A vital gasoline supply line for the US southeast and Atlantic coast will remain shut for days after a crew starting repairs for an earlier outage ignited a fatal fire on the pipeline, the operator said today.
Product was still burning at a rupture site west of Helena, Alabama, today when Colonial Pipeline notified shippers its 1.3mn b/d gasoline-bearing Line 1 would not start before noon on 5 November. Colonial cautioned that the restart guidance for Line 1 could change once product finished burning and workers could assess the damage.
Distillates-bearing, Line 2, which shares right-of-way on the same path from near Houston, Texas, to Greensboro, North Carolina, was restarted at midnight.
It was the second shutdown in less than two months on Colonial, a 5,500-mile (8,851km) system moving gasoline and diesel from the US Gulf coast up into the New York Harbor market. Petroleum marketers across the region already reported tightening supplies and panic fuel buying.
"It is going to be a tough spot as long as the pipeline's out," Alabama Petroleum Marketing Association president Bart Fletcher said.
A nine-person crew working yesterday to unearth Line 1 struck the line with a trackhoe just before 4pm ET. The strike released and ignited gasoline from the 36-inch pipeline, triggering a blast that ignited at least two wildfires around the main blaze, according to state officials. Flames and towering black smoke could be seen for miles. One worker was killed and six others injured.
The crew was preparing the line for the replacement and repair of a pipe segment only a few miles farther east that ruptured and leaked an estimated 7,400 bl of gasoline in September. Colonial planned to remove a temporary, 500-foot bypass constructed around that section by mid-November. That would require shutting off gasoline flows through the line upstream of the break to drain and safely remove the bypass.
Colonial did not respond to questions today on whether that project would still go forward this month.
The September leak halted flows across Line 1 for 13 days, draining southeastern terminals and leaving some retail locations without fuel. In that case it was fumes, not flames, that slowed repair work as digging near the damaged section stirred benzene out of the gasoline-saturated soil. Colonial has made other pipeline repairs this year that took roughly a day.
Nymex RBOB futures prices soared higher overnight by as much as 13pc, to $1.6351/USG, and marine freight rates for clean products in the US Gulf coast spiked to 2016 highs early today.
But both markets quickly cooled following notification that distillates service had resumed and Colonial had tentatively set the 5 November restart date for Line 1.
Kinder Morgan's Plantation pipeline, which moves 700,000 b/d fuel along a similar path into Virginia, was unaffected by the accident, that company said.
But unbranded fuel customers reported reduced supplies in Alabama less than 24 hours after the 31 October blast.
Marketers throughout the southeast responded quickly this week to the outage, Fletcher said. Alabama governor Robert Bentley issued declarations that will help ease rules on trucked deliveries of fuel that would need to travel farther distances between terminals until the pipeline was restored.
Customers also responded quickly, Fletcher said, as retailers have already seen higher volumes of fuel sales from drivers wary that supplies would again run low.
Fuel marketers had at least a month to restore tank volumes since the September leak, he said. "If this tragedy would have occurred two weeks ago, it could have been even worse from a supply standpoint," Fletcher said.
Risks for refiners in extended outage
An extended outage would pressure US Gulf coast refiners and lift both domestic and imported waterborne fuel deliveries along the US Gulf and Atlantic coasts, just as the September leak did.
Following the September break Atlantic coast gasoline inventories plummeted by 8mn bl. Marathon Petroleum reported unspecified increased spending on trucking and Jones Act shipping to supply customers during the outage.
Refiner Alon USA cut runs at its 83,000 b/d refinery in Krotz Springs, Louisiana, following the leak. The company reduced fluid catalytic cracking (FCC) rates and shipped gasoline by barge during the shutdown, impairing margins during the quarter, chief executive Paul Eisman said last week.
An extended outage could again reduce refinery rates in the US Gulf coast, Western Refining chief executive Jeff Stevens said today. The US independent refiner turned to increased waterborne deliveries in September to supply its terminal at Yorktown, Virginia. But that alternative had limits.
"It was very, very tight," Stevens said. "We were on strict allocation during that outage."
