Colonial Pipeline making 'progress' on system restart, working to curb fuel shortages

London — The Colonial Pipeline is making "forward progress" in the full restart of its operations, and is working with the US government to help alleviate fuel supply disruptions, it said late on May 11.

"Markets experiencing supply constraints and/or not serviced by other fuel delivery systems are being prioritized. We are collaborating with the Department of Energy (DOE) to evaluate market conditions to support this prioritization," Colonial said in its latest statement.

Colonial had previously said it hopes to have the pipeline substantially back online by the end of the week as it restarts one segment at a time. Some additional lateral lines are operating manually to deliver existing inventories to markets along the pipeline, it added.

Colonial had halted all pipeline operations May 7 because of a ransomware attack. The halt restricted flows of gasoline and other refined products for much of the US South and East Coast, preventing the pipeline from delivering more than 100 million gallons a day of fuel and heating oil.

Colonial said it delivered approximately 967,000 barrels (around 41 million gallons) to various delivery points along its system. It had also taken delivery of an additional 2 million barrels (around 84 million gallons) from refineries for deployment upon restart.

Key supply artery

The key refined products artery 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 consumption.

S&P Global Platts Analytics said the closure will have a ripple effect on gasoline, diesel, and clean tanker freight rates despite this being a potentially short-term event.

"European gasoline is a winner. More imports to New York in a relative[ly] short-haul trip. Clean freight gets bid," Platts Analytics said in a note. "Depending on the duration of the outage, we think there's [a] risk of some containment of product in the US Gulf Coast for gasoline and diesel."

This comes as the US Environmental Protection Agency late May 11 expanded an emergency fuel waiver allowing 12 states and the District of Columbia to sell off-spec gasoline through the end of the month to deal with the pipeline shutdown.

The expanded waiver runs through May 31 and covers: Alabama, Delaware, the District of Columbia, Georgia, parts of Florida, Louisiana, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia.

The Department of Transportation separately late May 11 issued a new order allowing trucks to carry overweight loads of gasoline and other fuels on highways to move more supply along Colonial's route.