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Nov. 30, 2017, 8:05 p.m. EST

TransCanada could lose Keystone permit over oil spill, South Dakota regulator says

Pipeline could be shut down if systemic problems found

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By Vipal Monga

An aerial view shows the darkened ground of the Keystone oil spill near Amherst, S.D.

A South Dakota state official said Thursday that a federal agency’s diagnosis of a recent leak in TransCanada Corp.’s Keystone pipeline could signal a systemic problem and could lead the state to revoke the permit that allows the company to operate the pipeline.

Gary Hanson, vice chairman of the South Dakota Public Utilities Commission, said in an interview Thursday that recent findings on the cause of the leak raised concerns about more widespread problems, because they showed the rupture in the pipe may have been caused by a weight placed on the pipeline during its construction meant to keep it from floating in groundwater. The commission regulates utilities and pipelines in the state.

“I’m worried about their standard operating procedure,” said Hanson. “The permit gives them permission to construct and operate the pipeline in the state of South Dakota, provided they follow all contingencies outlined in the permit. They may not have abided by all of those contingencies.”

Hanson said the utilities commission wouldn’t make a decision on revoking the permit before receiving a final report from the federal agency, the Pipeline and Hazardous Materials Safety Administration (PHMSA.) Revoking the permit could force TransCanada /zigman2/quotes/200192679/composite TRP -4.03%   /zigman2/quotes/203758221/delayed CA:TRP -2.98%   to stop pumping oil through the pipeline, a major artery for crude deliveries to refineries in the U.S.

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