(Updates with Flanagan South restart, price action)
By Nia Williams
CALGARY, Alberta, Aug 12 (Reuters) - Heavy Canadian crudeslumped to its lowest level in at least a decade on Wednesdayafter Enbridge Inc closed two of its main pipelines inthe United States because of a leak, piling fresh misery onCanadian oil companies that are close to producing at a loss.
Western Canada Select heavy blend crude for Septemberdelivery last traded at $20.75 per barrel below the West TexasIntermediate 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 toaround $22.50 a barrel, a level at which some companies willstruggle to cover the cost of production, blending andtransportation.
It was lower than the 2008 trough of $24.62, according toone trading source, when U.S. benchmark crude plunged to $32 abarrel as a result of the global financial crisis.
Enbridge shut down its Flanagan South and Spearheadpipelines in the U.S. Midwest late on Tuesday.
The company said it expects to restart the 600,000 barrelper day Flanagan South line later on Wednesday or on Thursday,but it did not know how long the adjacent Spearhead line wouldremain shut.
The pipelines, which have a combined capacity of nearly800,000 bpd, carry crude to the U.S. oil futures hub of Cushing,Oklahoma, and are two of the main conduits linking Alberta's oilsands 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 alreadybeing offered lower after BP Plc's Whiting, Indiana,refinery suffered damage over the weekend that could take one totwo months to repair.
Whiting is one of the biggest consumers of heavy Canadiancrude and the reduced demand comes at a time when oil sandsproduction, in particular from Imperial Oil's Kearl oilsands project in northern Alberta, is ramping up rapidly.
"This will further weigh on Canadian differentials followingthe unplanned BP Whiting outage and heavy PADD 2 maintenancestarting in September," said Dominic Haywood, an analyst withEnergy Aspects.
Traders in Calgary described the latest price drop as"horrible", and said many were anticipating mid-monthapportionment rationing the volume of crude each shipper can puton Enbridge lines.
Flanagan South and Spearhead also transport light and sweetcrude and traders said they expected an impact on those gradestoo.
Light synthetic crude from the oil sands for Septemberdelivery last traded at $5.15 a barrel below WTI. It settled at$4.30 per barrel below the benchmark on Tuesday. (Additional reporting by Jessica Resnick-Ault; Editing by GrantMcCool and Alan Crosby)