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Production Halted At 2 North Sea Platforms After Main Pipeline Shutdown

Fun Trading: 18 Dec 2017

Summary

  • Shell announced that production from the Shearwater and Nelson platforms in the central North Sea had been suspended due to Forties pipeline shutdown.
  • Forties pipeline is a vital artery of the North Sea production. Production loss is estimated at about 400K Boep/d which is significant and may boost oil prices for weeks.
  • This situation could be considered as a net positive for Shell and other oil majors.

Investment Thesis:

Royal Dutch Shell (RDS.A) (RDS.B), BP P.l.c (BP), and Exxon Mobil (XOM) are the most reliable long-term oil companies and should be part of your main oil portfolio. However, this special status comes with the shareholders’ obligation to follow tightly what is going on with the company on the day-to-day news which may eventually change the future outlook — in this case with a potential production cut. This is exactly what I intend to discuss today.

Oil majors Royal Dutch Shell, Exxon Mobil and BP P.l.c are three solid oil and gas producers in the offshore UK and Norway part of the North Sea. Upstream production is a critical component of these three oil majors and any significant disruption in the production flow can have a negative impact on future results.

Royal Dutch Shell is still one of the leaders in oil and gas production Offshore Europe despite the divestiture of its North Sea UK assets worth $3.8 billion to Chrysaor, completed in Q3.

The package included Shell’s interests in several fields – notably Buzzard, Beryl, Elgin-Franklin, and Schiehallion. The deal represented about half of Shell’s 2016 North Sea output and making Chrysaor the largest independent operator in the North Sea.

Royal Dutch Shell’s oil equivalent production per day for Europe in Q3 represented 597K Boep/d or 16.33% of the total oil and gas production reaching an impressive 3,657K Boepd.

ExxonMobil has an interest in around 40 producing oil and gas fields in the North Sea. Many of these fields are operated by Shell U.K. Exploration and Production as part of a joint operation. XOM is responsible for approximately 5% of U.K. oil and gas production. XOM oil equivalent production per day for Europe in Q3 represented 172K Boep/d or 4.44% of the total oil and gas production reaching an impressive 3,878K Boep/d.

Recent news in the North Sea: BP through Aker BP (in which BP hold a 30% stake) acquired Offshore North Sea Chalk: Valhall & South Arne from HESS (HES) in a $2 billion deal.

Valhall: 2017 net production 25 – 30K Boep/d.

South Arne: 2017 net production 10-15K Boep/d.

Good to Know

You can have access to my articles about the Q3 results for Royal Dutch Shelland Exxon Mobil.

SA recently published my article about Royal Dutch Shell, Exxon Mobil, and BP. Read here.

SA recently published my article about five Independent U.S oil and gas including Apache and ConocoPhillips. Read here.

Recent news

According to OffshoreEnergyToday:

A spokesperson for Shell told Offshore Energy Today that production from the Shearwater and Nelson platforms in the central North Sea had been suspended following the controlled shutdown of the Forties pipeline system.

Note: Shell is the operator of the Shearwater field with ExxonMobil as its partner. Fluids from the Shearwater platform are exported through the Shearwater Elgin Area Line (SEAL) and Forties Pipeline System. Oil from the Nelson field (North East from Shearwater) is also exported via Forties pipeline.

FULL ARTICLE WITH CHARTS

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