Enterprise Sees Plant Curbing Gulf Oil, Gas Supply Down for Days

(Bloomberg) - An Enterprise Products Partners LP plant that shut after an explosion late Monday, halting flows on a major natural gas pipeline and curbing oil production in the Gulf of Mexico, is expected to remain down for at least several days.

Federal investigators were scheduled to arrive at the Pascagoula, Mississippi, gas-processing plant on Wednesday as Enterprise officials met to discuss when operations may resume, company spokesman Rick Rainey said, without providing a more detailed timeline. At least two oil and natural gas platforms in the Gulf have halted production and the Destin pipeline, a joint venture of BP Plc and Enbridge Inc. that sends gas to the plant from offshore platforms, was forced shut.  

A prolonged outage threatens to raise energy prices by curbing production in the the Gulf of Mexico. It comes just as demand for natural gas, a power-plant fuel, is picking up amid summer heat spreading across the U.S. The Gulf last year accounted for 16 percent of the nation’s crude output and almost 5 percent of gas based on U.S. government data. 

Enterprise’s plant won’t be restarting in “the next few days,” Rainey said by phone from Houston on Wednesday. "It’s going to be longer than that."

Shale Boom

Evan as the Gulf’s share of America’s energy supply fell amid the shale boom, the government forecasts record offshore oil output this year and next as new production comes online. Total Gulf of Mexico dry gas production was down 15 percent, or 540 million cubic feet a day, since the fire was reported, according to Het Shah, a New York-based analyst for Bloomberg New Energy Finance.

Thunder Horse crude gained against West Texas Intermediate, the U.S. benchmark, to a $1.20-a-barrel discount on Tuesday and held that level on Wednesday, according to data compiled by Bloomberg. Gas futures on the New York Mercantile Exchange fell 1.1 percent at 1:14 p.m. after earlier reaching a 13-month high. Enterprise was up 1.6 percent at $28.86 in New York.

LLOG Expl oration shut its Delta House platform, while Murphy Oil Corp. closed Thunder Hawk. Spokesmen for other operators, including Exxon Mobil Corp. and Chevron Corp., said output hasn’t been affected. Duke Energy Corp. hasn’t had to curtail operations at its power plants, spokesman Thomas Williams said.

Gulf Output

The pipeline disruption has the potential to “significantly” curb Gulf of Mexico crude supply should offshore platforms fail to find another place to send their gas, Dominic Haywood, an analyst at Energy Aspects Ltd., said in a note Tuesday. The 10 platforms produced a combined 270,000 barrels a day in February, he said. BP Plc’s Na Kika and Thunder Horse platforms are particularly at risk because they lack alternatives for gas.

Destin Pipeline said in an e-mailed notice Wednesday that it was working to establish an alternative route for shippers starting at around 6 p.m. local time. The workaround may only last two to five days, the company said.

The Enterprise plant can process 1.5 billion cubic feet of natural gas a day and was averaging about 400 million before the blast, Enterprise said in a statement. Recent flows were based on customer demand, Rainey said.

Officials were still trying to determine the cause of the explosion and where it originated as investigators from the U.S. Chemical Safety Board were en route to the complex on Wednesday, he said.

- With assistance from Sheela Tobben, Meenal Vamburkar, Naureen S. Malik and Ryan Collins. To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net ;Harry R. Weber in Houston at hweber14@bloomberg.net To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net Jim Efstathiou Jr.

Copyright 2016 Bloomberg News.

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