South Dakota Warns Keystone Pipeline Permit Could Be Revoked After Oil Spill

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The state's Public Utility Commission is now awaiting the forensic analysis results from the spill to see whether any of the conditions it imposed on the pipeline's operator, TransCanada, had been violated, one commission official told Reuters.

South Dakota regulators said on Tuesday they could revoke TransCanada Corp's permit to operate the Keystone crude oil pipeline in the state if an initial probe into last week's spill finds the company violated its license. The pipeline is a key artery that carries crude into the United States from the oil sands of Alberta.

"With no timeline for restart, expect roughly 4 million bbls/week of Canadian imports to be backed out", TAC Energy, a fuel wholesaler, said in a note to customers.

Oil prices jumped two percent on Wednesday, the highest since July 2015. The price of WTI for prompt delivery also rose in comparison to contracts for future delivery, suggesting traders were scrambling to obtain immediate supplies. A more comprehensive analysis could take several months.

Earlier this week a member of the South Dakota Public Utilities Commission expressed concerns over the apparent frequency of the leaks. "It is supposed to have an operating life of more than 100 years and it was supposed to be a state-of-the-art pipeline construction".

While Hanson, who served on the commission in 2008 when TransCanada's permit for construction was approved, acknowledged the commission had known a leak was bound to happen, he said the multiple leaks were "very disturbing".

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