Colonial Pipeline is delivering fuel to all of its markets following the substantial progress made overnight on the restart, after being downed for five days from a cyberattack, the company said May 13."Colonial Pipeline has continued to make substantial progress in safely restarting our pipeline system," the company said in a statement. "We can now report that we have restarted our entire pipeline system and that product delivery has commenced to all markets we serve."
Colonial had halted all pipeline operations on May 7 because of a ransomware attack, restricting the primary artery for gasoline and refined products from delivering more than 100 million gal/d of fuels. Colonial stretches more than 5,500 miles from the Houston refining hub to New York Harbor, supplying about 45% of all the gasoline and diesel fuel consumed on the East Coast.
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A combination of regional shortages and panic-buying caused close to 50% or more of gas stations in North Carolina, South Carolina, Georgia, Virginia, Florida and Washington to run out of fuel. The situation is even worse within the most populated cities in those states, such as Atlanta and Charlotte, N.C., according to GasBuddy.
The short nature of the shutdown triggered modest impacts to spot commodities prices, although prices at the rack rallied, reflecting local shortages. For instance, the price of regular gasoline at Norfolk, VA averaged $2.1718/gal May 13, up from 13 cents/gal from May 7, DTN data shows.
Colonial warned it will still take several days for product to move through the system and return to normal.
"Following this restart, it will take several days for the product delivery supply chain to return to normal," the company said. "Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during this start-up period. Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal."
Product typically moves at 3-5 mph through the pipeline.
Colonial already was transporting fuel on many of the pipeline's laterals, and its Line 4 segment of the pipeline from North Carolina to Maryland was being operated manually.
The pipeline has taken an additional 2 million barrels -- 84 million gallons -- from refineries for deployment upon Colonial's restart.
President Joe Biden said May 13 he was pleased the regional fuel shortages would not last much longer.
"This is a temporary situation. Do not get more gas than you need in the next few days," Biden said, again warning against panic-buying and hoarding. "This is an urgent reminder of why we need to harden our infrastructure to make it more resilient against all threats, natural and manmade."
US Energy Secretary Jennifer Granholm also touted May 13 that Colonial told the government "that the restart of the pipeline went well overnight."
"This should mean things will return to normal by the end of the weekend," Granholm said on Twitter.
S&P Global Platts Analytics called the restart an "encouraging development" but said ongoing panic-buying, even in areas not served by the pipeline, would continue to exacerbate the impact of the supply shortfall.
Platts Analytics expects Northeast gasoline inventories to still fall below five-year lows this week before rebounding, and Gulf Coast refiners face containment issues due to gasoline product stocks as they wait for the full pipeline restart.
"Full recovery for both the East Coast and Gulf Coast will take a couple of weeks at least as there are lags and limits for all shipping options," Platts Analytics said.
USAC gasoline stocks, at 64.6 million barrels the week ending May 7, were 3% below the five-year average, US Energy Information Administration data shows.
FEDERAL MOVESThe Colonial restart comes after the federal government had taken several steps to expedite fuel transportation, including waiving certain fuel standards, eliminating restrictions on truckers' driving hours, and preparing to issue waivers on Jones Act-qualified tankers to move waterborne products.
The US has issued a Jones Act waiver to a single shipper to move gasoline and jet fuel from the Gulf Coast to the East Coast as the Colonial Pipeline restarts, the Department of Homeland Security said May 13.
Homeland Security Secretary Alejandro Mayorkas said he approved a "temporary and targeted waiver requested by an individual company," without naming the company or giving any volume details.
However, industry groups urged the Biden administration to issue a broader blanket waiver so slowdowns do not occur from approving shipments on a case-by-case basis.
The 1920 Jones Act requires all goods shipped between two US ports to be carried on ships that are US-built and US-flagged, with majority US owners and crew.
The US Environmental Protection Agency expanded late May 11 an emergency fuel waiver allowing 12 states and Washington to sell off-spec gasoline through the end of the month to alleviate shortages caused by the shutdown. The expanded waiver runs through May 31 and covers Alabama, Delaware, Washington, Georgia, parts of Florida, Louisiana, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, and Virginia.
The waiver allows sales of summer- or winter-grade gasoline with vapor pressure under 13.5 psi, and it allows any fuel handlers along the supply chain to comingle reformulated and conventional gasoline supplies as needed.
The Department of Energy is leading the federal response, and the FBI previously mentioned the DarkSide hacking group as the responsible party. The criminal organization worked with another unidentified party.
Biden reiterated May 13 that while there is "strong reason" to suggest the hackers are Russia-based, there is no evidence suggesting the Russian government was involved. Bloomberg reported May 13 that Colonial paid a $5 million ransom to the criminal group on May 7. Biden declined to comment when asked about the ransom payment.
The Colonial attack comes just as US fuel demand was quickly growing since bottoming out in January from the ongoing coronavirus pandemic, and just ahead of the busy summer driving season.
