The successor owner of the Keystone pipeline that spilled more than 13,000 barrels of crude oil into Kansas waterways by 2022 has agreed to a nearly $70 million settlement with the federal and state governments to cover damages and further cleanup mitigation, a U.S. District Court filing on July 10 said.
The deal was reached with Canada-based South Bow LP and South Bow Infrastructure Operations Inc., which own and operate the pipeline, following a 2024 spin-off from TC Energy, which owned the 36-gauge line when the accident occurred.
South Bow agreed to pay a $26.9 million civil penalty to resolve federal and state clean water violations, as well as $3 million to Kansas for additional restoration projects and $40 million to strengthen pipeline integrity, improve automated leak detection and prevent future accidental releases, the consent decree said. It is set for a 30-day comment period before it goes into effect.
The December 2022 rupture was one of the largest domestic oil spills in the United States in a decade and cost the former owner nearly $500 million to fix. The substance discharged from the pipeline was diluted bitumen, a heavy, viscous crude oil.
The rupture was caused by stress in the pipeline that went undetected for many years, said a report by Ohio engineering consultant RSI Pipeline Solutions, which was hired by TC Energy to investigate the cause of the accident. Lack of oversight during the construction of the pipeline in 2010 and gaps in TC Energy’s standards, policies and administrative controls were cited as the main cause.
The event prompted a major cleanup effort involving up to 800 federal, state and contractor personnel at the site as vacuum trucks removed oil from the creek to control its spread, TC Energy said, with two earth dams built downstream to contain the spilled oil.
A spokesman for South Bow said in a statement that the company “proactively” launched its response to the spill before receiving formal guidance from government officials, including a “comprehensive environmental remediation” completed by February 2024. He said that since the spill, the company has conducted more than 12,000 miles of pipeline inspections and 400 monitoring repairs and pipeline repairs. “This work reflects our ongoing commitment … to continually strengthen the integrity of the pipeline,” the spokesman said.
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“The incident had a massive impact on the state of Kansas, and we are pleased that this settlement will mitigate that damage,” said Ryan A. Kriegshauser, U.S. Attorney for Kansas.
South Bow, meanwhile, plans to extend its cross-border crude pipeline system from Canada in a joint venture with Houston-based Bridger Pipeline for a new section called the Prairie Connector from Guernsey, Wyo., to a major oil hub in Cushing, Okla.
President Donald Trump on April 30 signed a presidential permit for the route from Canada, which would allow up to 550,000 barrels per day of Canadian crude to reach US markets. It would follow a different route than the Keystone XL pipeline canceled by former President Joe Biden in 2021.
South Bow has not publicly disclosed the cost of the project, but one analyst, ATB Cormark Capital Markets, estimated it at $2 billion to $3 billion with a construction schedule of two to three years. The final investment decision for the project will be made in mid-2027.
But South Bow CEO Bevin Wirzba said construction wouldn’t begin until the company got what he called “full durability” guarantees — legal guarantees that a future U.S. administration can’t revoke the permit in 2029.
