Enbridge’s Line 6A Shut Post Leak – Analyst Blog

Enbridge Energy Partners L.P. (EEP) has completed collecting oil on Line 6A of the Lakehead System in Romeoville, Illinois. The partnership’s crude oil pipeline was shut down immediately after Line 6A ruptured on September 9.

 

While the partnership failed to identify the cause, it succeeded in spotting the source of leakage on the 34-inch pipeline, which is a part of its Lakehead System. The line transports light synthetics, heavy and medium crude oil from Superior, Wisconsin, to Griffith, Indiana. It had a daily capacity of 670,000 barrels and transported about 459,000 barrels of heavy crude daily at the time of the leak.

 

The partnership remains uncertain about the resumption of the line. On a positive note, the partnership highlighted that out of 6,100 barrels of crude oil that were released during the drip, approximately 6,050 barrels of oil have already been collected.

 

Citgo Petroleum Corporation’s Lemont, Illinois, refinery BP plc’s (BP) Whiting, Indiana, plant; Exxon Mobil Corporation’s (XOM) Joliet, Illinois, refinery; and Marathon Oil Corporation‘s (MRO) Robinson, Illinois, refinery have been affected by the leak. Although none of these refineries announced any production cut, Citgo highlighted its intention to seek alternate supplies.

 

Line 6A has been one of three major pipelines to transport Canadian crude to U.S. refineries and the key Cushing, Oklahoma, crude oil hub. Moreover, Calgary-based Enbridge tried to redirect oil supply through Line 6A after it closed Line 6B in Michigan following the July 26 rupture.

 

While we treat this leakage as a one-off event, the partnership’s investment strategy and the diversification of its asset base are key factors that have created opportunities for long-term growth.

 

Long-term prospects for the partnership’s primary liquids transportation asset, the Lakehead System, appear promising, but we still see limited volume growth in the near to medium term.

 

Consequently, Enbridge Energy units have a Zacks #3 Rank (short-term Hold recommendation), with an unchanged long-term Neutral recommendation at this stage.