Oil Output Halted at Seven US Gulf Platforms on Pipeline Outage

HOUSTON (Reuters) — U.S. offshore oil producers Shell, Chevron and Equinor on Thursday halted operations pumping hundreds of thousands of barrels per day, citing an onshore pipeline leak that a local official said should take about a day to fix.

The shut-ins are not expected to last but the number of facilities affected by the leak offered another example of how a relatively minor failure can affect a swath of U.S. energy infrastructure.

The shut-ins could halt about 600,000 barrels per day of oil production, a person familiar with offshore operations said.

A flange connecting two pipelines onshore in Louisiana failed and caused about two barrels of oil to spill onto the ground, said Chett Chiasson, executive director of Greater Lafourche Port Commission. A fix is expected to take about a day, he added.

The spill halted operation of the Mars and Amberjack Pipelines that serve several oil production platforms off the Louisiana coast. It occurred at a booster station that helps increase pipeline pressure to advance crude oil flow to onshore storage facilities in Clovelly, Louisiana.

Shell's Mars, Ursa, and Olympus platforms were shut because of the leak. The three are designed to produce up to 410,000 barrels of oil per day combined, according to data on the company's website.

Chevron's Jack/St. Malo, Tahiti, and Big Foot oil facilities, which also connect to the Amberjack pipeline, have halted production. Equinor said it shut its Titan platform.

Pipeline operator Shell said it was premature to estimate the impact of the shut-in and declined to provide a timeline on when operations would resume.

Murphy Oil, which uses the Mars pipeline for some of its Gulf of Mexico operations, could not immediately comment on its operations, a spokesperson said.

Fourchon Harbor Police Chief Michael Kinler said there was no sign of vandalism at the booster station and the amount of oil that leaked was not enough to halt traffic on the waterway or roads.

The leak happened late Wednesday or early Thursday between checks of the booster station infrastructure, Chiasson said. No waterways were affected by the spill and operations at the port were not affected, he added.

Shell's three platforms deliver Mars sour crude, a grade prized by oil refiners in the United States and Asia. Shell said it was evaluating "alternative flow paths" to move the oil to shore via other pipelines.

A temporary outage will have limited impact on physical crude markets, said traders and analysts.

"Short-lived outages don't tend to make a great impact on the oil market, but there is no doubt that we are going to lose some oil production for a day or two," said Andy Lipow, president of consultancy Lipow Oil Associates.

Prices for Mars sour crude briefly strengthened to trade at a 50-cent discount to U.S. crude futures CLc1. Trading in the grade has been volatile, as it competes domestically with sour barrels released from the U.S. Strategic Petroleum reserve and in international markets with cut-priced Russian Urals barrels.

Mars crude exports averaged about 135,000 bpd in the first seven months of 2022, according to data from Vortexa. That accounts for about 4.2% of total U.S. crude exports of 3.2 million bbl/d, based on EIA export data.

 

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