Enterprise Plant Blast Curbs Gulf of Mexico Oil, Gas Supply
Enterprise Products Partners’s natural gas processing plant in Mississippi will be shut for at least “a few days” after an explosion and fire that also closed a key gas pipeline and curbed oil output from the Gulf of Mexico.
Enterprise’s fuel processing facility will be down for at least several days, spokesman Rick Rainey said, without providing a more detailed timeline. At least two oil and natural gas platforms in the Gulf halted production after the June 27 blast and the Destin pipeline, a joint venture of BP and Enbridge that sends gas to the plant from platforms in the Gulf, said it was forced to halt service.
The blast threatens to raise oil and gas prices by curbing supplies from the Gulf just as demand for the power-plant fuel increases as summer heat expands across the United States. The Gulf last year accounted for 16 percent of the nation’s crude output and almost 5 percent of gas based on U.S. government data.
“It’s obviously not going to be the next few days,” Rainey said by phone from Houston. “It’s going to be longer than that. I don’t have a good estimate about when we are going to be back in service.”
Meanwhile, federal investigators were set to arrive at the facility Wednesday as Enterprise officials met at the site to discuss when operations may resume. The fire overnight Monday was finally put out around 5 p.m. local time Tuesday.
Evan as the Gulf’s share of America’s energy supply fell amid the shale boom, the government forecasts record offshore oil output this year and next as new production comes online. Total Gulf of Mexico dry gas production is down 15 percent, or 540 million cubic feet a day, since the fire was reported, according to Het Shah, a New York-based analyst for Bloomberg New Energy Finance.
Enterprise gained 1.9 percent to $28.94 at 11:39 a.m. in New York.
LLOG Exploration shut its Delta House platform, while Murphy Oil Corp. closed Thunder Hawk. Spokesmen for other operators, including Exxon Mobil Corp. and Chevron Corp., said output hasn’t been affected. Duke Energy has “not had to curtail any power production” at their plants, spokesman Thomas Williams said.
The pipeline disruption has the potential to “significantly” curtail Gulf of Mexico crude supply should offshore platforms fail to find another place to send their gas, Dominic Haywood, an analyst at Energy Aspects Ltd., said in a note Tuesday. The 10 platforms produced a combined 270,000 barrels a day in February, he said. BP’s Na Kika and Thunder Horse platforms are particularly at risk because they lack alternatives for gas.
Thunder Horse crude’s discount to West Texas Intermediate, the U.S. benchmark, narrowed 35 cents to $1.20 a barrel Tuesday, according to data compiled by Bloomberg. Gas futures on the New York Mercantile Exchange fell as much as 1.4 percent Wednesday after rising 7.4 percent Tuesday.
Destin Pipeline said in an emailed notice Tuesday that it was seeking an alternative route for shippers starting in the later half of Wednesday. The workaround may only last two to five days, the company said.
The Enterprise plant in Pascagoula, which can process 1.5 billion cubic feet of natural gas a day, was averaging about 400 million before the blast, Enterprise said in a statement. Recent production was based on customer demand, Rainey said.
Officials received reports of two explosions at the plant, Earl Etheridge, director of emergency services for Jackson County, Mississippi, said Tuesday by phone. Officials were still trying to determine a cause and where the explosion originated as investigators from the U.S. Chemical Safety Board were expected to arrive at the site Wednesday, according to Rainey.