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Oil output halted at three U.S. Gulf platforms on pipeline outage, Shell says
Global Banking & Finance Review®
Company
By Arathy Somasekhar and Laila Kearney
HOUSTON (Reuters) -Top U.S. Gulf of Mexico oil producer Shell said it had halted production at three of its U.S. Gulf of Mexico deepwater platforms after a leak shut pipelines connecting the platforms.
A failure at an onshore pipeline junction in Louisiana leaked about two barrels of oil, said Chett Chiasson, executive director of Greater Lafourche Port Commission. A fix is expected to take about a day, he added.
Shell said its 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.
“Shell is coordinating with local authorities and mobilizing personnel and equipment to assess the situation,” the company said in a statement. It did not estimate when the pipelines might resume operation.
The 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 strengthened to trade at a 50-cent a barrel discount to U.S. crude futures. The grade has seen volatile trading as it competes with sour barrels released from the U.S. Strategic Petroleum Reserve domestically and with cut-priced Russian Urals barrels in international markets.
Shell shut its Mars and Amberjack Pipelines because of the leak at the onshore Fourchon booster station, it said. The station helps increase the pipeline pressure and advance crude oil flow to onshore storage facilities in Clovelly, Louisiana.
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.
(Reporting by Arathy Somasekhar in Houston; additional reporting by Stephanie Kelly and Laila Kearney; editing by Grant McCool and Marguerita Choy)
A pipeline leak occurs when oil or gas escapes from a pipeline due to a failure or damage, which can lead to environmental hazards and production halts.
Mars sour crude is a type of crude oil produced in the Gulf of Mexico, known for its high sulfur content, making it desirable for certain refiners.
Oil production refers to the process of extracting crude oil from the ground, which is then refined into various petroleum products.
Alternative flow paths are different routes or methods used to transport oil when the primary pipeline is unavailable, ensuring continued supply.
Oil price fluctuations can significantly affect the economy, influencing everything from fuel costs to inflation rates and the profitability of energy companies.
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