TC Energy's Keystone oil pipeline is offline due to operational issues, cutting off a major conduit of Canadian oil to the U.S., four industry sources said on March 7.

The 622,000 bbl/d pipeline has been dogged by problems, including a 2022 spill in rural Kansas.

TC notified shippers of the outage but did not specify the problem or the possible length of the outage, one industry source said. The sources were not authorized to speak publicly.

A spokesperson for Calgary, Alberta-based TC said the company could not immediately comment.

"That's obviously very bad," said Rory Johnston, founder of the Commodity Context newsletter. "With Keystone, we're seeing a pattern of these sporadic outages. Western Canada is so often operating on a knife’s edge of crude egress capability."

Keystone, stretching 4,850 km (3,000 miles), transports oil from Alberta to Nebraska, where it splits, with one arm running east to the Midwest and the other running south to the U.S. crude storage hub in Cushing, Oklahoma and to the Gulf, where it is processed by refiners or exported.

The discount on Western Canada Select heavy crude for April delivery grew modestly to $16/bbl compared to West Texas Intermediate, from $15.75 before the Keystone news, a crude trader said.

The Keystone outage comes as shippers await completion of the Trans Mountain pipeline expansion, which will nearly triple capacity of a line moving oil from Alberta to the British Columbia coast, providing long-awaited relief to Canada's pipeline congestion.

TC shares were slightly higher in Toronto.

Last year, TC said it planned to spin off its liquids business, including Keystone, to focus on transporting natural gas. The company has been selling assets to reduce debt.

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