The U.S. government approved a Sept. 21 restart for Colonial Pipeline Co.'s main gasoline pipeline, authorities said on Sept. 20, after the line's biggest leak in nearly two decades caused supply shortages that pushed pump prices higher.
The largest gasoline conduit in the U.S. was partially shut down after a leak was discovered on Sept. 9 in Alabama, and motorists have since suffered long waits to fill up at forecourts across the southeast.
U.S. gasoline futures tumbled 5% on news of the restart. Gasoline futures had surged 9% and spreads had rallied last week after the leak.
The U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a written approval for restart of the line late Sept. 20. Earlier in the day, Reuters reported that the approval was forthcoming, citing an official familiar with the matter.
The line carries 1.3 million barrels per day of gasoline from the refining hub on the Gulf Coast to the East Coast.
Colonial has built a 500-ft to 700-ft (150m to 210 m) bypass line to resume full operations of Line 1.
The line is expected to operate at reduced pressure around the damaged section, but the company said it could still maintain normal flow rates.
A Colonial spokesman declined to comment on the approval.
The leak, discovered by a mining inspector who smelled a fuel odor in Helena, Ala., released about 6,000 barrels to 8,000 barrels (252,000 gallons to 336,000 gallons) of gasoline. The cause of the leak remains unknown.
When Line 1 restarts, it will take several days for the fuel delivery supply chain to return to normal, and some markets served by the pipeline may experience "intermittent service interruptions," Colonial said.
Retail prices may continue to climb until supply kinks are straightened out.
Georgia has been the hardest hit, with gasoline prices rising 4.5 cents from Sept. 19 to Sept. 20. At $2.361 per gallon of regular 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.
North Carolina Gov. Pat McCrory welcomed news that the line would likely restart on Wednesday.
"North Carolina is currently receiving about one-third of our normal supply of fuel," he said at a news conference in Charlotte on Sept. 20.
The industry has sought to plug the supply gap with shipments by sea into the U.S. East Coast. Waterborne shipments rose by about 58% and volumes rose by 23% between Sept. 9 and Sept. 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.
Recommended Reading
EOG: Utica Oil Can ‘Compete with the Best Plays in America’
2024-05-06 - Oil per lateral foot in the Utica is as good as top Permian wells, EOG Resources told analysts May 3 as the company is taking the play to three-mile laterals and longer.
E&P Highlights: May 6, 2024
2024-05-06 - Here’s a roundup of the latest E&P headlines, including technology milestones and new contract awards.
US Oil, Gas Rig Count Falls to Lowest Since January 2022
2024-05-03 - The oil and gas rig count, an early indicator of future output, fell by eight to 605 in the week to May 3, in the biggest weekly decline since September 2023.
Pemex Reports Lower 2Q Production, Net Income
2024-05-03 - Mexico’s Pemex reported both lower oil and gas production and a 91% drop in net income in first-quarter 2024, but the company also reduced its total debt to $101.5 billion, executives said during an earnings webcast with analysts.
Chouest Acquires ROV Company ROVOP to Expand Subsea Capabilities
2024-05-02 - With the acquisition of ROVOP, Chouest will have a fleet of more than 100 ROVs.