Source of US Gulf oil spill still unclear: Update

Adds crude price updates and table.

More than a week after its discovery, federal officials have yet to identify the source of an oil spill from a major offshore US Gulf of Mexico gathering line that shut in production at seven offshore facilities.

Emergency response crews have examined 40 miles of the 67 mile long Main Pass Oil Gathering (MPOG) pipeline system without finding any damage or source of the leak, the US Coast Guard said today. A survey of another six miles of surrounding pipelines has also failed to identify the leak. Overflights conducted since 20 November have observed no new oil releases or any effects on the shoreline and wildlife, the Coast Guard said.

The spilled crude was identified as Light Louisiana Sweet (LLS), although the MPOG system delivers crude to Empire, Louisiana, where it can be traded as Heavy Louisiana Sweet (HLS). LLS and HLS traded on Monday at premiums to the Nymex-quality WTI benchmark in Cushing, Oklahoma, of $3.50/bl and $3.75/bl, respectively, on the first session of January trade. Both LLS and HLS traded well above their average premiums in the prior trade month of $2.61/bl and $2.17/bl.

Federal officials said MPOG's closure has shut in production at seven facilities serviced by the line, which extends into the Main Pass, Viosca Knoll and Mississippi Canyon areas in the Gulf. The shut in has affected facilities operated by W&T Energy VI, Occidental Petroleum, Walter Oil and Gas, Cantium, Arena Offshore and Talos Energy Ventures, according to the Coast Guard.

Federal officials estimate that as much as 1.1mn USG (26,000 bl) of crude leaked, based on meter readings from MPOG. The spill is located about 19 miles off the coast of southeastern Louisiana.

By Haik Gugarats and Scott Phillips

HLS, LLS diff to Cushing DSW $/bl