WASHINGTON, Kan., Dec 18 (Reuters) – Farmer Bill Pannbacker got a call earlier this month from a representative from TC Energy Corp , telling him that its Keystone Pipeline, which runs through his farmland in rural Kansas, had suffered an oil leak.
But he was not prepared for what he saw on his land, which he owns with his wife, Chris. Oil had shot out of the pipeline and coated what he estimated was nearly an acre of pasture uphill of the pipe, which is set into a valley.
The grass was blackened with diluent bitumen, one of the thickest of crude oils, which was being transported from Canada to the Gulf of Mexico.
The rupture on Dec. 7 is the third in the last five years for the Keystone Pipeline, and the worst of the three – more than 14,000 barrels of crude has spilled and cleanup is expected to take weeks or months.
TC has not said when repairs could be completed and a 96-mile (155-km) segment of the pipeline will restart. Crews will remain busy on site through the holidays and completion of the cleanup depends on weather and other factors, the Canadian company said in a statement.
“We are committed to restoring the affected areas to their original condition or better.”
BEEHIVE OF WORKERS
Keystone’s two previous spills happened in unincorporated areas in North Dakota and South Dakota. And while the city of Washington, Kansas, is small with just over 1,000 residents, it is surrounded by farms where wheat, corn, soybeans are planted and cattle are raised. The spill in Washington County affected land owned by several people.
The once-quiet valley is currently a construction site buzzing with some 400 contractors, staff from pipeline operator TC Energy, and federal, state and local officials. They are working into the night, leaving a glow from the high-intensity lamps seen from miles away.
Cranes, storage containers, construction equipment and vehicles stretch for more than a half mile from the site of the rupture. The valley has become almost a small town, with several Quonset-style huts erected for workers.
Aerial photos showed a large, blackened swath of land that almost looks like an airborne object is throwing a shadow over the land. Pannbacker said that pasture was used for cattle grazing and calving, but with calving season over, there were no livestock there at the time.
The oil-blackened grass on the land, which is owned by Pannbacker and his sisters as part of a family trust, is now completely gone. It was scraped away and is now confined to a giant mound of dirt that is noticeably darker at the bottom. But oil droplets on plants further up the hill were still visible.
WIDER GROUP AFFECTED
Living in rural Kansas, the Pannbackers are used to preparing for harsh weather, but not an oil spill. Residents have been largely unconcerned despite the accident, even as the area will resemble a work site for the near-future.
“How many people have experienced an oil spill? Who knows what it’s like?” said Chris Pannbacker. “It’s not like a tornado or a natural disaster.”
Kansas State Representative Lisa Moser in a Facebook post said there are 14 landowners who are being compensated for either the spill or the use of their property during cleanup.
TC said it is discussing compensation with landowners but would keep details private. The company said it has stayed in regular contact with landowners. Pannbacker said TC has not yet discussed compensation with them yet.
Pannbacker says he does not expect the grass on the pastureland to return for at least two or three years; there is a well site on the pasture used for the cattle that they will not be using either.
Reporting by Erwin Seba in Washington, Kan.; additional reporting by Rod Nickel; writing by David Gaffen
Editing by Marguerita Choy
Our Standards: The Thomson Reuters Trust Principles.
WASHINGTON, Kan., Dec 10 (Reuters) – Residents near the site of the worst U.S. oil pipeline leak in a decade took the commotion and smell in stride as cleanup crews labored in near-freezing temperatures, and investigators searched for clues to what caused the spill.
A heavy odor of oil hung in the air as tractor trailers ferried generators, lighting and ground mats to a muddy site on the outskirts of this farming community, where a breach in the Keystone pipeline discovered on Wednesday spewed 14,000 barrels of oil.
Pipeline operator TC Energy (TRP.TO) said on Friday it was evaluating plans to restart the line, which carries 622,000 barrels per day of Canadian oil to U.S. refineries and export hubs.
“We could smell it first thing in the morning; it was bad,” said Washington resident Dana Cecrle, 56. He shrugged off the disruption: “Stuff breaks. Pipelines break, oil trains derail.”
TC Energy did not provide details of the breach or say when a restart on the broken segment could begin. Officials are scheduled on Monday to receive a briefing on the pipeline breach and cleanup, said Washington County’s emergency preparedness coordinator, Randy Hubbard, on Saturday.
