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U.S. approves Friday restart of key pipeline: Enbridge
September 16, 2010 / 5:03 AM / 7 years ago

U.S. approves Friday restart of key pipeline: Enbridge

NEW YORK (Reuters) - U.S. regulators have agreed to a Friday restart of Enbridge’s biggest pipeline carrying Canadian crude to refiners in the Midwest, the company said late on Wednesday, easing concern about a protracted disruption that drove oil prices to one-month highs this week.

The Pipeline and Hazardous Materials Safety Administration (PHMSA), which oversees U.S. pipelines, had yet to confirm the approval after Enbridge Inc completed repairs on Line 6A, following a leak in Romeoville, Illinois that forced the duct’s closure nearly a week ago.

Line 6A is the main artery of Enbridge's Lakehead Pipeline System, the backbone of U.S. oil imports from top supplier Canada. The line supplies refineries with a combined capacity of more than 1 million barrels per day (bpd) in the Chicago area and connects with a spur that reaches a key storage hub in Cushing, Oklahoma. For a map: link.reuters.com/mes92p

The 670,000-barrel-per-day (bpd) pipeline’s September 9 shutdown raised expectations that high inventories at the Cushing pricing hub for U.S. crude benchmark West Texas Intermediate (WTI) would drain, bringing WTI prices more in line with strong values for European marker Brent.

U.S. crude for October fell 68 cents to $75.34 a barrel by 11:04 p.m. ET, having dropped 1 percent on Wednesday. The contract hit a one-month high above $78 earlier this week on concern the Enbridge outage could last until October.

“We have consulted with PHMSA and agreed to a restart date of Friday,” Enbridge spokeswoman Terri Larson said.

The announcement was the latest in a series of conflicting reports from government and Enbridge officials about the restart date of the 34-inch-(0.9-meter-) diameter line.

While an Enbridge official confirmed the Calgary-based firm would not need to file a formal restart plan before re-opening the line, potentially avoiding a lengthy delay, U.S. pipeline regulators also said they would not allow that until Enbridge had met “all safety requirements necessary”.

On Tuesday Enbridge finished replacing 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 south of Chicago last Thursday. The cause of the leak is still under investigation.

Not all analysts expected a quick restart of 6A after a series of energy accidents this year increased pressure on regulators. Deutsche Bank, in a research note on Wednesday, said the duct may remain shut for a month or more.

Some Midwest refineries have already felt a squeeze from the 6A pipeline outage. The shutdown caused Citgo’s 167,000 bpd Lemont, Illinois refinery to seek alternative sources of supply to maintain operations.

ON THE HILL

Enbridge Chief Executive Patrick Daniel was questioned by U.S. lawmakers gathered before a Congressional transportation committee on Wednesday, after his company had two major spills in less than two months on a pipeline system that is four decades old.

The incident last week at 6A follows an earlier Enbridge pipeline leak on Line 6B, another branch of the Lakehead system, which spilled 19,500 barrels of crude into a Michigan river 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.

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 to increase regulatory oversight and improve guidance to pipeline operators, Porcari plans to tell lawmakers.

Enbridge’s leaks have come at a time when U.S. energy industry regulators are under the spotlight following BP Plc’s record oil spill in the Gulf of Mexico.

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