Colonial Expects Wednesday Gasoline Line Restart
Photo: Colonial Pipeline Co
Colonial Pipeline Co said on Tuesday it expects to restart its main gasoline line on Wednesday after its biggest leak in nearly two decades which led to a surge in prices at the pump and long lines in the southeast United States.
The leak, discovered by a mining inspector who detected a gasoline odor in Helena, Alabama on Sept. 9, released about 6,000 to 8,000 barrels (252,000-336,000 gallons) of gasoline in Shelby County, Alabama. The cause of the leak is unknown.
The partial shutdown of the damaged Line 1, which carries about 1.3 million barrels per day of gasoline from the refining hub on the Gulf Coast to the East Coast, has snarled delivery of products and gasoline.
Colonial, the nation's largest refined products system, is constructing a bypass line to resume full operations of Line 1. Crews are completing work on the bypass, which will be about 500 to 700 feet (150-210 meters) long and have essentially the same pressure and capacity specifications as the main line.
U.S. gasoline futures tumbled 5 percent on news of the restart. Gasoline futures had surged 9 percent and spreads <RBX6-Z6> <RBV6-X6> had rallied last week after Colonial's leak was discovered.
Analysts have said retail prices may continue to climb as supply disruptions will not be alleviated immediately. The state of Georgia has been the hardest hit, with prices rising 4.5 cents overnight. At $2.361 per regular gallon of gasoline, the cost of fuel has risen by more than 25 cents in a week, compared with an increase of just over 3 cents nationwide, according to motorist advocacy group AAA.
Shippers are adjusting by bringing more gasoline shipments by sea into the U.S. East Coast. The number of shipments rose by about 58 percent and volumes rose by 23 percent between Sept. 9 and 15 compared with the previous three weeks, according to data from Panjiva, a trade data company which tracks imports and exports.
About half of the 10 gasoline shipments to the East Coast during the period were from the U.S. Gulf, Panjiva said.
Sources have said Colonial shippers began booking vessels to transport fuel as Colonial's Line 1 remained partially shuttered.
Shipments of ultra-low sulfur diesel (ULSD) have not increased but may do so if Line 1 cannot be reinstated, since Colonial is using its distillates line to haul gasoline, Panjiva said.
Reporting by Devika Krishna Kumar