OIL FLOWS TO CREEK
Environmental specialists from as far away as Mississippi were helping with the cleanup and federal investigators combed the site to determine what caused the 36-inch (91-cm) pipeline to break.
Washington County, a rural area of about 5,500 people, is about 200 miles (322 km) northwest of Kansas City.
The spill has not threatened the water supply or forced residents to evacuate. Emergency workers installed booms to contain oil that flowed into a creek and that sprayed onto a hillside near a livestock pasture, said Hubbard.
TC Energy aims to restart on Saturday a pipeline segment that sends oil to Illinois, and another portion that brings oil to the major trading hub of Cushing, Oklahoma, on Dec. 20, Bloomberg News reported, citing sources. Reuters has not verified those details.
It was the third spill of several thousand barrels of crude on the 2,687-mile (4,324-km) pipeline since it opened in 2010. A previous Keystone spill had caused the pipeline to remain shut for about two weeks.
“Hell, that’s life,” said 70-year-old Carol Hollingsworth of nearby Hollenberg, Kansas, about the latest spill. “We got to have the oil.”
TC Energy had around 100 workers leading the cleanup and containment efforts, and the U.S. Environmental Protection Agency was providing oversight and monitoring, said Kellen Ashford, an EPA spokesperson.
U.S. regulator Pipeline and Hazardous Materials Administration (PHMSA) said the company shut the pipeline seven minutes after receiving a leak detection alarm.
CRUDE BOTTLENECK
A lengthy shutdown of the pipeline could lead to Canadian crude getting bottlenecked in Alberta, and drive prices at the Hardisty storage hub lower, although price reaction on Friday was muted.
Western Canada Select (WCS), the benchmark Canadian heavy grade, for December delivery last traded at a discount of $27.70 per barrel to the U.S. crude futures benchmark , according to a Calgary-based broker. On Thursday, December WCS traded as low as $33.50 under U.S. crude, before settling at around a $28.45 discount.
“The real impact could come if Keystone faces any (flow) pressure restrictions from PHMSA, even after the pipeline is allowed to resume operations,” said Ryan Saxton, head of oil data at consultants Wood Mackenzie.
Reporting by Erwin Seba in Washington, Kansas, and Nia Williams in Calgary, Alberta;
Additional reporting by Arathy Somasekhar in Houston, Rod Nickel in Winnipeg and Stephanie Kelly in New York
Editing by Gary McWilliams, Stephen Coates and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
Dec 9 (Reuters) – The effort to remove oil from the largest crude spill in the United States in nearly a decade will extend into next week, the U.S. Environmental Protection Agency said on Friday, making it likely that the Keystone pipeline shutdown will last for several more days.
TC Energy (TRP.TO) shut the largest oil pipeline to the United States from Canada on Wednesday after it leaked 14,000 barrels of oil into a Kansas creek. It said on Friday it is still determining when it will be able to return the line to service.
The outage on the Keystone, which carries 622,000 barrels of Canadian crude per day (bpd) to various parts of the United States, could affect inventories at the key Cushing, Oklahoma, storage hub and cut crude supplies to two oil refining centers, analysts said. Crews in Kansas continued clean-up efforts on Friday from the breach, the cause of which remained unknown.
“We’re beginning to get a better sense of the clean up efforts that will need to be undertaken in the longer-term,” said Kellen Ashford, spokesperson for the EPA Region 7, which includes Kansas.
TC Energy aims to restart on Saturday a pipeline segment that sends oil to Illinois, and another portion that brings oil to Cushing on Dec. 20, Bloomberg News reported, citing sources. Reuters has not verified those details.
This is the third spill of several thousand barrels of crude on the pipeline since it first opened in 2010. A previous Keystone spill had caused the pipeline to remain shut for about two weeks.
TC Energy remained on site with around 100 workers leading the clean-up and containment efforts, and the EPA was providing oversight and monitoring, Ashford said. TC is responsible for determining the cause of the leak.
