Enbridge says Line 14 repairs to wrap up on Tuesday

CALGARY/WASHINGTON Tue Jul 31, 2012 3:12pm EDT

Enbridge Inc. CEO Patrick Daniel speaks during their annual general meeting for shareholders in Toronto, May 9, 2012. REUTERS/Mark Blinch

Enbridge Inc. CEO Patrick Daniel speaks during their annual general meeting for shareholders in Toronto, May 9, 2012.

Credit: Reuters/Mark Blinch

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CALGARY/WASHINGTON (Reuters) - Enbridge Inc said on Monday that repairs to a ruptured Wisconsin pipeline could be complete as early as tomorrow, though regulators have not yet said when they will allow the company to restart the line.

U.S. pipeline regulators said no decision had been made on whether Enbridge will have to take any corrective measures before restarting a pipeline shuttered after spilling more 1,000 barrels of crude oil in Wisconsin.

"Everything is still being looked at," said Pipeline and Hazardous Materials Safety Administration spokesman, Damon Hill.

The 318,000 barrel per day Line 14 -- which carries Canadian crude to refiners in the Midwest -- was shut on Friday after the discovery of the spill, the latest in a series of incidents that threaten to damage the reputation of a company that launched its most ambitious expansion program ever just two months ago.

It came almost two years to the day after a ruptured Enbridge line fouled part of the Kalamazoo River in Michigan, spilling more than 20,000 barrels of oil.

Enbridge said in a statement that while repairs to the line could be complete on Tuesday, it will not know when crude shipments will restart until it wraps up that work.

With U.S. oil inventories in the Midwest brimming, analysts said there was no imminent threat to crude market supply unless the shutdown proved to be prolonged. U.S. oil futures eased on Monday, dropping 35 cents to $89.78 per barrel.

The spill occurred in the month-end gap between trading periods for Canadian cash crude, so it had no immediate impact on prices for the next delivery month, September. Cash gasoline in Chicago rallied, however, boosted by the pipeline shutdown and problems at three regional refineries, rising 13.5 cents per gallon and was pegged at 22 to 25 cents over August gasoline futures.

Indeed, Citgo Petroleum Corp said on Monday the pipeline outage was having an impact on production at its 167,000-barrel-per-day refinery in Lemont, Illinois.

Traders said they were wary of any complications in repairing the pipeline, though most did not expect a long outage.

"They are likely to fix it quickly," said Carl Holland, of Energy Trading Solutions, adding: "(It looks like) Much ado about nothing unless downtime extends beyond this coming Friday."

Regulators are now looking to assess the environmental impact of the spill as Enbridge cleans up the site.

Wisconsin's Department of Natural Resources said it is evaluating the site to determine if the spill caused any long-term health or safety issues. The agency is also analyzing the effect the spill may have on ground water.

"They did respond quickly and that makes a big difference as far as long term impacts because of this," said Tom Kendzierski, a DNR spills coordinator.

ANOTHER BLOW

Lorraine Little, an Enbridge spokeswoman, said that Line 14 had been given in-line inspections twice over the past two years. Earlier this year Enbridge had asked Wisconsin's Department of Natural Resources for permission to excavate and do any necessary repairs at multiple locations along lines 14, 6A, 13 and 61, which run through the state, according to public documents.

Little could not immediately say if the spill site was one of the locations the company was planning to excavate.

The spill is yet another blow to Enbridge's reputation, sullied earlier this month when the chairman of the U.S. National Transportation Safety Board said the company's employees "performed like Keystone Kops" during the 2010 Michigan spill.

The board said there was a complete breakdown in safety measures that allowed the pipeline to spill crude unchecked for 17 hours and that the company had a "culture of deviance" where employees failed to adhere to approved procedures and protocols.

Though Enbridge boosted inspections and made other changes to improve safety following the Michigan spill, analysts say that the latest incident may make increase the difficulty of getting a C$3.2 billion ($3.2 billion) plan to expand the company's mainline system past regulators.

"It makes (regulators) look bad when they approve pipelines or endorse companies that continually do this," said Chad Friess, analyst at UBS Securities. "I can definitely see why they'd be losing patience."

Enbridge shares fell 29 Canadian cents to C$41.83 on the Toronto Stock Exchange on Monday.

($1 = $1 Canadian)

(Reporting by Scott Haggett, Ayesha Rascoe, Janet McGurty, Selam Gebrekidan and Brendan O'Brien; Editing by Gerald E. McCormick, Marguerita Choy, Sofina Mirza-Reid and M.D. Golan)

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