ExxonMobil Corporation (XOM) has temporarily closed operations at its facility in Mobile Bay area of the Gulf of Mexico. Leakage of salt water, silt and sand, with traces of hydrocarbons, offshore Alabama upset production.
A dent in a subsea pipeline, located about a mile south of Dauphin Island in Mobile Bay, has a production capacity of 280 million cubic feet per day of natural gas. It is used to carry salt water produced from its offshore natural gas wells in the area to its onshore gas treating facility, left a luster in the water spotted last week, causing natural gas production disruption. The luster was identified to be three mile long and 100 foot wide.
The pipeline is buried below the sea floor in about 15 feet of water between Fort Gaines and the SandIsland lighthouse. ExxonMobil plans to carry out the repairs and production in the area will remain closed till the leakage in the pipeline is fixed and there is no timeline for its commencement.
ExxonMobil is investigating into the cause of this leakage and is also mobilizing equipments for the clean-up purpose. The company received U.S. regulators’ permission last month to restart operations at a portion of its Silvertip pipeline in Montana that caused a leakage of about 1,000 barrels of oil in July into the Yellowstone River.
Given ExxonMobil’s large base, achieving growth in oil and natural gas production has been a challenge over the past several years. Nevertheless, ExxonMobil remains in excellent financial health. Moreover, its recent pact with Rosneft to jointly explore and develop hydrocarbon resources in Russia, the U.S and other countries throughout the world shows its efforts to constantly reward its shareholders.
ExxonMobil holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we remain Neutral on the stock. The company faces tough competition from Chevron Corporation (CVX) and Total S.A. (TOT).
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