Hacked Pipeline May Stay Shut for Days, Raising Concerns About Fuel Supply

HOUSTON — The operator of the biggest petroleum pipeline between Texas and New York, which was shut down after a ransomware assault, declined on Sunday to say when it could reopen, elevating issues a few essential piece of infrastructure that carries almost half of the East Coast’s gasoline provides.

While the shutdown has up to now had little affect on provides of gasoline, diesel or jet gasoline, some vitality analysts warned extended suspension may elevate costs on the pump alongside the East Coast and depart some smaller airports scrambling for jet gasoline.

Colonial Pipeline, the pipeline operator, mentioned on Sunday afternoon that it was creating “a system restart plan” and would restore service to some small strains between terminals and supply factors however “will bring our full system back online only when we believe it is safe to do so.”

The firm, which shut down the pipeline on Friday, acknowledged on Saturday that it had been the sufferer of a ransomware assault by a legal group, that means that the hacker might maintain the corporate’s knowledge hostage till it pays a ransom. Colonial Pipeline, which is privately held, wouldn’t say whether or not it had paid a ransom. By failing to state a timeline for reopening on Sunday, the corporate renewed questions on whether or not the operations of the pipeline may nonetheless be in jeopardy.

The shutdown of the 5,500-mile pipeline was a troubling signal that the nation’s vitality infrastructure is susceptible to cyberattacks from legal teams or nations.

Energy specialists predicted that merchants would view the corporate’s announcement on Sunday as an indication that the pipeline would stay shut at the very least for just a few days. Tom Kloza, world head of vitality evaluation at Oil Price Information Service, mentioned he thought gasoline futures would rise 2 to three % starting Sunday evening and Monday.

Nationwide, the AAA motor membership reported that the average price of regular gasoline did not budge from $2.96 a gallon from Saturday to Sunday. New York State prices remained stable at $3, and in some Southeastern states like Georgia, which are considered particularly vulnerable if the pipeline does not reopen quickly, prices moved up a fraction of a penny a gallon.

The pipeline attack came at the beginning of the summer driving season, when fuel prices traditionally rise anyway.

“Even a temporary shutdown will likely drive already rising national retail gas prices over $3 per gallon for the first time since 2014,” said Jay Hatfield, chief executive of Infrastructure Capital Management and an investor in natural gas and oil pipelines and storage.

Goldman Sachs, in a report on Sunday, said that since there was no physical damage to the pipeline, higher fuel prices on the East Coast were “likely to be transient.”

Experts said several airports that depend on the pipeline for jet fuel, including Nashville, Tenn.; Baltimore-Washington; and Charlotte and Raleigh-Durham, N.C., could have a hard time later in the week. Airports generally store enough jet fuel for three to five days of operations.

White House officials held meetings on the pipeline attack over the weekend. The White House press secretary, Jen Psaki, said in a tweet that they are looking for ways to “mitigate potential disruptions to supply.”

To ease the impact, the Transportation Department on Sunday lifted some restrictions on the transport of gasoline, diesel and jet fuel by road to address what it called “emergency conditions.”

One reason that prices have not surged more so far is that the East Coast generally has ample supplies of fuel in storage. And fuel consumption, while growing, remains depressed from prepandemic levels.

Still, there are some vulnerabilities in the supply system. Stockpiles in the Southeast are slightly lower than normal for this time of year. Refinery capacity in the Northeast is limited, and the Northeast Gasoline Supply Reserve, a supply held for emergency interruptions, contains only a total of one million barrels of gasoline in New York, Boston and South Portland, Maine.

That is not even enough for a single day of average regional consumption, according to a report published on Saturday by Clearview Energy Partners, a research firm based in Washington. “Much depends on the duration of the outage,” the report said.

When Hurricane Harvey crippled several refineries on the Gulf Coast in 2017, suspending Colonial Pipeline flows of petroleum products to the Northeast for nearly two weeks, spot gasoline prices at New York Harbor rose more than 25 percent and took nearly a month to ease.

Regional refineries can add to their supplies from Kinder Morgan’s Plantation Pipeline, which operates between Louisiana and Northern Virginia, but its capacity is limited and it does not reach major metropolitan areas north of Washington, D.C.

The East Coast has ample harbors to import petroleum products from Europe, Canada and South America, but that can take time. Tankers sailing from the port of Rotterdam, the Netherlands, at speeds of up to 14 knots can take as long as two weeks to make the trip to New York Harbor.

Mr. Kloza said the Biden administration could suspend the Jones Act, which requires that goods shipped between American ports be transported on American-built and -operated vessels. That would allow foreign-flagged tankers to move additional barrels of fuel from Gulf ports to Atlantic Coast harbors. The Jones Act is typically suspended during emergencies like hurricanes.

“One could make the case that the Biden administration might consider such a move sooner rather than later if Colonial software issues persist,” Mr. Kloza said.

Source link Nytimes.com

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