5 Min Read
NEW YORK (Reuters) - A small oil spill on Monday forced Enbridge Inc. to close an oil pipeline in New York State, just four days after another leak in Illinois forced it to shut a massive Canadian crude export pipeline.
The Calgary-based pipeline giant said it shut the 70,000 barrel per day (bpd) Line 10, a 91-mile pipe from Westover, Ontario, Canada into New York State.
The latest shutdown came after an oil spill near Buffalo, New York, which appeared tiny and was likely measurable in ounces, not gallons, a New York-based official at the U.S. Environmental Protection Agency told Reuters.
There are now three U.S. stretches of Enbridge pipeline shut due to leaks, idling 930,000 barrels a day (bpd) of the company's capacity. That is equivalent to around half the volume of Canadian oil shipped daily to the United States.
U.S. crude futures rose to their highest close in more than a month on Monday, boosted partly by Enbridge's pipeline outage in Illinois, analysts said.
In post settlement trading crude prices had little reaction to the latest pipeline closure in New York state.
Enbridge said work crews removed on Monday a damaged, 12-foot section of the largest oil pipeline linking Canada to the U.S. Midwest, Line 6A, which spilled crude in Illinois last Thursday.
Enbridge spokeswoman Gina Jordan said the affected stretch of pipe at 6A, along with a ruptured water utility line found nearby, were sent to the National Transportation Safety Board in Washington for investigation. It isn't clear when 6A will be fully repaired, she said.
The 6A line, whose capacity is 670,000 bpd, was running at 459,000 bpd before it leaked last week. Enbridge said it has cleaned up at least 6,050 barrels of the 6,100 barrels of crude oil that had leaked through a 1-inch (2.5-cm) hole in Illinois.
Meanwhile, Enbridge has also kept its 190,000-barrel-per-day Line 6B pipeline shut since it leaked almost 20,000 barrels into a Michigan waterway in late July.
Few details were available on the latest pipeline leak near Buffalo. An Enbridge spokesman, Glenn Herchak, declined to comment on potential causes for any leak at Line 10, or to say when it could be restarted.
Oil markets are more focused on the spill and repairs at Line 6A, around 30 miles southwest of Chicago.
The massive pipeline that runs 467 miles from Superior, Wisconsin to Griffith, Indiana, is a main conduit of crude from Canada, the top oil supplier to the United States.
The recent spills have occurred on Enbridge pipeline systems that, in some stretches, are more than 40 years old. Analysts say they could raise U.S. regulatory scrutiny over pipeline safety.
Enbridge's Toronto-traded shares fell 62 cents to C$51.88 on Monday.
U.S. crude futures settled up 74 cents to $77.19 a barrel on Monday, their highest settlement since August 11. In post-settlement trade, crude eased to $77.14 per barrel.
Prices for gasoline and ultra-low sulfur diesel in the Midwest cash markets jumped due to the 6A outage, even though several refineries in the Chicago area were scheduled to go into seasonal maintenance in the coming weeks.
JP Morgan analysts warned that the suspension of crude shipments on the 6A line had the potential to reduce flows to Cushing, Okla., the delivery point for benchmark U.S. crude futures, by around 300,000 bpd.
If 6A's outage lasts beyond two weeks, it could help narrow the discount of front-month U.S. crude to the second-month, the bank said. It could also push U.S. crude to a premium to London's Brent crude, enticing more imports from overseas to meet a potential supply shortfall.
But given high oil inventories at Cushing and the wider Midwest and environmental concerns after the spill at BP's Macondo offshore Gulf of Mexico rig this year, regulators are likely to take their time in allowing pipeline flows to resume, the bank said.
U.S. regulators still have not allowed Enbridge to restart its 190,000-bpd Line 6B, which runs from Griffith, Indiana, to Sarnia, Ontario, after it was shut on July 26 by a rupture near Marshall, Michigan.
Repairs to the line, which spilled 19,500 barrels into the Kalamazoo River system in one of the largest pipeline leaks in recent U.S. history, were completed in August.
United Refining said its 70,000 bpd refinery in Warren, Pennsylvania is fed by Enbridge's Line 10 -- the site of the latest closure -- but the plant has alternative supplies.
Reporting by Erwin Seba in Houston, David Sheppard and Selam Gebrekidan in New York, Sakthi Prasad in Bangalore and Alejandro Barbajosa in Singapore; Writing by Joshua Schneyer; Editing by David Gregorio and Carol Bishopric.