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Brent price jumps on pipeline closure

One of the UK’s most important oil pipelines is being closed after a crack was discovered in Aberdeenshire.

The Forties pipeline carries crude North Sea oil across land for processing at Grangemouth.

The crack was discovered last week at Red Moss near Netherley.

The pipeline’s owner Ineos said on Monday that, despite pressure being reduced, the crack had extended. The Forties pipeline carries about 40% of North Sea crude oil.

More than 80 platforms will have to suspend production. The price of Brent crude rose about 2% to $ 64.69 a barrel amid surprise that the pipeline could be shut for about three weeks – far longer than expected.

Ineos said there would be a big impact on the industry but not on consumers.

‘Suitable repair method’

Ineos said in a statement: “Last week during a routine inspection Ineos contractors discovered a small hairline crack in the pipe at Red Moss near Netherley.

“A repair and oil spill response team was mobilised on Wednesday, 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.”

The company added: “A 300m 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.

“The incident management team has now decided that a controlled shutdown of the pipeline is the safest way to proceed.”

Ineos said the shutdown would “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”.

A spokesman for BP said: “Ineos has been in regular contact with us since this issue came to light last week, as per protocol. Ineos requested, and we have initiated, a temporary shutdown of production through our Andrew, Etap and Bruce hubs until this is resolved.

“We will continue to liaise with Ineos and offer any support we can to help bring this situation to a successful conclusion as quickly as possible.”

‘Wide-reaching implications’

Deirdre Michie, chief executive of Oil & Gas UK, said: “We have been in touch with Ineos and are closely monitoring the situation and hope this can be resolved safely and as quickly as possible.”

Energy consultancy Wood Mackenzie warned that even a temporary shutdown of the Forties Pipeline System (FPS) would have “wide-reaching implications”.

Senior analyst Fiona Legate said: “FPS transports liquids from over 80 fields, including the two largest producers in the UK – Buzzard and Forties.

“Companies with fields utilising the FPS export route will suffer from reduced cash-flows during the shutdown period.”

The FPS system runs from the unmanned offshore Forties Unity platform to the onshore terminal at Cruden Bay in Aberdeenshire.

From there an onshore pipeline transports oil 130 miles south to the Kinneil terminal, next to Ineos’ Grangemouth refinery and chemical plant, where it is processed and stabilised.

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BBC News – Business

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