Gas Pipeline Explosion in Canada May Drive Jones Act Waiver Requests

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October 11, 2018

Photo: Igor Karasi / Shutterstock

By Don Martin – An explosion on October 9 to the Enbridge natural gas pipeline in Canada near Prince George B.C. threatens natural gas distribution to the refineries located in Anacortes, Washington.

Refineries in the Anacortes area in Washington state depend on the Canadian natural gas supply to run several of their units that refine crude oil. As a result, the decrease in production will cause gas prices to spike in the Pacific Northwest energy markets.

More notably to the maritime business, the spike of prices in the Pacific Northwest will drive supply from normal markets to the Pacific Northwest as oil companies try to capture the temporary opportunity in the market. In addition, as the impacted refineries cannot fully process crude oil because key units are down or operating at lower capacities, feedstocks and other unfinished products must move out over the docks as refineries run out of room to store that material. As a result, several tug and barge companies on the US West Coast, and US Flag tankers are repositioning to the Pacific Northwest to move finished product into to those markets and take unfinished product out.

Sources say that not enough vessels are available to meet the crisis and that oil companies are considering requesting Jones Act waivers for foreign flag tankers to mitigate the supply/demand crisis in the Pacific Northwest. Industry experts are skeptical Jones Act waivers will be granted to foreign tankers as although tanker capacity may be limited today, US Flag assets are available in the US Gulf Coast and on the US East Coast.

The Enbridge pipeline connects to the Northwest Pipeline which supplies much needed natural gas to the refineries in and about Anacortes, Washington. Fortunately, no one was hurt and only one of the two lines suffered damage. Officials expect repairs to take 10 to 15 days.

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