* Capline a "very important artery" and supply source for Midwest * Detroit refinery to start turnaround when upgrade finished * Working to increase shale oil run at Ohio, Kentucky plants By Selam Gebrekidan and Kristen Hays NEW YORK/HOUSTON May 1 (Reuters) - Marathon Petroleum Corp's need to supply one of its Midwest refiners may prevent it from reversing a key regional pipeline to send Canadian crude to the giant U.S. Gulf Coast refining complex. While other companies are scrambling to reverse existing pipelines and build new capacity from the Midwest to the Gulf Coast, where crude can fetch a hefty premium, Capline remains an important supply link for Marathon's 212,000 barrels-per-day (bpd) refinery in Catlettsburg, Kentucky, according to the CEO of the company, which is a minority partner in Capline. "We need to keep that option open, No. 1," Gary Heminger told Reuters in an interview after analysts raised the issue during the company's first-quarter earnings conference call. "In the event there would be consideration in the market to reverse that down the road, then you would need to make sure you have a different artery that would be big enough in order to be able to supply crude oil into the Midwest," the CEO of Marathon, which has a 30 percent stake in the line, added. The 630-mile Capline, operated by Royal Dutch Shell, roughly tracks the Mississippi River to Patoka, Illinois. In the late 1960s, it delivered as much as 1.2 million barrels per day of imported and Gulf of Mexico crude oil from the Gulf Coast to Midwest refiners. However, throughput has dwindled below 200,000 barrels per day in February, the lowest rate in a decade, as oil output in the Midwest region has ramped up and more crude arrives via pipeline from Canada. The line shut briefly in March. While the Marathon is working to process crude produced in Ohio's Utica shale there, Heminger said it continues to be a "very important artery" that ensures the Midwest has a south-to-north supply source. "We need to ensure we have access for crude to move south to north," Gary Heminger told Reuters. In addition, Capline is connected to the Strategic Petroleum Reserve and the Louisiana Offshore Oil Port (LOOP), the only deepwater oil port in the U.S., Heminger noted, adding the ability to move crude up from the south improves supply security. "You don't want to be tied to just one supply source," he said. "Now we have two supply sources." Rising flows of crude oil from Canada and North Dakota have swamped the U.S. Midwest, driving down prices there relative to the Gulf Coast. Companies have sought to capitalize on the price disparity by building pipelines as well as moving crude to the coast by barge, truck and rail. The reversal of the Seaway pipeline, which is scheduled to begin sending Midwest crude to the Gulf in mid-May, is one of first steps toward alleviating the glut of crude that has built up in the Midwest over the past year. UTICA PLAY Heminger told analysts that Marathon, the largest Midwest refiner, plans to run 20,000 to 30,000 bpd of condensate from the Utica shale play in eastern Ohio and western Pennsylvania at Catlettsburg and its 78,000 bpd Canton, Ohio refinery. The company's project to build a permanent truck-unloading facility at its 78,000-bpd Canton refinery will be in service this summer, Heminger said. Marathon also said on Tuesday it would begin a 70-day turnaround at its 106,000 bpd refinery in Detroit, Michigan, after it completes an upgrade project in the third quarter of this year. The planned turnaround will affect all units at the refinery as Marathon ties in the new units, Heminger told analysts. He told Reuters that the Detroit plant won't always run heavy crude. When the coker is full, Marathon will run other lighter crudes. "The key is about a coker, you can always run heavy crude to fill that up and then fill the balance of your process units with a different crude," he said. "But if you have a sweet plant, you can never run heavy crude." The Detroit upgrade, which will allow the plant to process an additional 80,000 bpd of heavy Canadian crude, was 92 percent complete in late March, he said. The upgrade will boost the plant's overall capacity to 120,000 bpd.