North Sea pipeline shutdown pushes oil price over US$65 for the first time since mid-2015
Brent oil price has shot over US$65 a barrel for the first time since mid-2015 following the shutdown of North Sea’s largest pipeline.
Ineos, the operator of the Forties Pipeline System uses for the transportation of the UK North Sea crude, has decided to close the pipeline after discovering a hairline crack in the onshore section.
The shutdown is expected to take weeks while Ineos works to fix the issue, meaning that the fields using the pipeline will have to stop production.
According to Reuters, Brent crude futures were at US$65.29 a barrel at 02:53 GMT, up 60 cents, or 0.9 percent, from their last close, marking the first time Brent has gone over US$65 a barrel since June, 2015.
Ineos took over the operatorship over the Forties Pipeline System from BP in October. The pipeline delivers almost 40% of the UK’s North Sea oil and gas output.
During a routine inspection last week, Ineos discovered what it said was a small hairline crack in the pipe at Red Moss near Netherley, just south of Aberdeen.
“A repair and oil spill response team was mobilised on Wednesday, the 6th December, after a very small amount of oil seepage was reported. Measures to contain the seepage were put in place, no oil has been detected entering the environment and the pipe has been continuously monitored,” Ineos said, adding that a 300 metre cordon was set-up and a “small number of local residents were placed in temporary accommodation as precautionary measure.”
The pipeline pressure was reduced while a full assessment of the situation was made.
“Despite reducing the pressure the crack has extended, and as a consequence the Incident Management Team has now decided that a controlled shutdown of the pipeline is the safest way to proceed. This will allow for a suitable repair method to be worked up based on the latest inspection data, while reducing the risk of injury to staff and the environment,” Ineos said on the 11th December.
The Forties Pipeline System (FPS) is an integrated oil and gas liquid transportation and processing system with a nominal capacity of more than one million barrels per day serving the central area of the North Sea. Oil and gas liquids from over 50 offshore fields and St Fergus flow through pipelines into FPS.
FPS transports crude oil and gas liquids from offshore and onshore entry points, processes the liquids at Kinneil and redelivers to the customer Forties Blend crude oil at Hound Point and either raw gas or fractionated gas products at Grangemouth.