TransCanada to restart Keystone pipeline on November 28

By Nia Williams

CALGARY, Alberta (Reuters) - TransCanada Corp will restart its Keystone crude oil pipeline at reduced pressure on Tuesday after getting approval from U.S. regulators, the company said on Monday.

Calgary-based TransCanada shut down the 590,000 barrel-per-day pipeline, one of Canada's main crude export routes, on Nov. 16 after 5,000 barrels of oil leaked in South Dakota. Keystone carries crude from Alberta's oil sands to U.S. refineries.

The company said its repair and restart plans were reviewed by the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) and it will start operating the pipeline at reduced pressure to gradually increase the volume of crude moving through the system.

TransCanada did not specify what the reduced pressure would be or when the pipeline would return to full capacity and PHMSA did not immediately respond to a request for comment.

"We are communicating plans to our customers and will continue working closely with them as we begin to return to normal operating conditions," TransCanada said in a statement.

The Keystone outage roiled crude oil prices on both sides of the border as market players anticipated a glut of crude building up in Alberta while inventories fell in the U.S. futures trading hub of Cushing, Oklahoma.

The discount on Western Canada Select heavy blend crude for December delivery in Hardisty, Alberta, narrowed in thin trade to $17.90 a barrel below U.S. crude, according to Shorcan Energy brokers. On Friday December WCS settled at $21.50 a barrel under the U.S. benchmark.

In its most recent update TransCanada said it has so far cleaned up 1,065 barrels of oil.

The cleanup "is going as fast as we would hope, they are working 24 hours a day," said Brian Walsh, environmental scientist manager with the South Dakota Department of Environment and Natural Resources.

(Additional reporting by Catherine Ngai in New York; Editing by David Gregorio)