Genesis Energy plans bypass to bring CHOPS back online by late December

Houston — Genesis Energy told customers it now plans to build a pipeline bypass to bring the Cameron Highway Oil Pipeline System back online by the end of the year.

The 500,000 b/d crude system, called CHOPS, has been down since late August when an associated platform in the Gulf of Mexico was damaged by Hurricane Laura. Genesis had hoped to have the pipeline system back online by late November, but the new plan is to instead build a temporary bypass to get the crude oil flowing again.

"This alternative will allow CHOPS to resume flow in the shortest amount of time," Genesis said in a message to customers late on Nov. 18. "Assuming no significant delays in getting the permit application approved, completion of the bypass is anticipated by yearend, which makes it unlikely CHOPS will be able to resume operations before that time."

Crude oil flows on CHOPS, which delivers to Texas Gulf Coast end points in Port Arthur and Texas City, are still mostly being redirected to the Poseidon or Auger pipelines for transportation to locations onshore in Louisiana.

Genesis has been negotiating with the US Bureau of Safety and Environmental Enforcement for the necessary repairs to the damaged Garden Banks 72 platform that will eventually bring CHOPS back to normal operations. Genesis said it still needs to submit a new plan to BSEE to address any required repairs. That's why Genesis aims to use an interim bypass solution instead.

"As we continue our dialogue with BSEE about any required platform repairs and the timing of such, we have elected to apply for a permit to construct a bypass for the CHOPS system which will route the production around the Garden Banks 72 platform in the near term," Genesis said.

While CHOPS itself wasn't damaged, the pipeline system goes over the offshore platform that sustained some topside damage and structural stress during Laura.

Genesis said it doesn't plan to provide another update until Dec. 9.

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 have proven achievable for the major Gulf of Mexico crude pipeline system to Texas.

Genesis' 350,000 b/d Poseidon Pipeline instead goes to southeastern Louisiana. Genesis also is working with Shell's Auger Pipeline that takes a similar route as Poseidon.

An increase in Gulf of Mexico produced sour crude flows to the Louisiana area provides more competition for Mars crude, which also delivers to end points in Louisiana, potentially applying downward pressure on differentials for the grade.