TransCanada restarting Keystone oil pipeline

HOUSTON (Reuters) - TransCanada Corp was restoring operations on Sunday along the Keystone crude oil pipeline, one week after it was shut by a leak at a Kansas pumping station, a company spokesman said.

"We are in the process of restarting Keystone but I can't give you a firm time line (on shipments) - likely imminent," said TransCanada spokesman James Millar in statement.

The 591,000 barrel-per-day pipeline brings oil from Hardisty, Alberta to the Cushing, Oklahoma, oil hub, the pricing point for the New York Mercantile Exchange's benchmark crude contract.

The restart comes one day after the U.S. Pipeline and Hazardous Materials Safety Administration said TransCanada could restart the pipeline after meeting a series of safety requirements after leaks that idled the key export line twice in May.

PHMSA issued a corrective action order on Friday, demanding the company agree to a series of immediate and long-term measures following the outage on May 29, when 10 barrels (420 gallons) of crude spilled due to a faulty fitting at a pump station in rural Northeast Kansas.

The outage raised oil prices as it limited oil shipments from Canada, the largest crude supplier to the United States. Canadian cash oil prices weakened as supplies backed up in Alberta.

In early May, Keystone was shut down for nearly a week after a 500-barrel spill at a pump station in North Dakota, which TransCanada blamed on a different piece of equipment.

In its corrective action order, PHMSA revealed a leak in South Dakota on May 25, but said it was below the threshold for reporting it.

With immediate repairs completed, PHMSA had said TransCanada must perform metallurgical testing, analysis of the failures and review other parts of the year-old system.

The leaks occurred as TransCanada seeks U.S. State Department approval for a controversial $7 billion expansion of the Keystone system, which would carry crude derived from Canada's oil sands as far as the U.S. Gulf Coast.

Opponents of the expansion seized on the recent leaks and PHMSA's order requiring a safety review as reasons the Obama administration should turn down TransCanada's request to expand the pipeline.

The line was pumping about 480,000 bpd of crude before a half-inch fitting failed at the Severance pumping station in Kansas.

Most of the Kansas spill was kept within containment dams set up at the pumping station, but some oil escaped as mist. Workers cut back prairie grass, replaced fences and wiped down equipment that had been sprayed.

The clean-up work in Kansas was completed on Thursday.

(Reporting by Erwin Seba; Editing by Marguerita Choy)