HOUSTON/NEW YORK Enbridge Inc said on Friday it has stopped an oil spill from its 6A pipeline, which delivers up to a third of Canada's crude oil exports to the United States, but gave no estimate on when the key export line may resume operations.
The U.S. Environmental Protection Agency said earlier that the pipeline was spewing oil at a rate of between 200 and 600 barrels per hour -- the equivalent of up to 14,400 barrels day, a large spill by U.S. pipeline standards.
The leak was discovered around noon on Thursday at a stretch of pipeline in Romeoville, Illinois, about 30 miles southwest of Chicago.
"The leaking has stopped," said Enbridge spokesman Larry Springer.
A clean-up crew has begun excavating the buried pipeline to remove the oil, Springer said. It was too early to know the magnitude of the spill or when the line could be repaired, he added.
The latest incident comes less than two months after a smaller Enbridge line on the same Lakehead pipeline system was shut after spilling nearly 20,000 barrels in Michigan. Calgary-based Enbridge has still not been allowed to restart that line.
U.S. oil prices surged $2.20 or nearly 3 percent, and the spread between the first- and second-month oil futures contracts narrowed by $1, as the leak on the 467-mile line from Superior, Wisconsin to Griffith, Indiana threatened to slash oil supplies to the industrial U.S. Midwest region.
The price of crude grades traded in Canada fell, since producers in the oil exporting country will have fewer options to ship their crude. [ID:nN09207996] The severity and rapid succession of spills on the aging Enbridge pipeline system -- which is more than three decades old -- could mean a lasting disruption in crude supplies. U.S. oil safety regulators are already on edge over the recent BP oil spill in the Gulf of Mexico.
"Our guess is the leak could be fixed quickly. However, a second leak in this short a period of time is likely to attract regulatory scrutiny, which could take some time to resolve," said Simmons & Co. analysts in a note to investors.
Enbridge said the stretch of leaking pipeline has been "isolated," and the spilled oil was contained. More than 200 personnel were working on the scene.
The U.S. Environmental Protection Agency (EPA) said it will require Enbridge to siphon out at least half of the 16,000 barrels of oil that remain inside stretch of Illinois pipeline, and gave the Calgary-based pipeline operator an October 9 deadline to bring the area affected by the spill "back to normal."
Enbridge said it would take some time before normal shipments can resume on the line, which was transporting 459,000 barrels per day before the leak.
"We do believe there will be a significant impact to (pipeline) customers, and we're asking for their patience," Enbridge spokesman Glenn Herchak said earlier.
Assuming a steady flow-rate of up to 600 barrels per hour, or 14,400 barrels per day, Enbridge's latest spill may rank among the ten largest U.S. pipeline spills of the past decade, according to U.S. government data.
Restarting Line 6A would require approval from the U.S. Department of Transportation (DOT), which sent Enbridge two warnings about potential corrosion on its Lakehead pipelines earlier this year.
A U.S. government official, who asked not to be named, told Reuters there was no immediate plan to restart 6A and DOT inspectors were investigating the leak.
Enbridge shares fell 38 cents to close at C$52.50 in Toronto trade on Friday.
Canada shipped 1.75 million barrels of crude to the United States in the week to September 3, making it by far the largest foreign supplier. Saudi Arabia, the No. 2 supplier, shipped 1.16 million bpd to U.S. markets last week, according to data from the U.S. Energy Information Administration.
Oil traders are mulling how long the outage might last.
It's been six and a half weeks since Enbridge shut its 190,000 bpd Line 6B after spilling oil into a river in Michigan, forcing some U.S. Midwest refiners to scale back output.
But in 2007, an explosion that killed two Enbridge workers in Clearbrook, Minnesota and damaged a section of pipeline 180 feet long resulted in a shutdown that lasted only one week, although it resulted in a $2.4 million fine for violations.
The larger 6A pipeline could take much less time to repair and restart than the 6B pipeline that traverses Michigan. Line 6B broke underneath a sensitive river bed, while 6A's leak did not appear to threaten waterways.
"Such leaks are not unusual, and in normal circumstances we would expect the line to be up and running in a matter of days," analysts at JP Morgan said.
"But given the profile of the leak on Line 6B, and the lengthy environmental review process that the restart is clearly going through, such a rapid restart is unlikely."
Sources familiar with operations at BP Plc's 405,000 bpd Whiting, Indiana refinery, which is supplied by 6A, said the plant has crude in storage but declined to comment on how long those supplies would last if the outage continues.
U.S. MARKET IMPACT
Line 6A is a crucial part of Lakehead, which feeds Midwest oil refineries and the Cushing, Oklahoma, crude storage hub, the delivery point for U.S. crude futures.
U.S. crude for near-term delivery firmed against barrels for delivery later. October U.S. crude futures traded at an 85 cent per barrel discount to November barrels, narrowing the spread that was up to $2.16 a barrel on Thursday.
Cash petroleum product prices in Chicago and the U.S. Gulf Coast also jumped, on expectations any prolonged outage could leave refiners in the region, which process over 1.2 million bpd, scrambling for supplies.
In Canada, cash crude differentials are weakening because the pipeline outage means less available capacity to ship crude southward, creating a potential glut locally.
"I would imagine Enbridge will have to limit (receiving crude) very soon, and yes, Canadian pricing is very weak," said one Houston-based oil trader who declined to be named.
(Reporting by Joshua Schneyer, Erwin Seba, Kristen Hays, Bruce Nichols, David Sheppard, Selam Gebrekidan, Eric Johnson, Andrew Stern and Scott Haggett; writing by Joshua Schneyer and Matthew Robinson; Editing by David Gregorio)