UPDATE 1-Canadian heavy crude slumps to lowest in at least a decade

(Updates with Flanagan South restart, price action)
By Nia Williams
CALGARY, Alberta, Aug 12 (Reuters) - Heavy Canadian crude
slumped to its lowest level in at least a decade on Wednesday
after Enbridge Inc ENB.TO closed two of its main pipelines in
the United States because of a leak, piling fresh misery on
Canadian oil companies that are close to producing at a loss.
Western Canada Select heavy blend crude for September
delivery last traded at $20.75 per barrel below the West Texas
Intermediate benchmark, according to Shorcan Energy brokers,
having settled at $19.80 per barrel below on Tuesday.
Earlier in the session it hit $21.75 per barrel below WTI,
the widest differential since August last year.
That pushed the outright price of Canadian heavy crude to
around $22.50 a barrel, a level at which some companies will
struggle to cover the cost of production, blending and
transportation.
It was lower than the 2008 trough of $24.62, according to
one trading source, when U.S. benchmark crude plunged to $32 a
barrel as a result of the global financial crisis.
Enbridge shut down its Flanagan South and Spearhead
pipelines in the U.S. Midwest late on Tuesday. ID:nL1N10N1EZ
The company said it expects to restart the 600,000 barrel
per day Flanagan South line later on Wednesday or on Thursday,
but it did not know how long the adjacent Spearhead line would
remain shut.
The pipelines, which have a combined capacity of nearly
800,000 bpd, carry crude to the U.S. oil futures hub of Cushing,
Oklahoma, and are two of the main conduits linking Alberta's oil
sands to refineries on the U.S. Gulf Coast.
The shutdown means crude could get bottlenecked in Alberta,
putting further pressure on heavy prices which were already
being offered lower after BP Plc's BP.L Whiting, Indiana,
refinery suffered damage over the weekend that could take one to
two months to repair.
Whiting is one of the biggest consumers of heavy Canadian
crude and the reduced demand comes at a time when oil sands
production, in particular from Imperial Oil's IMO.TO Kearl oil
sands project in northern Alberta, is ramping up rapidly.
"This will further weigh on Canadian differentials following
the unplanned BP Whiting outage and heavy PADD 2 maintenance
starting in September," said Dominic Haywood, an analyst with
Energy Aspects.
Traders in Calgary described the latest price drop as
"horrible", and said many were anticipating mid-month
apportionment rationing the volume of crude each shipper can put
on Enbridge lines.
Flanagan South and Spearhead also transport light and sweet
crude and traders said they expected an impact on those grades
too.
Light synthetic crude from the oil sands for September
delivery last traded at $5.15 a barrel below WTI. It settled at
$4.30 per barrel below the benchmark on Tuesday.