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Bad weather hampers TransCanada’s Keystone work

The Keystone oil pipeline is pictured under construction in North Dakota in this undated photograph released on Jan. 18, 2012.


TransCanada Corp. said on Friday that poor weather was impeding efforts to inspect a section of its idled Canada-to-United States oil pipeline, but the company stuck to its estimate for a weekend restart for the major export conduit.

TransCanada, the country's largest pipeline company, shut down the 590,000-barrel-a-day Keystone oil pipeline on Wednesday after an in-line inspection tool detected what the company referred to as a "small anomaly" on the pipe. It said it expected the line would be down for three days.

"Bad weather is hampering our efforts in getting heavy equipment on site," TransCanada spokesman James Millar said in an e-mail.

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"Our current statement (on the timing for restart) still stands," Mr. Millar said.

TransCanada has not given the location of the potential defect, but the U.S. Pipelines and Hazardous Materials Safety Administration said on Thursday it had sent an inspector to observe repairs on a section between Missouri and Illinois.

The pipeline, which has the capacity to move a quarter of Canada's oil exports to the United States, extends to Wood River, Ill., and the major storage hub at Cushing, Okla., from Hardisty, Alta.

On Thursday, the outage pulled U.S. oil prices off their lows and pressured Canadian crude prices. West Texas Intermediate was down 2 cents at $92.08 (U.S.) a barrel on Friday morning.

"Because of the ample supplies of oil (in the United States), a three-day closure is not extremely bullish – if they announce a delay, that's when the market will start to get a bid in it again," said Gene McGillian, analyst at Tradition Energy in Stamford, Conn.

The pipeline is the first phase of TransCanada's overall Keystone system and has been in operation since 2010.

The next phase, between Cushing and Gulf Coast refineries, is under construction amid opposition from some landowners. The contentious Keystone XL project, between Alberta and southern Nebraska, still requires U.S. federal approval after President Barack Obama rejected the initial application early this year.

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TransCanada has re-applied to build that $5.3-billion portion of the system, hoping for an approval early next year.

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in mergers, acquisitions and private equity for The Globe and Mail’s Report on Business. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general topics. More


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