On April 2, a neighbor spotted oil along the side of a rural road surrounded by green farmland near Freeman, South Dakota, and told landowner Loren Schultz. Schultz took one look at the leaked oil and, according to a local TV station, called TransCanada.
A section of the company's buried Keystone pipeline, which pumps crude oil from Alberta to refineries in Illinois and Texas, had been leaking for an unknown amount of time, and TransCanada had no idea.
After it was shut down more than a week ago due to the major oil spill, the pipeline is now back up and running.
According to a preliminary report, Keystone leaked that day because of a "weld anomaly." VICE News has found the section of pipe that leaked was manufactured overseas in India by a company known in the past to make leaky, substandard pipe. TransCanada installed the section of pipeline in 2009 — the same year the US agency that monitors national pipelines warned there could be failures in that exact same type of pipe.
Initially, TransCanada reported a small leak this month of 187 gallons. Then it excavated the buried pipeline and updated that estimate to a whopping 16,800 gallons of oil — nearly 90 times what it first reported.
Within six minutes of being notified by the on-call center, TransCanada shut down the entire pipeline, which was leaking at a rate of two drops per minute, according to a report by Pipeline and Hazardous Material Safety Administration (PHMSA), which oversees pipelines that cross state lines. Workers also dug 10-to-12 foot trenches and cleared 275 feet of soil around the pipeline in their search for the leak, and placed absorbent material to prevent the oil from spreading.
The PHMSA has previously warned TransCanada about Keystone after the pipeline sprung two leaks back in May 2011. The first was in North Dakota, spilling 400 barrels of crude oil. The second was in Kansas, leaking 10 barrels. The National Energy Board, which oversees federal pipelines in Canada, has also warned the company about Keystone after an inspection found three of its pump stations in Manitoba and Saskatchewan were non-compliant.
In a statement, TransCanada said it would be in a better position to comment on the most recent leak when the results of an investigation are complete, but the preliminary PHMSA report sheds more light on the incident. The report blames a "girth weld anomaly" on a transition weld in a section of pipeline that was installed in 2009 — but it's not yet known how the welding problem occurred.
A girth weld is used to join two pieces of pipe together, while a transition weld connects different thicknesses of pipe in locations where a thicker pipe is needed, such as under a road.
The section of pipe that failed is 30 inches in diameter and constructed with API 5L X-70 line pipe manufactured by Welspun. Based in India, Welspun manufactures pipeline and textiles including towels. The company has previously come under fire for producing substandard, leaky pipes.
On May 21, 2009 — the same year TransCanada installed the section of Keystone pipe that later leaked — the PHMSA issued an advisory bulletin to owners and operators of natural gas and hazardous liquid pipelines, telling these operators there was a potential for their pipes to "exhibit inconsistent chemical and mechanical properties."
"Yield strength and tensile strength properties that do not meet the line pipe specification minimums have been reported. This advisory bulletin pertains to microalloyed high strength line pipe grades, generally Grade X-70 and above."
Following the PHMSA alert, public interest law centre Plains Justice obtained documents from the pipeline agency through a freedom of information request. In 2010, the law centre published a report on the documents that slammed Welspun for providing substandard, defective pipe to Kinder Morgan and Boardwalk Pipelines.
According to the report, Kinder Morgan found sections of pipe produced by Welspun were substandard, and removed 7,100 feet of defective pipe joints. Kinder Morgan asked Welspun to investigate the substandard pipe joints and recertify them. Welspun did so, downgrading an unknown number of pipe joints from the API 5L X70 Standard to lower standards.
Welspun also provided 363 miles of pipe to Boardwalk Pipelines with a total of 485 expansion anomalies, "for a rate of over one anomaly per mile," the report stated.
"Globalization of steel pipe supply chains has made quality control more challenging and increased the need for greater domestic measures to ensure discovery of defective pipe," the report says. The group calls for the PHMSA to fully investigate the root causes of pipeline failures and better, more stringent regulation of large, high-pressure pipelines.
VICE News requested comment from Welspun, but the company declined, saying the matter is currently under investigation and it had no knowledge of the incident other than what had been reported in the press.
"It's cheap, cheap, cheap, cheap," industry expert and licensed engineer Don Deaver said when asked why a pipeline company would source its pipe from overseas. "Their main concern is price and cost and everything else is secondary."
TransCanada should have known the pipe standards had been lowered, Deaver said, but it's also on the manufacturer to tell the pipeline company if its pipe has problems.
"The question is: when did they find out that something needed to be done?" Deaver said. "In Kinder Morgan's case, they found out by doing pressure tests because they had a bunch of failures. We don't know what Keystone did. Did they have problems with it? Did they just read about it later on? What was their actual experience with pressure testing? And how did the results of what they used to downgrade compare to what Kinder Morgan found out on their orders? There's questions there that someone should be asking."
TransCanada declined to comment on how and when it found out that the pipe standards had been downgraded, citing the ongoing investigation.
On April 30, 2007, the PHMSA issued a special permit to TransCanada with 51 conditions, allowing Keystone to operate at a stress level of 80 percent of the steel pipe's minimum yield strength, although federal regulations would normally limit that stress level to 72 percent.
Following the April 2 leak, TransCanada inspected Keystone in November 2015 with an "internal acoustic inspection tool." The company also has a leak detection system and the company routinely monitors Keystone with aerial patrols, with the most recent one on March 29, 2016. But none of this managed to catch the leak.
TransCanada spokesperson Mark Cooper said the company has set out a plan for a full integrity review of the pipeline based on feedback from the regulator. "We are developing an action plan in collaboration with the regulator that will examine things such as construction records, in-line inspections with sensitive tools that run inside sections of pipe and more."
Now that Keystone is up and running again, TransCanada says it is operating at reduced pressure. Tweeting about the incident, TransCanada said its goal is zero incidents.
Keystone crosses several sensitive environmental areas, including rivers, and the nearest of these "could affect" areas was about 1,400 feet downstream of the leaky pipe, or almost four American football fields away.
As for the landowner, he wasn't upset by the leak. "I'm not too concerned about it," Schultz said. "I'm sure they'll take care of it and clean up all the ground that's got oil in it."
Follow Hilary Beaumont on Twitter: @HilaryBeaumont