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Don’t Back U.S. Shale To Keep Oil Prices Down

Don’t Back U.S. Shale To Keep Oil Prices Down

The common assumption that U.S.…

Mississippi Plant Blast Hampers Gulf Production

Mississippi Explosion

The fire at the fuel plant in Pascagoula, Mississippi, continues to hamper gas operations in the area, causing Destin to declare a force majeure because of the incident, with no timetable for resuming operations.

The fire was brought under control yesterday, and investigations into the cause of the incident have begun.

The plant—now owned by Enterprise Products Partners (EPP)—was previously under joint ownership between Enterprise Products Partners (40 percent) and BP (60 percent). EPP closed the deal to purchase BP’s share on the first of the month.

As of Tuesday afternoon, operations had not resumed and there was no word on when that might occur. Officials in Pascagoula have closed the 225-mile Destin gas pipeline, which has the capacity to carry some 1.2 billion cubic feet of natural gas from offshore fields to plant. The pipeline is owned by BP and Enbridge Inc.

Destin said that it was considering options for alternate ways to transport the product. Destin may begin using the VKGS system some time on Wednesday afternoon, and that plan may only last from two to five days.

Related: The Oil Price Rebound Will Be Brief – Goldman Sachs

The Enterprise plant can refine approximately 1.5 billion c/f per day. Enterprise said that at the time of the incident, the plant was processing about 400 million c/f per day.

Two oil and natural gas platforms in the Gulf have also halted operations because of the incident. LLOG said that is was shutting down its Delta House offshore production system and Murphy Oil announced that there was a shut in at its Thunder Hawk platform. However, Murphy also said that it expected “minimal disruptions in operations” as it plans to send its gas to another plant.

Oil and gas prices could go up since the blast has curbed supplies from the Gulf of Mexico. Dominic Hayward from Energy Aspects LTD said that the supply of crude from the Gulf could be significantly impacted in the event the platforms do not find other places to send gas.

By Lincoln Brown for Oilprice.com

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