By Jeffrey Jones and Ayesha Rascoe
CALGARY/WASHINGTON (Reuters) - The U.S. pipeline regulator raised the pressure on Enbridge Inc on Thursday over the latest spill on its U.S. oil pipeline network, demanding that it submit a plan to improve the safety of the entire 1,900 mile system before restarting a key Midwest line.
The U.S. Pipeline and Hazardous Materials Safety Administration said it added new conditions to this week's corrective action order for the restart of Line 14 to address failures on that pipeline as well as a string of others in recent years on its U.S. system, part of the world's longest network for moving oil and petroleum products.
The move came as Enbridge's top executives defended the company's safety record amid growing public pressure, saying that quick action to stop the flow of crude from the 318,000 barrel per day pipeline in rural Wisconsin showed it had bolstered safety procedures after a devastating 2010 Michigan oil spill.
The new order is almost certain to mean the pipeline remains idle for even longer, potentially months, according to experts, tightening supply of light, sweet crude for Chicago-area refineries at the height of the U.S. driving season. Benchmark gasoline prices jumped more than 1 percent on Thursday as Midwest premiums spiked this week to a near record high.
The situation is being watched closely by the energy industry, environmentalists, Canadian regulators and Enbridge's investors, as the company, which transports most of Canada's oil exports to the United States, struggles to win approval to restart the pipeline and expand other parts of its network.
There is still no estimate when Line 14 can restart, even though Enbridge has finished the repairs. Shippers are worried a lengthy outage could also back crude supplies up in Alberta, forcing some producers to shut in production.
"PHMSA has communicated its longstanding concerns about this pattern of failures with (Enbridge) over the past several years," PHMSA wrote in an amendment to its corrective action order. "Given the nature, circumstances, and gravity of this pattern of accidents, additional corrective measures are warranted."
DEFECTS, PREVIOUS SPILLS
In its initial corrective action order, which set out 12 safety measures, tests and analyses Enbridge must undertake before it can restart the pipeline, PHMSA chided Enbridge, saying its "integrity management program may be inadequate."
The regulator noted that defects had been discovered when Line 14 was built 14 years ago and that it had ruptured in Wisconsin in 2007, spilling 1,500 barrels of oil.
It also noted the 2010 rupture of Line 6B in Michigan, which sent 20,500 barrels of crude into the Kalamazoo river system, leading to a nine-week shutdown and $750 million of repairs.
Besides developing a plan to address all its safety issues, Enbridge must appoint an independent expert to oversee its implementation, PHMSA said.
Line 14 ruptured on Friday near Grand Marsh, Wisconsin, spilling more than 1,000 barrels into a field.
Despite PHMSA's strong words, executives said on a conference call to discuss second-quarter financial results that heightened attention to leaks is driven more by the debate over Canadian oil sands development and Enbridge's contentious C$6 billion ($6 billion) Northern Gateway pipeline to Canada's West Coast than by Enbridge's own safety record.
Still, much of the call focused not on the 7 percent increase in adjusted quarterly profit but on the Line 14 leak and other incidents, as analysts and investors grow more concerned about the increased regulatory scrutiny and other ways that the issue is clouding Enbridge's business prospects.
(Editing by Marguerita Choy)
