Business Blog Posts

CALGARY, Alberta Reuters Enbridge Inc on Saturday started digging up the pipeline that halted nearly a third of Canadas crude oil exports to the United States when it sprung a leak two days ago, but the company does not have an estimate on how long repairs will take.

Enbridge said removal of the damaged pipe is complicated by utility lines and sewer pipes near its line, forcing workers to dig by hand or use high-pressure water to expose the oil conduit. It cant yet say when that will be completed or when shipments might resume.

"Excavation has begun, but its a busy corridor," said Gina Jordan, a spokeswoman for Enbridge. "There is still no estimate on when we can restart the line."

The leak was discovered around noon on Thursday at a stretch of pipeline in Romeoville, Illinois, about 30 miles southwest of Chicago. Enbridge quickly shut down its Line 6A, the largest of its three major lines that take Canadian crude to refineries in the U.S. Midwest and on to the Cushing, Oklahoma, oil storage hub.

The line can handle 670,000 barrels per day but was transporting about 459,000 bpd before the leak.

Canada shipped 1.75 million barrels of crude to the United States in the week to September 3, making it by far the largest foreign supplier. Saudi Arabia, the No. 2 supplier, shipped 1.16 million bpd to U.S. markets last week, according to data from the U.S. Energy Information Administration.

U.S. oil prices surged $2.20, or nearly 3 percent, on Friday as the leak on the 467-mile line from Superior, Wisconsin to Griffith, Indiana threatened to slash oil supplies to the Midwest.

The latest incident also comes less than two months after a smaller Enbridge line on the same Lakehead pipeline system that includes Line 6A was shut after spilling nearly 20,000 barrels in Michigan. Calgary-based Enbridge has still not been allowed to restart that line.

The U.S. Environmental Protection Agency is supervising Enbridges clean-up at the spill site. It said on Saturday that the oil had been contained and the company was removing spilled oil in a retention pond near the site of the leak.

Some oil spilled into storm sewers, forcing the temporary closure of a waste-water treatment plant. However, that oil has also been isolated in the plants lagoons and is beginning to be removed.

The EPA is still unable to estimate the size of the leak and said it was unsure whether oil continued to drain out of the damaged line.

"We havent exposed the line yet so we dont know if oil is still leaking," said Sam Borries, the EPAs on-scene coordinator at the spill site. "But its no longer bubbling up to the surface."

Editing by Paul Simao

DETROIT Reuters British defense contractor BAE Systems Plc BAES.L has hired advisors to sell part of its North American commercial aerospace business in an auction that could generate up to $2 billion, a source familiar with the matter told Reuters on Saturday.

BAE Systems, which hired J.P. Morgan Chase and Wells Fargo to advise it in the auction, is seeking the first round of bids for its platform solutions unit by next week, said the source, who asked not to be identified because news of the auction has not been made public.

Private equity firm Carlyle Group, Goodrich Corp and Honeywell are among the interested parties for BAE Systems platform solutions group, the source said.

BAE previously declined to comment.

Reporting by Ben Klayman, Soyoung Kim and Rhys Jones, editing by Vicki Allen

LONDON Reuters BP Plc said its BP.L head of exploration and production, the unit responsible for the Gulf of Mexico oil spill, is to step down from the board of BPs Russian joint venture, TNK-BP.

A BP spokesman said on Saturday that Andy Inglis was stepping down to make way for outgoing BP Chief Executive Tony Hayward, who was nominated to the TNK-BP board as part of an exit package agreed in the wake of the United States worst oil spill.

Some BP insiders have said Inglis might be forced out of his position atop BPs core production unit following the blown-out well disaster, which has prompted U.S. lawmakers to accuse BP of fundamental shortcomings on safety in its drilling operations.

But spokesman Andrew Gowers said Inglis retained the full support of BPs board.

"The decision to nominate Tony to the TNK-BP board required another director to make way, and Andy has had quite a few things on his plate recently," Gowers said.

TNK-BP pumps around 2 million barrels per day and is Russias third-largest oil producer.

Inglis has taken a leading role in the effort to permanently seal the leaking Macondo, on which a temporary cap was fitted on July 15.

BP has promised to take a "hard look" at itself following the oil spill, and employees expect some big changes beyond the departure of Hayward, who angered the U.S. public with a series of gaffes following the accident.

American Bob Dudley, who is currently heading the spill response effort, will replace Hayward on October 1.

In addition to questioning the future of Inglis, some staffers have said Doug Suttles, Chief Operating Officer of BPs Exploration and Production unit, could also be in the line of fire.

Gowers said Suttles also retained the support of the BP board.

WASHINGTON Reuters A leading U.S. banking group is urging Basel Committee negotiators working on new international capital standards to ditch part of their proposal.

The American Bankers Association said on Friday it opposes requiring financial institutions to build up their reserves when the economy is going strong so that they can better handle eventual downturns.

The proposal for a "counter-cyclical buffer," being considered this week by banking regulators from 27 countries, duplicates existing regulatory powers, the ABA said.

The proposal would be difficult to implement, could lead to unintended consequences, and could "impose significant and unwarranted increases in the cost and permanent constraints on the supply of credit that would be a detriment to the broader economy," the group said.

The ABA voiced its concern in a letter to members of the Basel Committee, the group of central bank and regulatory officials negotiating the new capital standards.

The committee is set to meet Sunday in the Swiss town of Basel to agree on tougher bank capital and liquidity standards. Leaders of the Group of 20 countries are expected to adopt the new standards at a meeting in November.

The idea behind a "counter-cyclical capital buffer" is that it can prevent the overheating of the economy during boom times while allowing banks to build up capital so they are in a better position to lend when a slowing economy needs a jolt.

In short, it is meant to help tame wild swings in the economy.

As a basis for determining when more capital should be held, negotiators have proposed looking at whether there is excessive credit levels in the broader economy in relation to economic output.

The ABA argued that the committees approach is rigid and could lead to a "one-size-fits-all" approach that punishes banks that take proper risk precautions.

"Prudent banks should not be penalized by the actions or inactions of those that do not adhere to equally high standard," the group wrote.

The international banking community is closely watching the Basel negotiations and are worried that stricter capital requirements will cause industry profits to shrink and, in some cases, force banks to sell off pieces of their business.

The banking industry also contends that standards that are too strict will curtail the availability of credit, especially as the global economy is regaining its footing.

The lack of capital and liquidity is seen as one of the main causes of the financial crisis. Proponents of requiring banks to hold more and better-quality capital say such a move could prevent future calamities.

Reporting by Dave Clarke; editing by John Wallace