UPDATE 2-Regulators inspect broken Alberta pipeline

* Damaged section of Rainbow line being examined

* Regulators determining if spill sign of wider problems

* Basic finding should be complete within a few days (Adds detail.)

By Scott Haggett

CALGARY, Alberta, May 5 (Reuters) - The section of Plains All American Pipeline LP's (PAA.N) Rainbow line that ruptured on April 29, causing Alberta's biggest oil spill in 36 years, was being examined by regulators on Thursday.

The regulators were trying to determine if the crack is a sign of bigger problems with the aging pipeline, which could mean extensive repairs and a prolonged shutdown.

Inspectors from Alberta's Energy Resources Conservation Board and outside engineers were looking at the damaged pipe and hoped to have basic findings "in the next few days" about the cause of the crack, which spilled 28,000 barrels of oil in northern Alberta, said Davis Sheremata, a spokesman for the board.

"Hopefully, we'll get a basic idea of what caused the failure," he said. "Based on that ... if it's a one-time occurrence, we'll have to decide what needs to be done to return the pipeline to a state where it can begin operating."

If the board determines the one-inch wide gash in the pipe is part of a bigger problem with the line, which was constructed in the mid-1960s, it will remain closed until inspectors are satisfied it can operate safely.

The spill was the largest in Alberta since 1975 and one-third bigger than the incident that shut Enbridge Inc's (ENB.TO) Line 6B last summer when it ruptured near Marshall, Michigan, spilling 20,082 barrels of heavy Canadian crude into the Kalamazoo River system.

That spill shut the Enbridge line for nine weeks. U.S. regulators allowed the line to restart after extensive repairs were carried out.

Sheremata said the ERCB may impose similar conditions if testing shows a systemic problem with the Rainbow pipeline.

The break in the line, which carries about 187,000 barrels of crude oil a day, was noticed by Plains' staff early on Friday. The line was shut and the company sent a cleanup crew into the remote site 100 km (62 miles) northeast of Peace River, Alberta.

In a statement posted on its website, Plains said it believes the cracked pipe was a one-off incident and not an indication of a wider problem. The company has repaired the line but is waiting for regulators to approve a restart.

It is not the first spill on the system. In 2006, the line ruptured 10 km (6 miles) south of Slave Lake, Alberta, spilling 7,500 barrels of oil. Investigators said stress-corrosion cracking, fatigue cracking and external coating failure combined to cause the leak.

The Rainbow line carries about 187,000 barrels of oil a day from Zama in northwest Alberta 770 km (480 miles) south to Edmonton.

Plains bought the pipeline from Imperial Oil Ltd (IMO.TO), Exxon Mobil Corp (XOM.N) and Royal Dutch Shell (RDSa.L) in 2008, two years after that incident.

Alberta regulators say oil spills from pipeline are rare. However the Rainbow incident came just a week after Kinder Morgan Energy Partners had to close its 300,000 bpd Trans Mountain line when a small leak was spotted on the line's right-of-way, 150 km (93 miles) west of Edmonton.