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Kansas oil spill the biggest in Keystone pipeline history, federal data shows

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A ruptured pipe dumped enough oil this week into a northeastern Kansas creek to nearly fill an Olympic-sized swimming pool, becoming the largest onshore crude pipeline spill in nine years and surpassing all the previous ones on the same pipeline system combined, according to federal data.

The Keystone pipeline spill in a creek running through rural pastureland in Washington County, Kansas, about 150 miles (240 kilometers) northwest of Kansas City, also was the biggest in the system’s history, according to U.S. Department of Transportation data. The operator, Canada-based TC Energy, said the pipeline that runs from Canada to Oklahoma lost about 14,000 barrels, or 588,000 gallons.

The spill raised questions for environmentalists and safety advocates about whether TC Energy should keep a federal government permit that has allowed the pressure inside parts of its Keystone system — including the stretch through Kansas — to exceed the typical maximum permitted levels. With Congress facing a potential debate on reauthorizing regulatory programs, the chair of a House subcommittee on pipeline safety took note of the spill Friday.

A U.S. Government Accountability Office report last year said there had been 22 previous spills along the Keystone system since it began operating in 2010, most of them on TC Energy property and fewer than 20 barrels. The total from those 22 events was a little less than 12,000 barrels, the report said.

“I’m watching this situation closely to learn more about this latest oil leak and inform ways to prevent future releases and protect public safety and the environment,” Democratic U.S. Rep. Donald Payne Jr., of New Jersey, tweeted.

TC Energy and the U.S. Environmental Protection Agency said the spill has been contained. The EPA said the company built an earthen dam across the creek about 4 miles downstream from the pipeline rupture to prevent the oil from moving into larger waterways.

Randy Hubbard, the county’s emergency management director, said the oil traveled only about a quarter mile and there didn’t appear to be any wildlife deaths.

The company said it is doing around-the-clock air-quality checks and other environmental monitoring. It also was using multiple trucks that amount to giant wet vacuums to suck up the oil.

Past Keystone spills have led to outages that lasted about two weeks, and the company said it still is evaluating when it can reopen the system.

The EPA said no drinking water wells were affected and oil-removal efforts will continue into next week. No one was evacuated, but the Kansas Department of Health and Environment warned people not to go into the creek or allow animals to wade in.

“At the time of the incident, the pipeline was operating within its design and regulatory approval requirements,” the company said in a statement.

The nearly 2,700-mile (4345-kilometer) Keystone pipeline carries thick, Canadian tar-sands oil to refineries in Illinois, Oklahoma and Texas, with about 600,000 barrels moving per day from Canada to Cushing, Oklahoma. Concerns about spills fouling water helped spur opposition to a new, 1,200 mile (1,900 kilometers) Keystone XL pipeline, and the company pulled the plug last year after President Joe Biden canceled a permit for it.

Environmentalists said the heavier tar sands oil is not only more toxic than lighter crude but can sink in water instead of floating on top. Bill Caram, executive director of the advocacy Pipeline Safety Trust, said cleanup even sometimes can include scrubbing individual rocks in a creek bed.

“This is going to be months, maybe even years before we get the full handle on this disaster and know the extent of the damage and get it all cleaned up,” said Zack Pistora, a lobbyist for the Sierra Club at the Kansas Statehouse.

Pipelines often are considered safer than shipping oil by railcar or truck, but large spills can create significant environmental damage. The American Petroleum Institute said Friday that companies have robust monitoring to detect leaks, cracks, corrosion and other problems, not only through control centers but with employees who walk alongside pipelines.

Still, in September 2013, a Tesoro Corp. pipeline in North Dakota ruptured and spilled 20,600 barrels, according to U.S. Department of Transportation data.

A more expensive spill happened in July 2010, when an Enbridge Inc. pipeline in Michigan ruptured and spilled more than 20,000 barrels into Talmadge Creek and the Kalamazoo River. Hundreds of homes and businesses were evacuated.

The Keystone pipeline’s previous largest spill came in 2017, when more than 6,500 barrels spilled near Amherst, South Dakota, according to a U.S. Government Accountability Office report released last year. The second largest, 4,515 barrels, was in 2019 near Edinburg, North Dakota.

