Firm hits snag in efforts to contain Canada oil spill

Bloomberg

Husky Energy is running into difficulty containing and cleaning up a 1,570-barrel oil pipeline spill that entered the North Saskatchewan River in Canada this week, after rising water levels compromised its initial plan to capture the release.

The company responded Thursday morning when a sheen on the water indicated a spill, and discovered it was from the failure of a Saskatchewan gathering system pipeline that has since been shut. An attempt to isolate the oil plume in the water with booms was foiled as a 3-foot increase in the river’s water level pushed debris into the barriers, letting the oil move downstream, the provincial government said late Friday.

“The spill will require an escalation of action on the part of all parties,” Karen Hill, a spokeswoman for Saskatchewan’s Executive Council, said. The emergency response is expected to continue for several days, she said. “There are many new steps being taken to re-establish a boom perimeter and intensify skimming activities.”

The oil is headed for the city of North Battleford, which gets some of its drinking water from the river. As a precaution, North Battleford has filled water reservoirs as well as the water tower and shut its water intake from the river. The community can rely on groundwater for the next few days until the immediate risk has passed, officials said. Earlier Friday, a government official said Husky had recovered 270 barrels of oil from the land.

Rising oil and gas output has strained pipelines from Alberta to California even as regulators increase scrutiny of spills. Calgary-based Enbridge Inc. said this week it will spend $172 million paying fines and boosting safety across its pipeline operations in a deal with the U.S. Justice Department connected to its 2010 oil spill near Marshall, Michigan, that released 20,000 barrels into the Kalamazoo River. Such leaks have been used by opponents of proposed new pipelines such as Keystone XL to hinder approvals.

Advocacy groups including Greenpeace and Environmental Defence released statements condemning this week’s spill, concluding it’s the latest evidence that pipelines aren’t safe. Environmental Defence said the incident highlights risks to drinking water tied to TransCanada Corp.’s proposed Energy East pipeline, which would carry crude across six Canadian provinces to the Atlantic Coast.

“Obviously this is not something that anybody wants to see happen,” Brad Wall, the Saskatchewan premier, said Friday. Wall, a vocal advocate for new oil export pipelines from Canada, said he hopes the incident won’t intensify opposition to the projects, given the rail alternative isn’t as safe. “Though pipelines remain imperfect in terms of a conveyance of our oil, they’re still the safest way to move oil.”

The leak occurred on a pipeline that transports heavy oil and diluent — a light hydrocarbon used to thin the crude so it flows — near Maidstone, Saskatchewan, about 19 miles east of Lloydminster, the community that sits on the boundary of that province with Alberta. The leak occurred near the river, not under the river bed, Rob Peabody, chief operating officer for Calgary-based Husky, said Fridayl.

Husky’s nearby operations, which include heavy oil production, an asphalt refinery and an upgrader to turn the crude into synthetic oil, are expected to see minimal effects to production because of the flexibility of the rest of the gathering system, Peabody said. The upgrader’s operations have not been affected, said Mel Duvall, a Husky spokesman.

“We will build on whatever we learn from our investigations,” Peabody said, adding that it will take weeks to identify the exact cause of the incident. “The first priority is to absolutely focus on containment and water quality monitoring and working with local communities to mitigate any effects that might appear.”

The last major oil spill in Saskatchewan was the 2014 derailment of a Canadian National Railway Co. train, when 26 cars jumped the tracks and two of them carrying petroleum distillate, a light hydrocarbon solvent, caught fire.

Husky ranks in the top quartile among integrated oil companies for a three-year average oil spill rate relative to crude produced, Bloomberg Intelligence analysts Gregory Elders and Philipp Chladek reported last month. Asim Ghosh, Husky’s chief executive officer, said the company will improve its procedures with lessons from the Saskatchewan incident.

“If we have a pipeline spill, we address the pipeline spill,” Ghosh said Friday. “We have procedures in place and we ensure that we make the procedures even more robust from each learning experience.”