Colonial pipeline expects to restart this week: Update

Adds comment from refiners, pipeline operators.

Colonial Pipeline plans to restore service by the end of the week on the massive system moving motor fuels from the US Gulf coast to the New York Harbor Market.

The operator of the system moving up to 2.5mn b/d of gasoline, diesel and jet fuel through the US southeast and Atlantic coast said that a phased recovery from a ransomware attack should restore full service across its system this week.

"This plan is based on a number of factors with safety and compliance driving our operational decision, and the goal of substantially restoring operational service by the end of the week," the company said today.

Colonial notified shippers late 7 May that the sprawling products pipeline system shut down key systems to contain a ransomware infection. The company restored some operations yesterday at terminals and smaller branch lines moving throughout the US southeast and Atlantic coast markets. But the major trunk lines remained shut today.

Limited market impacts so far

The disruption hit as shippers had extra time to consider loading fuel into the 5,500-mile (8,851km) pipeline network.

US Gulf coast refiners described little change to operations as the week opened. Fuel suppliers eyed alternative supply routes but waited for more details on the timing for a service restoration.

An extended outage could curtail crude processing in the largest US refining hub and drain US Atlantic basin supplies to replace domestic fuel output. But fast-moving traders risk paying a premium for a quickly restored milder status quo.

Colonial offers the only pipeline connection stretching from the US Gulf coast to the key New York hub. Kinder Morgan's 700,000 b/d Products (SE) Pipe Line system — formerly known as Plantation — moves fuels from Louisiana to Virginia. The line was fully subscribed and the company deferred non-essential maintenance on the system while Colonial responds to the outage, Kinder Morgan said.

Shipping fuels between US ports requires the use of costlier, US-flagged and crewed Jones Act tankers. Rates and interest in those vessels picked up this morning, according to brokers.

Major US Gulf coast refiners reported normal operations so far. Marathon Petroleum continued to supply customers and was evaluating alternatives in case they were necessary, the company said. ExxonMobil also continued to operate normally.

By Elliott Blackburn