By Jeffrey Jones
CALGARY, Alberta (Reuters) - U.S. regulators
Wednesday approved a gradual restart of an Enbridge Inc
oil pipeline that ruptured more than eight weeks ago,
fouling a Michigan river system and squeezing oil supplies for
U.S. and Canadian refiners.
The U.S. Pipeline and Hazardous Materials Safety
Administration said Enbridge, which ships the bulk of Canadian
crude exports to the United States, could resume flows on Line
6B in a process that will be tightly controlled and monitored
by the regulator and a third party.
PHMSA did not immediately say exactly when operations could
resume on the 290,000 barrel per day line and an Enbridge
spokesman said the company still requires another written
approval from the PHMSA before going ahead.
The regulator has said that pressure would be restricted by
20 percent when flows resumed.
The approval caps a summer in which Enbridge was forced to
deal with three outages, creating headaches for Canada's oil
producers and refiners on both sides of the border.
Coming on the heels of the BP Plc oil spill in the
Gulf of Mexico, the leaks raised questions about the company's
ability to operate its huge transport network reliably and
safely and sullied Canada's reputation as a secure supplier.
PHMSA, an agency of the U.S. Department of Transportation,
said Enbridge had agreed to new demand last week that it submit
plans within a year to replace a section under the St. Clair
River between Michigan and Ontario that was found dented.
The company must also perform tests along the entire length
of the pipeline.
Line 6B, which runs to Sarnia, Ontario from Griffith,
Indiana, broke open near Marshall, Michigan, on July 26,
spilling an estimated 19,500 barrels of heavy crude into the
Kalamazoo River system.
That forced the shutdown of line and a cleanup effort
involving more than 1,000 workers. The U.S. National
Transportation Safety Board is investigating the incident.
As it worked to get the line ready for restart, Enbridge
had to test it at several locations to ensure it could
withstand normal operating pressure.
SQUEEZED OIL SUPPLIES
Refineries in Ohio, Michigan, Pennsylvania and Ontario
processing more than 700,000 bpd were forced to seek
alternative supplies. Some had to cut fuel production.
Meanwhile, discounts on Canadian oil compared with
benchmark U.S. light crude ballooned due to the outage and
Enbridge's need to ration space on other lines as shippers
scrambled to reroute volumes.
The situation worsened two weeks ago when a leak on
Enbridge's Line 6A near Romeoville, Illinois, forced it to shut
that 670,000 bpd conduit. That pushed up crude futures as it
normally carries about 5 percent of total U.S. oil imports.
The company shut its 70,000 bpd a day Line 10 early
September as well when a small volume of crude was found on its
casing. It was quickly restarted when it was determined to be
Enbridge resumed shipments on Line 6A last week.
Crude futures fell 26 cents to $74.71 a barrel Wednesday
after U.S. government data showed a rise in crude oil
inventories and imports last week, despite Enbridge's outages.
Enbridge shares closed up 6 Canadian cents at C$51.68 on
the Toronto Stock Exchange. Its U.S. affiliate, Enbridge Energy
Partners, rose 61 cents to $53.98 in New York.
(Additional reporting by Scott Haggett; Graphic by Steven
Culp; Editing by Marguerita Choy)