Shell Natural Gas Terminal Maintenance Scheduled for August 18

Shell to Close St. Fergus Gas Terminal Aug. 18 (Update2)

By Ben Farey

Aug. 8 (Bloomberg) -- Royal Dutch Shell Plc, Europe's biggest oil company, will close a natural-gas terminal in Scotland this month for planned maintenance, crimping U.K. supplies and boosting prices.

The St. Fergus terminal, which receives gas from U.K. and Norwegian North Sea fields, will shut down from Aug. 18 to Aug. 30, Shell spokesman Jack Page said by phone from Aberdeen today.

The Brent oil and gas fields will close as a result and the Flags gas pipeline into St. Fergus will be shut from Aug. 12 until Aug. 30. Page couldn't say when Brent will shut. The Flags pipeline ships gas to St. Fergus from Brent, StatoilHydro ASA's Statfjord field and smaller East Shetland Basin fields.

Gas for delivery during the rest of August advanced 7.1 percent to 52.50 pence a therm at 2:04 p.m. London time, according to prices from ICAP Plc. That's equal to $10.08 a million British thermal units. A therm is 100,000 Btus.

``Perhaps because this is the first time the whole Shell terminal will close since 1990, we are seeing a more nervous short-term response,'' Sam Shoro, senior European gas consultant at Global Insight Inc., said in an e-mail. ``I would expect prices to correct again next week,'' he said, noting that storage levels are high and supply is not tight.

Shell's St. Fergus terminal processes about 20 million cubic meters of gas a day in August, Page said. That's about 10 percent of U.K. demand at this time of year. The fields that feed into Flags flow more than 30 million cubic meters a day typically, Shoro said.

Declining Flows

Besides the Flags pipeline, Talisman Energy Inc.'s Fulmar field and the Kittiwake, Clyde, Gannet and Nelson fields send gas to St. Fergus through the Fulmar pipeline. A third pipeline runs directly to the terminal from Shell's Goldeneye field. Goldeneye produced about 9 million cubic meters a day in the 12 months through March, figures from the U.K.'s Department for Business, Enterprise & Regulatory Reform show.

Declining flows at Shell's St. Fergus terminal today are related to the total planned shutdown of the gas-processing plant later this month, Page said.

National Grid Plc data show deliveries into the terminal dropped 10 million cubic meters from yesterday to a rate of about 8 million cubic meters a day today.

``The affected fields are lining themselves up with the St. Fergus shutdown,'' which will take place ``module by module,'' Page said.