Houston, 29 October (Argus) — US Gulf coast refined products trading faded this afternoon as pipeline operator Colonial said its main line connecting Greensboro, North Carolina, to the New York Harbor would shut down at 7pm ET.
The 5,000-mile Colonial pipeline functions as a river of vital transportation fuels, bringing gasoline, diesel, jet fuel and heating oil from US Gulf Coast refineries northward to major markets along the US Atlantic coast.
The Port Authority of New York and New Jersey said earlier today that as of 2pm ET all maritime facilities, including New York Harbor, were closed until further notice due to Hurricane Sandy, which is speeding up and moving ashore this evening as a category 1 hurricane.
Sandy is expected to cause widespread flooding and power outages across several northeastern states. The expected storm surge will peak more quickly than previously thought – around 6pm ET – in New York and New Jersey, according to weather forecasts.
Price Futures Group analyst Phil Flynn noted today the likely impact on products demand following the hurricane.
“While the storm will shut down 6.5pc of US refining capacity and motorists will top off their tanks, the shutdown of major cities and the expected power outages may take a toll on demand unlike anything we have seen before,” Flynn said of Hurricane Sandy's aftermath.
“This could be the biggest demand destruction event in history,” he said, citing government statistics that show the east coast is, by far, the largest consuming region of gasoline.
“They consumed 3.2mn b/d [in July]” and are the second-largest consumer of distillates by US region, he said.
US east coast refiners have been reducing rates and battening hatches at their facilities for days as the hurricane churned closer to US Atlantic coast shore. National Hurricane Center forecasters have charted a path for the storm taking it through roughly 1mn b/d of refining capacity, or 78.76pc of the region's operating capacity. Meteorologists expect the massive storm to hit land overnight.
The storm, with 90mph (145km/hour) winds near its center, started causing some flooding as early as this morning along the east coast. Hurricane-force winds will pick up tonight, battering areas east of Washington, DC, to Philadelphia, Pennsylvania, while tropical storm-strength conditions will hit all of the mid-Atlantic and most of the northeastern US, according to MDA EarthSat private forecasters.
Phillips 66 began idling over the weekend its 250,000 b/d Bayway refinery in Linden, New Jersey. The company also shut down three storage terminals in the New York Harbor. Hess is shutting down its 65,000 b/d cracking facility in nearby Port Reading, New Jersey, and expects to completely idle that facility by this afternoon. A loading rack at the facility has already been closed.
Philadelphia Energy Solutions — a joint venture between the Carlyle Group and Sunoco — said it had shut many of the process units and placed others in standby at its 330,000 b/d refinery in Philadelphia, Pennsylvania. PBF Energy reduced rates at its 190,000 b/d Delaware City, Delaware, and 160,000 b/d Paulsboro, New Jersey, refineries, as well. Delta Air Lines said the storm was not yet severe enough to begin shutting down operations at its 185,000 b/d refinery in Trainer, Pennsylvania.
Midstream operators have also adjusted operations. NuStar Energy shut its Paulsboro and Linden, New Jersey, oil and products terminals, and was in the process of shutting down another five terminals in Maryland and Virginia. While Colonial said it would shut the main Greensboro to New York pipeline ahead of the storm, southern products lines from Houston, Texas, to Greensboro, and another trunk line from Greensboro to Maryland will continue to operate.
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