Oil spill in rural Kansas creek shuts down Keystone pipeline

TOPEKA, Kan. (AP) — An oil spill in a creek in northeastern Kansas shut down a major pipeline that carries oil from Canada to the Texas Gulf Coast, briefly causing oil prices to rise on Thursday.

Canada-based TC Energy said it shut down its Keystone system Wednesday night following a drop in pipeline pressure. It said oil spilled into a creek in Washington County, Kansas, about 150 miles (241 kilometers) northwest of Kansas City.

The company said in a news release that the pipeline segment where the spill occurred had been “isolated” and that the company was using booms, or barriers, to keep the spilled oil from moving downstream. It didn't say how much oil was spilled or what caused the spill.

There was a brief surge in oil prices midday Thursday as word of the spill began to spread, with the cost for a barrel of oil for near-term contracts rising by nearly 5%, and above the cost of oil contracts further into the future. That typically suggests there is anxiety in the market over immediate supply.

“It’s something to keep an eye on, but not necessarily an immediate impact for now,” said Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks gasoline prices. “It could eventually impact oil supplies to refiners, which could be severe if it lasts more than a few days.”

Past Keystone spills have led to outages that lasted about two weeks, but this outage could possibly be longer because it involves a body of water, said analysts at RBC Capital Markets in a note to investors. Depending on the spill’s location, it’s possible that a portion of the pipeline could restart sooner, they said.

“Much of the oil through Keystone gets exported, so we expect little to no impact on domestic gasoline prices,” said Andrew Gross, spokesman for AAA. “Any spike in reaction...