Oil Outages in Gulf of Mexico Straining Tight Market

Oil Outages in Gulf of Mexico Straining Tight Market
Six oil and gas fields in the Gulf of Mexico have been shut.

Six oil and gas fields in the Gulf of Mexico have been shut after a leak at a Louisiana booster station halted two pipelines in the region. 

Shell Plc on Thursday shut its Mars and Amberjack pipelines which together can move as much as 500,000 barrels a day of oil from the Gulf of Mexico to the coast. That resulted in the closure of Shell’s Mars, Ursa and Olympus fields, as well as Chevron Corp.’s Jack/St. Malo, Tahiti and Big Foot fields, the companies said.

Both pipelines are expected to resume service Friday as the leak has been contained, Shell spokesperson Cindy Babski said in an email. She didn’t provide an update on restarting production at the fields. 

The outage comes at a time when global energy supplies are exceedingly tight. While US crude inventories have been cushioned by the government’s tapping of emergency oil reserves, stocks nevertheless remain below the five-year average. Supplies could tighten further, with the International Energy Agency forecasting that oil demand will accelerate this year. 

The disruption of supplies in the Gulf of Mexico strengthened prices for Mars Blend crude, a regional sour crude benchmark. Meanwhile, Gulf of Mexico dry-gas production is down about 2.4%, the most since Aug. 2, according BloombergNEF. September gas futures traded in New York are up as much as 8.4% to a two-week high.

--With assistance from Sergio Chapa and Christine Buurma.

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