The Forties Pipeline in the North Sea is expected to return to normal flow rates of some 450,000 bpd around new year, the operator of the pipeline, Ineos, said in its latest media update on the progress of the repairs.
Ineos shut the pipeline down on December 11 after discovering a hairline crack in the pipe just south of Aberdeen. Following the announcement of the controlled shutdown, Brent prices spiked not only because the pipeline carries some 450,000 bpd, but also because Ineos said that the repair would take “weeks rather than days.”
Not only is the Forties pipeline a key transit route for North Sea oil, the Forties crude blend is the largest component of the Brent-Forties-Oseberg-Ekofisk-Troll (BFOE) complex, which is the basis for the Brent futures contract.
Earlier this week, Ineos said that it had started doing pressure tests on the pipeline after it was repaired, with full flow expected to resume in early January. The company has now moved the timeline for a return to normal rates to around new year—early next week.
“All restrictions on the flow of oil and gas from platforms feeding into the pipeline system have been fully lifted,” Ineos said on Thursday.
A spokeswoman for Shell told Reuters on Wednesday that the oil major had started to gradually resume production operations at its Shearwater and Nelson oil and gas platforms in the North Sea.
The Forties pipeline carries some 40-45 percent of the UK’s liquids production and more than 80 fields feed into the pipeline.
The large Buzzard field—which makes more than 30 percent of the total crude oil stream to Forties--was expected to reach full production rates on Thursday, people with knowledge of the matter told Bloomberg.
Despite the restart of the fields and pipeline facilities, traders told Platts that force majeure for deliveries of crude oil from offshore platforms into the pipeline was still in force as of December 28.
The January crude loading program has been changed with 13 cargoes deferred from December to January, and another 12 cargoes have been deferred from January to February. According to trading sources who spoke to Platts, there have not been deferrals of cargoes since early last week.
Following news that flows from the Forties have restarted, the strongly backwardated structure of the underlying Brent contracts has flattened sharply over the past few days, traders noted.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- What Drove WTI Above $60?
- Panama Canal Can’t Handle U.S. LNG Boom
- Higher Oil Prices Slow China’s Crude Stockpiling