UPDATE 2-Alliance shuts 1.6-bcfd natgas pipeline; Chicago prices up

Sat Aug 8, 2015 9:34am EDT
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(Add statement on timing of restart in paragraph 3)

By Nia Williams

CALGARY, Alberta Aug 7 (Reuters) - Alliance Pipeline shut its Western Canadian 1.6 bcfd pipeline that feeds natural gas to Chicago on Friday after poisonous, flammable gas got into the system, forcing at least five producers to curb output and lifting Chicago prices.

The company declared force majeure on the 2,400-mile (3,850- km) pipeline, which delivers gas from Western Canada and North Dakota's Williston Basin to the Chicago market. It accounts for about a third of Canada's daily net exports to the United States.

Alliance said it expects the shutdown to last several days and will offer a more precise timeline when plans are finalized.

Alliance, a limited partnership owned by affiliates of Enbridge Income Fund Holdings and Veresen Inc, told shippers late on Thursday that hydrogen sulphide, a hazardous gas, entered the mainline pipeline system as a result of complications experienced by an unnamed upstream operator.

Seven Generations Energy Ltd and RMP Energy Inc were forced to shut in essentially all their production after Alliance called for suppliers to suspend injections for an indeterminate period, starting on Friday.

NuVista Energy Ltd and Crew Energy have also suspended a portion of their output, as did Cequence Energy Ltd. In a statement, Crew said it expected service to resume in three to four days.

Gas prices in Chicago MC-CHICIT-IDX, one of the biggest U.S. hubs where most of the Alliance pipeline gas ends up, rose about 7 cents to $2.91 per mmBtu on Friday.   Continued...