Enbridge Line 14 Spills Oil – Analyst Blog
Texas-based Enbridge Energy Partners LP (EEP) will again be targeted by the safety regulators as crude oil leaked from Line 14, which forms a part of the partnership’s Lakehead System. The oil release is now under control.
However, management did not reveal the details regarding the restart of the 317,600 barrels per day pipeline. The reason of the spill also remains unclear. Parent company Enbridge Inc. (ENB) intends to replace the section of the pipeline that spilled about 1,200 barrels of oil in the Wisconsin field.
As the news of oil release was received, Enbridge Energy temporarily closed the two larger nearby lines — the 400,000 barrels per day (bpd) Line 61 and the 670,000 bpd Line 6A. Both pipelines started operations within a day.
The pipeline that spilled oil mainly carries light crude to refineries in the Chicago area. U.S. sources a large part of its foreign crude from Canada. Enbridge pipelines, the world's largest crude oil pipeline system, transport substantial share of those consignments. Thus the affect of the disruption on Chicago refineries will largely depend on the amount of crude that has been stocked by those companies.
The spill, considered moderate in scale, occurred about a month after Enbridge Energy and Enbridge Inc. received notifications of a possible breach of federal rules following a leak in Michigan in July 2010. The oil spill was really big compared to the leak in Wisconsin. Enbridge Energy suffered another leak in Alberta, Canada a month ago.
These incidents are likely to affect Enbridge Energy’s recently announced plans to make expansions in crude oil mainline pipeline system worth $3.2 billion. The project was proposed to transfer crude from western Canada to the Eastern refineries as well as avoid obstacles in the U.S. Midwest. The initiative would comprise capacity addition to the company's Lakehead System and the Eastern Access Projects with its commissioning scheduled for 2014.
Enbridge Energy holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.
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