Colonial delays restart as fuel prices keep rising after Harvey

By Catherine Ngai and Libby George HOUSTON/NEW YORK, Sep 4 : Colonial Pipeline Co, the biggest US fuel system, delayed reopening a segment of its system in Texas that was shut due to Hurricane Harvey, increasing worries about rising retail prices and the domestic distribution of gasoline and distillates.

The company, which had originally scheduled a Sunday restart for the segment going from Houston to Hebert, Texas, said it planned to reopen the distillates line on Monday. The line would be ready to move gasoline on Tuesday, it added.

The company’s pipelines connect refineries along the US Gulf Coast to markets in the Northeast, transporting more than 3 million barrels a day of gasoline, diesel and jet fuel.

Colonial is petitioning the Federal Energy Regulatory Commission to allow it to move so-called transitionary gasoline, a grade between summer and winter blend, which would ease the supply crunch. Earlier, refiner Valero Energy had sought help from Texas Governor Greg Abbott, saying Colonial’s problems were backing up its ability to ship certain kinds of gasoline to customers.

US gasoline futures fell in early trade on Sunday, down nearly 2.3 per cent. Gasoline margins were also down nearly 7 per cent.

The storm took down a quarter of US oil refining capacity, hit oil and gas platforms along the Gulf and lifted average gasoline prices by more than 20 cents since Aug. 23.

Retail fuel costs surged through the weekend amid fears of shortages, despite the restart of several key refineries on the US Gulf Coast that had been crippled by Harvey.

On Sunday, average retail prices rose again, to 2.621 dollar a gallon, with weekly increases hitting 18 percent in Georgia and 19 percent in South Carolina, according to motorists advocacy group AAA.

Refiner Phillips 66 said on Sunday that it requested a Jones Act waiver to its Alliance refinery in Louisiana, but the petition was still pending.

The Jones Act mandates the use of US-flagged vessels to transport goods between US ports. The CBP has occasionally allowed exemptions for oil and gas operators to use often cheaper, tax-free, or more readily available foreign flagged vessels.

On Sunday, about 5.5 per cent of the Gulf’s oil production and 8.4 per cent of the natural gas output remained shut, the federal Bureau of Safety and Environmental Enforcement said, while operators began inspecting facilities and resuming work.

The total lost production in the Gulf since platforms started shutting is about 2.97 million barrels of oil and 6.35 billion cubic feet of gas.

ExxonMobil Corp said on Sunday that its Hadrian South subsea production system and Galveston 209 platform in the US Gulf of Mexico were back online after shutting due to storm Harvey, a spokeswoman said in an email on Sunday.

The firm had said over the weekend that it began restarting the country’s second-largest oil facility, the 560,500 barrels per day (bpd) Baytown, Texas, refinery, while Phillips 66 said it was working to resume operations at its 247,000 bpd Sweeny refinery.

The hurricane battered Texas before weakening to a tropical storm and inundated the region with torrential rains and flooding.

Not only refineries have started resuming operations. Pipelines and terminals have also been restarting over the weekend, assuaging worries over the ability of refineries to get the crude oil they need to operate.

Still, several Texas ports remained closed to large vessels, limiting discharge of imported crude and products.


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