Shell's Zydeco oil pipeline running at reduced capacity

A 3D printed natural gas pipeline is placed in front of displayed Shell logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

NEW YORK, Nov 17 (Reuters) - Shell Pipeline Co.'s Zydeco oil pipeline from Houston to Port Neches, Texas, is operating at reduced capacity due to project work at Port Neches, and is expected to remain at reduced capacity until mid to late December, the company said on Thursday.

The Zydeco pipeline system alleviates transportation bottlenecks of crude arriving in Houston from the Eagle Ford, Permian and Bakken regions, according to Shell Midstream Partners' website. The system connects several crude oil pipelines in Houston and Port Neches, and spans over 350 miles (563.27 km), with a mainline capacity of 375,000 barrels per day.

The capacity reduction of the line from Houston to Port Neches sent some U.S. physical crude oil grades surging, dealers said, with Light Louisiana Sweet crude this week firming to $6 a barrel above U.S. crude oil futures , its strongest in more than two years.

At a 50-cent differential, Mars Sour crude was at its strongest since April, Refinitiv Eikon data show.

Reporting by Stephanie Kelly; additional reporting by Laila Kearney; Editing by Mark Porter and Josie Kao

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Thomson Reuters

A New-York-based correspondent covering the U.S. crude market and member of the energy team since 2018 covering the oil and fuel markets as well as federal policy around renewable fuels.