TC Energy Corp’s Marketlink crude pipeline was operating at reduced rates due to supply disruptions, three sources said on Thursday, after Keystone pipeline shut following a leak of more than 9,000 barrels of oil in North Dakota.
The Marketlink pipeline has a capacity of 750,000 barrels per day (bpd) and flows south from Cushing, Oklahoma, the delivery point for U.S. crude futures, to Nederland, Texas.
Marketlink is connected to the 590,000-bpd Keystone oil pipeline system, a key transporter of Canadian crude from northern Alberta to refineries in the U.S. Midwest.
TC Energy said in a statement it would focus on cleaning up the spill and preparing to make Keystone pipeline repairs. The company did not respond to requests for further comment.
Earlier, TC Energy said on its website that the Marketlink system was not affected by the Keystone outage, which was shut from Hardisty, Alberta to Cushing, Oklahoma and to Wood River-Patoka, Illinois.
By Thursday, however, Marketlink appeared to have shut after it was last seen operating at reduced rates of 288,000 bpd, according to market intelligence firm Genscape.
About 9,120 barrels of oil were estimated spilled from Keystone near the city of Edinburg, North Dakota, state officials said. The leak was discovered on Tuesday night and affected a wetland, the officials said.
“The initial guesses on a pipeline leak of this magnitude are 7-10 days (of repairs) which will reduce flows into Cushing by about 3-3.5 million barrels of heavy crude and some synthetic crude,” said Scott Shelton, a broker at ICAP in Durham.
The disruption on Marketlink pressured U.S. crude futures time spreads, that typically reflect supply and demand in Cushing, traders and brokers said.
Trading in Canadian crude markets were muted on Thursday morning, dealers said.
The Keystone outage will likely dent supplies at Cushing, which would be offset partially by Marketlink flows slowing, said Andy Lipow, president of Lipow Oil Associates in Houston.
Crude grades such as Magellan East Houston and Mars Sour could strengthen as the U.S. Gulf Coast market looks for replacement barrels, Lipow said.
“If we assume that a significant amount of Keystone barrels were actually Western Canadian select-type barrels, it might be difficult to replace that quality barrel on a prompt basis and you might see refiners turning to lower-sulfur lighter barrels to extent they can,” Lipow said.
Inventories at Cushing rose by nearly 1.5 million barrels between Friday, Oct. 25 and Tuesday, Oct. 29, dealers said, citing Genscape.