Colonial to begin Line 1 excavation today: Update

OREANDA-NEWS. September 19, 2016. Gasoline futures prices climbed today as crews began excavating a damaged section of the main pipeline connecting US Gulf coast gasoline production to the New York Harbor market.

Colonial Pipeline said it may weld a temporary steel pipeline segment in place as it works to restart service next week on Line 1, the main gasoline pipeline connecting terminals beginning on the Texas coast to terminals throughout the southeast on a path to Greensboro, North Carolina. The company offered few details on efforts to resume service by the end of next week.

Excavation work would begin this afternoon to uncover a damaged section southwest of Birmingham, Alabama, that released up to 8,000 bl of gasoline.

The operator of the 5,500-mile (8,851km) pipeline network moving products from Texas to Linden, New Jersey, said it would take time to determine the cause of the release.

Previous notices estimated a 6,000 bl release. Fumes from the gasoline, the remote location of the break and weather conditions slowed repairs on the line, which Colonial had originally expected to restart tomorrow.

The company instead began splitting capacity on its parallel, distillates-bearing Line 2 to move gasoline around the break. Barrels shifted onto that line should begin arriving at their destinations tomorrow.

Nymex October RBOB futures settled at \\$1.4616/USG, higher by 10.05?/USG than 9 September, when the break was first disclosed. Rates on Jones Act tankers authorized to move products between US ports have spiked this week and interest in exports out of the US Gulf coast climbed as refiners look to work around the outage.

The outage could help draw down both gasoline and ultra-low sulfur diesel (ULSD) inventories on the US Atlantic coast that remained well above normal at the end of last week. But fuel distribution points far from those stored volumes could face shortages.

And refinery maintenance, planned and unplanned, could also complicate supplies. Phillips 66 today confirmed work underway at a key northeast gasoline producer, its 250,000 b/d Bayway refinery in Linden, New Jersey.