Dec 14 (Reuters) - Tightening space constraints on Enbridge
Inc's pipeline network, which ships the bulk of
Canadian oil exports to the United States, have led to a glut
of crude in Western Canada.The situation worsened last week when Enbridge said it had shut a major U.S. Midwest pipeline for extended maintenance.
In response, some oil producers have suspended shipments and halted production. Prices for Canadian crude have skidded.
Here are some key facts.
CAUSE: Enbridge, which moves about 2 million barrels a day to the U.S. Midwest and Midcontinent as well as southern Ontario, has been running two pipelines at reduced pressure since restarting them after ruptures and spills in the summer.
They are Line 6A, which moves up to 670,000 bpd to Griffith, Indiana, from Superior, Wisconsin; and 6B, a 290,000-bpd line to Sarnia, Ontario, from Griffith.
The reductions have led Enbridge to apportion, or ration, space on several of its U.S. lines after monthly shipper nominations exceeded their capacity.
In early December, an Illinois utility's substation tripped off line, cutting power to a pumping station on Line 6A and reducing the flow for about a week. That forced Enbridge last week to cut its shippers' allocations even more.
Enbridge has said it expects the situation to improve as the month progresses.
However, the company shut 6A again for a scheduled integrity test last week. The pipeline restarted on Sunday.
Adding to the squeeze, Kinder Morgan has rationed
space on its 300,000-bpd pipeline to Canada's West Coast from
Alberta.EFFECT: With the bottleneck, Enbridge storage tanks in Edmonton and Hardisty in Alberta, and Superior in Wisconsin are full and the company has had to disrupt some feeder pipeline service. Some producers have been unable to ship oil and have cut output.
Physical prices for oil, especially heavy oil, have slumped. The discount on Western Canada Select heavy blend oil compared with U.S. benchmark light crude has ballooned by about 27 percent since the start of December, and was recently quoted at more than $20 a barrel.
IMPACT ON PRODUCERS:
- Devon Energy Corp said last week it had reduced
heavy oil production by 10,000 bpd. The company's Canadian
operations produced 65,000 bpd in the third quarter.
[ID:nN09255894]- Syncrude Canada Ltd, which runs one of the country's largest oil sand plants, said it had not cut production, but had been forced to delay shipments. A spokeswoman at the 350,000-bpd joint venture did not specify volumes affected.
- Cenovus Energy Inc said its oil sands operations
were not affected but the company had slowed production at
conventional fields, such as Pelican Lake in Alberta and
Weyburn in Saskatchewan. It is storing and trucking oil where
it can. - Suncor Energy Inc , the country's biggest oil
company, said tight pipeline space was "putting some pressure"
on its ability to ship crude. It said the impact was minor and
it was working to ensure that remained the case.
(Reporting by Jeffrey Jones; editing by Rob Wilson)
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