Colonial Pipeline plans to restart its gasoline-only Line 1 Wednesday, the company said Tuesday.
In a notice to shippers, Colonial also said work was being completed on a temporary bypass line around the damaged section of the pipeline in Alabama.
Lines 1 and 2 were shut September 9 on an "integrity issue," Colonial said at the time. Service on the normally distillates-only Line 2 was restarted over the weekend and Colonial began shipping gasoline on it. Line 1 remains under repairs.
Colonial Monday said it had started constructing 500-700 foot temporary bypass line around the damaged area of the pipeline, with its capacity expected to be approximately the same as Line 1.
Lines 1 and 2 run from Pasadena, Texas, to Greensboro, North Carolina, carrying 1.37 million b/d of gasoline and 1/16 million b/d of distillates, respectively. In Greensboro, both lines join to create a multi-product Line 3 that runs to Linden, New Jersey.
MARKET SKEPTICAL OF WEDNESDAY RESTART
Market sources were skeptical that the Line 1 restart would happen immediately.
"If they get it done tomorrow, I'll be impressed," one Gulf Coast refined products broker said Tuesday. "My money is on the work-around being in place on Thursday. But when it does, I think we could see some more support for the markets"
A US blendstocks trader said the re-opening should sway his markets. Ahead of the announcement from Colonial, alkylate, reformate and raffinate barges were down slightly Tuesday morning.
"Once Colonial opens up, you will see a lot more business being done," he said. "That temporary line should make things a lot more dynamic."
GULF COAST PRICES STRENGTHEN ON NEWS, FUTURES FALL
Gulf Coast refined products trade values were up sharply Tuesday morning on the Colonial news. CBOB for Colonial's prompt 54th cycle was heard traded as high as NYMEX October RBOB minus 3.50 cents/gal, a cent and a half higher than Monday's assessment. Conventional gasoline was heard talked as high as futures minus 1.50 cents/gal, 3 cents higher than Monday.
"In the Gulf Coast, things will probably be slightly depressed," the broker said. "Though we are seeing slight upticks based on the idea that things will get going again this week."
Gulf Coast ULSD prices reacted immediately following news that barrels may not be backed up in the Gulf Coast, with trades heard at minus 4.75 cents/gal, minus 4.50 cents/gal, minus 4.25 cents/gal and minus 4 cents/gal. It was assessed Friday at minus 5 cents/gal. The 1 cent/gal move is a relatively large one for the market, sources said.
The RBOB futures market dropped abruptly in reaction to the Colonial announcement Tuesday, said Andy Lipow of Lipow Oil Associates. Front-month NYMEX RBOB dropped sharply at 9:45 am EDT to $1.3392/gal, the low for the day. The contract recovered slightly in early afternoon New York trading, but was still down 6.52 cents at $1.3556/gal.