A corrective action order from the U.S. Pipeline and Hazardous Materials Administration (PHMSA) to TC on Thursday said the company shut the pipeline down seven minutes after receiving a leak detection alarm. The affected segment, 36 inches (91 cm) in diameter, was Keystone’s Phase 2 extension to Cushing built in 2011.
Washington County, a rural area of about 5,500 people, is about 200 miles (320 km) northwest of Kansas City.
The oil spill has not threatened the local water supply or forced local residents to evacuate, Washington County Emergency Management Coordinator Randy Hubbard told Reuters. Workers quickly set up a containment area to restrict oil that had spilled into a creek from flowing downstream.
“There is no human consumption drinking water that would come out of this,” Hubbard said.
Livestock producers in the area have been notified and have taken their own corrective measure to protect their animals, he added.
The EPA is the main federal agency that oversees inland oil spills. If the EPA finds TC Energy liable for the spill, the company would be responsible for the cost of cleanup and repairing any harm to the environment, as well as potential civil and criminal penalties.
Pipeline operators are typically held accountable for breaches by the EPA through the Clean Water Act (CWA) and the related Oil Pollution Act, among others, according to Zygmunt Plater, an environmental law professor at Boston College Law School.
Those federal acts restrict the discharge of pollutants such as oil into waterways and hold pipeline operators responsible for the costs associated with containment, cleanup and damages from spills.
CRUDE BOTTLENECK
A lengthy shutdown of the pipeline could also lead to Canadian crude getting bottlenecked in Alberta, and drive prices at the Hardisty storage hub lower, although price reaction on Friday was muted.
Western Canada Select (WCS), the benchmark Canadian heavy grade, for December delivery last traded at a discount of $27.70 per barrel to the U.S crude futures benchmark, according to a Calgary-based broker. On Thursday, December WCS traded as low as $33.50 under U.S. crude, before settling at around a $28.45 discount.
PHMSA has to approve the restart of the line. Even once the pipeline starts operating again, the affected area will have to flow at reduced rates pending PHMSA approval.
“The real impact could come if Keystone faces any pressure restrictions from PHMSA, even after the pipeline is allowed to resume operations,” said Ryan Saxton, head of oil data at Wood Mackenzie.
Additional reporting by Arathy Somasekhar, Rod Nickel, Stephanie Kelly and Clark Mindock; Editing by Marguerita Choy
Our Standards: The Thomson Reuters Trust Principles.
CHICAGO, April 6 (Reuters) – For nearly two decades, Abe Sandquist has used every marketing tool he can think of to sell the back end of a cow. Poop, after all, needs to go somewhere. The Midwestern entrepreneur has worked hard to woo farmers on its benefits for their crops.
Now, facing a global shortage of commercial fertilizers made worse by Russia’s invasion of Ukraine, more U.S. growers are knocking on his door. Sandquist says they’re clamoring to get their hands on something Old MacDonald would swear by: old-fashioned animal manure. read more
“I wish we had more to sell,” said Sandquist, founder of Natural Fertilizer Services Inc, a nutrient management firm based in the U.S. state of Iowa. “But there’s not enough to meet the demand.”
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Some livestock and dairy farmers, including those who previously paid to have their animals’ waste removed, have found a fertile side business selling it to grain growers. Equipment firms that make manure spreading equipment known as “honeywagons” are also benefiting.
Not only are more U.S. farmers hunting manure supplies for this spring planting season, some cattle feeders that sell waste are sold out through the end of the year, according to industry consultant Allen Kampschnieder.
“Manure is absolutely a hot commodity,” said Kampschnieder, who works for Nebraska-based Nutrient Advisors. “We’ve got waiting lists.”
Sky-high prices for industrial fertilizer are projected to reduce American farmers’ corn and wheat plantings this spring, according to U.S. government data. That further threatens global food supplies as domestic wheat inventories are the lowest in 14 years, and the Russia-Ukraine war is disrupting grain shipments from those key suppliers. read more
While manure can replace some of the nutrient shortfall, it’s no panacea, agriculture specialists say. There’s not enough supply to swap out all the commercial fertilizer used in the United States. Transporting it is expensive. And prices for animal waste, too, are rising on strong demand.
It’s also highly regulated by state and federal authorities, in part due to concerns about impacts on water systems.
