The two separate shutdowns that occurred along the 2.6mn bpd Colonial Pipeline system during week ending March 9, 2018, depressed associated rack activity for gasoline and distillates, according to Genscape Supply Side Pipeline data. The shutdowns impacted PADD and rack city-related volumes and average prices for the wholesale transactions of refined products.
The first incident occurred on March 7, when a fuel oil leaked at Colonial’s Bel Air facility near Baltimore, MD, according to a media bulletin from Colonial. The leak prompted the pipeline company to shut the 900,000 bpd Line 3 leg of the pipeline system, which delivers gasoline and distillates into PADD 1B terminals and ultimately into Linden, NJ (New York Harbor). Colonial had initially reported that Line 3 was restarted the evening of March 8 on schedule, according to Colonial.
This Line 3 shutdown coincided with the second nor’easter winter storm (Winter Storm Quinn) on March 7, which had already slashed rack activity at terminals associated with Line 3. However, the full effects of the storm for the coastal, heavily populated portions of PADD 1B had abated by March 8 and the typical rebound in regional rack activity following inclement weather did not appear to materialize that day despite most schools and businesses reopening. New England (PADD 1A) schools and businesses remained closed on March 8 due to heavy snowfall in populated areas such as Boston.
An analysis of Genscape Supply Side Pipeline data for terminals along Colonial Line 3 showed that gasoline and diesel volumes declined week-over-week on March 8, continuing the downward trend seen amid Quinn on March 7. The slow recovery in overall products demand appeared to mitigate the extended Line 3 shutdown on March 8.
Gasoline rack activity in Newark, NJ, for associated Colonial Pipeline terminals was down 22.4 percent from the previous week on March 8, a slight improvement from the 29.9 percent decline on March 7 amid Winter Storm Quinn. In Paulsboro, NJ, gasoline rack activity was 34.9 percent below the previous week on March 8, which was another mild improvement from the 36.8 percent declines seen on March 7. Overall, Genscape’s pipeline data showed that March 8 total rack activity across the entire Line 3/Line 4 system north of Greensboro, NC, was down 11 percent week-over-week.
For diesel, a similar trend emerged along Colonial Line 3 in PADD 1B amid the winter storm and the pipeline shutdown north of Baltimore. Total rack volumes along Colonial Lines 3 and 4 were down 13.6 percent week-over-week on March 8, up from a 26.1 percent week-over-week decline the previous day. Newark, NJ, diesel rack activity appeared to be impacted by the line shutdown and possibly some lingering after-effects of the storm, with the region’s diesel rack sales down 27.7 percent from the previous week on March 8. This is a moderate improvement from the 47.9 percent week-over-week declines seen on March 7.
Separately, Colonial announced a shutdown of the 1.4mn bpd Line 1 system on March 8, which connects Houston and other U.S. Gulf Coast refining centers to Greensboro, N.C., a critical supply source for markets in the southeastern U.S. (PADD 1C) and eventually PADD 1B. Line 1 was shut to investigate a “possible integrity issue” on the afternoon of March 8, and by the next morning, Colonial announced that Line 1 had restarted following that investigation.
Given the short duration of the shutdown, the impacts on gasoline rack activity at PADD 1C terminals associated with Colonial was minimal. An analysis of state-level Genscape Supply Side Pipeline data shows that only rack activity in Mississippi declined week-over-week, while gasoline rack activity in other states increased from the previous week. On a proportional basis, Mississippi gasoline rack activity associated with Colonial Line 1 has averaged in March just 1.8 percent of total rack activity along Colonial Line 1.
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