Jason Tidd, Topeka Capital-Journal
Fri, December 23, 2022
In this photo taken Dec. 9 by a drone, cleanup continues in the area where the ruptured Keystone pipeline on Dec. 7 dumped oil into a creek in Washington County, Kansas.
After the Keystone pipeline spilled 14,000 barrels of crude oil onto Kansas pasture and into a creek, Gov. Laura Kelly is on board with reconsidering the state's property tax exemption for pipelines.
"I thought we should have done that a long time ago," Kelly told The Capital-Journal on Tuesday. "Yeah, that, I think, was a mistake that we made. ... I think that was a big mistake to provide a property tax exemption."
The pipeline failure happened Dec. 7 on the 36-inch Keystone pipeline about 3 miles east of Washington. An estimated 588,000 gallons of oil stained the prairie black and spilled into Mill Creek. It is the biggest onshore oil pipeline spill in nine years and bigger than all previous Keystone spills combined.
Cleanup efforts have been slow. The type of crude oil carried by the pipeline is particularly difficult to clean. After two weeks, just over half of the oil has been recovered. The company advised ahead of the winter storm that the weather could further slow the recovery rate.
More:As pipeline operator searches for cause of Kansas oil spill, residents await cleanup
Kansas lawmakers could end tax exemption after oil spill
Gov. Laura Kelly called property tax exemptions to new oil and gas pipelines under Kansas law a mistake.
Ending the tax exemption is likely on a short list of what state lawmakers could do in response to the oil spill as the pipeline falls under federal regulation. Meanwhile, Sen. Mike Thompson, R-Shawnee and the Senate's top energy policymaker, has expressed reluctance to do more than hold hearings.
TC Energy has benefited from several million dollars worth of tax exemptions since it opened in 2011 and before. State lawmakers passes a package of tax benefits for various energy projects as part of an effort to woo the Keystone pipeline to Kansas.
Legislative records show Kelly, who was then in her second year as a state senator, was one of two senators to vote against the bill with the pipeline tax exemption in 2006.
Kansas statute 79-227 exempts new oil and natural gas pipelines from property taxes from the start of construction until 10 years after construction is completed.
While she supports ending the tax exemption, Kelly, who considers herself to have an "all of the above" approach to energy policy, is not opposed to the oil and gas industry as a whole.
"It was a pleasure to speak at the Kansas Independent Oil & Gas Association conference in Wichita yesterday," the governor tweeted in August. "This industry unlocks the potential underneath our feet, puts tens of thousands of Kansans to work, and pumps hundreds of millions of dollars into our state’s economy."
In 2006, as TransCanada explored routing a pipeline through Kansas, legislators passed the Kansas Energy Development Act with the intention of incentivizing energy projects. The company later said it invested more than $680 million into the Kansas economy with the pipeline.
The Keystone pipeline's Cushing extension connects Steele City, Nebraska, to Cushing, Oklahoma. It spans about 210 miles in Kansas, passing through Washington, Clay, Dickinson, Marion, Butler and Cowley counties.
More:Kansas senator compares climate change message to Nazi propaganda. Here's what else was said at oil convention.
Kansas only state along Keystone route with this property tax exemption
No other states along the Keystone route had such a property tax exemption. Other provisions in the gut-and-go 21-page bill created income tax credits and accelerated depreciation. It included refineries, pipelines, coal power plants, ethanol plants and fertilizer plants.
Legislative staff estimated the pipeline provisions of the law would result in $1.7 million in lost revenue for fiscal year 2009, the only year with an estimate. The figure assumed the Keystone pipeline would qualify.
But by 2012, officials had estimated that TransCanada was avoiding about $19 million in a single year of property taxes. At the time, the Kansas Department of Revenue and local county governments challenged a Court of Tax Appeals decision to approve the exemption, citing a legal requirement for Kansas refineries to have access to the pipeline.
The Kansas Court of Appeals later upheld the exemption, ruling that while the refineries did not have direct access to the Kansas portions of the pipeline, indirect access from existing pipelines connecting the refineries to Oklahoma satisfied the law because lawmakers did not require otherwise.
