Colonial Pipeline Update - May 13

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Bottom Line: The shut down of the Colonial Pipeline system will cause significant logistical problems for at least two weeks.

From EIA

Colonial Pipeline, a 2.5-million-barre l-per-day (b/d) system of approximatel y 5,500 miles of pipeline, is a significant m ode of shipment for
transportation fuels to the U.S. East Coast, particularly for se veral states in the Southeast (F igure 2). The pipeline carries refined petroleum products
such as gasoline, diesel, heating oil, and jet fuel from Houston, Texas, up to Linden, New Jersey, and serves several markets a long the route through
various branch lines. Because no refineries between Alabama and t he mid-Atlantic produce subst antial quantities of transportati on fuels, the
southeastern United States is supplied primar ily by pipeline flows and, to a lesser degr ee, by direct marine shipments from the U.S. Gulf Coast and
imports.

Until Colonial Pipeline resumes operation, petroleum distribution term inals in the Southeast will rely on inventories and suppl ies obtained from
alternative sources, such as the smaller 720,000 b/d Plantation Pipeline t hat also carries petroleum products from the U.S. Gul f Coast to as far as
Washington, DC.
Pipeline shipments move at approximately five miles per hour, so some markets may need to rely on regional inventories for seve ral days after
Colonial Pipeline service is re stored. Markets along the Atlantic Coast with access to deepwater ports (such as Savannah, Georg ia; Charleston, South
Carolina; Wilmington, North Carolina; and No rfolk, Virginia) can receive limited impor ts from the global market and marine ship ments via coastwise
compliant shipping from the U.S. Gulf Coast. Central Atlantic and Northeast markets can import petroleum products from Europe and Canada and
can also obtain supplies from in-region refineries.
Federal and state governments have issued regul atory waivers and notices to loosen restri ctions on trucked shipments of petrole um products. As of
May 9, the Federal Motor Carrier Safety Administration issued waivers on driving time for truckers delivering refined petroleum products for 17
states and the District of Columbia, then adding West Virginia on May 11. On May 11, the U.S. Environmental Pr otection Agency issued a temporary
waiver through May 31 on the Reid vapor pressure requirements for fuel sold in reformulated gasoline areas in 11 states and the Distr ict of
Columbia, as well as specific counties in Florida, in an effort to better facilitate the supply of gasoline. The White House ha s indicated its willingness
to review requests for temporary maritime waivers on ships transporting fuel from the Gulf Coast to affected areas.
Until service on the pipeline is restored, the refiners in the Gu lf Coast region (PADD 3) that normally feed product into the p ipeline will also face
increasing pressure to reduce motor fuel pr oduction as regional inventories in the U. S. Gulf Coast begin to fill to capacity be cause of logistical
constraints without flows through the Col onial Pipeline. Although coastal barges can move some products, the increased costs an d availability of
vessels will hamper the ability of Gulf Coast refi ners to supply East Coast demand. Run cuts at the Citgo Lake Charles refinery, Total Port Arthur
refinery, and Motiva Port Arthur refinery have already been reported.
The regional average gasoline retail price on May 10 was $2.86 per gallon (gal) for the East Coast, an increase of nearly 9 cents/gal from the previous
week. For the Lower Atlantic (PADD 1C), the retail price was $2. 78/gal, an increase of 9 cents/gal from the previous week and t he highest increase of
any other region or subregion (Figure 3).