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November 29, 2007 at 11:06 am #3863
Enbridge Says Pipeline Still Burning After Explosion
By Christian Schmollinger and Sophie Tan
Nov. 29 (Bloomberg) — Enbridge Inc., Canada’s largest pipeline company, said a fire at one of its pipelines that supply crude oil to the U.S. is still burning after a blast yesterday that killed two workers.
The company closed the four pipelines of the Lakehead system, capable of delivering 15 million barrels a day, and “at least one or two lines will be shut down for quite some time,” spokeswoman Denise Hamsher said today by telephone from Clearbrook, Minnesota, where Enbridge operates a terminal.
Oil surged more than $4 a barrel, the most in a month, after a leak and explosion occurred at the No. 3 pipeline, which was undergoing maintenance. Canada was the largest exporter of oil to the U.S. in August, delivering 1.9 million barrels a day that month, according to the latest statistics from the U.S. Department of Energy.
“This is a very important pipeline (system), which is why we see a knee-jerk reaction in crude oil prices to the news of the shutdown,” Lawrence Eagles, an analyst with the Paris-based International Energy Agency, said today. “There is a tendency for people to assume the worst, but we need to look at the extent of the damage and how long the shutdown will last.”
Crude oil for January delivery gained as much as $4.55, or 5 percent, to $95.17 a barrel in electronic trading on the New York Mercantile Exchange. That’s the biggest increase since Oct. 31. The contract, which rose for the first time this week, traded at $94.17 at 9:29 a.m. in London.
Enbridge is waiting for the fire to burn out before inspecting the Lakehead system, spokesman Larry Springer said by telephone from San Antonio today.
“We want to get in and visually inspect lines 1 and 2, but until the fire is down a little bit more we can’t do that,” Springer said. “If they are OK then we would be able to consider restarting those.”
Enbridge’s Hamsher said the company will know by tomorrow if some of the pipelines can be safely restarted. The blast occurred about 3 miles (4.8 kilometers) from the Clearbrook terminal, the Calgary-based company said in a statement distributed yesterday by Market Wire.
“The site is not accessible right now and we are unable to assess the damage,” Hamsher said. “We are working with the emergency services on putting out the fire, and our top priority is the safety of all our workers.”
The Lakehead network carries oil from the Canadian border to Chicago and Detroit with an extension to Buffalo, New York, according to the Enbridge Web site.
The system delivered an average of 1.5 million barrels a day in 2006, according to the Web site of Enbridge Energy Partners LP, the subsidiary that operates Lakehead. That represented 71 percent of refinery demand in Minnesota, 62 percent in the greater Chicago area, and 82 percent in Ontario.
“Some of the rebound in oil prices today is a reaction to a sharp drop in oil prices yesterday,” IEA’s Eagles said.
Futures fell $3.80, or 4 percent, to settle at $90.62 a barrel yesterday, having declined 3.4 percent the day before. The two-day decline was the biggest since Jan. 4, when prices plunged on unseasonably mild weather in the northern U.S.
To contact the reporters on this story: Christian Schmollinger in Singapore at firstname.lastname@example.org ; Sophie Tan in Singapore at email@example.com
Last Updated: November 29, 2007 05:54 EST
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