"Although requiring a direct connection to a 'qualifying pipeline' by Kansas refineries would arguably benefit Kansans more, this is a question for the legislature and not for the courts. ... To find otherwise would require us to rewrite the statute, which we have no authority to do," the court opined.
The Legislature did not amend the statute after the ruling — but it has been tried.
In 2017, a bill would have repealed the exemption for new projects while leaving existing projects unaffected. Local government officials supported it. The bill died in committee after opposition from the Kansas Petroleum Council and other oil and gas companies and lobbyists. Similar proposals met the same fate in 2015 and 2016.
This article originally appeared on Topeka Capital-Journal: Kansas could revisit pipeline tax exemption after Keystone oil spill
Feds reviewing special permit process for pipelines as Kansas oil spill cleanup proceeds
Jonathan Shorman
Wed, December 21, 2022
As Kansas continues to clean up from the Keystone pipeline oil spill, the U.S. agency that regulates pipelines is reviewing its process for granting special permits that allow pipelines, including Keystone, to operate at pressures above the standard for crude oil transport.
The U.S. Pipeline and Hazardous Materials Safety Administration has commissioned an independent study of the process from Oak Ridge National Laboratory in Tennessee. A 2021 audit of Keystone pipeline accidents by the Government Accountability Office, or GAO, found that the severity of Keystone’s spills has worsened in recent years.
About 558,000 gallons of oil — enough to fill around 43½ standard swimming pools — spilled in a rural area near Washington, Kansas, on Dec. 7. The spill is the largest in the history of Keystone, which stretches from Canada to Texas.
A special permit allows segments of Keystone to operate at a higher stress level than what is generally allowed, as long as its operator, TC Energy, meets 51 conditions. Typically, pipelines must only operate at pressures of 72% of its specified minimum yield strength — the stress level at which a steel pipeline will begin to deform, according to the GAO. Keystone was authorized to 80%.
Reuters first reported the agency is reviewing the special permitting process. The agency confirmed the existence of the review to The Star on Wednesday, but didn’t provide the date it began beyond saying Oak Ridge National Laboratory was commissioned for the review following the 2021 GAO audit.
The cause of the Kansas spill isn’t clear. TC Energy said Wednesday that it had removed the “impacted pipeline segment” and sent it to a lab for metallurgical testing.
But Keystone’s special permit has come under increased scrutiny in the weeks following the accident.
Josh Axelrod, a senior advocate in the nature program at the Natural Resources Defense Council, an environmental advocacy group, called the review a good development. Given the Pipeline and Hazardous Materials Safety Administration’s status as a relatively small agency, he raised concerns about the agency’s ability to provide proper oversight of Keystone and other pipelines.
“My concern … is that they’re not really equipped to be watching these things as closely as they probably should be,” Axelrod said.
This map shows the route of the Keystone Pipeline across North America. The darker section in the middle is the 288-mile Cushing Extension, which remains shut down as crews continue to recover oil and investigate the cause of the spill.
Independent pipeline adviser Richard Kuprewicz previously told The Star the type of steel pipe used by Keystone, called Grade X-70 for its strength and thickness, should be able to handle a pressure increase from 72% to 80% as long as the operator followed the required safety guidelines.
State Rep. Rui Xu, a Westwood Democrat, traveled to the area on Monday and attended a briefing by government and company officials. He said the company responded to a question about the pipeline’s pressure by saying it was operating according to regulations.
Over the past two weeks, the Keystone spill has transformed a swath of land near the Kansas-Nebraska border into a massive clean-up operation. More than 600 people are involved in the response.
TC Energy said it had recovered nearly 7,600 barrels of oil so far, and warned that work may slow because of the impending winter storm.
“The affected segment of the Keystone Pipeline System remains safely isolated as investigation, recovery, repair and remediation continue to advance. This segment will not be restarted until it is safe to do so and when we have regulatory approval from PHMSA,” the company said in an update posted to its website.
