MAJOR U.S. OIL PIPELINE SHUT DOWN BY FLOODS
Flooding in the Red River on the
Texas/Oklahoma border has shut down the Basin Pipeline, a
24-inch pipeline that transports as much as 300,000 barrels per
day of sweet and sour crudes from Texas to Cushing, Okla, a
Texaco Pipeline Co spokesman confirmed.
    "The water is rushing by so fast that we can't get any
divers down to assess the damage but there is some possibility
that the pipeline could be up by the end of the week," a company
source said.
    The pipeline transmits roughly two-thirds sour crude and
one-third sweet crude oil from the Midland, Texas region.
    Texaco sources said that if the pipeline service is
restored by Friday there would be little problem in restoring
oil which has been lost to the flood.
    "But if the pipeline is down more than 10 days it will be
difficult to make up without prorationing and we would not like
to proration this pipeline, if we don't have to."
    The Basin Pipeline is jointly owned by Atlantic Richfield
Corp <ARC>, Shell Oil Co, a subsidiary of the Royal Dutch/Shell
Group <RD> and Texaco Inc <TX>, which is the pipeline's
operator.
     Peter Beutel, analyst at Elders Futures Inc, said crude
oil futures contracts on New York Mercantile Exchange rose to
new highs this afternoon following news of the pipeline break.
    July crude futures of West Texas Intermediate traded up to
19.60 dlrs a barrel, a rise of more than 20 cts.
    Cash market prices also firmed on the news with sellers of
WTI raising offers to 19.60 dlrs a barrel.
    Sour crudes, which would be most affected by the pipeline
shutdown, however, were slow to react to the news with West
Texas Sour and Alaska North Slope holding 50 cts to one dlr a
barrel below WTI, respectively.
    Dan Stevens, manager of public and government affairs at
Texaco, said the company hopes to fix the pipeline in five days
but that will depend on when the water level of the Red River
recedes. There is already evidence that the water level is
dropping and it appears the rain has stopped in the area
affecting the pipeline, Stevens said.
    He said the segment of the pipeline that was damaged was
underground and at a distance from the Red River that flooded.
The pipeline runs over the Red River and under the subsoil
nearby, according to Stevens. He said some of this subsoil was
apparently washed away.
   
    The potential for environmental damage is being downplayed
at this time despite the volume of oil that runs through this
line.
    Texaco's Stevens said that aerial surveillance has not
found any crude on the water in the river or in Lake Texoma,
which is nearby.
 Reuter
