U.S. energy officials looking into shortages after Colonial blast

Reuters News
Posted: Nov 02, 2016 10:27 AM

By Erwin Seba and Devika Krishna Kumar

HELENA, ALABAMA/NEW YORK (Reuters) - U.S. energy officials sought to determine the extent of gasoline shortages on Wednesday, two days after a fatal blast in Alabama shut a crucial supply pipeline to the East Coast, as retail gasoline prices inched higher in southeastern states.

Monday's blast, which killed one worker and injured five others, occurred several miles from September's gasoline spill that interrupted Colonial Pipeline Co's main line flow for 12 days. The leak was the largest in two decades.

A small fire continued to burn at the blast site on Wednesday morning, a Colonial spokesman said. The company is trying to complete repairs on the line and resume shipments as early as Saturday.

Retail gas prices in Georgia, one of the worst-hit states during Sept. 9 outage, climbed about 3 cents to $2.19 a gallon on Wednesday, according to motorist advocacy group AAA. Georgia, Alabama and North Carolina have waived rules governing transport of fuels to ensure adequate supplies.

Colonial [COLPI.UL] said it aimed to reopen the vital supply artery by Saturday, but said the timetable may change as it gets updated information from the site of the accident. The pipeline can carry about 1.3 million barrels per day of gasoline from the Gulf Coast to the Northeast.

The Department of Energy began to assess the extent of fuel supply shortages caused by the accident, a department source said. The DOE advises the Department of Homeland Security on shortages in the event companies or state governments seek a waiver of the Jones Act to allow relaxation of rules on shipping of fuel by ships. There have not been any requests yet.

Pipeline safety experts said while regulators will investigate the incident, the pipeline could resume service sooner than it did in September due to fewer uncertainties about the cause.

Ramona Morris, regional director for the U.S. Occupational Safety and Health Administration, said the investigation into the blast would last six months.

Late Tuesday afternoon, a steady stream of tractor-trailers carrying heavy repair equipment and pickup trucks with workers rumbled through Helena, a town of 18,000. They went down a winding two-lane blacktop highway, turning off the dusty dirt road to the scene of the fire located in a densely forested area.

The full cause of the Colonial September spill has not been made public. A nine-member crew was working on repairs related to the September leak when an excavator struck the line, setting off the explosion, according to Colonial officials.

Gasoline futures were down 2.4 percent at mid-day Wednesday after rising as much as 15 percent on Tuesday.

Markets on the East Coast are relatively better positioned due to access to ports. By noon Tuesday, some 14 ships were provisionally booked to sail from Europe to the region, more than quadrupling shipping costs, traders and ship brokers said.

The explosion came amid opposition to pipeline construction by environmental and Native American groups. They are protesting the construction of an oil pipeline in North Dakota. President Barack Obama said late Tuesday the government is examining ways to reroute the line to address the concerns.

(Additional reporting by Jessica Resnick-Ault in New York and Timothy Gardner in Washington; Editing by Jeffrey Benkoe)