Explosion Shuts Down Colonial Refined Products Pipeline in the southern United States

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Explosion Shuts Down Colonial Refined Products Pipeline in the southern United States

Thu, 11/03/2016 - 13:29
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Explosion Shuts Down Colonial Refined Products Pipeline in the southern United States
Explosion Shuts Down Colonial Refined Products Pipeline in the southern United States

In the second major disruption of the Colonial Pipeline in two months, Colonial Pipeline Company was forced to shut down its two main pipelines supplying the East Coast with gasoline and other refined products from Houston to Linden, New Jersey as maintenance crews hit the line with construction equipment causing a fire and explosion and killing one person and putting five others in the hospital.

The southeastern U.S. is “highly dependent on pipeline supplies from Colonial and, ultimately, Colonial flows form the baseline of U.S. East Coast supply,” Robert Campbell, head of oil products research at Energy Aspects Ltd. in New York, said in a note. The longer the mainlines are offline, “the more upward pressure will be placed on U.S. East Coast fuel prices, while downward pressure will be exerted on U.S. Gulf Coast product prices.”

Gasoline traders moved quickly to make up for any probable shortages, rushing to book extra tankers for replacement fuel supplies from Europe, according to two shipbrokers directly involved in the trade. Freight costs for cargoes across the Atlantic surged 78 percent to $16,308 a day, the highest returns possible on that route since January, Baltic Exchange data show.

The Colonial explosion comes during a time when environmental activists are protesting long-distance pipelines carrying heavy fuel from Canada to the US, leading to the cancellation of Keystone XL and the temporary suspension of Dakota Access. The latter is presently being contested by native American Indians and others from around the United States.

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