Gas haulers in Alabama get temporary hours of service exemption

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Commercial Carrier Journal (CCJ)  /  November 1, 2016

Alabama Gov. Robert Bentley issued Tuesday an emergency declaration following an Oct. 31 explosion of a gasoline pipeline in Helena, Alabama, effectively relaxing hours-of-service regulations for gasoline haulers operating in the state.

The pipeline that exploded is part of the same Colonial Pipeline that leaked in September that caused gas shortages in several states along the East Coast. The pipeline runs from Texas to New York and New Jersey. Several states issued emergency declarations as a result of that leak.

Bentley’s State of Emergency declaration suspends hours regulations for any drivers or carriers providing aid through pipeline repair or fuel transportation for 30 days through Dec. 1, unless the order is canceled sooner.

Colonial Pipeline representatives said the gasoline pipeline, Line 1, will likely remain shut down the rest of this week. Line 2, which transports diesel, jet fuel and other distillates, was restarted late Oct. 31 and is expected to remain in operation.

Colonial says the incident occurred at approximately 2 p.m. local time Oct. 31, when a crew working on a permanent fix for the gasoline pipeline struck the pipeline with a trackhoe, sparking a fire and explosion that killed one worker and injured four others. The fire has since been contained.

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[HeavyGunner]

Huh, once the east coast big cities get affected they sure change their tune about regulating the hell out of truckers. 

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Aging Pipelines Raise Concerns

The Wall Street Journal  /  November 2, 2016

More than 60% of U.S. fuel pipelines were built before 1970, according to federal figures. Recent disruptions on Colonial Pipeline Co.’s fuel artery running up the East Coast show why some energy observers worry that this is a problem.

The pipeline, which began operating fully in 1964, was partially shut down for nearly two weeks in September. Fuel prices spiked throughout the Southeast, rising more than 20 cents a gallon in places like Atlanta.

Motorists this week began to worry again after the company’s main gasoline pipeline, which supplies about a third of the gas consumed on the East Coast, was shut down. It was struck by construction equipment Monday, killing one person and injuring several others.

The company has said the 5,500-mile pipeline, which runs from Houston to New Jersey and serves 13 states, could restart as soon as Saturday, though as of Wednesday afternoon the pipeline was still on fire. Gasoline futures fell 2.4%, to $1.4479 a gallon, on the New York Mercantile Exchange Wednesday after rising as much as 15% following the Colonial explosion.

Colonial isn’t the only major pipeline constructed decades ago. That includes a 3,000-mile fuel pipeline that first opened in 1956 and serves California, Texas and five other states. Another system that now carries fuel more than 1,800 miles from the Gulf Coast to the Chicago area opened in 1971.

Building pipelines has become harder amid opposition from landowners and environmental groups concerned about pipeline safety and stemming fossil-fuel development. Kinder Morgan Inc. had plans to build a new fuel pipeline from South Carolina to Jacksonville, Fla., by 2017. But it shelved the project after running into opposition, including legislation in Georgia aimed at keeping it from being built.

Carl Weimer, executive director of the advocacy group Pipeline Safety Trust, said fuel pipeline systems can operate safely for decades if they are well maintained. But after 40 or 50 years, problems like corrosion increase. “Clearly, operators don’t have a complete handle on how to operate these older pipelines,” Mr. Weimer said, referring to maintenance issues that get harder as systems age.

Companies, industry groups and even regulators have said that with advances in pipeline monitoring and repair techniques, as well as regular maintenance and inspection, pipelines can last a long time.

Colonial’s pipeline carries more than 100 million gallons of fuel a day. Its role as a critical link between refiners on the Gulf Coast and consumers up and down the Atlantic Coast means that any problem on the pipeline can have an outsize impact on fuel supplies and prices at the pump.

Most other regions that rely on pipelines to deliver fuel from far-flung refiners are located near a second system that could deliver fuel as a fallback.

“If a pipeline from Los Angeles to Las Vegas goes down, there’s some capability to supply Las Vegas from Salt Lake City,” said David Hackett, president of consulting firm Stillwater Associates.

Colonial Pipeline has spent more than $95 million on an upgrade that has allowed the pipeline to carry more than 200,000 additional barrels a day since 2011. But the company would need to expand its capacity by another 300,000 to 500,000 barrels a day to meet demand, Chief Financial Officer Dave Doudna said in a 2015 interview. He said that would require a new pipeline, which would cost more than a billion dollars and face large regulatory hurdles.

“The permitting process takes a long time, the cost to build is expensive. And what you end up finding is that customers aren’t willing, or have not been willing to commit, for a period of 10 to 15 years,” he said. “I would say a lot of it is the regulatory environment we’re living in today.”

Finding customers to underwrite the cost of a big investment like a pipeline is a challenge for the infrastructure industry broadly, said Rob Thummel, portfolio manager for energy-focused asset manager Tortoise Capital Advisors.

In places like the Northeast, which can also take in fuel from overseas or waterborne shipments from the Gulf Coast in a pinch, customers aren’t always willing to lock in long-term contracts. Some customers worry that demand will change in the coming years or imports could become more attractive.

