CHOPS pipeline restart in Gulf of Mexico pushed back to Feb. 4

Houston — A bypass pipeline to restore service to the Cameron Highway Oil Pipeline System in the US Gulf of Mexico is delayed again and will come back online on Feb. 4, pipeline operator Genesis Energy said.

After previously announcing the planned restoration of crude flows from the Gulf to Texas port hubs for Feb. 1, Genesis said some modest weather delays have pushed the restart back another three days.

"An unforeseen weather pattern has developed since our last update and has affected our ability to safely perform certain construction activities," Genesis said in its message to crude shippers.

The 500,000 b/d, offshore crude system, called CHOPS, has been down since late August when an associated platform in the Gulf of Mexico was damaged by Hurricane Laura. After several delays, Genesis in December 2020 said it hoped to finish a temporary bypass pipeline in January to get the crude oil flowing again. Genesis said late on Jan. 27 it will resume normal operations in early February.

CHOPS is the only system in the Central Gulf of Mexico that delivers crude to onshore Texas. Southern Green Canyon crude oil flows on CHOPS, which delivers to Texas end points in Port Arthur and Texas City, are still mostly being redirected to the Poseidon or Auger pipelines to locations onshore in Louisiana.

The increased flows of medium sour crude to the Louisiana coast, where other Gulf of Mexico produced crudes such as Mars are delivered, have at times helped to weaken Mars values since August.

March barrels of Southern Green Canyon crude were last heard to trade at a 5 cents/b discount to cash WTI, while March barrels of Mars crude were heard to trade at a 55 cents/b premium to cash WTI.

SGC crude has an API gravity of around 29.9 degrees and a sulfur content of around 2.16%, while Mars crude has an API gravity around 29.4 degrees and a sulfur content of around 1.95%, according to Platts data. Both grades are rich in heavier end products like residual fuel and gasoil.

Genesis also was negotiating with the US Bureau of Safety and Environmental Enforcement for the necessary repairs to the damaged Garden Banks 72 platform that could eventually give CHOPS expanded crude capacity.

But Genesis now says it will only fully repair the damaged platform if it decides to add crude oil capacity to CHOPS.

"The bypass was the fastest path towards allowing CHOPS to move exactly the same amount of oil to shore that it could prior to Hurricane Laura," said Genesis Vice President Dwayne Morley in an email response. "We also determined that the GB 72 platform can easily and economically be reinforced to provide intermediate pumping capability and contribute to significantly increasing the flowing capacity of CHOPS, if and when we determine such incremental capacity is required by our existing and future customers, although we have other options as well."

Genesis originally planned to bring CHOPS back by October and, after delays, aimed to work with BSEE to have it online by late November. But none of those goals proved achievable.

In the meantime, Genesis has leaned on the Poseidon and Auger pipelines. Genesis' 350,000 b/d Poseidon Pipeline goes to southeastern Louisiana. Genesis also is working with Shell's Auger Pipeline that takes a similar route as Poseidon.