Enbridge Inc. is slowly restarting two key pipelines that deliver nearly a million barrels of crude out of Alberta after shutting them down Sunday when heavy rains caused a leak in a smaller line near Fort McMurray.
The Calgary-based company said late Monday it had begun operations on one pipeline but was still assessing another. The loss of the lines was credited Monday with boosting oil prices on North American markets.
The company closed the two lines as a precaution after discovering an oil spill – which it estimated at 750 barrels – from a pipeline that links CNOOC Ltd.'s Long Lake oil-sands processor near Fort McMurray to the province's export network. Enbridge said unusually heavy rains appeared to cause a release, which sent small quantities of crude into local waterways.
Enbridge chief executive Stephen Wuori said the first priority was the safety of crews operating in the region.
"Our second priority is to complete the assessments as quickly as can be safely accomplished, and to restore service on these lines in order to minimize impacts to our customers," he said in a statement.
News of a pipeline disruption helped reverse a recent decline in crude prices on North American markets, with the trendsetting West Texas Intermediate gaining $1.28 to reach $94.96 (U.S.) a barrel on the New York Mercantile Exchange after losing nearly $6 late last week.
Pipeline companies such as Enbridge are seeking to build new routes to export Canadian oil but face political debate and opposition by environmentalists. Companies are under pressure to show they are taking steps to ensure the safety of pipelines, especially in the wake of some highly publicized spills in the United States and Canada in recent years.
TransCanada Corp. said its oil and gas pipelines remain fully operational.
"At this time, the flooding throughout the Calgary region and other parts of southern Alberta has not had an impact on TransCanada's pipeline and power operations," company spokesman Shawn Howard said in an e-mailed statement.
"While access to our corporate offices in Calgary has been affected, we quickly implemented our business continuity plans and essential personnel were relocated to our backup operations centre and there has been no impact on the delivery of products to customers and consumers throughout North America."
Gene McGillian is a broker at Tradition Energy in Stamford, Conn.
"When word seeped out that pipelines were shut down in Alberta that helped put a bit of a bite in the market and it erased some of its [previous] three-day losses," he said. "Now the question is how long those pipelines are going to be shut down."
He noted the crude market went into a tailspin after the U.S. Federal Reserve announced its intention to reduce the extraordinary monetary stimulus that has been adding liquidity to commodity markets. Those concerns were buttressed by signs of economic weakness in China, the world's second-largest crude consumer.
North American prices have recently closed a double-digit discount compared to international crude prices, as North Sea Brent – the most widely cited global benchmark – gained 25 cents on Monday to $101.16 (U.S.) a barrel. At $6.20 a barrel, West Texas's discount to Brent is hovering near its lowest since November, 2011.
Bank of Nova Scotia economist Patricia Mohr said she didn't expect that a brief interruption of the Enbridge pipeline would have much impact on the North American crude market, but that there are other factors that have buoyed Canadian prices lately. They include a stronger U.S. economy and the planned restart of two Midwest refineries that had been shut down for maintenance and are major customers for Canadian producers.
As well, Canadian producers are overcoming a shortage of pipeline capacity by using a growing availability of tanker cars to ship oil to market by rail.