Force majeure declared over Keystone pipeline vandalism

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What happened recently to TC Energy’s huge Keystone pipeline that stretches across the U.S. and through Oklahoma enroute to the Gulf Coast refineries might make a case why the Keystone XL pipeline was needed in the U.S.

What happened was this. Just as President Biden pitched Saudi Arabian leaders to increase the flow of oil, the Keystone pipeline operations were thrown into disarray. It was caused by a power outage at a pump station in South Dakota.

Sheriff’s officers are investigating suspected vandalism, indicating the transformer had been vandalized. CTV News in Calgary reported East River Power stated the substation in South Dakota had been targeted on Sunday.

As a result, TC Energy Corp., the pipeline operator, was forced to declare force majeure—it was an Act of God and out of the control of the company. TC Energy immediately reduced output on the Keystone line and issued a statement.

“”On July 17, 2022, we were made aware of a non-operational incident resulting from third-party damage to the power supply to a facility on the Keystone Pipeline System near Huron, South Dakota. Our system continues to operate safely. Initial damage assessments have been completed with no material impact to TC Energy-owned facilities.

“A force majeure has been declared on Keystone, which is operating at a reduced rate due to damage to the third-party power utility. Repairs are being undertaken and we are working to restore full service as soon as possible. A timeline for full-service restoration is not available at this time.”

Traders and refiners immediately bid up the price of crude oil, adding to what Biden has been fighting for months.

In particular, the crude oil in question that drew increased pricing was Canadian Cold Lake crude for August delivery. Cold Lake crude is a heavy oil mined from the northern Alberta oil-sands region. It is also preferred by some refiners in Louisiana and Texas because they are equipped to readily turn it into gasoline and diesel fuel.