(Adds analyst comment, market movements, background)
By Devika Krishna Kumar
Oct 17 Colonial Pipeline said on Monday it would
cut shipping volumes while it works to restart the section of
its main gasoline conduit that was damaged after its biggest
leak of the fuel in nearly two decades in Alabama last month.
Prompt New York Harbor gasoline prices and refining
margins 1RBc1-CLc1 for making the auto fuel jumped on the
news. The line is the main artery for gasoline supplies to the
East Coast market.
Colonial, the biggest refined products system in the United
States, is responsible for supplying about one-third of the 3.2
million barrels per day of gasoline consumed on the East Coast,
according to U.S. Energy Department data.
Allocations on Colonial's Line 1 will be reduced by about 20
percent for 10 days, the company told shippers in a notice.
U.S. gasoline crack spreads, a key metric for margins for
U.S. refiners, jumped by 5.3 percent to $13.32 a barrel on news
of the reduced volumes. Cash prices for New York Harbor gasoline
for prompt delivery was also said to be offered higher.
Still, the impact of the lower supplies would likely be
limited because the peak-demand summer driving season is over,
said Sandy Fielden, director of research, commodities and energy
at Morningstar in Austin, Texas.
The damaged section of the 1.3 million-bpd line that
connects the refining hub of the Gulf Coast to the East Coast
was shut for more than 12 days after a leak was discovered on
That outage squeezed supply and caused long lines at the
pump in many southeastern U.S. states, prompting complaints of
A bypass line was constructed to restart operations while
the company repaired the main conduit.
Colonial expects to fully restart the damaged part of the
fuel artery by mid-November, company spokeswoman Malesia Dunn
said in an email. A draft restart plan has been submitted to
federal regulators for approval, she added.
A spokeswoman for the U.S. Department of Transportation's
Pipeline and Hazardous Materials Safety Administration declined
on Monday to comment on whether it had approved the plan.
The administration said on Friday that Colonial must cut
pressure on the line by 20 percent, even after restarting the
damaged line, until it could ensure the line could safely
operate at full capacity.
(Reporting by Devika Krishna Kumar in New York; additional
reporting by Jarrett Renshaw and Jessica Resnick-Ault; Editing
by Bernard Orr and Richard Chang)