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U.S. offshore oil output to restart after pipeline fix

A damaged oil pipeline component that disrupted output at several offshore U.S. Gulf of Mexico platforms is expected to be replaced by day’s end, a Louisiana official said on Friday, with producers moving to reactivate some of the halted production.

A failed flange connecting two onshore pipelines operated by Shell Plc (SHEL.L) in Louisiana leaked an estimated two barrels of oil. The oil, which spilled onto an area covered with gravel, has been removed, said Chett Chiasson, executive director of Greater Lafourche Port Commission.

The spill halted operation of two pipelines that bring oil from several production facilities off the Louisiana coast, curtailing about 600,000 barrels per day of output from Shell, Chevron Corp (CVX.N) and Equinor (EQNR.OL), according to two people familiar with offshore operations.

The Amberjack pipeline, one of two stopped by the leak, has restarted at reduced capacity, Shell spokesperson Cindy Babski said. The Mars pipeline remained offline but is expected to resume operation later on Friday, she said.

Shell’s three platforms that deliver Mars sour crude, an oil grade popular with refiners in the United States and Asia, remained shut.

Chevron, which also had three production facilities shut by the leak, is ramping up production at its Jack/St. Malo, Tahiti, and Big Foot platforms, the company said. Equinor’s Titan platform was also disrupted.

Mars crude oil prices had initially strengthened to about a 50-cent discount to U.S. crude oil futures on news of the leak on Thursday, but it eased to trade at a midpoint of a $1.40 discount on Friday as the outage appeared short-lived.

Crude oil futures prices slipped by about 2% on expectations that supply disruptions caused by pipeline outages would be short-lived. International benchmark Brent crude futures fell $1.45, or 1.5%, to settle at $98.15 a barrel, while U.S. West Texas Intermediate (WTI) crude closed $2.25, or 2.4%, lower at $92.09 a barrel.
Source: Reuters (Reporting by Stephanie Kelly; Editing by Mark Porter, Mike Harrison, Barbara Lewis, Richard Chang and Marguerita Choy)

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