Hurricane damage to an offshore U.S. oil transfer hub will sharply cut Royal Dutch Shell's oil and gas production into early next year, the company said on Monday, slashing deliveries of a type of crude oil prized by refiners.
Shell has emerged as the hardest-hit oil producer from Hurricane 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.
The damaged transfer facility, West Delta-143, carries oil and gas from three major fields for processing at onshore terminals. Shell previously suspended "numerous" contracts to supply crude from the fields, citing hurricane losses.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.
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.More from ReutersSubscribe for our daily curated newsletter to receive the latest exclusive Reuters coverage delivered to your inbox.
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