December 4, 2018 / 10:35 PM / 5 days ago

Two key Canada-to-U.S. oil pipelines hit by disruptions

NEW YORK/VANCOUVER (Reuters) - Two major pipelines carrying oil from Canada to the United States were hit by weather-related disruptions on Tuesday, the latest hit to Canada’s oil industry just days after the Alberta government announced forced cuts in crude production.

FILE PHOTO: A TransCanada Keystone Pipeline pump station operates outside Steele City, Nebraska, U.S., March 10, 2014. REUTERS/Lane Hickenbottom/File Photo

A number of lines on the Enbridge Inc (ENB.TO) Mainline system, which carries crude and other liquids, were hit by power outages in the Western Canadian province of Saskatchewan due to severe weather, the company said Tuesday.

TransCanada Corp’s (TRP.TO) 590,000 barrel-per-day crude Keystone pipeline was also shut due to the outage, according to a shipper on the line and traders. There was no estimated restart timeline for the line, one source said, citing a notice to shippers. The company did not respond to a request for comment.

The outages, though temporary, are just the latest constraints to hit Western Canadian oil producers already struggling to export crude due to full pipelines as production has surged to a record at more than 4.6 million barrels a day in 2018.

Both systems originate in Alberta, where most of Canada’s oil is produced.

Enbridge, for its part, said it will remain in contact with SaskPower, that province’s primary utility, through the night “to evaluate the possibility of starting the lines earlier.” The Mainline system ships about 1.2 million bpd.

The Alberta government on Sunday imposed mandatory output cuts of 8.7 percent, or 325,000 bpd, until excess crude in storage is drawn down. The cuts will begin in January.

Western Canadian Select (WCS) heavy oil prices weakened on the news, dealers said, closing at $29.25 a barrel below West Texas Intermediate CLc1 benchmark prices. In October, that discount hit a record of $52 below U.S. prices, but had narrowed to a $19 discount on Monday after the production cuts were announced.

Traders said they expect the outages to be brief.

“If the lines are not up tomorrow, I’m sure folks will start to get nervous,” one shipper on the lines said.

TransCanada’s Keystone line runs to Steele City, Nebraska and from there to other U.S. markets. Decreased power consumption on that line was observed at about 9:30 a.m. EST (1430 GMT), according to market intelligence firm Genscape.

Enbridge said its lines 1, 2a, 3, 4, 13 and 67 would be shut through the night, as SaskPower anticipates power will remain down until at least until Wednesday morning.

Reporting by Devika Krishna Kumar in New York and Julie Gordon in Vancouver; Editing by Marguerita Choy and Lisa Shumaker

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