Colonial Pipeline Co’s main gasoline line, a crucial supply source for the U.S. East Coast, will be shut for at least several days, the company said on Tuesday, after an explosion and fire in Alabama killed one worker and injured five others.
Shippers using the East Coast supply artery were bracing for a longer shutdown as Colonial said it was hard to predict a repair schedule. The shutdown will restrict gasoline supplies to millions of Americans in the U.S. Southeast and possibly the Northeast. The Northeast could be less affected since it can get supplies via waterborne shippers.
Colonial [COLPI.UL] said its main gasoline line could be open as early as Saturday. Crews have isolated the fire, which came weeks after its biggest gasoline spill in nearly two decades shut the same line for 12 days, it said.
The latest incident also temporarily shut down the distillates line, which transports diesel and jet fuels to the Northeast. It reopened early Tuesday, Colonial said.
Gasoline prices rose as much as 13 percent on Tuesday.
The shutdown already has shippers and fuel companies scrambling to secure supplies via sea or other alternatives to get fuel to the East Coast. Fuel retailers and consumers are likely to be most affected, though prices at the pump have not risen yet, even as gasoline futures have spiked.
The explosion occurred several miles from the September leak. A nine-man crew working on the line in Shelby County hit Line 1, the main gasoline pipeline, with a large excavator known as a track hoe, Colonial said late Monday. About 1.3 million barrels of gasoline flows daily on the line.
A spokesperson for the U.S. Pipeline and Hazardous Materials Safety Administration said investigators were on the scene. They noted that contractors were “reportedly” working on repairs on Line 1 related to the Sept. 9 spill.
One person was killed and five others hospitalized in the latest incident, Colonial said.
Barclays analyst Warren Russell said on Tuesday prior to Colonial’s statement that a restart could take longer due to concerns by regulators, given the proximity to the September leak, and as repair and safety inspections take place.
“The facts on the ground are not 100 percent clear,” said Russell. “This is the second accident in two months, so the stakes are much higher this time around.”
The explosion took place in an unincorporated wildlife area outside Helena, Alabama. Colonial and the state’s forestry commission were leading the response.
The 5,500-mile (8,850-km) Colonial Pipeline is the largest U.S. refined products pipeline system and can carry more than 3 million barrels of gasoline, diesel and jet fuel between the U.S. Gulf Coast to the New York Harbor area.
GASOLINE PRICES SPIKE
Gasoline futures rose as much as 13 percent early in the session to $1.6351, the highest since early June. At midday, it rose 4.1 percent to $1.48 per gallon. U.S. gasoline margins hit their highest since early May.
Ryan Chandler, vice president at Colonial Group Inc, which is not connected to Colonial Pipeline, said he has been fielding calls from the pipeline’s customers seeking access to its Charleston and Savannah marine terminals.
Chandler’s company manages three marine terminals in the U.S. Southeast and ships on the Colonial pipeline. He said during the September outage, business at the Savannah terminal jumped sevenfold, while Charleston jumped fivefold.
For inland markets in the U.S. Southeast, which do not have access to ports, alternative supplies can be harder to get.
The September spill led to long lines at the pump and a shortage of fuel in states like Georgia, Tennessee and Alabama.
(Reporting by Devika Krishna Kumar, Scott Disavino, Jessica Resnick Ault in New York; Additional reporting by Jarrett Renshaw in New York; Editing by W Simon and JS Benkoe)