Vandalized transformer led to Keystone pipeline operating at reduced rate

An American utility company says vandalism to a transformer led to a power disruption which has forced the Keystone pipeline to operate at a reduced rate for the past several days.

Earlier this week, TC Energy said it was made aware Sunday of a “non-operation incident resulting from third-party damage to the power supply to a facility on the Keystone Pipeline System near Huron, South Dakota.”

A spokesperson for East River Electric in South Dakota said Wednesday that a sensor warning went off at 12:30 a.m. Sunday, alerting the company of a problem at a transmission substation that serves the Keystone pipeline.

The company found a transformer had been vandalized, causing the power disruption. This particular substation powers only the Keystone pipeline.

The company said the incident caused a “fairly significant” amount of damage, including a mineral oil leak. Mineral oil is used in transformer operations.

Repair crews have been on scene every day since, but the spokesperson said there is no timeline on when the power will be back up and running as they are waiting on parts.

The East River Electric spokesperson said the Beadle County Sheriff’s Office and the FBI have been alerted and are investigating. Global News has reached out to the local sheriff’s office and the FBI for comment.

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The power disruption led TC Energy to declare a “force majeure” on Keystone, which means it is operating at a reduced rate due to the damage to the third-party power utility.

In an update Wednesday, TC Energy said its system continues to operate safely.

“We are unable to further discuss operations as it involves commercially sensitive information. We can confirm there was no material impact to TC Energy-owned facilities during the incident. Currently, there is no timeline for completion of repairs and restoration of power service,” the company said in its update.

Analysts say the reduced capacity will put pressure on the oil market.

“If this lasts more than the three days it already has, it’ll start to back up oil in the tanks here in Alberta, and differentials that were already fairly wide here at $20-some dollars will start to get wider,” said Richard Masson, an executive fellow with the University of Calgary’s School of Public Policy.

“Even one pump station along Keystone, which is a 590,000-barrel-a-day line, can have a big impact.”

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Masson said from his experience, situations like this are pretty rare.

“Usually there’s a way for companies to make their deliveries or find they can pull it out of storage or something like that, but it could be a big enough outage that it’s just not possible. The refineries right now are depending on it, so I guess they didn’t have a lot of choices.”

It comes at a time when many countries around the world are relying less on Russian oil.

“I think there’s going to be a lot of disruption in the market and the U.S. is counting on us, we’re a huge supplier to them,” Masson said. “We’re the biggest supplier to the U.S. So we really need the infrastructure to work well to make it efficient.

“These pipelines feed refineries that provide the gasoline that helps people get to work, get their groceries, go to hospitals — all those kind of things. And so when pipelines go down, there’s less supply and right now supply is already tight, and so prices will go up and availability will go down.

“We really need to make sure that we keep pipelines running as efficiently as possible. That’s going to be key to trying to deal with the Russian situation and the overall shortages that were occurring even prior to Russia.”

The Keystone Pipeline System stretches more than 4,000 kilometres, running from Hardisty, Alta., into Nebraska, where it splits for deliveries into both Illinois and Texas.