U.S. hurricane damage to cut Shell oil output through year-end

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 Royal Dutch Shell, the largest U.S. Gulf of Mexico oil producer, said damage to offshore transfer facilities from Hurricane Ida will cut its production into early next year, slashing deliveries of a type of crude oil prized by refiners.

Shell was the hardest-hit producer from Ida, which tore through the U.S. Gulf of Mexico last month and removed 27 million barrels overall from the market. About 40% of Shell’s production from the offshore region remains offline, and the slow restart has hampered export activity in general.

The Gulf contributes about 16% of U.S. oil production, or 1.8 million bpd. Shell is the largest U.S. Gulf of Mexico oil producer with eight facilities pumping about 476,000 bpd, according to Rystad.

Shell’s damaged transfer facility, West Delta-143, carries oil and gas from three major fields for processing at onshore terminals. The company previously suspended numerous contracts to supply crude from the fields, citing hurricane losses.

Rystad Energy analyst Artem Abramov estimated the lost production will remove 200,000 to 250,000 barrels per day (bpd) of Gulf of Mexico oil supply for several months.

“Disruptions are now having an impact on total available crude for export from the U.S., not just the offshore grades,” said Krista Kulh, a Houston-based analyst with consultancy firm Facts Global Energy.

The fields are a key source of Mars sour crude, a grade prized by oil refiners in the United States and Asia. Mars prices had soared to a one-year high earlier this month then eased as other oil supply constraints lifted.

“Based on current pricing there is likely to be much less crude exported,” Kuhl added.

A Shell spokesman declined to comment further.

Shell’s Mars and Ursa oilfields which supply about 200,000 bpd combined would be affected into the first quarter of next year. The third oilfield, Olympus, produces about 100,000 bpd and will be able to resume production sometime in the fourth quarter, Shell said.

Damage to the transfer station pushed up price of Mars crude earlier this month to a more than one-year high and threatened September-October exports.

U.S. crude oil prices fell about $1 a barrel on Monday over worries about a Chinese real-estate developer’s solvency and a U.S. Federal Reserve Bank meeting this week that could see less lenient lending terms.

  • Reuters (Reporting by Arathy S Nair in Bengaluru; Editing by Aditya Soni, Nick Macfie and David Gregorio)

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