Colonial Shuts Key Fuel Line to New York Harbor After Spill

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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 booster 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 company said an equipment failure had resulted in the leak, and this was being repaired.

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.

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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 outage coincided with the largest weekly drop in US gasoline demand since March 2020. The weakness for consumption means fuel producers on the Gulf Coast are feeling the pinch from the pipeline disruption more than consumers: Gulf Coast gasoline fell by a couple cents per gallon against futures following the outage, while New York markets also softened. East Coast gasoline supplies have been building over the past few weeks during a seasonal demand lull worsened by a severe winter storm.

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 provide details about the volume and product that leaked.

(Updates with additional comments from Colonial in second paragraph and price movements in sixth paragraph)