“It’s not just, ‘Build it and they will come,’ ” he said. “You need a committed partner who is committed to pay the toll, not just for a year or two, but at least 10 years.”

By contrast, more than 20,000 miles of new crude-oil pipelines have been built in the past decade, and natural-gas pipeline infrastructure has expanded as well, as production from U.S. shale formations increased rapidly, though these projects are also facing opposition.

But the pipes that carry gasoline, diesel and other fuels haven’t experienced the same growth, because fuel demand isn’t rising everywhere and because some run through more populated areas than where crude is drilled and face more public resistance.

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More fuel trucks expected on roads due to Alabama pipeline explosion

WTOC  /  November 2, 2016

Fuel may not be a problem in the Lowcountry and Coastal Empire, but a higher number of tanker trucks on the roads might be.

The trucks are coming from as far away as Atlanta to get their fuel following the pipeline explosion in Alabama.

Georgia Governor Nathan Deal issued an executive order lifting their driving restrictions.

Fewer tanker trucks will be coming through weigh stations for the next several days. That's because the governor's executive order allows them to bypass weigh stations to make sure gas stations have fuel.

They still have to be safe, though.

"We'll be out patrolling for safety violations. We'll be looking for unsafe drivers, erratic drivers, to try and keep the roadways safe,” said Sgt. Bill Blocker with the Department of Public Safety.

Truck drivers normally can drive 11 hours or 700 miles daily. The executive order lifts both for up to 14 days and prevents price gouging.

"As far as safety, I don't think it's going to affect anybody. The drivers know what they're doing. They're going to rest. They're resting as they're waiting to get loaded. They may have a longer day," said truck driver Randy Chambers.

That longer day mainly a result of long lines to fill up their trucks. Many drivers say they're sure safety won't be a problem.

"It kind of helps us to stop having to run through the weigh scales and slowing down. At a point, it helps. Sometimes it may not,” said truck driver James Hubbard.

"They may work a 20-hour day, but I doubt they'll drive any further because there are longer waits to get loaded up,” said Chambers.

Department of Public Safety officers won't make random stops on these tanker trucks during this emergency period. They will still make sure drivers aren't fatigued and stay safe.

"Of course safety is still our number one priority with the state. We want to make sure our roads remain as safe as possible,” said Sgt. Blocker.

Gov. Deal did ask that you not rush to the pump to get gas. That only causes the demand to spike and in turn prices too.

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Three states suspend hours of service regulations for gas haulers

Overdrive  /  November 3, 2016

Governors in two other states have issued executive orders to suspend hours of service regulations for gas haulers.

Georgia Gov. Nathan Deal signed the order Nov. 1 to suspend the regulations for 14 days through midnight on Nov. 15 for drivers hauling gas into the state.

North Carolina Gov. Pat McCrory signed an executive order to extend the state of emergency he issued during Hurricane Matthew.

“The Colonial Pipeline disruption is a transportation challenge, not a production challenge,” McCrory said in a news release. “With my executive order, we are waiving certain state requirements to facilitate truck transport of gasoline and to protect consumers from price gouging.”

Colonial Pipeline hasn’t said when gas will begin flowing through the ruptured line again, but initially said it could be down for up to a week.

In the wake of the September spill that disrupted the Colonial line to the East Coast, Illinois-based fuel hauler Dave Marti (pictured), whose small fleet runs leased to Transport Service Inc., noted the pipeline disruption presented opportunities for tank haulers but that, in his case, getting away from primary work on short notice just wasn’t possible then given the farming community his trucks serve. “We just can’t get away,” he said in September. With harvests slowed significantly since then, opportunities might arise for haulers within the relative orbit of the explosion.

Original story follows:

Alabama Gov. Robert Bentley issued Tuesday an emergency declaration following an Oct. 31 explosion of a gasoline pipeline in Helena, Alabama, effectively relaxing hours-of-service regulations for gasoline haulers operating in the state.

The pipeline that exploded is part of the same Colonial Pipeline that leaked in September that caused gas shortages in several states along the East Coast. The pipeline runs from Texas to New York and New Jersey. Several states issued emergency declarations as a result of that leak.

Bentley’s State of Emergency declaration suspends hours regulations for any drivers or carriers providing aid through pipeline repair or fuel transportation for 30 days through Dec. 1, unless the order is canceled sooner.

Colonial Pipeline representatives said the gasoline pipeline, Line 1, will likely remain shut down the rest of this week. Line 2, which transports diesel, jet fuel and other distillates, was restarted late Oct. 31 and is expected to remain in operation.

Colonial says the incident occurred at approximately 3 p.m. local time Oct. 31, when a crew working on a permanent fix for the gasoline pipeline struck the pipeline with a trackhoe, sparking a fire and explosion that killed one worker and injured four others. The fire has since been contained.

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What Happens When the Most Important Pipeline in the U.S. Explodes

Bloomberg  /  November 4, 2016

The 5,500-mile Colonial delivers about half of the refined products used on the East Coast.

