December 21, 2010 / 6:10 PM / 9 years ago

UPDATE 2-Enbridge rations more oil pipeline capacity

* Pipeline restrictions extend into January

* Marketers, producers see impact similar to December

* Canadian oil prices pressured (Adds company, market comments, details)

By Jeffrey Jones

CALGARY, Alberta, Dec 21 (Reuters) - Enbridge Inc (ENB.TO) is rationing capacity again on its huge oil pipeline system, extending restrictions that have backed up supplies in Western Canada and pressured prices for the country’s crude.

Enbridge, which carries the bulk of Canada’s oil exports to the United States, said on Tuesday five of its pipelines in the U.S. Midwest were overbooked by 26 percent to 43 percent for January, as shippers tried to move brimming supplies.

“The apportionment results from a combination of high nominations from shippers and temporary capacity restrictions that Enbridge has instituted in connection with the focused pipeline integrity inspection program on our system,” spokeswoman Gina Jordan said in an email.

Capacity on the 2 million barrel a day network has been tight since the summer, when two of Enbridge’s major Midwest pipelines suffered ruptures. Enbridge has stepped up maintenance and testing as a result, increasing the number of outages and backing crude up in Alberta.

Canada is the top foreign supplier to the United States, and two weeks ago an outage on Enbridge’s 670,000 bpd Line 6A contributed to a cut in overall U.S. imports that prompted the largest drop in inventories since 2002.

Meanwhile, storage tanks have become full and Enbridge has shut some feeder pipelines temporarily, pressuring Canadian oil prices. The discount on Western Canada Select heavy blend for January delivery ballooned by nearly a third to more than $20 a barrel under benchmark West Texas Intermediate oil.

Early quotes for February were discussed at $17.50 to $19 a barrel under WTI, but one marketer said he expected that to widen.

“It’s going to be worse,” the marketer said. “There’s absolutely no flex in the system.”

Some producers have cut some output or, in the case of Syncrude Canada Ltd, stored volumes on site and delayed shipments.

It is too early to say if the 350,000 barrel a day oil sands operation will be forced to repeat such measures next month, said Siren Fisekci, spokeswoman for Canadian Oil Sands Trust COS_u.TO, which has the biggest share in Syncrude.

“We were in the same situation in December and we were able to work through it in that month, and we’ve got 41 days to work through homes for those January volumes,” Fisekci said.

Imperial Oil Ltd (IMO.TO) said it was “mitigating any significant impacts” on its extensive production facilities in Western Canada and its two refineries in southern Ontario.

“But it’s an evolving issue that we continue to watch,” Imperial spokesman Jon Harding said.

Adding to the squeeze, Kinder Morgan KMP.N said on Tuesday that shippers on its 300,000 bpd Trans Mountain pipeline to Vancouver from Alberta had their nominations cut to 60 percent as they clamored to move crude west. Its overall system, which also includes the Westridge dock in Burnaby, British Columbia, is apportioned at 27 percent.

Enbridge detailed the following restrictions for January:

- Line 5, Superior, Wisconsin to Sarnia, Ontario, 490,000 bpd, apportioned at 33 percent, meaning shippers can send just 67 percent of hoped-for volumes. Largely due to self-imposed rate restrictions as crews conduct integrity testing.

- Line 6A, Superior to Griffith, Indiana, apportioned at 26 percent.

- Line 14, Superior to Mokena, Illinois, 320,000 bpd, apportioned at 26 percent.

- Line 61, Superior to Flanagan, Illinois, 400,000 bpd, apportioned at 26 percent.

- Line 6B, Griffith to Sarnia, 290,000 bpd, apportioned at 43 percent. 6B ruptured near Marshall, Michigan in late July and was down for nine weeks. Enbridge told U.S. regulators on Tuesday it raised its estimate of oil spilled to 20,082 barrels from 19,500 barrels. (Editing by Peter Galloway)

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