Canadian regulator lets Nexen reopen 40 utility pipelines at Long Lake

Canadian regulator lets Nexen reopen 40 utility pipelines at Long Lake

The Long Lake oil sands facility. (Image courtesy of Nexen)

The energy watchdog for the Canadian province of Alberta has decided to allow Nexen Energy (TSX, NYSE:NXY), the Canadian subsidiary of China’s CNOOC Ltd, to reopen some pipelines ordered closed following a major spill in July.

After inspecting Nexen's Long Lake facility and reviewing documents, the Alberta Energy Regulator (AER) said it would allow a restart of 40 of 95 utility pipelines that carry fuel gas, natural gas and water pose a low risk to public safety and the environment.

“The remaining 55 pipelines affected by the order, which contain several products, including crude oil, natural gas, salt water, fresh water and emulsion, continue to be suspended,” the regulator said in a statement.

AER revoked the operating licences for the pipelines at Long Lake on August 28 as part of a probe into one of the largest-ever oil-related pipeline spills on North American soil.

Nexen said the reopening of the utility pipelines meant it would be able to maintain about 75% of its Long Lake oil sands production and upgrader operations.

The company also vowed to conduct daily inspections of some of its gas pipelines, part of a plan crafted after Alberta forced Nexen to shut down nearly 100 pipelines last week.

Canada's total oil sands production is close to 2 million barrels a day, much of which is exported to the U.S.— the largest consumer of Canadian crude.