On Monday, a construction crew in Alabama triggered a massive explosion when a track-hoe struck the biggest fuel pipeline in the U.S. The blast killed one person, injured several, and sparked a wildfire that burned for nearly a day across 31 acres.

It also stopped the flow of millions of gallons of gasoline that move up the East Coast each day, from refineries in Houston to tanks in Linden, N.J., outside New York Harbor. The 5,500-mile Colonial Pipeline delivers about half of the refined products used on the East Coast. It consists of two lines—one that carries gasoline, the other that carries distillate fuels such as diesel and jet fuel. Think of it as the country’s fuel aorta.

The consortium that owns Colonial includes private equity behemoth KKR, industrial conglomerate Koch Industries, and oil-and-gas supermajor Royal Dutch Shell. The fact that it’s so little known, yet such a vital piece of infrastructure, is a testament to how well Colonial has been run over the years.

But this is its second outage in two months. In September, a spill leaked 250,000 gallons of gasoline and caused states of emergency to be declared in Georgia and Alabama as gasoline ran out in some areas. The Colonial was down for 12 days.

The U.S. has plenty of gasoline in storage. Tanks are brimming with near-record levels of supply. But that was true in September as well, when the outage caused all kinds of disruptions and price spikes.

“All that supply does you absolutely no good if you can’t move it around,” said Phil Flynn, a senior market analyst with the Price Futures Group in Chicago.

By Tuesday morning, Colonial’s Line 2, the distillate pipe, was up and running. By Tuesday afternoon, news broke that its main line, Line 1, would be back up by Saturday afternoon, an optimistic timetable, according to some traders, given the level of destruction at the site. Still, the news helped cool the initial spike in the price of gasoline futures, which had jumped the most since 2008, fueled by a record level of trading that day.

Traders in Houston working for big refineries have had to find a place to put all the excess barrels of gasoline and diesel they normally would send into the Colonial. That has set off a bidding war for the limited number of tankers and barges available to move products between U.S. ports. An obscure maritime law called the Jones Act requires that only U.S.-made, U.S.-flagged ships can deliver goods between ports. According to Bloomberg vessel-tracking data, about 27 Jones Act vessels were in service around the U.S. Gulf and the East Coast as of Thursday morning.

Ship owners have been able roughly to double the price they charge to lease their tankers and barges, said Court Smith, a research analyst at MJLF & Associates, a shipping brokerage in Connecticut. Depending on how long the outage lasts, the federal government could waive the Jones Act, as it did after Hurricane Sandy in 2012, to alleviate fuel shortages in the Northeast.

Traders who can’t get their hands on Jones Act ships will have to find tanks on land. Floating storage has also become a thing, where people lease ships to store their product. Refiners along the Gulf can also start changing the slate of products they make. The worst option for them is to throttle back and produce less, which would eat into their profits.

If it’s anything like the September outage, a fleet of vessels bringing imported gasoline will start heading to the U.S. East Coast, where they can probably fetch higher prices. During the second half of September, gasoline imports to the East Coast jumped from about 500,000 barrels a day to 800,000 barrels a day.

One vessel, the Flagship Violet, made its way from India eventually to New York harbor. It never unloaded and has been sitting outside New York harbor ever since, laden with 500,000 barrels of alkalyte, a distillate used to raise the octane in gasoline, according to data from ClipperData, a petroleum market research firm. On Nov. 1, the vessel changed its destination for the first time in a month, to a location within New York harbor.

The outage is good news for refineries on the East Coast that can take those imported barrels.

“The clear winners here are the Philadelphia-area refiners,” said John Mayes, director of special studies at Turner Mason, an energy consulting firm in Dallas. Shares of PBF Energy, which owns a large refinery outside Wilmington, Del., spiked on Tuesday by 12 percent in early trading, though they have since come down.

Given the assurances from Colonial and what has so far been a more muted market response, some participants think the outage will be less severe than the one in September, when gas stations in Alabama and Georgia ran out of fuel. “We’re not going to see pumps getting bagged,” said Ernie Barsamian, a principal at the Tank Tiger, a tank-storage broker in New Jersey.

The September outage prompted a cannonball run as tanker trucks raced to deliver gasoline from the Midwest to the Southeast. “You saw trucks driving all night from Indiana, Illinois, and Ohio, down to Alabama and Georgia,” said Tom Kloza, chief analyst at the Oil Price Information Service. Although the outage is supposed to be contained by Saturday, Kloza is expecting the impact to be similar to what happened in September.

No matter how long it lasts, the Colonial outage will probably lead to higher gasoline prices in the days leading up to the presidential election in states such as Tennessee, Georgia, and the Carolinas. Normally, spiking prices at the pump as Americans go to the polls could spell trouble for the incumbent party. But the impact will likely be smaller, given how cheap gasoline has been over the past two years. 

“I think gasoline prices on Election Day will be 15¢ to 20¢ higher than they were last year,” Kloza said. “But let’s remember, that’s still $1.35 lower than they were in 2012.”