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How Important Is The Colonial Pipeline?

Refined products pipe’s second disruption highlights the value pipelines bring to U.S. consumers

Colonial Pipeline’s Line 1 resumed shipping gasoline on Sunday morning, after experiencing its second outage this year on October 31.

The Colonial outage continues to highlight the importance of both the Colonial Pipeline system to East Coast markets and the need for flexibility and redundancy in the nation’s energy infrastructure network, as RBN Energy President Rusty Braziel discusses in Forbes.

This time around, Lower Atlantic motor gasoline stocks were 20 percent higher than the previous five-year average, keeping prices steady. The previous outage saw record changes in gasoline stocks in both the Atlantic and Gulf Coast, causing prices to spike.

At full capacity, the line carries 1.4 MMBbls/d of gasoline from the Gulf Coast to a major product and storage hub in Greensboro, North Carolina. Branches provide gasoline to central and south Tennessee, southern Georgia, and Virginia, while other portions of the Colonial system of pipelines send gasoline, diesel, and kerosene-type jet fuel to Maryland and New Jersey.

Colonial a Lifeline for East Coast

Although the East Coast (PADD 1) is the largest transportation fuels consuming region in the country, the region has limited refinery capacity and produces transportation fuels to meet just one-fifth of regional consumption. The Gulf Coast (PADD 3) in turn consumes one third of the refined products it produces.

(Click to enlarge)

Source: EIA Related: EIA’s Inventory Report May Halt Oil’s Post-Election Rally

Pipeline infrastructure linking the Gulf and East coasts as well as domestic and international trade are critical to balancing the mismatch between supply and demand for transportation fuels in each region. During the previous outage, long distance deliveries were made by truck as well as on ships and barges. Some cargoes to markets across the Atlantic were turned around and rerouted back to New York Harbor.

(Click to enlarge)

This flexibility and redundancy in the network allowed the gasoline market to quickly absorb the price shock and rebalance, although a longer outage would have posed more difficulties.

With many key U.S. pipelines including the Colonial almost a half century old and new infrastructure projects facing increased opposition in what Braziel dubs “the Keystone XL effect,” the benefits that safe, reliable pipeline infrastructure brings to Americans cannot be overstated.

By Oil & Gas 360

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