WRAPUP 3-Enbridge says govt OKs Friday 6A restart

Wed Sep 15, 2010 8:46pm EDT

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By Joshua Schneyer

NEW YORK, Sept 15 (Reuters) - The U.S. Pipeline and Hazardous Materials Safety Administration has agreed to restart Friday of a key pipeline carrying Canadian crude oil to the U.S. Midwest, a company spokeswoman said on Wednesday.

PHMSA could not be reached immediately to confirm the Enbridge announcement on the restart of Line 6A, which was shut last Thursday after a leak was discovered in Romeoville, Illinois, near Chicago.

"We have consulted with PHMSA and agreed to a restart date of Friday," Enbridge spokeswoman Terri Larson said in a late Wednesday email, which was confirmed in a subsequent telephone conversation.

The announcement was the latest in a series of conflicting reports from government and Enbridge officials about when the 34-inch-(0.9-meter)-diameter line would restart.

While an Enbridge official confirmed that the Calgary-based firm would not need to file a formal restart plan before restarting the line, potentially avoiding a lengthy delay, U.S. pipeline regulators also said they wouldn't allow that until Enbridge had met "all safety requirements necessary."

Oil prices see-sawed through the session, first falling sharply on a report that the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration could give the go-ahead by Friday, but later paring some losses when the agency said no date for a resumption had been set.

U.S. crude closed down 78 cents at $76.02 a barrel, about $2 off its peak from Friday, as traders awaited more clarity on restarting flows on the 670,000 barrel per day (bpd) line that normally supplies over 5 percent of U.S. crude imports.

"There is no date set for the restart of Line 6A and no approvals have been issued to Enbridge," a PHMSA spokesman said. "When determining to authorize a restart, PHMSA conducts a comprehensive review of an operator's pipeline system."

The company has not been asked to file a formal restart plan, Enbridge Senior Vice President Art Meyer told reporters on a conference call, but added that it was ultimately up to PHMSA to determine when operations could resume. He said that work on repairing the line was now complete.

A PHMSA spokeswoman earlier declined to comment on a Bloomberg News report quoting Carl Griffis, Chicago-area senior engineer at PHMSA, as saying the pipeline doesn't appear to have "systemic" problems and should restart by the end of the week -- sooner than many analysts had expected.

On Tuesday Enbridge finished replacing a stretch of the 6A pipeline, which runs from Wisconsin to Indiana and leaked 6,100 barrels of crude oil through a small hole in Romeoville, about 30 miles (47 km) south of Chicago last Thursday. The cause of the leak is still under investigation.

Not all analysts expect a quick restart at 6A after a series of energy accidents this year increased pressure on regulators. Deutsche Bank, in a research note on Wednesday, said the 6A line may still be shut in for a month or more.

Enbridge shares fell 10 cents in Toronto on Wednesday to C$51.99 per share.

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TAKE A LOOK-Enbridge crude line shut [ID:nN10265810]

Factbox on refineries [ID:nN13195749]

Factbox on outage impact [ID:nN13190665]

Factbox on pipelines feeding the Midwest [ID:nN10275799]

History of Enbridge's pipeline spills [ID:nN10254087]

Graphic on Enbridge pipeline configuration:

link.reuters.com/qyz52p

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ON THE HILL

Enbridge Chief Executive Patrick Daniel was set to be grilled by U.S. lawmakers gathered before a Congressional transportation committee Wednesday, after his company had two major spills in less than two months on a pipeline system that is four decades old.

The incident last week at 6A follows an earlier Enbridge pipeline leak on Line 6B, another branch of the massive Lakehead Pipeline System, which spilled 19,500 barrels of crude into a river system in Michigan in late July.

That line has not yet been allowed by regulators to restart. The spill in Michigan occurred on a pipeline that had been subject to a Federal warning notice early this year, ordering Enbridge to beef up safety measures against potential leaks.

The larger line, 6A, has not been subject to any such notice, known as a corrective action order. That means it may be allowed to restart without a lengthy federal approval process.

REGULATORS EYE NEW PIPELINE RULES

In prepared remarks ahead of the hearing in Washington, the U.S. Deputy Secretary of Transportation John Porcari told lawmakers he would propose new legislation to strengthen pipeline safety following the recent Enbridge spills.

The DOT is working on new rules that will increase regulatory oversight and improve guidance to pipeline operators, Porcari plans to tell lawmakers.

Enbridge's leaks have come at a time when U.S. energy industry regulators are under the spotlight following the massive BP Plc (BP.L) (BP.N) oil spill in the Gulf of Mexico.

Another incident has put pipeline safety on the public radar, after a natural gas line operated by Pacific Gas & Electric (PCG.N) exploded in San Bruno, California last week, killing at least four people and destroying homes.

Some Midwest refineries have already felt a squeeze from the 6A pipeline outage, which is in its seventh day.

The shutdown caused Citgo's 167,000 bpd Lemont, Illinois refinery to seek alternative sources of supply to maintain operations.

The line typically supplies Chicago-region refineries whose combined crude processing capacity tops 1 million barrels per day. (Reporting by Joshua Schneyer in New York, Timothy Gardner and Christopher Doering in Washington, and Erwin Seba, Kristen Hays and Bruce Nichols in Houston; Editing by Richard Chang)

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