* Oil prices drop on prospect of quick pipeline restart
* Enbridge 670,000 bpd line may restart this week-Report
* Company has completed repairs of Illinois pipe leak
* Federal regulators see stricter pipeline oversight
By Joshua Schneyer
NEW YORK, Sept 15 Enbridge Inc (ENB.TO) said on Wednesday that it has completed repairs on a leaky stretch of its 670,000 barrel-per-day 6A pipeline in Illinois and awaits permission to restart the line that supplies up to a third of Canada's crude shipments to the United States.
Oil prices CLc1 fell almost 2 percent early Wednesday as traders bet that the line, which supplies about 5 percent of U.S. crude imports, could be allowed to resume shipments as early as this week.
Enbridge Chief Executive Patrick Daniel was expected 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.
An Enbridge spokeswoman told Reuters on Tuesday that the company may be able to restart Line 6A without submitting a formal restart plan to regulators, avoiding a potentially long approval process to resume operations.
The pipeline should restart by the end of the week and doesn't appear to have "systemic" problems, Bloomberg News reported on Tuesday, citing Carl Griffis, Chicago-area senior engineer at the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration.
The PHMSA declined to comment on Griffis' statements, but a spokeswoman said "we will not allow a limited restart of the line until Enbridge has satisfied all regulations."
Neither Enbridge nor the DOT has given any official estimate on when Line 6A will restart.
"If the Federal official is correct in this assessment, the restart will be much earlier than most industry observers were expecting," said analysts at Houston energy investment bank Simmons & Co. in a daily note to clients.
Not all analysts expect a quick restart at 6A. Deutsche Bank, in a research note on Wednesday, said the 6A line may still be shut in for a month or more before getting approval to restart.
Enbridge replaced on Tuesday 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, a company spokeswoman said. The cause of the leak is still under investigation.
Expectations of a quick restart for crude shipments along Line 6A helped knock down oil prices from a one-month high above $78 a barrel this week.
U.S. crude prices fell for a second consecutive day on Wednesday, dipping $1.36 a barrel to $75.44 by 11:07 a.m. EDT. Oil futures for October delivery weakened against barrels for November delivery, as traders bet on no prolonged shortfall of crude for refineries across the U.S. Midwest. CL-1=R
Enbridge shares fell 2 cents in Toronto on Wednesday to C$52.08 per share.
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.
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:
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.
James L. Oberstar, chairman of the House Committee on Transportation and Infrastructure, said he has not had a chance to review the DOT's plans, but acknowledged "There is urgency."
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, Timothy Gardner, Christopher Doering and Kristen Hays; Editing by Alden Bentley)