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FILE PHOTO: Holding tanks are seen at Colonial Pipeline's Linden Junction Tank Farm in Woodbridge, New Jersey, U.S. in an undated photograph. Colonial Pipeline/Handout via REUTERS./File Photo

Colonial Shuts Key Fuel Line to New York Harbor After Spill

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January 5, 2023

By Sheela Tobben and Chunzi Xu (Bloomberg) —

Colonial Pipeline Co. halted operations on a critical conduit that supplies fuel to the US Northeast, the latest disruption to energy flows following an outage on the Keystone oil pipeline last month.

Some product was released at Colonial’s Witt delivery station near Danville, Virginia, prompting the shutdown of its Line 3 Tuesday, spokeswoman Meredith Stone said in an email. The company is planning a restart at around 12 p.m. Eastern time on Saturday, she said.

The ruptured Colonial pipe leaked an estimated 60 barrels of diesel, which flowed into a storm water collection basin at its facility, said Aaron Proctor, a spokesman for the state’s environmental quality department. The pipe’s operator indicated it expected repairs will occur by Friday, according to an emailed statement from the Pipeline and Hazardous Materials Safety Administration. 

Colonial’s Line 3 transports refined products such as gasoline, diesel and jet fuel to the New York Harbor market from Greensboro, North Carolina, and is part of a broader system that supplies fuels to the eastern US from refineries on the Gulf Coast. 

The incident follows the outage to TC Energy Corp.’s Keystone pipeline after the biggest onshore oil spill since 2010. The conduit, which can deliver as much as 600,000 barrels a day of Canadian crude into the US Midwest, only fully returned to service last week. 

The Colonial shutdown has so far had limited impact on the New York Harbor market — gasoline even softened slightly against Nymex futures on Thursday morning. Gulf Coast gasoline fell by a couple cents against futures following the outage. The East Coast’s gasoline supplies have been building over the past few weeks during a seasonal demand lull.

New York Harbor is a major import hub receiving fuel from Canada, Europe, India and South America, making it better insulated from Colonial pipeline disruptions than the Southeast. A prolonged outage of Line 3 could strain supplies on the East Coast, though, while flooding the Gulf Coast with fuel.

Colonial didn’t respond to an email seeking comment about the volume and product that leaked. The company has also not given a cause for the release, although it said the impact appears to have been contained within its property.

–With assistance from Joe Aboussleman.

© 2023 Bloomberg L.P.

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