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Markets watching Keystone pipeline closure

  |   Oct. 19, 2012 at 9:58 AM
WASHINGTON, Oct. 19 (UPI) -- An analyst said U.S. energy markets were taking a wait-and-see approach after a federal regulator ordered the closure of the Keystone oil pipeline.

The U.S. Pipeline and Hazardous Material Safety Administration was informed by TransCanada that the Keystone oil pipeline was closed for repairs following the identification of possible safety issues. No leaks were reported.

The Keystone oil pipeline runs 2,100 miles from oil fields in Alberta province to refineries in Illinois and Oklahoma. The pipeline transports about 500,000 barrels of so-called tar sands oil per day.

Oliver Jakob, a director from Petromatrix, a research company in Switzerland, said the market impact was likely to be negligible.

"For now the shutdown of the Keystone pipeline had a limited impact," he was quoted by Bloomberg News as saying. "Nobody is exactly sure about the anomaly and the weekend will therefore include a risk that we come back on Monday to a worse- than-expected situation."

Keystone operator TransCanada plans to build an extension to the pipeline in order to reach refineries along the southern U.S. coast.

Opponents of pipelines like Keystone argue tar sands are potentially more corrosive and therefore vulnerable to spills. A leg of the Lakehead pipeline system in Michigan spilled tar sands oil in 2010 in what is considered the costliest onshore release in history.

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