* Largest spill on Colonial line in 20 years
* Restart expected by next week
* Gasoline futures rise, cash prices in NY higher
(Adds states of emergency in Georgia and Alabama)
By Devika Krishna Kumar and Jessica Resnick-Ault
NEW YORK, Sept 15 Colonial Pipeline Co, operator
of the largest refined products pipeline system in the United
States, said on Thursday it would delay until next week the full
restart of its main gasoline line bringing fuel to the East
Coast after a 6,000-barrel leak in Alabama.
The company on Friday shut its main gasoline and distillate
lines, which are critical to East Coast product supply, after
the leak in Shelby County, Alabama, which appears to be the
largest spill for this line in 20 years.
Colonial had originally estimated a full restart of Line 1,
which runs to Greensboro, North Carolina from Houston, by this
weekend, but work was delayed on Wednesday evening and into
Thursday morning because of gasoline vapors at the site, the
Traders are bracing for tighter supply in the U.S. East
Coast and Southeast markets such as Georgia and Virginia if a
full restart of the gasoline line is delayed further,
particularly as the outage comes around refinery maintenance
season when refiners are producing less fuel.
Gasoline prices soared on the news of the delay, with U.S.
gasoline futures rising as much as 6 percent to a session
high of $1.4433 a gallon. Gasoline margins 1RBc1-CLc1 also
soared to the highest since June, and New York Harbor cash
prices rose as Gulf prices weakened, traders said.
"If it were to go on a lot longer, it would be a hairy
situation," said Robert Campbell, head of oil products markets
at consultancy Energy Aspects in New York.
The cause of the leak has not yet been determined, Colonial
spokesman Steve Baker said in an email. The company noted that
it was "disappointed" that further progress had not been made in
the repairs. The distillate line has since been fully restored,
and Colonial is pumping batches of gasoline on that line as a
Separately, shippers have begun moving fuel from the
refinery-rich Gulf Coast to the demand-heavy East Coast via
tanker, according to a Colonial shipper. Those vessels, because
they are required to be U.S.-flagged under the Jones Act, are
typically more expensive than transport via pipeline.
Docks on the Gulf Coast are "already getting busy" after the
outage, a source at a U.S. refiner said.
Inventories on the East Coast are still above the 5-year
average, but traders say that could change if the 1.2
million-barrel-per-day gasoline line continued to operate at
reduced rates for a prolonged period.
"We do have the inventory to manage it for the time being,
but we're going to be under a fair bit of pressure, and the
uncertainty isn't helpful," said Campbell.
This is the largest spill on the Colonial line since 1996,
when about 22,800 barrels of fuel oil leaked in South Carolina,
according to National Transportation Safety Board data.
The governors of both Georgia and Alabama issued states of
emergency on Thursday as a result of the spill, allowing waivers
of regulations on vehicle transport of fuel. The waivers allow
trucks hauling transportation fuel to spend more hours on the
road to deliver the fuel.
The U.S. Environmental Protection Agency waived certain
requirements for summer-grade gasoline in the Atlanta and
Nashville areas on Wednesday to allow Colonial to maximize its
ability to ship gasoline.
Colonial said gasoline hauled on Line 2 would be arriving
into the southeast on Saturday, and said it expects additional
downtime in delivering gasoline ahead of the full restart of
(Reporting by Devika Krishna Kumar and Jessica Resnick-Ault in
New York; Editing by Chris Reese and Richard Chang)