Forties pipeline system could be out until January

Ineos said manufacturers are creating special parts to fix a pipeline system that carries about 40 percent of North Sea production to inland refineries.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Dec. 19, 2017 at 6:25 AM
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Dec. 19 (UPI) -- Custom parts needed to fix the Forties pipeline system are being made, though it may be the second week in January before work is finished, the operator said.

Ineos, which owns the Forties pipeline system, shut down operations on a network catering to about 40 percent of North Sea oil production Dec. 11 after finding a hairline crack on infrastructure near Aberdeen.

In its latest formal update, the company said the crack is stabilized and the custom parts necessary to fix the issue are being made or are already on their way to site of the crack.

"At this stage, it is still too early to say exactly how long the repair will take to complete, and there is no change to the previously indicated timescale of two to four weeks from Dec. 11," the company stated. "We will work to complete this as quickly as possible but safety is our highest priority."

Ineos confirmed a formal declaration of force majeure last week on contracts for the system after a number of fields closed as a result of the disruption. Force majeure is a contractual condition related to circumstances beyond the control of the parties involved.

The closure of the system triggered a 2 percent spike in the price for Brent crude oil, the global benchmark for the price of oil and component of the basket of oils fed into the Forties system. The price for Brent was up slightly from Monday's close to $63.60 per barrel. That's down about $2 per barrel since the pipeline was closed.

The Forties system carries Brent, Forties, Oseberg and Ekofisk oils, which account for a basket that make up the global benchmark. Commodity pricing group S&P Global Platts changed up the basket of what constitutes the benchmark by adding Forties, Oseberg and Ekofisk grades from the North Sea as production from the Brent field itself started to decline. In January, Platts announced plans to add oil from the Troll field, operated by Norwegian energy major Statoil, to the basket.

Ineos paid BP around a quarter billion dollars to acquire the 235-mile Forties pipeline system earlier this year.

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