Oil spill cleanup crews from pipeline operator TC Energy gather at their morning briefing on Saturday, Dec. 10, 2022, in Washington County, Kansas.
Democratic Gov. Laura Kelly said in an interview on Wednesday that she was concerned by the situation. Kansas is working closely with TC Energy and the Environmental Protection Agency, she said.
“Obviously you’ve got to fix the problem immediately and then we’ve also got ongoing investigation to figure out what happened and how to ensure that this never happens again. And to hold the company accountable for whatever they did inappropriately,” Kelly said.
Kelly said the Kansas Department of Health and Environment is on site, as well as the Kansas Department of Wildlife and Parks (roughly 100 animals have been found dead at the site).
A birds-eye image provided by TC Energy shows a base camp of sorts, with makeshift offices and dozens of vehicles. Independent images may be difficult to obtain: the Federal Aviation Administration has restricted air traffic over the site, prohibiting flights except those associated with relief operations.
The Star’s Katie Bernard and Natalie Wallington contributed reporting.
Jonathan Shorman
Wed, December 21, 2022
As Kansas continues to clean up from the Keystone pipeline oil spill, the U.S. agency that regulates pipelines is reviewing its process for granting special permits that allow pipelines, including Keystone, to operate at pressures above the standard for crude oil transport.
The U.S. Pipeline and Hazardous Materials Safety Administration has commissioned an independent study of the process from Oak Ridge National Laboratory in Tennessee. A 2021 audit of Keystone pipeline accidents by the Government Accountability Office, or GAO, found that the severity of Keystone’s spills has worsened in recent years.
About 558,000 gallons of oil — enough to fill around 43½ standard swimming pools — spilled in a rural area near Washington, Kansas, on Dec. 7. The spill is the largest in the history of Keystone, which stretches from Canada to Texas.
A special permit allows segments of Keystone to operate at a higher stress level than what is generally allowed, as long as its operator, TC Energy, meets 51 conditions. Typically, pipelines must only operate at pressures of 72% of its specified minimum yield strength — the stress level at which a steel pipeline will begin to deform, according to the GAO. Keystone was authorized to 80%.
Reuters first reported the agency is reviewing the special permitting process. The agency confirmed the existence of the review to The Star on Wednesday, but didn’t provide the date it began beyond saying Oak Ridge National Laboratory was commissioned for the review following the 2021 GAO audit.
The cause of the Kansas spill isn’t clear. TC Energy said Wednesday that it had removed the “impacted pipeline segment” and sent it to a lab for metallurgical testing.
But Keystone’s special permit has come under increased scrutiny in the weeks following the accident.
Josh Axelrod, a senior advocate in the nature program at the Natural Resources Defense Council, an environmental advocacy group, called the review a good development. Given the Pipeline and Hazardous Materials Safety Administration’s status as a relatively small agency, he raised concerns about the agency’s ability to provide proper oversight of Keystone and other pipelines.
“My concern … is that they’re not really equipped to be watching these things as closely as they probably should be,” Axelrod said.
This map shows the route of the Keystone Pipeline across North America. The darker section in the middle is the 288-mile Cushing Extension, which remains shut down as crews continue to recover oil and investigate the cause of the spill.
Independent pipeline adviser Richard Kuprewicz previously told The Star the type of steel pipe used by Keystone, called Grade X-70 for its strength and thickness, should be able to handle a pressure increase from 72% to 80% as long as the operator followed the required safety guidelines.
State Rep. Rui Xu, a Westwood Democrat, traveled to the area on Monday and attended a briefing by government and company officials. He said the company responded to a question about the pipeline’s pressure by saying it was operating according to regulations.
Over the past two weeks, the Keystone spill has transformed a swath of land near the Kansas-Nebraska border into a massive clean-up operation. More than 600 people are involved in the response.
TC Energy said it had recovered nearly 7,600 barrels of oil so far, and warned that work may slow because of the impending winter storm.
