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Here Is how experts State Canadian oil could be impacted by the Keystone oil spill

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Here Is how experts State Canadian oil could be impacted by the Keystone oil spill

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On Thursday, an estimated 9,120 barrels of oil spilled from TC Energy Corp.’s Keystone’s crude pipeline near Edinburgh, North Dakota.Early estimates suggest 1.4 million litres of oil have spilled, impacting 2,090 square meters of land.

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The company said there were no injuries and it was investigating the reason for this breach.The pipeline was shut down since the leak.In addition to increasing environmental issues, the spill has prompted questions about how, and if, it will affect the Canadian petroleum industry. Will oil prices be impacted and will Canadians notice a rise in gas prices?


Here is what experts say:Patrick DeHaan, head of patroleum analysis at GasBuddy, says while the quantity of oil dropped is a”drop in the bucket” in relation to how much petroleum the pipeline transports, from a spill standpoint, the incident is”fairly important,” along with the consequences are”rather noteworthy. “Crude oil began flowing through the pipeline in 2010. It is part of a system that is also to incorporate the projected $8 billion Keystone pipeline, designed to transfer the oil to broadcasts on the Gulf Coast from western Canada. “The fact that the pipeline has shut down now as a result of this spill, it seems like there can be downtime of many days, or even longer, in which this potentially affected part of this pipeline in which this breach occurred,” DeHaan said. “And surely since this pipeline carries Canadian crude oil down to the Unites States into refineries in the Midwest, this might start to result in a small backup in petroleum supply in Canada which may negatively affect the purchase price of Canadian oil. “TC Energy has not said when pipeline operations would resume, but advised shippers that support to U.S. Midwest refiners would remain shut during the outage. The line could remain shut for at least a week, according market sources.

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DeHaan says the longer the pipeline is shut, the bigger the problem could become. “I would say in an issue of over five times, seven days it would start to become meaningful, therefore it would occur in rather short order,” he said. “And a pipeline breach of this magnitude — that calls into question the line’s ethics, therefore it could take longer than that. “So I think we’re right on the cusp of having a bigger backup problem in Canada at this stage.”

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According to Roger McKnight, chief oil analyst using En-Pro International Inc., there is a high demand currently for Canadian crude petroleum, notably by refiners on the Gulf Coast and in the Midwest, because of the low cost. He said there is a high need for what’s known as distillates such as jet fuel, heating oil and diesel fuel as we head into the chilly months.He says refiners are”trying to shake up the refineries to prepare for winter,” increasing the requirement for this kind of crude petroleum. “Any interruption in the flow of crude to the refineries and at the at the Gulf Coast or in the Midwest does produce some issues as far as prices are concerned,” he said. “So it depends upon how long it takes for them to correct this and how the stock market really reacts to this news.”

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He says if traders looking at the futures market think this will be a significant supply interruption, then it may lead to a small spike in the purchase price of crude, gasoline and diesel.However, ” he says the pipeline would have to remain shut for longer than two weeks for there to be a sizable impact.McKnight says he doesn’t think that will occur because officials are going to want to clean the spill and repair the pipeline as quickly as possible”because it is in their very best interest” to do so. “I can not see this lasting. This is not a major, major earth-shattering spill or escape,” he said. “it is a minor one in terms of spill levels. “Will gas prices be affected?According into DeHaan, as of right now, the spill will likely only have”negligible” impact on gas prices in the Great Lakes region at the U.S.. He says because nearly all the oil flowing through the Keystone pipeline does not end up back in Canada, that is. “But even after that, until this pipeline is down for a period of time, that would amount to over a week. I wouldn’t say there could be widespread consequences as a result of its shutdown,” he said. “But then, there would likely be more of a pricing impact in the U.S. simply because the breach at the pipeline severed the connection from Canadian oil fields to U.S. refineries. “DeHaan says it is likely the spill will not have any impact, or may have”very limited impact” on gas prices in Canada. “I wouldn’t expect that many motorists would feel really any impact from this,” he said.He added, however, that some portions of Western Ontario, such as Sarnia, could observe a”very small” impact because refiners at the excellent Lakes serve those areas. However, he says if the pipeline stays shut for an extended period of time, Canadians may start to see”minor impacts” in the pump.

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McKnight, too, says the spill likely will not have some impacts on gas rates. “Matter of fact, I’m calling for prices to really fall west of Thunder Bay within the brief term,” he stated,”because the Midwest refinery, they’re up to 90 percent potential, which can be a six percent increase over last week.” — With files from The Associated Press and Reuters


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