Two major products pipelines serving the US East Coast offered the first real glimpse of supply hope on Thursday, announcing restart plans for crucial regional arteries.
Colonial Pipeline said its key Line 3 would soon begin shipping some product to New Jersey, which was hit hardest by Hurricane Sandy. The company also said it was working with Buckeye, which made its own announcement that it was restarting operations, to boost deliveries to the Linden, New Jersey, supply hub, while at least one refiner was heard trucking supplies in to alleviate problems.
There was still plenty of infrastructure offline, however, including refineries and terminals. Industry officials didn't see how this week's gasoline and ULSD waivers would make any real headway in boosting products at this point.
Any talk of tankers from the Gulf Coast was quashed by the amount of time it would take to get them to ports, which may or may not be open. No Jones Act waiver applications were reported.
One port that began to come back to life Thursday was New York Harbor, where authorities started allowing fuel barges to deliver cargoes on a restricted basis. The barges will have access to the Upper New York Bay, the Hudson River and the East River to Long Island Sound, according to the Department of Energy. Kinder Morgan late in the day said it would open its New York Harbor terminals for business in the next 24-48 hours, running off backup generators.
New York waterways still closed Thursday included the Arthur Kill, Kill Van Kull and Buttermilk Channel.
The DOE also said that, as of Thursday, 14 East Coast petroleum terminals remained closed following Hurricane Sandy. It added that 12 have reopened and two have limited operations. LINDEN PRODUCTS
One of the bigger announcements Thursday was made by Colonial Pipeline, which said its Linden terminal would have partial power later in the day and that deliveries from Colonial and Buckeye into that area would also resume later in the day.
Colonial said its Linden facility "expects to restore partial operations today after installing portable generators at the New York Harbor facility late Wednesday," but noted "commercial power" has not yet been restored there. The company said it is also "working with Buckeye Pipeline to resume deliveries to its Linden-area terminal later today."
Buckeye also serves the northern New Jersey/New York area, including JFK, LaGuardia and Newark airports. TRUCKING
Due to continued logistical issues at New Jersey terminals and pipelines, PBF Energy has begun to load fuel trucks at its refinery in Delaware City, Delaware, for delivery to the New York, New Jersey and Maryland areas, the company said.
The 190,000 b/d refinery remained open throughout Hurricane Sandy, company spokesman Michael Karlovich said in an email, adding that maritime traffic out of the refinery has also been opened by the US Coast Guard.
As for other refineries, there was no restart date for Hess' 70,000 b/d FCC plant in Port Reading, New Jersey, which has no power, or Phillips 66's 238,000 b/d Bayway plant near Linden, which now has full power, according to the company.
Refiners have enough inventories to meet demand, but that product cannot get to where it needs to go, Charlie Drevna, head of the American Fuel and Petrochemicals Manufacturers Association, said in an interview.
"The service stations are the microcosm of the problems that refiners have of bringing stuff in," Drevna said. "You have service stations that have full tanks and no power, and you have service stations that had fuel and they are running out rapidly. It's just going to take time to get all this sorted out. The problem is power and flooding, whether it's at the refinery or at the terminal or anywhere along the route."
Inventories are good, Drevna said.
"It's just getting power up and water out," he explained. "I don't know if there's anymore significant damage to the refineries that are down other than flooding."
"You can look at the geography and see why Hess and Phillips are shut down and the other ones in Pennsylvania and Delaware are running because of where Sandy hit," he said. "It's gonna be awhile before things are anywhere near normal in northern Jersey."
John Felmy, chief economist of the American Petroleum Institute, said "the challenge we face more than anything else is power. You have issues of getting product in, either bringing in more product by water or pipeline," Felmy said in an interview. "The gasoline system is so complicated, you can't unilaterally say 'Let's just mix it all together.' The question is what storage is available. I would think you would not have a lot of excess storage now. But you don't know."
Colonial has said it commingle gasoline grades "only when necessary." TANKERS
On the use of tankers to bring product from the Gulf Coast, Felmy said it would "take so long to do it, it's not going to be immediate relief. But moving it from closer facilities such as Philadelphia or Delaware might help."
He expressed doubt the US would waive the Jones Act, even in the wake of a major storm like Sandy. But the US Department of Homeland Security has not received any Jones Act waiver requests, a spokeswoman said Thursday.
