The April ICE Brent futures contract price spiked and then fell slightly February 12, 2016, following multiple Genscape notices regarding the shutdown and restart of BP’s 1.15mn bpd Forties Pipeline System.
The system was shut due to an issue at the Kinneil fractionation terminal. Kinneil, Scotland, is the location where the flow from the North Sea on the Forties pipeline system is stabilized for consumption. If issues arise with the gas fractionation trains, as Genscape detected, then Forties pipeline flow can be affected.
By 22:06 (GMT) February 12, 2016, the Brent price decreased $0.23/bbl to $32.66/bbl following a 21:51 (GMT) Genscape notice that the Kinneil Train 3 fractionation unit was restarting. Genscape subsequently alerted that Forties pipeline flow had resumed to below 400,000 bpd at 22:07 (GMT).
Earlier that day, Brent increased a cumulative 6.4 percent or $2.02/bbl to $33.40/bbl from 11:15 (GMT) to 19:28 (GMT) as the pipeline shut down events unfolded.
At 11:15 (GMT) on February 12, 2016, Genscape notified customers that the 550,000 bpd Train 3 gas fractionator at the Kinneil fractionation terminal was shut earlier that morning. Furnace stack activity decreased at the Train 1 and 2 gas fractionator, which have a combined capacity of 680,000 bpd. Within 40 minutes, the Brent price gained $0.30/bbl to $31.68/bbl on indications of decreased supply.
Next, at 15:00 (GMT) Genscape alerted customers to decreased flow along the Forties pipeline as decreased power consumption was detected at the Netherley pumping station upstream from Kinneil.
By 16:10 (GMT), Brent rose to $32.44/bbl from $31.33/bbl, a 3.5 percent increase of $1.11/bbl. At that time, a third notice was sent to customers stating all three Kinneil trains were offline, as the train 1 & 2 gas fractionator was completely shut at about 12:00 (GMT) after a period of decreased activity. After 25 minutes the Brent benchmark rose another $0.46/bbl to $32.90/bbl.
Genscape Forties pipeline flow shut shortly after at 16:30 (GMT). At 17:04 (GMT), notice of a complete shutdown of the Forties system was sent to customers. Brent rallied an additional $0.78/bbl to $33.40/bbl by 19:28 (GMT), a gain of 2.4 percent.
Operational issues at the Kinneil fractionation terminal caused production restrictions to be put in place, according to various sources. Decreased Forties supply delayed the loading of scheduled cargoes and resulted in higher bidding from Vitol for supply, according to Reuters.
Additionally, maintenance is scheduled for Jetty 1 at Hound Point from March 1 to March 12, 2016, according to Platts. VLCCs will not be able to load at the port during that time, closing arbitrage shipments to Asia. About 84 percent of crude exports at Hound Point load at Jetty 1. Jetty 2, which can accommodate Aframax and smaller-sized vessels, will remain open. The port ships Forties crude to overseas markets.
Genscape's Forties Supply Chain Service provides insightful alerts as they happen. They not only highlight variations in the real-time pipeline flow, but also underline events that affect the key operating units at Kinneil and Grangemouth. The daily snapshot of oil storage, pipeline, shipment, and refinery activity provides a valuable overview of Forties exiting the system. Genscape has an extensive in-the-field network of high-tech, proprietary monitors that provide real-time tracking and measurements of production levels, cargo shipments, outages, and other key factors. To learn more, or request a free trial of Genscape's Forties Supply Chain Service, please click here.