U.S. Offshore Oil Production Restarts after Pipeline Fix

August 15, 2022

A Shell Gulf of Mexico platform / Copyright: Mike Duhon Productions - Shell Photographic Services
A Shell Gulf of Mexico platform / Copyright: Mike Duhon Productions - Shell Photographic Services

A damaged oil pipeline component that disrupted output at several offshore U.S. Gulf of Mexico platforms was repaired late Friday, a Louisiana official said, with producers moving to reactivate some of the halted production.

A failed flange connecting two onshore pipelines operated by Shell Plc in Louisiana leaked an estimated two barrels of oil. The oil, which spilled onto an area covered with gravel, has been removed, said Chett Chiasson, executive director of the Greater Lafourche Port Commission, and the flange had been repaired by Friday evening, he said.

The spill halted operation of two pipelines that bring oil from several production facilities off the Louisiana coast, curtailing about 600,000 barrels per day of output from Shell, Chevron Corp, and Equinor, according to two people familiar with offshore operations.

On Friday evening, the Amberjack and Mars pipelines that were stopped by the leak were back online and returning to normal service, after crews completed the repairs at the Fourchon booster station, Shell spokesperson Cindy Babski said.

Shell is also in the process of ramping up production at its three platforms that deliver Mars sour crude, an oil grade popular with refiners in the United States and Asia, Babski added.

Chevron, which had three production facilities shut by the leak, said it is ramping up production at its Jack/St. Malo, Tahiti and Big Foot platforms. Equinor's Titan platform was also disrupted.

Mars crude oil prices had initially strengthened to about a 50-cent discount to U.S. crude oil futures CLc1 on news of the leak on Thursday, but eased to trade at a midpoint of a $1.40 discount on Friday as the outage appeared short-lived.

Crude oil futures prices slipped by about 2%, also on expectations that supply disruptions caused by pipeline outages would be short-lived.

International benchmark Brent crude futures fell $1.45, or 1.5%, to settle at $98.15 a barrel, while U.S. West Texas Intermediate (WTI) crude closed down $2.25, or 2.4%, at $92.09 a barrel.

(Additional reporting by Stephanie Kelly and Shivam Patel; Editing by Mark Porter, Mike Harrison, Barbara Lewis, Richard Chang and Marguerita Choy)



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