Why the North Sea Oil Pipe Is Critical for Global Crude
Hairline Crack Shuts Down Critical U.K. Oil Pipeline
The halt of the Forties Pipeline System after the discovery of a hairline crack matters to global crude markets more than most such incidents. The North Sea oil price, its relative price and a measure of the strength of the Brent crude market all surged after the halt. Oil refiners’ margins for processing North Sea oil also slumped.
It’s a network of offshore and onshore oil and gas pipelines and terminals with the capacity to carry 575,000 barrels of crude per day from around 85 fields in the North Sea, including several in the Norwegian sector. Crude is piped via a terminal at Cruden Bay on the Scottish coast to the Grangemouth refinery and petrochemical plant, as well as to the Hound Point export terminal near Edinburgh. Average daily throughput in 2016 was 445,000 barrels a day, according to Ineos, which took control of the pipeline on Oct. 31 from prior operator BP Plc. The discovery of a crack just south of Aberdeen meant that the entire line has to be shut, which means all fields connected to the line will be affected. BP hasn’t commented so far on when it last inspected the area where the crack was found.