Oil prices, opposition to TransCanada surge in US after Keystone oil spill

A major oil spill on the Keystone pipeline in South Dakota helped push US crude prices higher on Friday, while fueling opposition to another pipeline project by owner TransCanada Corp that faces a crunch decision in Nebraska next week.

The climb in US crude futures and slide in Canadian heavy crude prices, as well as TransCanada Corp shares, came the day after the 5,000 barrel spill, tied for this year's largest pipeline leak in the United States.

No date has been set for reopening Keystone, TransCanada said, adding that a media report that had identified a restart date was incorrect.

The spill gave further ammunition to environmental groups and other US opponents of another pipeline the company has proposed, the long-delayed Keystone XL.

Keystone carries 590,000 barrels per day of crude from Alberta's oil sands to markets in the United States. The state of Nebraska was set to decide on Monday whether to approve Keystone XL.

On Thursday, Calgary, Alberta-based TransCanada said it had contained the leak in the town of Amherst, South Dakota, and was investigating the cause. It said the pipeline will be shut until it gets approval to restart from the US Pipeline and Hazardous Materials Safety Administration (PHMSA).

"It’s not a tiny spill by any means," said Kim McIntosh, environmental scientist manager at the South Dakota Department of Environment and Natural Resources. McIntosh said it may take longer than usual for the company to determine the extent of contamination, a process that usually takes days.

The last Keystone pipeline spill recorded was about 400 barrels of oil in Hutchinson County, South Dakota, in April 2016. "The 2016 release took around 10 months to clean up; this will take longer," said McIntosh. "I can’t predict whether it will take 20 months or 12 months."

In Nebraska, Keystone XL opponents seized on the spill as an example of its environmental risks.

"Pipelines are basically plumbing; and plumbing leaks. It comes as no surprise," said Tom Genung, who lives near the proposed Keystone XL route in Holt County, Nebraska.

The Nebraska Public Service Commission, or PSC, is scheduled to announce a decision on Monday on Keystone XL. Its decision focuses narrowly on whether the pipeline is in the public interest, and not on environmental issues, which it is not allowed to consider.

Art Tanderup's family farm in Neligh, Nebraska, lies in the path of the 830,000 bpd Keystone XL project. He said the proposed XL pipeline would be built over huge swaths of porous, sand-like soil atop the Ogallala aquifer, putting farmers and ranchers at risk of water contamination if a spill occurs.