Pipeline Profiles: Keystone Pipeline

Pipeline system and key points

Section updated June 2020

The Keystone pipeline system is owned by TransCanada Keystone Pipeline GP Ltd. and was put in service in 2010. The Keystone pipeline transports crude oil from Hardisty, Alberta to refining markets in the U.S. Midwest and U.S. Gulf Coast. The Canadian portion runs from Hardisty east across Saskatchewan and Manitoba, before turning south and crossing the Canada-U.S. border near Haskett, Manitoba into North Dakota.

The pipeline continues south across South Dakota to Steele City, Nebraska, where the pipeline has two branches: one runs east through Kansas and Missouri to delivery points at Wood River and Patoka, Illinois, and the other runs south delivery points located at Cushing, Oklahoma and Houston and Port Arthur, Texas. At Patoka, Keystone delivers crude oil to the Plains terminal which facilitates delivery to local refineries via third party pipelines.

Official CER documents related to the construction, operation and maintenance of the Keystone pipeline can be found here: Keystone pipeline regulatory documents [Folder 418396].

You can see Keystone Pipeline and all CER-regulated pipelines on the CER’s Interactive Pipeline Map. The map shows more detailed location information, the products carried by each pipeline, the operating status and more. You can also see the Keystone Pipeline System Map.

Keystone pipeline system map

Source: CER

Text version of this map

This map provides an overview of the Keystone Pipeline System.

Throughput and capacity

Section updated quarterly (early March, mid-May, mid-August and mid-November)

Note: The physical capacity of a pipeline is based on many factors such as the products being carried, direction of flow, pipeline pumping capacity, and maintenance work or other pressure restrictions. The actual physical capacity of the pipeline may, at times, be higher than the assumed operational capacity stated here.

Open data can be freely used, modified and shared by anyone for any purpose. The data for these graphs are available.

Nomination and Verification Procedures

Section updated June 2020

Pipeline tariffs specify the procedures by which shippers are to submit nominations for transportation service, including the form and timing of nominations. The tariffs also set out the rights and authorities of pipeline companies to verify nominations. The CER regulates and determines compliance with tariffs for pipelines under its jurisdiction, which include the major export pipelines from western Canada. Pipeline companies and shippers are required to follow the rules and regulations of transportation service as set out in the tariffs.

Keystone seeks verification (in the form of upstream and downstream verification) of a shipper’s nomination only when Keystone deems that it has reasonable grounds to do so. These verifications may occur if a shipper has failed to use the pipeline capacity that it was allocated in the previous month or failed to provide Keystone with sufficient notice regarding cancelled batches. In effect, this allows a shipper on Keystone to nominate up to the entire pipeline capacity, subject to Keystone determining that the shipper has proper credit in place to pay the transportation tolls for the resulting allocated volume.

Apportionment

Section updated June 2020

A shipper must submit nominations each month to it wishes to move its oil on a pipeline. Shippers must submit nominations for both committed (or contracted) transportation service, if available, as well as uncommitted transportation service. If the total volume of nominations for uncommitted capacity is more than what is available, the pipeline company must “apportion” the nominations.

Apportionment is the percentage by which each shipper’s nominated volume is reduced in order to match the pipeline’s uncommitted capacity. Generally, apportionment is applied equally across all shippers seeking to use that capacity: for example, if shipper A nominates 100 barrels and shipper B nominates 1 000 barrels, then, under 10% apportionment, shipper A will be able to ship 90 barrels, and shipper B will ship 900 barrels.

The interactive graph below shows data for nominations and apportionment on the Keystone Pipeline.

Open data can be freely used and shared by anyone for any purpose. The data for these graphs are available.

Tolls

Section updated June 2020

A toll is the price charged by a pipeline company for transportation and other services. Tolls allow pipeline companies to safely operate and maintain pipelines. Tolls also provide funds for companies to recover capital (the money used to build the pipeline), pay debts, and provide a return to investors. The interactive graph below shows the tolls for the 10-year committed toll for light petroleum from Hardisty, Alberta to the U.S. border (for ultimate transportation to Cushing, Oklahoma) since 2010.

Open data can be freely used and shared by anyone for any purpose. The data for these graphs are available.

Keystone negotiated its committed tolls with shippers through open seasons. Keystone shippers hold long-term contracts for about 90% of the pipeline's capacity. Committed toll levels on Keystone vary based on term lengths and delivery points. Uncommitted service is offered to “walk up” shippers. Keystone offers the uncommitted shippers an option to utilize the international joint rate to ship crude oil from Canada to the U.S., ending in Texas. A Canadian uncommitted toll is also available for uncommitted service to Haskett, near the boundary between Manitoba and North Dakota, for ultimate delivery to the United States.

Official CER documents related to the traffic, tolls and tariffs for the Keystone pipeline can be found here: Keystone pipeline toll documents [Folder 565660].

