US weighs waivers to ease southeast fuel crunch: Update

Adds federal, airline details.

US leaders paused some summer gasoline requirements and may waive costlier waterborne shipping mandates to ease pressure on southeastern US gasoline supplies cut by a ransomware attack.

Colonial Pipeline expects to know by the end of tomorrow whether it can this week restore its massive system supplying nearly half of US Atlantic coast transportation fuels, US energy secretary Jennifer Granholm said today. Easing certain regulatory requirements could help to refill more isolated southeastern fuel stockpiles drained by fears that the outage could persist.

"We know that we have the gasoline, we just have to get it to the right places, and that is why these next couple of days will be challenging," Granholm said. "Things will be back to normal soon."

Operators hope to restore by the end of the week the 5,500-mile (8,851km) pipeline network moving more than 2.5mn b/d of gasoline, diesel and jet fuel from the US Gulf coast along the Atlantic coast to the New York Harbor market. Colonial shut the system on 7 May after discovering a ransomware infection to prevent a potential spread to its pipeline systems. Operators restarted service at 65 terminals and stub pipelines over the weekend, and yesterday began brief service to pump available fuels through a trunk line from Greensboro, North Carolina, to Woodbine, Maryland. But the key southern pipelines that feed all terminals with fuels produced at the US Gulf coast refining hub remain off line.

Shipper systems needed to schedule and store fuels along the largest pipeline network remain down. The company said in a note to shippers late yesterday it could not take new nominations or post schedules for its network as remediation work continues.

Georgia, North Carolina, South Carolina, Tennessee and Virginia all face supply shortages with limited alternatives so long as Colonial remains offline. Georgia is among the top ten US states for gasoline demand. The outage has also disrupted jet fuel supplies, albeit into a market still reduced by global travel restrictions. Airlines adjusted routes and added fuel elsewhere to stretch supplies in the affected areas.

Regulatory waivers may offer little immediate relief for an outage operator Colonial Pipeline hopes to resolve this week. The administration was exploring available rail tankers and waiving trucking requirements in addition to the waterborne and fuel quality steps. The Federal Energy Regulatory Commission (FERC) was also prepared to prioritize shipments into the southeast. The US government could waive Jones Act requirements to use US-crewed and flagged vessels to move fuels between US ports, drawing instead from a cheaper and more readily available international fleet. Every available Jones Act vessel was booked by yesterday, with the remaining fleet needing more time to crew and return to service after operators idled vessels for weak demand.

The US Environmental Protection Agency today waived certain summer gasoline specifications in three states and the District of Columbia to allow greater flexibility for supplies as operators continue work to restart a pipeline network that supplies nearly half of US Atlantic coast transportation fuels.

By Elliott Blackburn