Heavy Louisiana Oil Gains as Exxon Shuts Pipe ‘Indefinitely’

Heavy Louisiana Sweet oil has risen to a premium over Light Louisiana Sweet since Exxon Mobil Corp. shut a portion of its Southwest Pipeline System from South Bend to Sunset, Louisiana.

The line was shut “indefinitely” Oct. 31, according to an Oct. 21 bulletin sent to shippers obtained by Bloomberg News. The pipeline helps carry Heavy Louisiana Sweet oil, according to the company’s website.

The 12-inch pipeline carries oil from South Bend to Krotz Springs, Patricia Errico, an Exxon spokeswoman, said in an e-mail. Exxon made alternative arrangements available for customers before the closure, she said.

Exxon shut the pipeline after a special permit application seeking to “modify repair criteria” on the segment was rejected, according to the spokeswoman.

Alon USA Energy Inc. shut its 83,000-barrel-a-day Krotz Springs refinery for upgrades that will improve the capacity of the plant’s fluid catalytic cracking unit and its ability to handle different grades of crude, the company said in a Nov. 3. statement.

Alon said it expects to finish work during the first half of this month and that throughput will exceed 62,000 barrels a day in the fourth quarter.

Heavy Louisiana Sweet has climbed to a premium of $1.65 a barrel over Light Louisiana Sweet from a discount of 70 cents on Oct. 31, according to data compiled by Bloomberg.

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