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Shell (RDS.A) to Shut WD-143 Stations to Fix Ida-Led Damages

Shell (RDS.A) is the largest Gulf Coast oil producer in the United States and the time it will take to renovate its underground pipes damaged by Hurri...

This story originally appeared on Zacks

Per a detailed damage survey undertaken by Royal Dutch Shell plc (RDS.A), Hurricane Ida caused a severe structural destruction to its West Delta-143 (WD-143) offshore facilities, inducing the same to remain offline for repairs.

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Production from Shell's properties in the Gulf of Mexico's Mars corridor is transferred to onshore crude and natural gas terminals through its WD-143 sites.

The company hopes to restart production activity in the fourth quarter of 2021 from its Olympus platform, which flows through the WD-143 C facility. Also, it anticipates output generation from its Mars and Ursa facilities in the opening quarter of 2022, which passes through the WD-143 A platform.

Shell is the largest Gulf Coast oil producer in the United States and the time it will take to mend its underground pipes damaged by the hurricane would slash its production from the three offshore fields by roughly 200,000 barrels of oil and gas per day.

About 28% of the U.S. Gulf of Mexico crude production remained shut due to the catastrophic impacts of the hurricanes Ida and Nicholas. The company’s 250,000-bpd Norco refinery remains closed due to extensive damages inflicted upon by the previous storm. Hurricane Ida wiped out much of the U.S. Gulf offshore oil and gas production. No refineries in Texas are known to have closed from hurricane Nicholas.

Unlike Hurricane Ida, Nicholas did not derail Gulf’s production as the storm made a landfall along the Texas coastline. Most refineries in the state were operating normally while the utilities were restoring power to their customers who lost electricity. However, the Perdido platform's position in the westernmost deepwater Gulf region made it highly susceptible to Nicholas.

Fortunately, Shell was able to resume oil production at its Perdido offshore platform in the western Gulf of Mexico after the tropical storm Nicholas forced it to temporarily close down operations. Approximately 60% of Shell-operated production in the Gulf of Mexico is back online at this point in the recovery.

Shell had been waiting to see its downstream facilities, which suffered power outages, resume operations prior to restoring production in Perdido. Williams Companies Inc. WMB cited that its pipeline and processing facilities were ready to receive natural gas from the Perdido offshore platform, following the resumption of operations.

Apart from its Perdido platform, Shell’s Appomattox, Enchilada/Salsa and Auger assets continue to ramp up production post Hurricane Ida’s devastation.

Shell is one of the primary oil majors — a group of U.S. and Europe-based big energy multinationals. The company is fully integrated as it participates in every aspect related to energy from oil production to refining and marketing.

Shares of the company have fared better than the industry in the past three months. The stock has declined 2.6% compared with the industry’s 4.2% fall.

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Zacks Rank & Other Stocks to Consider

Shell currently carries a Zack Rank #2 (Buy). Other top-ranked players in the energy space include Canadian Natural Resources Limited CNQ and Continental Resources, Inc. CLR, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, the Zacks Consensus Estimate for Canadian Natural’s 2021 earnings has been raised by 14.7%, while that for Continental has been raised by 52.7%.

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Williams Companies, Inc. The (WMB): Free Stock Analysis Report


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