(Adds details from Tudor, Pickering, Holt note after paragraph 2)

Sept 18 (Reuters) -

Energy Transfer said a fire at its natural gas liquid $(NGL)$ pipeline in La Porte, Texas, which started on Monday, continued to safely burn itself out on Wednesday with the flame having diminished overnight.

The pipeline was isolated for residual product to burn off, after a massive fire knocked out power to thousands of homes and businesses and prompted an evacuation of the area.

"When isolation equipment is installed, we will purge a short section with nitrogen, which will extinguish the fire, and begin repairs," the company said.

The fire started after a car crashed into an above-ground pipeline valve, and it is suspected to involve the Justice pipeline, a 20-inch Y-grade line that connects with Energy Transfer’s Liberty and West Texas Gateway pipelines, researchers for investment firm Tudor, Pickering, Holt & Co said in a note.

Energy Transfer has not confirmed the name or capacity of the pipeline that ruptured and was not available immediately to confirm the details.

Y-grade refers to a mix of NGLs, including ethane, propane, butane, isobutane, and natural gasoline, which are extracted from the raw natural gas stream. Propane, butane, and isobutane are also called liquefied petroleum gas $(LPG)$ and are mainly used as fuel for cars, cooking, heating and to produce other petrochemicals.

The Justice pipeline, which entered service in 2012 with a capacity of 375,000 barrels per day, carries Y-grade from the Permian and Eagle Ford shale fields to Energy Transfer's Mont Belvieu fractionators.

"ET will likely be able to utilize its vast network, including its storage assets and Lone Star NGL line, to absorb the service disruption. News of the event sent LPG prices higher, with propane and butane up 7% and 10% since Friday’s close" the research note added.

(Reporting by Anushree Mukherjee and Anmol Choubey in Bengaluru Editing by Marguerita Choy)

((anushree.ashishMukherjee@thomsonreuters.com;))