Enbridge Pipeline Fire Could Cause Higher Oil Prices in North America

Over the weekend Enbridge Inc. had to shut its Illinois pipeline, which supply’s oil to the BP plc., Exxon Mobil Corp, and Citgo Petroleum Corp, refineries in the Chicago area, following a collision between two vehicles which killed two people, injured several others and set fire to the pumping station near New Lenox, Illinois. About 20,000 gallons of oil leaked from the lines before flow could be halted.

Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, believes “the pipeline closure could pressure local prices in the North American market, but I can’t see any price implications for global markets.”

Three pipes were damaged. Line 6A has already restarted transporting crude oil. According to Larraine Little, a spokeswoman for Enbridge, line 14 is expected to resume operation on March 7th, with line 64 planned for the following day.

Flow has been limited along the pipeline. The 14/64 pipe can ship 320,000 barrels a day from Superior, Wisconsin, to Mokena, Illinois, while 6A can carry 670,000 barrels a day between Superior and Griffith, Indiana. Rachel Moore, a spokeswoman from Exxon (who have a refinery in Illinois dependant on the Enbridge pipeline) said that, “at this point contractual obligations are being met. As is our practice we do not comment on day-to-day operations.”

Andy Lipow, president of Lipow Oil Associates LLC, stated that the disruption to supply along the pipeline is “going to put pressure on producers” by reducing their ability to transport crude oil to buyers. “All of the outbound pipeline capacity out of North Dakota and Canada was already running at capacity.”

By. Charles Kennedy of Oilprice.com