Abandonment funding

Section updated June 2020

The CER requires all pipelines to set aside funds to safely cease operation of a pipeline at the end of its useful life. In 2016, TransCanada Keystone estimated it would cost $268 million to do this. These funds will be collected over 25 years and are being set aside in a trust.

Table 1: Keystone Pipeline’s abandonment trust fund balance
  2015 2016 2017 2018 2019
Trust fund balance ($) 12 050 000 22 955 000 34 992 000 47 800 000 64 300 000

Official CER documents related to abandonment funding can be found here, sorted by year and by company: abandonment funding documents [Folder 3300366].

Financial resource requirements

Section updated June 2020

The Canadian Energy Regulator Act requires major oil pipeline companies to set aside $1 billion to pay for the costs of any incident that occurs, such as a spill. See sections 136 to 142 of the Act for more information. TransCanada Keystone Pipeline GP Ltd. demonstrated that is has financial resources in excess of $1 billion dollars. Official CER documents related to the Keystone’s financial resources can be found here: Keystone financial resources documents [Folder 2939093].

Pipeline financial information

Section updated June 2020

Pipeline companies report important financial information to the CER quarterly or annually. A solid financial position enable companies to maintain their pipeline systems, attract capital to build new infrastructure, and meet the market’s evolving needs. The data in this table comes from Keystone’s quarterly surveillance reports [Folder 673804] filed with the CER.

Table 2: Keystone Pipeline financial data
  2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Revenues (million $) 48 310 370 399 432 466 445 477 504 535
Net income (million $) 19 164 205 214 223 243 223 239 245 213
Net plant (million $) 1 806 2 106 2 097 2 060 2 035 2 090 2 052 2 008 1 963 1 920
Return on net plant (%) 2.12 7.78 9.78 10.39 10.94 11.61 10.87 11.92 12.47 11.08

Corporate financial information

Section updated June 2020

TransCanada PipeLines Ltd. has operations in Canada, the United States and Mexico and operates three core businesses: natural gas pipelines, oil and liquids pipelines, and power. In 2016, Keystone’s earnings, including the United States portion of the pipeline, accounted for approximately 20% of TransCanada PipeLines Ltd.’s earnings. Credit ratings are investment grade.

Credit ratings provide an idea of the financial strength of a company, including its ability to attract capital to build new infrastructure and meet financial obligations. The credit ratings below are expert opinions of how likely the debt issuer is to live up to its obligations.

Table 3: TransCanada PipeLines Limited credit ratings
  2012 2013 2014 2015 2016 2017 2018 2019 2020
DBRS credit rating A A (low) A (low) A (low) A (low) A (low) A (low) A (low) A (low)
Moody’s credit rating A3 A3 A3 A3 A3 A3 A3 Baa1 Baa1
S&P credit rating A- A- A- A- A- A- BBB+ BBB+ BBB+

Financial regulatory audits

Section updated June 2020

The CER audits pipeline companies to confirm compliance with the Canadian Energy Regulator Act, regulations, CER orders and CER decisions. Financial regulatory audits focus on toll and tariff matters such as detecting cross-subsidies. Keystone’s last audit was completed in March 2014. Official CER documents related to Keystone’s financial regulatory audits can be found here: [Folder 1058162].

Condition compliance

Section updated June 2020

Every pipeline company in Canada must meet federal, provincial or territorial, and local requirements. This includes Acts, Regulations, rules, bylaws, and zoning restrictions. Pipelines are also bound by technical, safety, and environmental standards along with company rules, protocols and management systems. In addition to these requirements, the CER may add conditions to regulatory instruments that each company must meet. Condition compliance is monitored by the CER and enforcement action is taken when required. For a detailed list of conditions that TransCanada Keystone must meet, and their status, please see the condition compliance table and search for “TransCanada Keystone Pipeline GP Ltd.”

Safety performance

Section updated June 2020

The CER holds the companies it regulates accountable to protect the safety of Canadians and the environment. As part of this accountability, companies must report to the CER events such as incidents and unauthorized third-party activities that happen without the pipeline company’s written consent. For a summary of pipeline incidents and unauthorized activities on Keystone pipeline since 2008, visit the Safety performance dashboard and select “TransCanada Keystone Pipeline GP Ltd.”

Emergency management

Section updated June 2020

The CER checks to make sure companies are keeping pipelines safe by doing inspections, in-depth safety audits, and other activities. Yet, even with these precautions, an emergency could still happen. Sound emergency management practices improve public safety and environmental protection outcomes, and provide for more effective emergency response.

The CER holds its regulated companies responsible for anticipating, preventing, mitigating, and managing incidents of any size or duration. Each company must have an emergency management program that includes detailed emergency procedures manuals to guide its response in an emergency situation. We oversee the emergency management program of a regulated company’s projects as long as they operate.

The CER requires companies to publish information on their emergency management program and their emergency procedures manuals on their websites so Canadians can access emergency management information. To view TransCanada Keystone’s Emergency Response Plan, view TransCanada’s Emergency Preparedness website.

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