US oil traders rush to find alternative options after cyber attack shuts down pipeline
Sellers are seeking barges and ships to deliver fuel that would have otherwise been shipped on the Colonial Pipeline system
Fuel suppliers are rushing to secure alternative methods of delivery to avert fuel shortages from Atlanta to New York after a ransomware attack shut down the nation’s biggest oil products pipeline.
Traders and fuel shippers are seeking barges and ships to deliver petrol that would have otherwise been shipped on the Colonial Pipeline system.
Others are securing tankers to temporarily store petrol in the US Gulf in the event of a prolonged shutdown.
Colonial Pipeline halted all operations on its system as a precautionary measure on Friday after suffering a cyber attack that affected some of its information technology systems, the company said on Saturday.
It is working to restore operations, although no timetable for a restart is yet available.
The attack comes just as the nation’s energy industry is preparing to meet stronger fuel demand associated with summer travel.
Petrol demand has grown steadily this year as the nation’s most populous states emerge from lockdowns and ease most economic restrictions that were intended to limit the spread of Covid-19.
As more Americans are vaccinated, many are once again commuting to the office, planning summer trips for the first time and booking flights.
In preparation, US refiners have been ratcheting up their operations to levels seen before the outbreak devasted oil demand last March.
The pipeline is a key component in delivering petrol, diesel and jet fuel to the East Coast from the nation’s refining belt along the US Gulf Coast.
It has the capacity to send about 2.5 million barrels per day on its system from Houston as far as North Carolina, and another 900,000 bpd to New York.
Ransomware cases involve hackers seeding networks with malicious software that encrypts the data and leaves the machines locked until the victims pay the extortion fee.
This would be the biggest cyber attack on a US fuel pipeline.
A key concern at present is meeting product demand in the US south-east, which is especially dependent on the Colonial system.
The north-east can secure petrol shipments from Europe, where there has been an excess of product recently due to extended lockdowns there.
An alternative might be to use the Kinder Morgan operated Plantation Pipeline, although it only extends as far north as the capital Washington.
Its capacity at 720,000 bpd is far short of Colonial’s and already has other users moving supplies.
Updated: May 9, 2021 05:59 PM