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Penn West Trucks Alberta Oil After Rainbow Pipeline Shuts

Penn West Petroleum Ltd. is trucking crude oil, placing it in storage and using alternative pipelines after a segment of Plains Midstream Canada LP’s Rainbow pipeline was shut in Alberta following a leak.

“It affects us for sure, but we’ve got options to move crude via other lines, you can truck and we’ve got storage capabilities,” Jason Fleury, a spokesman for Penn West, said in a telephone interview. No production has been shut in, he said.

Fleury declined to say how much crude was being trucked. The Calgary-based company produces about 100,000 barrels a day in northern Alberta, he said.

Plains All American Pipeline LP (PAA) shut the 220,000-barrel-a- day Rainbow pipeline, which runs from Zama in northern Alberta to Edmonton, on April 29 after a leak was detected, according to the company’s website. Repair work will begin once a second stopple unit, a piece of equipment used in the repairs, is added.

The first stopple fitting was installed today and a plug was set that isolated the rupture from the north, the company said on its website. A second stopple fitting was welded and a plug was expected to be set today.

Plains expects to have the physical line repaired by the end of the week. The restart of the line is “contingent on regulatory approval,” according to the company.

The replacement pipe was hydrotested and the failed pipeline section is being analyzed to discern the reason for the failure, the company said.

A portion of the pipeline between Nipisi and Edmonton remains in service, Roy Lamoreaux, a Plains spokesman, said in an e-mail yesterday. The segment typically has volumes of about 50 percent of Rainbow’s daily volume, which averaged 187,000 barrels a day in 2010, according to Lamoreaux.

The leak has been contained within an area about 0.5 mile (0.8 kilometer) by 150 feet (46 meters).

EnerMAX Services Inc., a trucking company in Alberta, is moving crude along different routes because of the pipeline disruption, Sean McKelvey, a business development manager at the company, said in a telephone interview.

Crude that is typically moved south from the Rainbow Lake area to Valleyview, Alberta, is now being moved from the Rainbow Lake area east to Gordondale, Alberta, and the Boundary Lake region along the Alberta-British Columbia border, he said.

The Rainbow pipeline ships condensate along with sweet, or low-sulfur oil, and heavy crude, according to Plains’s website.

To contact the reporters on this story: Aaron Clark in New York at aclark27@bloomberg.net; Leela Landress in Houston at llandress@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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