The renewable energy boom is…
Ironically, the wave of ESG…
The Forties crude oil pipeline network should return to normal operation in early January, its owner Ineos said. The shutdown of the piece of infrastructure caused Brent crude to jump to almost US$65 a barrel, as it supplies about 40 percent of UK’s daily crude oil and gas consumption.
Ineos, which acquired the Forties network from BP two months ago for US$125 million, shut the pipeline down after discovering hairline cracks on parts of it. Now it is repairing the cracks, which it last week said were now under control and were no longer widening. It will now repair the affected parts over the Christmas holidays.
Initially, the company said, the pipeline wouldn’t operate at full capacity, it would instead only ship small amounts of oil and gas, “as part of a coordinated plan that allows Ineos to carefully control the flow into the system. Based on current estimates the company expects to bring the pipeline progressively back to normal rates early in the new year.”
The news is a nice surprise for oil bears as just a couple of days ago, Ineos said the pipeline would remain shut for two to four weeks from December 11, adding that it was awaiting custom parts to repair the crack.
The Forties pipeline has a daily capacity of half a million barrels of oil, but its average throughput has been 450,000 bpd. Not only is the 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.
According to data compiled by Bloomberg, the Forties shutdown will remove an additional 5.5 million to 13 million barrels of oil from the market by the time the pipeline is restarted, which should support prices for a while longer, until Forties restarts.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.