Keystone Oil Pipeline Shut After Leak in North Dakota, Disrupting Canada-US Crude Supply

Table of Contents

North Dakota/Calgary/New Delhi, April 10, 2025 [Keystone pipeline shutdown] – The Keystone pipeline, a critical link transporting Canadian crude oil to the United States, was shut down Tuesday morning following an oil spill near a pump station in southeast North Dakota, according to U.S. state officials.

The shutdown has halted a conduit that carries up to 15% of Canada’s oil exports to the U.S., intensifying concerns over near-term supply constraints in key American hubs and roiling energy markets.

Shutdown Triggered by Pump Station Incident

At approximately 7:44 a.m. local time, a pump station worker reported hearing a loud noise, prompting an immediate safety protocol. The pipeline was shut within two minutes, said Bill Suess, spokesperson for the North Dakota Department of Environmental Quality.

“A volume of oil was discovered in a field near the pump station,” Suess said, adding that the extent of the spill remains unknown and the source of the leak will require excavation.

There is no current timeline for the pipeline’s restart.

Keystone’s Critical Role in North American Energy Supply

Operated by South Bow Corp., the 30-inch diameter Keystone pipeline carried more than 620,000 barrels per day of crude oil from Alberta, Canada, into the U.S. as recently as December, according to data from the Canada Energy Regulator.

Keystone feeds crude into the Cushing, Oklahoma storage hub, a linchpin for U.S. oil pricing benchmarks.

“Even a short disruption to this pipeline significantly tightens crude availability in the mid-continent region,” said an oil market analyst at S&P Global.

Market Reaction: Oil Prices Surge, Canadian Crude Discounts Widen

The immediate market impact was substantial:

• U.S. crude futures’ prompt spread surged to session highs following the announcement.
• The discount for Western Canadian Select (WCS) — Canada’s primary heavy crude blend — widened to $11.25 per barrel against West Texas Intermediate (WTI), up from just over $9 a day earlier.
• Shares of South Bow Corp. fell as much as 6.2% on the Toronto Stock Exchange.

“This is a significant physical disruption that directly impacts Cushing balances,” said a senior trader with a U.S.-based hedge fund.

Environmental and Operational Response Underway

Environmental authorities are on site, and an investigation into the exact location and cause of the spill is ongoing. Given Keystone’s previous record of incidents, regulatory scrutiny is expected to intensify.

South Bow Corp. has not issued an official statement at the time of reporting. Emails sent to the company have gone unanswered.

“Before restart, they will need to isolate and repair the fault. We expect a multi-day outage at minimum,” said Suess.

Wider Energy Market Implications

The Keystone pipeline shutdown could have global reverberations:

• A prolonged outage could tighten North American crude supply, increasing demand for Middle Eastern and West African barrels.
• It could delay refinery runs in the U.S. Midwest and Gulf Coast, particularly those configured to process heavier Canadian crude.
• It could pressure rail and alternate pipeline routes, increasing transportation costs and fuel prices for consumers.

Additionally, the news comes amid broader geopolitical volatility in energy markets, with U.S.-China trade tensions and OPEC production shifts influencing investor sentiment.

Uncertainty Looms Over Restart Timeline

As of Wednesday, the Keystone pipeline remains offline, with no projected timeline for restoration. The spill investigation, potential regulatory delays, and the need for infrastructure repairs could collectively result in prolonged supply disruptions.

For an already tight crude market in the U.S., especially at Cushing, this outage adds a new layer of uncertainty.

“This event underlines how crucial infrastructure reliability is to market stability,” said an energy policy expert at Columbia University’s Center on Global Energy.

The Hindustan Herald Is Your Source For The Latest In Business, Entertainment, Lifestyle, Breaking News, And Other News. Please Follow Us On Facebook, Instagram, Twitter, And LinkedIn To Receive Instantaneous Updates. Also Don’t Forget To Subscribe Our Telegram Channel @hindustanherald