Posted by on December 11, 2017 3:08 pm
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Categories: Business Crack spread Crude Economy Forties pipeline system Hound Point Ineos Petroleum industry pipeline Price of oil

Following the discovery of a “small hairline crack” in The Forties Pipeline System – one of the most important oil conduits in the world – its operator Ineos has decided a total controlled shutdown “for weeks, not days” is the safest option. This has sent the spread between WTI and Brent soaring

 

A “small hairline crack” was discovered during a routine inspection last week by Ineos contractors, just south of Aberdeen in Scotland. The pipeline’s pressure was reduced for a full assessment but during that time the crack extended.

As Bloomberg reports, Brent futures rose as much as $1.18 to $64.71 a barrel in London – the highest since June 2015…

“Despite reducing the pressure the crack has extended, and as a consequence the Incident Management Team has now decided that a controlled shutdown of the pipeline is the safest way to proceed,” Ineos said in a statement.

 

“This will allow for a suitable repair method to be worked up.”

The pipeline system feeds crude to the Hound Point export terminal near Edinburgh in Scotland.

At over 400,000 barrels a day, the supplies that flow through the link are the single largest constituent part of the Dated Brent grade that helps to settle more than half the world’s physical oil prices.

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