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Shell declared force majeure on some oil deliveries due to damage from Hurricane Ida

September 10/2021

MOSCOW (MRC) -- Royal Dutch Shell Plc, one of the largest operators in the Gulf of Mexico, declared force majeure on some oil deliveries due to damage from Hurricane Ida, which has crippled U.S. offshore oil production, said Reuters.

More than three-quarters of the U.S. Gulf of Mexico's offshore oil output remained shut following Ida. Crude buyers said the full restart of production remained unclear due to extensive damage to various facilities. The hurricane was one of the most devastating for offshore producers since back-to-back storms in 2005 cut output for months.

Shell has a majority stake in the Mars offshore field in the Gulf of Mexico, where it was still assessing damage that has kept production offline for nearly two weeks. "Crews are working to complete a comprehensive assessment of the damage and to the degree possible, assess how long production from our Mars corridor assets will be impacted," company spokesperson Curtis Smith said in a statement.

Force majeure is a legal provision used by companies during unforeseen events such as hurricanes when they cannot meet contractual obligations. Shell is one of the largest U.S. Gulf producers, with output of approximately 150 million barrels of oil equivalent per year. U.S. offshore crude production totaled more than 600 million barrels in 2020, according to U.S. Energy Department figures.

Asian buyers including China and South Korea have stepped up purchases of Gulf-produced crude in recent months, and now face lengthy delays before shipments arrive as oil companies assess damage from Ida. China's Unipec, the trading arm of Asia's top oil refiner Sinopec, is expecting late September and early October deliveries of Mars crude, the Gulf sour benchmark, to be disrupted, trade sources said.

The Louisiana Offshore Oil Port, the largest deepwater export terminal for loading crude oil, also remained offline as of Thursday. U.S. oil exports sank in the most recent week, falling to 2.3 million barrels per day, a fall of 700,000 bpd, as a result of the shut ins.

Shell has started to send personnel to its Appomattox platform in the gulf while damage assessments are continuing at its West Delta-143 (WD-143) offshore facilities. Those facilities serve as the transfer station for all production from Shell's assets in the Mars corridor in the Gulf of Mexico to onshore crude and natural gas terminals.

As MRC informed previously, Royal Dutch Shell plc. said in November that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, petrochemistry, Crude oil, Shell, Russia, USA.
Category:General News
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