The Petroleum Institute said pipelines go through tests before opening using pressures that exceed the company’s planned levels and are designed to account for what they’ll carry and changes in the ground they cover. An arm of the U.S. Department of Transportation oversees pipeline safety and permitted TC Energy to have greater pressures on the Keystone system because the company used pipe made from better steel.

But Caram said: “When we see multiple failures like this of such large size and a relatively short amount of time after that pressure has increased, I think it’s time to question that.”

In its report last year to Congress, the GAO said Keystone’s accident history was similar to other oil pipelines, but spills have gotten larger in recent years. Investigations ordered by regulators found that the four worst spills were caused by flaws in design or pipe manufacturing during construction.

TC Energy’s permit included more than 50 special conditions, mostly for its design, construction and operation, the GAO report said. The company said in response to the 2021 report that it took “decisive action” in recent years to improve safety, including developing new technology for detecting cracks and an independent review of its pipeline integrity program.

The company said Friday that it would conduct a full investigation into the causes of the spill.

The spill caused a brief surge in crude prices Thursday. Benchmark U.S. oil was up more modestly — about 1% — on Friday morning as fears of a supply disruption were overshadowed by bigger concerns about an economic downturn in the U.S. and other major countries that would reduce demand for oil.

The pipeline runs through Chris and Bill Pannbacker’s family farm. Bill Pannbacker, a farmer and stockman, said the company told him that the issues with the pipeline there probably will not be resolved until after the Christmas and New Year’s holidays.

The hill where the breach happened was a landmark to locals and used to be a popular destination for hayrides, Pannbacker said.





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Fiji fires police commissioner and end security deal with China

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Police operate a security check point in the Fijian capital of Suva in December following general elections. The Pacific island nation has played an important regional role amid competition between China on the one side and Australia, New Zealand and the United States on the other.

Saeed Khan | Afp | Getty Images

Fiji’s president on Friday suspended the commissioner of police following a general election saw the first change in government in the Pacific island nation in 16 years, after the military earlier warned against “sweeping changes.”

President Ratu Wiliame Katonivere said Commissioner of Police Sitiveni Qiliho had been suspended on the advice of the Constitutional Offices Commission, “pending investigation and referral to and appointment of, a tribunal.”

The Supervisor of Elections Mohammed Saneem was also suspended by the commission, the statement said.

Qiliho declined to comment to local media because he said he will face a tribunal over his conduct. He was seen as being close to former prime minister Frank Bainimarama, who led Fiji for 16 years before a coalition of parties narrowly won December’s election and installed Sitiveni Rabuka as leader of the strategically important Pacific nation.

The day before a coalition agreement was struck, Qiliho and Bainimarama called on the military to maintain law and order because they said the hung election result had sparked ethnic tensions, a claim disputed by the coalition parties.

The Pacific island nation, which has a history of military coups, has been pivotal to the region’s response to competition between China and the United States, and struck a deal with Australia in October for greater defence cooperation.

No more China policing deal

On Thursday, Fiji Times reported that Rabuka said his government would end a police training and exchange agreement with China.

“Our system of democracy and justice systems are different so we will go back to those that have similar systems with us,” the prime minister was quoted as saying, referring to Australia and New Zealand.

The prime minister’s office did not immediately respond to a request for comment.

Republic of Fiji Military Forces Commander Major General Jone Kalouniwai earlier this month warned Rabuka’s government against making “sweeping changes,” and has insisted it abide by a 2013 constitution which gives the military a key role.



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Inventory glut and underused factories

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Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.

Jonathan Ernst | Reuters

Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.

Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.

The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.

“Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.

In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

Here are some of the most concerning bits from Intel’s earnings report and analyst call:

Weak and uncertain guidance

Intel didn’t give full-year guidance for 2023, citing economic uncertainty.

But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.

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But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.

An inventory glut

Dropoff in gross margin

Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.

Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.

“We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.

The not-so-bad news: Dividend and self-driving

Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.

If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.

Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.

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Gelsinger was asked about this dynamic on Thursday.

“I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.

There was at least one bright spot for Intel on Thursday.

Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.



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China’s reopening will boost these retail names, Wells Fargo says

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