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 (BestGrowthStock) – 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)

UPDATE 2-Enbridge rations more oil pipeline capacity