Manure can cause serious problems if it contaminates nearby streams, lakes and groundwater, said Chris Jones, a research engineer and water quality expert at the University of Iowa.
Livestock farmers say it’s a heavy lift to meet all the government rules and track how manure is applied.
RACE FOR WASTE
Regardless of the drawbacks, demand is booming.
In Wisconsin, three dairy farmers told Reuters they turned down requests to buy their manure sent via text and Twitter messages.
North Carolina-based Phinite, which makes manure-drying systems, says it’s fielding solicitations from growers as far away as Minnesota, Illinois, Iowa and Indiana.
Smithfield Foods, the world’s largest pork producer, has noticed the shift at the U.S. hog farms that supply its slaughterhouses.
“We’re definitely seeing farmers move toward manure with the increase in fertilizer prices,” said Jim Monroe, a spokesperson for the company, which is owned by Hong Kong-listed WH Group Ltd (0288.HK).
Industrial fertilizers such as nitrogen require a lot of energy to produce. Prices started to surge last year amid rising demand and lower supply as record natural gas and coal prices triggered output cuts by fertilizer manufacturers. Extreme weather and COVID-19 outbreaks also roiled global supply chains. read more
War in Ukraine has made the situation worse by reducing fertilizer exports from Russia and its ally Belarus due to Western sanctions and shipping snags. That threatens to shrink harvests around the world at a time of record food inflation. Combined, Russia and Belarus accounted for more than 40% of global exports of potash last year, one of three critical nutrients used to boost crop yields, according to Dutch lender Rabobank.
As of March, commercial fertilizer prices reached a record high, with nitrogen fertilizer jumping four-fold since 2020 and phosphate and potash up three-fold, said London-based consultancy CRU Group.
One person left bereft is Dale Cramer, who grows corn, soybeans and wheat on about 6,000 acres in Cambridge, Nebraska. Searching for alternatives, he has sniffed around feedlots for manure since last August with no luck.
“A lot of people have put their names in for the same thing,” Cramer said.
HONEYWAGON SCRAMBLE
With demand for manure surging, prices have followed, delivering an unexpected windfall to livestock producers and cattle feedlots.
Prices for good-quality solid manure in Nebraska alone have reached $11 to $14 per ton, up from a typical price of $5 to $8 per ton, consultant Kampschnieder said. A dry winter helped drive up prices by leaving manure with less water in it, making it more concentrated, and thus more valuable, he said.
Iowa farmer Pat Reisinger is relieved he has dung from the pigs and dairy cows he raises to fertilize the corn, soybeans and hay he grows to feed those animals. He sold a little manure to one neighbor and is getting phone calls from others in need.
“If I sold any more, I’d have to turn around and buy commercial fertilizer, which makes no sense,” Reisinger said.
The boom has also has lifted machinery companies that make spreading equipment for solid manure as well as so-called honeywagons: wheeled tanks hitched to trucks and tractors for transporting and applying liquefied waste.
In Canada, Husky Farm Equipment Ltd is sold out of honeywagons. The company built its first contraption back in 1960 as a way to make collecting and spreading manure more efficient, according to President Walter Grose. Today Grose sells directly to farmers and machinery dealerships, and he can’t keep up.
“We have people looking for equipment right away and we’re sold out for six months,” said Grose who sells honeywagons in several sizes. Bigger tanks come with a $70,000 average price tag.
CNH Industrial , the American-Italian farm and construction equipment giant, said it has seen strong demand for its New Holland brand box spreaders – essentially, a steel box that attaches to a tractor to haul and spread solid manure.
Kansas equipment dealership KanEquip Inc is sold out of New Holland spreaders, even though prices have jumped 10% from the normal list price of $30,000, said regional manager Bryndon Meinhardt. He said the dealership has ordered 10 more to meet demand.
NO POOP FOR YOU
Even in states where large livestock herds generate massive quantities of manure, there’s not enough to replace commercial fertilizer completely. Iowa, the top U.S. producer of pork and corn, already applies all of its manure on land covering about 25% of its corn acres each year, said Dan Andersen, an associate professor at Iowa State University who specializes in manure management.
On average, Iowa uses about 14 billion gallons of manure annually, said Andersen, known as @DrManure on Twitter. He expects Iowa growers may suck out an extra billion gallons this year from storage in tanks on farms to substitute pricey commercial fertilizer.
