(Adds detail, background)
By Arathy S Nair
Sept 20 (Reuters) - Hurricane damage to an offshore U.S. oil
transfer hub will sharply cut Royal Dutch Shell's oil and gas
production into early next year, the company said on Monday,
slashing deliveries of a type of crude oil prized by refiners.
Shell has emerged as the hardest-hit oil producer from
Hurricane Ida, which tore through the U.S. Gulf of Mexico last
month and removed 27 million barrels overall from the market.
About 40% of Shell's production from the offshore region remains
offline.
The damaged transfer facility, West Delta-143, carries oil
and gas from three major fields for processing at onshore
terminals. Shell previously suspended "numerous" contracts to
supply crude from the fields, citing hurricane losses.
The fields are a key source of Mars sour crude, a grade
prized by oil refiners in the United States and Asia. Mars
prices had soared to a one-year high earlier this month then
eased as other oil supply constraints lifted.
"This is pretty big," said Rystad Energy analyst Artem
Abramov. He estimated the lost production will remove 200,000 to
250,000 barrels per day (bpd) of Gulf of Mexico oil supply for
several months. The Gulf contributes about 16% of U.S. oil
production, or 1.8 million bpd.
A Shell spokesman declined to comment further.
Shell is the largest U.S. Gulf of Mexico oil producer with
eight facilities pumping about 333,000 bpd, according to Rystad.
Shell's Mars and Ursa oilfields which supply about 200,000
bpd combined would be affected into the first quarter of next
year. The third oilfield, Olympus, produces about 100,000 bpd
and will be able to resume production sometime in the fourth
quarter, Shell said.
Damage to the transfer station pushed up price of Mars crude
earlier this month to a more than one-year high and threatened
September-October exports.
U.S. crude oil prices fell about $1 a barrel on
Monday over worries about a Chinese real-estate developer's
solvency and a U.S. Federal Reserve Bank meeting this week that
could see less lenient lending terms.
(Reporting by Arathy S Nair in Bengaluru; Editing by Aditya
Soni and Nick Macfie)
