(Recasts with expected cost of Michigan spill. In U.S. dollars
unless noted)

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Enbridge Inc's
struggles mounted Tuesday as its U.S. affiliate
said the oil spill that fouled a Michigan river system could
cost as much as $400 million and regulators slapped it with a
$2.4 million fine for a deadly 2007 explosion in Minnesota.

Enbridge Energy Partners, the Houston-based
operator of the U.S. part of the company's massive pipeline
system, said total charges for the July 26 pipeline rupture
near Marshall, Michigan, could be $300 million to $400 million,
excluding any fines or penalties.

The cost would include charges for emergency response,
environmental remediation, pipeline repairs, claims by third
parties and lost revenue, Enbridge said in a filing with the
U.S. Securities and Exchange Commission.

After insurance recoveries, the charges could be $35
million to $45 million, said Enbridge, whose ruptured pipeline
spilled 19,500 barrels of heavy Canadian crude into the
Kalamazoo River system.

The charges are not expected to impair Enbridge Energy's
ability to pay distributions to its unitholders, it said.

Calgary-based Enbridge is working to clean up the spilled
oil in an effort involving more than 1,300 people as the outage
of the 190,000 barrel a day pipeline, called Line 6B,
complicates the North American oil and refining markets.

It is awaiting a decision from the U.S. Department of
Transportation's pipeline safety agency on its plan to restart
Line 6B. Regulators rejected its last plan on Friday, saying
the line required more extensive testing before oil flows could

As the company worked to rebuild its reputation in
Michigan, U.S. regulators slapped it with a $2.4 million fine a
November 2007 explosion in Clearbrook, Minnesota, that killed
two workers.

The U.S. DOT said its investigation into the blast found
Enbridge failed to maintain and repair its pipeline adequately.
It also failed to clear the work area of sources of ignition
and did not hire properly trained and qualified workers, the
regulator said.

As part of the ruling, the company must revise its
maintenance and repair procedures, the agency said.

"This department holds pipeline operators accountable for
protecting their own workers as well as the health, welfare and
safety of American communities where they operate," U.S.
Transportation Secretary Ray LaHood said in a statement.

Enbridge spokesman Larry Springer said his company had no
qualms with the findings of the investigation and the
corrective actions being demanded, but said the amount of the
fine was out of line with regulations.

"We agree, not so much with the penalty, but really with
the conclusions they reached -- they really match our
conclusions," Springer said.

The DOT said it also issued two other orders against
Enbridge, totaling $57,800, for violations at facilities in
Houma, Louisiana, in 2006, and Cushing, Oklahoma, in 2009.

The 2007 blast occurred when the pipeline, the 450,000
barrel a day Line 3 to the U.S. Midwest from Alberta, was at
the end of a repair. On the day after the explosion oil prices
shot up as much as $4 a barrel.

The current pipeline outage has not had such a pronounced
impact on the overall oil market, but it has complicated the
affairs of both oil shippers and refiners.

Enbridge's Line 6B serves refineries in Ohio, Michigan,
Pennsylvania and southern Ontario. Three plants in the upper
Midwest have been forced to cut back production.

Prices for Canadian heavy crude oil, meanwhile, have
dropped with the line out and another major pipeline in the
region is operating under reduced pressure.

Enbridge Inc shares rose 99 Canadian cents to C$51.21 on
the Toronto Stock Exchange on Tuesday, while Enbridge Energy
Partners rose 28 cents to $55.61 in New York.

($1=$1.03 Canadian)
(Editing by Rob Wilson)