TransCanada is facing as much as $187,200 in penalties for safety violations in the operation of its Keystone pipeline system, which crosses several Midwestern states.

In a letter of a proposed civil penalty, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) notified the company of four violations of pipeline safety regulations.

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The violations surfaced during inspections and reviews of the system after TransCanada in October 2012 found corrosion in a section of its pipeline, including four small holes deeper than 60 percent through the metal, PHMSA officials said.

The deepest made it 97 percent through the metal, leaving the pipeline wall less than 1/64th of an inch thick. While deep, the anomaly was small, about the size of the sharpened end of a pencil, TransCanada said. At the time, the company reported the anomalies to PHMSA and shut the system down.

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Mark Cooper, a spokesman for the Calgary, Alberta-based energy company, said the letter is not a final order and TransCanada plans to respond.

“At no time was there a threat to public safety or the environment. No leak occurred. This demonstrates the layers of protection in TransCanada’s safety management systems,” he said.

“TransCanada has learned from this incident. We have adopted improved engineering and construction practices.”

Cooper said TransCanada believes no incident is acceptable and has a strong safety record. The company runs more than 42,000 miles of gas pipelines and 2,600 miles of liquids pipelines.

Pipeline companies use electric currents called cathodic protection to prevent corrosion. In this case, TransCanada’s protection was not adequate and low-voltage electricity from another nearby pipeline caused the metal in the Keystone to corrode.

TransCanada’s first 30-inch diameter Keystone pipeline from Hardisty, Alberta, to Patoka, Illinois, began moving oil in 2010. It passes through North Dakota, South Dakota, Nebraska, Kansas, Missouri and Illinois.

The company also has a 36-inch diameter Cushing Extension from Steele City, Nebraska, to Cushing, Oklahoma, where there is a major oil storage facility and distribution hub. It went online in February 2011.

The PHMSA letter delivered to TransCanada President Vern Meier in Texas said the company violated safety by failing to:
• Have adequate cathodic protection in place within a year of pipeline construction
• Conduct tests on the pipeline at least once each year, with intervals not exceeding 15 months
• Correct deficiencies in cathodic protection found in 62 locations within a reasonable time
• Minimize detrimental effects of electrical currents from another nearby pipeline

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