Part of the current supply problem is rooted in the evolution of the U.S. farm economy. As America’s livestock sector has consolidated, there are geographical hubs where animals are raised for eggs, milk or meat, and where the most manure is produced. As a result, some places have too little, while others have too much and have wrestled with ways to dispose of it.
Last October, Pennsylvania dairyman Brett Reinford thought he might be tight on manure storage space over the winter. So he made an offer to local farmers: You come and haul it away, you can have it for free. He got no takers.
Fast forward six months and Reinford is now sitting on liquid gold. “We’re keeping it all and I wish we had more,” he said.
Manure could become even more precious later this year, as U.S. livestock herds and poultry flocks shrink.
The number of hogs in the United States has dropped to its lowest level in about five years, as producers grapple with swine diseases and rising costs for feed and other inputs. Bird flu, meanwhile, has wiped out more than 22 million chickens and turkeys on commercial U.S. farms since February.
But even hard-hit poultry farmers could have something to use: Their dead birds can be composted and applied as fertilizer, according to the Iowa Department of Agriculture and Land Stewardship.
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Reporting By P.J. Huffstutter and Tom Polansek in Chicago, and Bianca Flowers in Chicago and New York. Additional reporting by Leah Douglas in Washington, D.C.; Editing by Caroline Stauffer and Marla Dickerson
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Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base
NEW YORK, Oct 27 (Reuters) – Crude oil tanks at the Cushing, Oklahoma storage and delivery hub for U.S. crude futures are more depleted than they have been in the last three years, and prices of further dated oil contracts suggest they will stay lower for months.
U.S. demand for crude among refiners making gasoline and diesel has surged as the economy has recovered from the worst of the pandemic. Demand across the globe means other countries have looked to the United States for crude barrels, also boosting draws out of Cushing.
Analysts expect the draw on inventories to continue in the short-term, which could further boost U.S. crude prices that have already climbed by about 25% in the last two months. The discount on U.S. crude futures to the international Brent benchmark should stay narrow.
“Storage at Cushing alone has the potential to really rally the market to the moon,” said Bob Yawger, director of energy futures at Mizuho.
Cushing stockpiles have dropped to 27.3 million barrels, the lowest since October 2018, the Energy Information Administration said on Wednesday, or about half of where inventories were at this time a year ago. [EIA/S]
Inventories have fallen because of a ramp-up in U.S. demand, which has encouraged domestic refiners to keep crude at home to provide fuel such as gasoline and distillates to U.S. consumers, said Reid I’Anson, senior commodity analyst at Kpler.
In addition, U.S. production has been slow to recover from declines seen in 2020. At the end of 2019, the nation was producing roughly 13 million barrels of oil per day (bpd), but in recent weeks has been less than 11.5 million bpd. At the same time, product supplied by refineries – a proxy for demand – is about just 1% below pre-pandemic peaks.
Crude inventories at the Cushing, Oklahoma, storage hub fell 31.2 million barrels in the most recent week, the lowest since October 2018.
As a result, the spread between U.S. crude and Brent, has collapsed. The spread narrowed to roughly $1.09 a barrel this week from $4.47 earlier this month, which had been about the widest spread since May 2020.
In an additional sign of high short-term demand for U.S. crude, the premium for U.S. crude delivered this December versus December 2022
reached a high this week of $12.48 per barrel, most since at least 2014, according to Refinitiv Eikon data.
In the next three months, Rystad Energy expects refinery runs in the United States to increase by 500,000 to 600,000 barrels per day. This would outpace production gains of 300,000-400,000 bpd, and keep the spread between the two benchmarks narrow.
“Only if OPEC (the Organization of the Petroleum Exporting Countries) intervenes with more supply of crude or if COVID rears its ugly head again, curbing demand, this high volatility will come off,” said Mukesh Sahdev, senior vice president and head of downstream at Rystad Energy.
The U.S. crude discount to Brent has reached its narrowest recently since September 2020. Meanwhile, the premium for U.S. crude delivered this December versus December 2022 reached the most since at least 2014.
Reporting by Stephanie Kelly; Editing by David Gregorio and Marguerita Choy
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