Oil output halted at 7 U.S. Gulf platforms on pipeline outage

© Reuters. FILE PHOTO: Shell logo and stock graph are seen in this illustration taken May 1, 2022. REUTERS/Dado Ruvic/Illustration

By Arathy Somasekhar and Laila Kearney

HOUSTON (Reuters) -U.S. offshore oil producers Shell (LON:RDSa), Chevron (NYSE:CVX) and Equinor on Thursday halted operations at facilities pumping hundreds of thousands of barrels of oil per day, citing an onshore pipeline leak that a port 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 helps increase the pipeline pressure and 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 (NYSE:MUR), which also uses the Mars pipeline for some of its Gulf of Mexico operations, could not provide immediately comment on its operations, a spokesperson said.

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.

Prices for Mars sour crude briefly strengthened to trade at a 50-cent discount to U.S. crude futures. 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.

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.