HOUSTON (Reuters) -Oil major Shell (LON:) on Monday announced its plans to temporarily shut down certain segments of its Zydeco pipeline system for maintenance, scheduled to begin on September 24 and last for three to four days.
The Zydeco pipeline system, with a total length of over 350 miles and a mainline capacity of approximately 375,000 barrels per day, is divided into four segments and is responsible for transporting crude oil from Houston, Texas to St. James, Louisiana.
During the shutdown period, the supply of light crude oil into Louisiana will be reduced, impacting the Light Louisiana Sweet blend. Despite this, the premium of Light Louisiana Sweet to U.S. West Texas Intermediate crude has remained relatively narrow in recent days, trading at around a $1.38 premium per barrel on Friday.
Analysis:
Shell’s decision to shut down portions of the Zydeco pipeline for maintenance can have implications on the supply and pricing of crude oil in the region. The temporary reduction in the supply of light crude oil into Louisiana may affect the composition of the Light Louisiana Sweet blend and potentially impact its premium over U.S. West Texas Intermediate crude. This could have ripple effects on the energy market and influence pricing decisions for both consumers and investors. It is important to monitor the developments in the pipeline maintenance and its impact on the broader market to make informed financial decisions.