US northwest refiners shut on nat gas outage: Update

Adds update on prices, BP.

Portland gasoline prices shot higher today after a key natural gas line rupture in Canada forced Pacific northwest refineries to shut units.

Every major refiner confirmed reducing or planning to reduce rates on almost 589,000 b/d of Washington refining capacity after Enbridge shut a portion of its 1.6 Bcf/d (45mn m³/d) Westcoast Energy natural gas mainline.

A rupture and fire last night shut the 36-inch pipeline, a major source of gas supply for the Pacific northwest, from compressor station 2 in Canada to the US-Canadian border near Huntingdon, British Columbia (BC). The pipeline provides about 1 Bcf/d of Canadian gas to the US.

The fire was extinguished and the affected segment, as well as a neighboring pipeline, was depressurized.

Portland sub-octane gasoline more than doubled, to 53¢/USG premium to benchmarks, as refiners confirmed shutdowns for the lack of natural gas. Ultra-low sulfur diesel (ULSD) rocketed from a 1.5¢/USG discount to an 8¢/USG premium. Natural gas powers boilers providing steam and allows the cheap generation of hydrogen essential to the production of low-sulfur transportation fuels demanded along the US west coast. Hydrocrackers would be the first units affected by a loss of natural gas, followed by downstream units that need steam to create the very high temperatures needed to break down molecules for diesel and gasoline.

Phillips 66, Shell and the former Andeavor refineries near the Washington coast all reported responding to a loss of natural gas. BP's 222,700 b/d Cherry Point refinery continued to operate but expected to cut rates soon, according to a source familiar with operations.

Puget Sound Energy, the largest utility in Washington state, has asked customers to conserve natural gas and electricity today because of the disruption.

Canadian energy regulator the National Energy Board sent inspectors today to the site of the rupture, near Prince George, BC. No injuries were reported as a result of the fire, but about 100 people in the Lheidli T'enneh First Nation were evacuated following the incident, Enbridge said.