“The affected segment of the Keystone Pipeline System remains safely isolated as investigation, recovery, repair and remediation continue to advance. This segment will not be restarted until it is safe to do so and when we have regulatory approval from PHMSA,” the company said in an update posted to its website.
Oil spill cleanup crews from pipeline operator TC Energy gather at their morning briefing on Saturday, Dec. 10, 2022, in Washington County, Kansas.
Democratic Gov. Laura Kelly said in an interview on Wednesday that she was concerned by the situation. Kansas is working closely with TC Energy and the Environmental Protection Agency, she said.
“Obviously you’ve got to fix the problem immediately and then we’ve also got ongoing investigation to figure out what happened and how to ensure that this never happens again. And to hold the company accountable for whatever they did inappropriately,” Kelly said.
Kelly said the Kansas Department of Health and Environment is on site, as well as the Kansas Department of Wildlife and Parks (roughly 100 animals have been found dead at the site).
A birds-eye image provided by TC Energy shows a base camp of sorts, with makeshift offices and dozens of vehicles. Independent images may be difficult to obtain: the Federal Aviation Administration has restricted air traffic over the site, prohibiting flights except those associated with relief operations.
The Star’s Katie Bernard and Natalie Wallington contributed reporting.
TC Energy sends ruptured Keystone pipeline segment for testing after regulator order
Investigators, cleanup crews begin scouring oil pipeline spill in Kansas
Wed, December 21, 2022
(Reuters) - TC Energy said on Wednesday that it had safely removed the ruptured segment of Keystone pipeline that caused an oil spill earlier this month and sent it for metallurgical testing as directed by U.S. regulators.
TC Energy Corp had submitted its plan to restart the Keystone pipeline to the U.S. Pipeline and Hazardous Materials Safety Administration, a source familiar with the matter said on Tuesday, nearly two weeks after the line ruptured in the worst oil spill in the United States in nine years.
Even though a cleanup will take weeks or months, the line can still restart once it is repaired and the plan approved by the regulator.
The 622,000-barrel-per-day (bpd) pipeline was shut after it spilled oil in rural Kansas.
The line leaked diluent bitumen, a heavy oil that tends to sink in water, making it harder to collect than oils that float. More than 400 people are involved in the cleanup, including TC workers, pipeline regulators, state and local officials and the U.S. Environmental Protection Agency.
TC is required to complete an analysis of the root causes of the line's failure by early March, or 90 days after PHMSA issued a corrective action order.
Parts of the pipeline carrying oil from Alberta, Canada, to refineries in Illinois opened last week at reduced capacity.
(Reporting by Kavya Guduru and Seher Dareen in Bengaluru; Editing by Mark Porter and Tomasz Janowski)
Investigators, cleanup crews begin scouring oil pipeline spill in Kansas
Wed, December 21, 2022
(Reuters) - TC Energy said on Wednesday that it had safely removed the ruptured segment of Keystone pipeline that caused an oil spill earlier this month and sent it for metallurgical testing as directed by U.S. regulators.
TC Energy Corp had submitted its plan to restart the Keystone pipeline to the U.S. Pipeline and Hazardous Materials Safety Administration, a source familiar with the matter said on Tuesday, nearly two weeks after the line ruptured in the worst oil spill in the United States in nine years.
Even though a cleanup will take weeks or months, the line can still restart once it is repaired and the plan approved by the regulator.
The 622,000-barrel-per-day (bpd) pipeline was shut after it spilled oil in rural Kansas.
The line leaked diluent bitumen, a heavy oil that tends to sink in water, making it harder to collect than oils that float. More than 400 people are involved in the cleanup, including TC workers, pipeline regulators, state and local officials and the U.S. Environmental Protection Agency.
TC is required to complete an analysis of the root causes of the line's failure by early March, or 90 days after PHMSA issued a corrective action order.
Parts of the pipeline carrying oil from Alberta, Canada, to refineries in Illinois opened last week at reduced capacity.
(Reporting by Kavya Guduru and Seher Dareen in Bengaluru; Editing by Mark Porter and Tomasz Janowski)
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