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Enbridge Shuts Major Canada-U.S. Oil Line Due to Leak Near Chicago
CALGARY, Alberta - Enbridge Inc shut down the largest of its three major oil pipelines on Thursday, reducing supply on the main transit route for Canadian crude into the United States.
Greenpeace protesters dressed as oil workers walks past the flow of molasses and water meant to represent an oil spill outside the offices of pipeline and energy company Enbridge in Vancouver, British Columbia July 28, 2010. (REUTERS/Andy Clark) The incident, just six weeks after Enbridge was forced to shut a smaller part of its Lakehead system, pushed prompt crude futures toward $75 as it may ease a glut at the Cushing, Oklahoma delivery point for U.S. crude futures.
Enbridge closed its 670,000 barrel per day Line 6A, which feeds midwest refineries and Cushing, after a leak was discovered near Romeoville, Illinois. Though the size of the spill is not yet known, local fire officials said the line was shut early in the afternoon and that the oil has been contained. Canada is the largest oil exporter to the United States and Enbridge's pipelines carry the lion's share of that crude.
Front-month U.S. crude prices jumped as much as 72 cents to $74.97 a barrel in afterhours trading on the line shutdown. November added just two pennies, as traders bet the outage would create tighter short-term conditions at Cushing.
The discount of front-month WTI crude to the second month shrank to about $1.10, from almost $1.80 a barrel earlier this week, flattening a market structure known as contango, where prompt oil is cheaper than future supplies.
"Some people had been selling WTI and buying Brent crude, but now they are covering their shorts, and thereby they have to buy back WTI at the front of the curve," said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
Enbridge shut its 190,000-bpd Line 6B, which runs from Griffiths, Indiana, to Sarnia, Ontario, on July 26 after a rupture near Marshall, Michigan, spilled 19,500 barrels into a river system.
Though repairs were completed last month, U.S. regulators have not yet allowed the company to restart shipments on the line, forcing Enbridge to ration use of its remaining lines.
The closure of Line 6B had already forced down crude prices and the newest outage will probably further depress prices in Canada and force refineries served by the line to find alternative supplies.
"WTI spreads are coming in on this news and Canada grades are being sold off fast," said one U.S. crude trader.
Line 6A, which carries light, medium and heavy crudes, as well as synthetic oil from northern Alberta's oil sands, runs from Superior, Wisconsin to Griffiths and supplies oil to refineries in the Chicago region, as well as to the Cushing storage hub.
The rupture occurred near a 167,000 barrel per day refinery operated by CITGO. Other nearby refineries supplied by Line 6A include BP's 435,000 bpd Whiting, Indiana plant and ExxonMobil's 238,600 bpd Joliet, Illinois, refinery.
"We have employees on scene assessing the situation," said Terri Larson, an Enbridge spokeswoman.
Maggie Carson, a spokeswoman for the Illinois Environmental Protection Agency said Enbridge had deployed absorbent booms and a vacuum truck to clean up the oil and none was spilled into a nearby river.
"The crude released has been contained and has had no impact on the DuPage River," she said.
The U.S. Pipeline and Hazardous Materials Safety Administration, which regulates pipeline safety, has sent an inspector to the scene of the leak.
Enbridge shares closed at C$52.22 on Thursday on the Toronto Stock Exchange, before word of the leak.
(Reporting by Scott Haggett, Bruce Nichols in Houston, Timothy Gardner in Washington and Joshua Schneyer, Edward McAllister in New York and Alejandro Barbajosa in Singapore; Editing by Michael Urquhart)
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8 Comments so far
Show AllOil here, oil there, oil everywhere. The Dinosaurs revenge.
In the recent epidemic of oil-company disasters this is yet another example of what the fascist Chicago-school economic theory has wrought.
This morning MSNBC.com reports yet another gas-explosion catastrophe that killed at least four, injured at least 52 and destroyed 50 houses.
It looks like another attack by terrorists who wear expensive suits, carry briefcases and pay enormous bribes to politicians who make the laws that grant corporations a license to kill.
Gawd bless Amerikkka!
you totally correct. and if any of the toxic oil shit gets into people's drinking water then you can't drink the water.
incredible the amount of corporate irresposibility in the dick usa
matt
galveston tx
Oh thank God they reported on Enbridge's stocks! That was my first concern upon hearing about this!
" Five will get you Ten..."
from stardust
The Gamblers betting in a room
that has no night or day.
And betting here and betting there,
in hopes of magic play!
For prompt crude pushed to 75
for glut at old OK.
So traders bet the outage then,
crude price to jump. OBEY!
And discount front month crude is up
in trading after hours.
The selling this to cover shorts,
they have no magic powers.
Now, Enbridge is a slick old one
its safety rate is nill!
For gamblers care not for the real,
they chase the money swill.
To tell the truth, what good are they?
Sooothsayers with no brains.
Just vampires sick--like on cocaine,
you suck poor Nature's veins!
But tell you what, you Wall St. guys,
you're trading mystic air.
And if your eyes could see outside,
we've got dead birds to share!***
On my recent drive eastwards from the West Coast of Canada , I read a number of local newspapers.
This story is getting a lot of play up here and there a lot of "letters to the editor" writing about it.
Universally editorials are condemning Enbridge and letters to the editor pointing out this as proof Enbridge not credible when they claim a pipeline from The tarsands to Prince Rupert on Canada's West Coast will not put the enviroment at risk.
This will help to make it much harder for the Federal and Provincial Governmnets to push this through without a thorough review.
Good, hopefully they won't build the line to Prince Rupert! Pipelines like these are dangerous when the corporations that own them care more about profits than maintenance.
As the greedy rich who own these pipelines keep getting richer by the hour, they continually fail to put money back into infrastructure ... because it cuts into their bottom line profitability. The Alaska pipeline is in horrible condition, because BP (who now owns ARCO) isn't maintaining the line. There will be more major spills.