TransCanada aims to restart Keystone oil line Sunday

CALGARY, Alberta Sat Oct 20, 2012 8:26pm EDT

CALGARY, Alberta Oct 20 (Reuters) - TransCanada Corp expects to restart its major crude oil pipeline to the United States from Canada on Sunday after inspecting a section of the line for a possible defect, a company spokesman said.

TransCanada, the country's largest pipeline company, shut down the 590,000-barrel-a-day Keystone oil pipeline late on Wednesday after an in-line inspection tool detected what it referred to as a "small anomaly" on the pipe.

The outage pushed up U.S. oil prices on Thursday.

Keystone had initially been expected to be down three days. The company said on Friday that bad weather was hampering operations.

"It is looking more like a Sunday re-start," TransCanada's James Millar said in an email on Saturday.

TransCanada has not given the location of the potential defect, but the U.S. Pipelines and Hazardous Materials Safety Administration said it had sent an inspector to observe repairs on a section between Missouri and Illinois.

The pipeline, which has the capacity to move a quarter of Canada's oil exports to the United States, extends to Wood River, Illinois, and the major storage hub at Cushing, Oklahoma, from Hardisty, Alberta.

It is the first phase of TransCanada's overall Keystone system and has been in operation since 2010.

The next phase, between Cushing and Gulf Coast refineries, is under construction amid opposition from some landowners. The contentious Keystone XL project, between Alberta and southern Nebraska, still requires U.S. federal approval after U.S. President Barack Obama rejected the initial application early this year.

TransCanada has re-applied to build that $5.3 billion portion of the system, hoping for an approval early next year.

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