Colonial Pipeline begins restart process that will take several days

Colonial Pipeline said it initiated the restart process late on May 12 that will take several days to restore full fuel transportation to much of the US South and East Coast.

Colonial had halted all pipeline operations on May 7 because of a ransomware attack, restricting the primary artery for gasoline and refined products from delivering more than 100 million gal/d of fuels. Colonial stretches more than 5,500 miles from the Houston refining hub to New York Harbor, supplying about 45% of all the gasoline and diesel fuel consumed on the East Coast.

A combination of regional shortages and panic-buying caused close to 50% or more of gas stations in North Carolina, South Carolina, Georgia, and Virginia to run out of fuel. The situation is even worse within the most populated cities in those states, such as Atlanta, Georgia and Charlotte, North Carolina, according to GasBuddy.

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"Following this restart, it will take several days for the product delivery supply chain to return to normal," Colonial said in a statement. "Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period. Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal."

Product typically moves at 3 to 5 mph through the pipeline.

Colonial already was transporting fuel on many of the pipeline's laterals, and its Line 4 segment of the pipeline from North Carolina to Maryland was being operated manually.

The pipeline has taken an additional 2 million barrels -- 84 million gallons -- from refineries for deployment upon Colonial's restart.

US Energy Secretary Jennifer Granholm said the restart would still take a few days. She said the East Coast "still may feel a supply crunch as Colonial fully resumes," and she urged Americans to avoid hoarding and price gouging.

Colonial previously said it hoped to have the pipeline substantially back online by the end of the week as it restarts one segment at a time.

Federal moves

The anticipated announcement from Colonial comes after the federal government had taken several steps to expedite fuel transportation, including waiving certain fuel standards, eliminating restrictions on truckers' driving hours, and preparing to issue waivers on Jones Act-qualified tankers to move waterborne products.

The US Department of Transportation's Maritime Administration concluded a May 11 assessment of Jones Act fleet availability, the White House said, without detailing its findings.

However, industry groups urged the Biden administration to issue a broader blanket waiver so slowdowns do not occur from approving shipments on a case-by-case basis.

The 1920 Jones Act requires all goods shipped between two US ports to be carried on ships that are US-built and US-flagged, with majority US owners and crew.

The US Environmental Protection Agency expanded late May 11 an emergency fuel waiver allowing 12 states and Washington to sell off-spec gasoline through the end of the month to alleviate shortages caused by the shutdown. The expanded waiver runs through May 31 and covers Alabama, Delaware, Washington, Georgia, parts of Florida, Louisiana, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, and Virginia.

The waiver allows sales of summer- or winter-grade gasoline with vapor pressure under 13.5 psi, and it allows any fuel handlers along the supply chain to comingle reformulated and conventional gasoline supplies as needed.

The Department of Energy is leading the federal response, and the FBI previously fingered the DarkSide hacking group as the responsible party, although the criminal organization worked with another unidentified party.

The Colonial attack comes just as US fuel demand was quickly growing since bottoming out in January from the ongoing coronavirus pandemic, and just ahead of the busy summer driving season.

Gasoline demand rose 78,000 b/d in February from January, according to monthly Department of Energy data. Using weekly DOE data, demand improved further by about 786,000 b/d for March over February, but growth slowed to 294,000 b/d in April, according to S&P Global Platts Analytics.