Gulf of Mexico sheen sends Shell stocks sinking

Published Apr 13, 2012

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Bloomberg New York

EUROPEAN oil giant Royal Dutch Shell dropped the most in eight months in London trading yesterday after saying it was investigating the source of “a light sheen” of oil over 26km2 in the Gulf of Mexico.

Shell’s Class A and class B shares slid the most on the London Stock Exchange’s FTSE 100 index of equities. The index declined by 0.1 percent, while Shell’s Class A shares fell as much as 5.5 percent to £20.235 (R257), the lowest intraday level since October 6. By 3pm in London it had recovered to £21.19, down 1 percent on the day and 10 percent this year.

Shell had deployed an oil-spill response vessel and requested flights to monitor the sheen between its Mars and Ursa output areas, spokeswoman Kelly op de Weegh said in a statement. Both platforms were still operating, she said.

“Shell has no current indication that the sheen originates from its wells.” The sheen covers an area of 1.6km by 16km.

The company, based in The Hague, has suffered several leaks in the North Sea and Nigeria since August last year, including the worst for the regions in at least a decade.

In 2010, British rival BP recorded the worst US spill as its Macondo well in the Gulf of Mexico leaked an estimated 4.9 million barrels of oil after a drilling rig fire, which left 11 workers dead and thousands of square kilometres of fishing grounds and beaches shut.

“Given the location of the sheen, we expect sensitivities to be high,” said RBC Capital Markets analyst Peter Hutton.

Meanwhile, Total, the third-largest oil producer in Europe, is fighting a natural gas leak at its Elgin platform in the UK’s North Sea fields, which also contains light liquids.

A sheen of condensate spread to an area of 22km by 4.5km, UK Department of Energy and Climate Change estimates from March 29 show.

Separately, Shell said in a sustainability report that operational spills of oil and oil products doubled to 6 000 tons last year, from 2 900 tons in 2010. The Bonga field spill in Nigeria accounted for about 80 percent of the total volume last year, it said.

Shell produced 180 000 barrels of oil equivalent a day net to the company in the Gulf of Mexico last year, according to the report.

BP is Shell’s partner in the Mars unit, while BP, Exxon Mobil and ConocoPhillips are partners with Shell at Ursa.

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