Bloomberg News

U.S. Studies Vulnerability of Fuel Pipelines to East Coast

March 19, 2012

The U.S. is studying the vulnerability of Colonial Pipeline Co. and Kinder Morgan Energy Partners LP (KMP) pipelines that carry fuel from Gulf of Mexico refineries to the East Coast, the U.S. Homeland Security Department said today.

“We will be conducting analysis to better understand how disruptions to Colonial’s pipeline and Plantation pipelines could affect the broader critical infrastructure,” said Brandon Wales, director of the department’s Homeland Infrastructure Threat and Risk Analysis Center.

Wales was responding to lawmaker questions about the risk of terrorist attacks to energy assets during a hearing webcast by a U.S. House Homeland Security Committee panel from Aston, Pennsylvania, today.

The agency has conducted more than 60 vulnerability assessments for U.S. pipeline infrastructure in the past several years, Wales said.

“Our primary concern would be a prolonged damage to the pipeline that kept it down more than a week, more than two weeks,” said Wales. “Once you start getting beyond a week or two the ability for the excess inventory at terminals along its route starts to be diminished and then you start to have more serious impacts.”

Sunoco, ConocoPhillips

Sunoco Inc. (SUN), which owns three plants on the U.S. East Coast and announced plans to exit refining in September, lost $1.68 billion in 2011 as the profit margin for turning oil into fuel shrunk to the lowest point since 2009, according to data compiled by Bloomberg.

Sunoco announced Dec. 1 the immediate idling of the 194,000-barrel-a-day Marcus Hook refinery in Pennsylvania. The company will decide by July whether to halt production at its 355,000-barrel-a-day Philadelphia refinery. ConocoPhillips (COP) stopped processing crude at the 190,000-barrel-a-day Trainer, Pennsylvania, plant on Sept. 30.

Colonial operates 5,500 miles of pipeline delivering gasoline, diesel, jet fuel and other refined products from Gulf Coast refineries to markets across the U.S. South and East Coast.

Kinder Morgan operates more than 8,000 miles of pipelines across the U.S., including the 3,100-mile Plantation system delivering petroleum products from the Gulf Coast to states in the southeast U.S. and along the East coast.

To contact the reporters on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net; Aaron Clark in New York at aclark27@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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