In the southeastern United States, No. 2 diesel rack activity recently declined following an outage on Colonial Pipeline’s Line 1 refined products pipeline earlier this month, according to Genscape Supply Side data. The movement was unseasonable, as diesel demand typically rises in the early fall.
During the 12-day Line 1 outage that started September 9, Colonial re-purposed its Line 2 pipeline to move gasoline, edging out some distillate barrels into southeast states. While Line 1 flows mostly gasoline, Line 2 is traditionally designated for distillate. After the outage rack activity declines were initially focused on gasoline demand in the same market.
Colonial Pipeline shut parts of Line 1 due to a 252,000 gallons (6,000 barrels) leak, affecting deliveries in Alabama, Tennessee, Georgia, North Carolina, and South Carolina, and restarted the line on September 21 with a line that bypassed the leak, according to a company press release. During the outage, Colonial used Line 2, a 1.1 million bpd distillate line, to pump gasoline. Colonial did not say in the release how much diesel capacity was displaced, but market sources suggested that nearly all of Line 2 was used for gasoline movements during the outage.
Typically, diesel demand in September and October increases during harvest season, with additional fuel needed for farm equipment and trucking. The lack of diesel deliveries off Colonial into key southeastern rack cities has caused a significant reduction in diesel rack activity for several locations in Georgia, Tennessee, North Carolina, and South Carolina on a weekly and monthly basis.
In Georgia, Athens diesel rack activity for September 23 to September 27 was seven percent below the previous week. As of September 27, total September diesel rack volumes were 5.956 million gallons, five percent below August and four percent below July. In Albany, September rack activity was 9.366 million gallons, 15 percent below August and nearly seven percent below July. Bainbridge rack activity was also affected by the Line 2 switch to gasoline, with September rack activity seven percent below August.
Tennessee diesel rack activity also showed declines for September 23 to September 27. In Knoxville, diesel rack volumes were 14 percent below the previous week. As of September 27, monthly diesel rack volumes were six percent below August. In Nashville, diesel rack activity for September 23 to September 27 was five percent below September 16 to September 20. September diesel rack volumes in Nashville were less than one percent above August, relatively small growth during the fall harvest season. Chattanooga diesel rack activity for September was 15 percent below August.
South Carolina diesel volumes also fell during the decline in Line 2 diesel shipments this month. In Belton diesel rack activity for September 23 to September 27 was 78 percent below the previous week. September rack activity for diesel was just two percent above August, relatively small growth during the fall diesel season. In North Augusta, no. 2 diesel rack volumes between September 23 and September 27 were 11 percent below September 16 to September 20. For the month of September, total diesel rack activity was seven percent below August.
The declines in diesel rack volumes also extended north to North Carolina along Line 2’s path. For September, Fayetteville total rack volumes were 34 percent below August and 18 percent below July. In Raleigh/Apex, diesel rack activity during September 23 and September 27 was 44 percent below the previous week, and total September volumes were four percent below August. Charlotte weekly diesel rack volumes for September 23 to September 27 were 35 percent below the previous week, and total September activity was four percent below August.
The Line 1 outage severely affected gasoline rack activity in the southeastern United States in September, though activity levels have started to recover in most cities with the Line 1 restart. Gasoline rack activity in Tennessee, North Carolina, and South Carolina for September 23 to September 27 showed double digit gains compared to the same time period the previous week. But, Georgia gasoline rack volumes remained weak, with September 23 to September 27 activity nine percent below the previous week.
Genscape's Supply Side Analyst and Supply Side Monitor provide analysts and traders with daily or hourly volumes and prices for regular gasoline, midgrade gasoline, premium gasoline, jet fuel, kerosene, and diesel. Receive the industry’s only insight into PADD and rack city related volumes and average prices for wholesale transactions of refined products. To learn more, or request a free trail of Genscape's Supply Side Analyst and Supply Side Monitor, please click here.