Colonial Pipeline is crossing Line 1 barrels into Line 2 north of Atlanta, Georgia, after shutting part of its gasoline-only Line 1 following a leak Aug. 14, the company said in an Aug. 17 notice to shippers.
The leak occurred at approximately 5:42 pm ET (2142 GMT) on Aug. 14.
"Colonial Pipeline responded to a report of a product release near our pipeline in the area of Huntersville, North Carolina. Upon notification, the pipeline was shut down, and crews were dispatched to the site," the shipper said in the notice.
Line 1 transports gasoline from Houston, Texas, to Greensboro, North Carolina, while Line 2 carries distillates.
Colonial said all mainlines and stub lines, with the exception of Line 1 from Charlotte to Greensboro, North Carolina, remained operational. Over the weekend, the pipeline issued a nomination freeze for Line 1 Cycles 46-48 and allocated Cycle 49, the first such restrictions since Cycle 18 in mid-March for the gasoline-only line.
An allocation occurs when the pipeline is oversubscribed and means shippers cannot move all of the product they initially scheduled, while a freeze means no new product can be scheduled for the cycle.
"Line 1 volumes are being crossed over into Line 2 downstream of Atlanta Junction," according to a notice sent Aug. 17. "The temporary Line 1 crossover operations will allow the system to continue to operate but at reduced overall rates."
US Gulf Coast gasoline sources were monitoring the situation, but the market showed a muted response.
USGC A2 CBOB gasoline on scheduling day for Colonial's prompt 48th cycle was assessed at NYMEX September RBOB futures minus 8.70 cents/gal early in the session, down 75 points on the day.
USGC unleaded 87 dropped 35 points on the day to be assessed at futures minus 6.25 cents/gal.
Colonial Pipeline Line 3 barrels headed into Linden, New Jersey, were little impacted with Cycle 45 RBOB (F1) holding at NYMEX September RBOB plus 0.25 cent/gal and CBOB (A2) down 20 points to futures minus 3.35 cents/gal.
"Guessing you may see some increase in offline values at least on C43 or earlier," a trader said. "Those barrels already made it to GBJ (Greensboro,
North Carolina)."
Another source said price movements would depend on how long the line is shut. A short fix might have a minor impact while a longer outage could send Gulf Coast prices lower, the second trader said.
"How do you ship barrels to New York Harbor if the pipe is not shipping?" the trader said. "You need to go get American flag ship -- more money -- or ocean going barges, which are expensive as well."
Colonial's scheduled delivery time for Cycle 44 CBOB into Greensboro was delayed by five days to Aug. 21.
