Canadian pipeline firm to pay $26.9 million over major Kansas oil spill

Just over three years since the biggest land-based pipeline spill in the United States in almost a decade, the company that manages the Keystone Pipeline System has reached an agreement with the U.S. government in a proposed settlement which calls for it to pay a $26.9 million civil penalty. This settlement comes after a pipeline rupture in December 2022 in Washington County, Kansas, which spilt approximately 13,000 barrels of heavy crude oil into the local creek. Beyond the payment of the civil penalty, the company has also pledged to make investments in safety measures, as well as restoration in Kansas.

Why is South Bow paying a $26.9 million penalty

As reported by Associated Press (AP), the proposed settlement resolves allegations by the US Environmental Protection Agency (EPA) and the State of Kansas that South Bow, the Canadian company now operating the Keystone Pipeline system, violated federal and state clean water laws.Under the agreement, South Bow will pay a $26.9 million civil penalty, spend approximately $40 million on measures designed to prevent similar accidents and contribute more than $3 million to Kansas for environmental restoration projects. The company stated that it had already completed environmental remediation by February 2024 and has since conducted more than 12,000 miles (19,000 kilometres) of pipeline inspections along with hundreds of excavations to assess and repair sections of the pipeline.

What happened in the 2022 Keystone Pipeline oil spill?

On December 7, 2022, the Keystone Pipeline ruptured near Mill Creek in Washington County, Kansas, releasing an estimated 12,937 barrels (approximately 543,000 gallons) of crude oil into the surrounding environment. According to the US Environmental Protection Agency (EPA), the spill affected about 3 miles (6 kilometres) of Mill Creek and its floodplain before emergency response teams contained the release. The incident remains the largest spill in the Keystone Pipeline’s history and one of the most significant inland crude oil spills in recent US history.

Image: NRDC

As detailed by the EPA, a large-scale response involving federal, state, local and tribal agencies, alongside the pipeline operator, was launched immediately after the rupture. More than 2,100 personnel participated in the cleanup effort, which included recovering oil from the creek, removing contaminated soil and vegetation, restoring affected habitats and continuously monitoring water quality. While there were no reported injuries or impacts to public drinking water supplies, the spill caused considerable environmental damage to aquatic ecosystems and wildlife. Cleanup operations continued for months, with long-term environmental monitoring and restoration carried out under EPA oversight.

What caused the Keystone Pipeline rupture?

The experts have found out that this pipeline failure was caused not by some external force applied to it but rather by some internal issues connected with construction. According to the research conducted by the United States Pipeline and Hazardous Materials Safety Administration (PHMSA), the cause of the failure was external loading downstream of the girth weld which caused excessive bending stress which existed throughout its operation period due to the installation in 2010. While installing the curved section of the pipeline, the ground under it was not sufficiently compacted, which led to uneven sinking and constant mechanical strain of the pipe.According to the court papers published by Associated Press (AP), even though the excavation happened in 2013, when the problems became known, no repairs were ever done to this particular damaged section of the pipeline. After several years of applying stress to this vulnerable pipe, a fatigue crack occurred in it, resulting in the burst on December 7, 2022.The proposed settlement aims to ensure that similar incidents are less likely to occur in the future. Along with the $26.9 million civil penalty, South Bow has agreed to invest approximately $40 million in additional pipeline safety measures, including enhanced integrity management, inspections and maintenance programmes. The company has also said it has completed more than 12,000 miles (19,000 kilometres) of inline inspections and carried out hundreds of excavations to assess pipeline conditions following the Kansas spill.The incident has also intensified debate over the safety of ageing oil pipeline infrastructure across North America. Environmental groups argue that the spill underscores the need for stricter oversight, more frequent inspections and stronger accountability for pipeline operators, particularly as major pipelines continue to transport millions of barrels of crude oil across environmentally sensitive areas. For regulators, the settlement is intended not only to address the environmental harm caused by the Kansas spill but also to reinforce compliance with federal pipeline safety and environmental protection standards, reducing the likelihood of similar failures in the future.