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Jet fuel issues continue to dog US pipelines

12 May 2017 16:24 (+01:00 GMT)
Jet fuel issues continue to dog US pipelines

Houston, 12 May (Argus) — Ongoing jet fuel quality problems out of the US Gulf coast have befuddled the fuels industry entering a third consecutive summer travel season.

Pipeline operators this spring said they continued to receive intermittent deliveries of jet fuel testing off specification following lengthy journeys from the US Gulf coast refining hub to Chicago and northern Atlantic markets — two years after the problem was first noticed.

All of the fouled fuel was rejected and isolated, according to both operators and airline groups, and had not caused any "air service disruptions" since they first appeared in April 2015, airline trade group A4A said. Treatment of the off-spec fuel was manageable, companies told Argus.

"It is a hassle, but it is not going to stop us from doing business," said Randy Fairbank, vice-president of marketing for World Fuel Services, a fuel supplier at 2,900 airports around the world.

But while the supply chain has adapted, investigators this spring appeared no closer to identifying and halting the source of the off-spec fuel.

Contacts across multiple industries that produce, deliver and consume jet fuel refused to discuss the scope of this year's fouled fuel problem in detail. Pipelines moving the fuel, including the massive Colonial pipeline and Explorer pipeline systems, would not describe the associated costs with treating the fuel or responses still under consideration.

Experts speaking on background confirmed batches continue to bedevil the industry at a low but unusual rate, demanding additional storage, treatment, testing and, sometimes, replacement.

Fuel spending days or weeks flowing from the coast to the more distant destinations on US product systems most often failed specification tests for jet fuel thermal stability, or JFTOT. Because the fuel at that point was blended from multiple refineries and other producers, pipeline operators say they cannot easily find the culprit. Chemists have considered the changing slate of US Gulf coast crudes running through refineries, pipeline composition, biological contaminants and other potential causes without discovering a common cause.

The fouled fuel coats engine parts with a carbon buildup that requires immediate maintenance, resulting in surprise repair costs and lost time if not caught before fueling. Airlines have not incurred those expenses because they will not accept anything failing numerous rounds of testing, airlines said. The fuel still drove up costs in other ways.

Shippers or pipelines must move off-specification fuel into storage for treatment and retesting, a process taking anywhere from 48 hours to several days, depending on storage and treatment chemical availability. Airline industry trade group A4A said that last July it worked with both independent testers and suppliers of the treatment process to ensure the industry could respond.

Airlines and their fuel vendors, meanwhile, must keep airports in the affected regions supplied. Some adjusted storage strategies to add reserves or space to treat failing fuel. Buyers that could not wait for treatment turned to local supplies, often more expensive than the US Gulf coast-produced batches piped into the area. Airlines have also at times adjusted fueling strategies to have planes refill in other markets.

Both Explorer Pipeline, the 660,000 b/d system moving product from the US Gulf coast into the midcontinent, and the 2.4mn b/d Colonial Pipeline system connecting the Texas coast to the New York Harbor market, confirmed mitigating fouled fuel and participating in industry-wide talks on the problem.

Pipeline operator Magellan confirmed "isolated" problems across its 9,700-mile midcontinent system, while declining to comment on the nature or specific location of the issues. Kinder Morgan, which takes product from near Baton Rouge, Louisiana, into northern Virginia and Tennessee, said it had no recent issues with fuel failing tests at delivery. Kinder did not comment on whether it had seen such issues in the past.

Explorer reduced allocations for jet fuel on its system by 30-50pc more than a year ago in response to the bad fuel batches. The company has considered other, unspecified approaches, and said refiners and shippers were splitting the cost of the response on that system.

Colonial offered fewer details on its response, saying its work with customers to resolve specification issues was confidential. The company's recent proposal to slash the sulfur content of jet fuel across its system was not related to the off-specification problem, a spokeswoman said.