Its more than 5,500 miles of pipelines, most of it underground, pass through more than a dozen states with major lines that cut across the northern portion of metro Atlanta. In the past, Colonial has said it transports about 45% of all fuel consumed on the East Coast, ultimately serving more than 50 million people, seven airports and the U.S. military. Its lines carry different grades of gasoline, diesel, jet fuel and home heating oil, among other products.
The company has storage capacity for 28 million barrels along its system, according to Colonial’s web site. At 42 gallons a barrel, that’s enough space for 1.18 billion gallons. But it wasn’t immediately clear Monday how much of that space is filled.
More broadly, throughout the U.S. there are 84,000 miles of pipelines that deliver crude oil to 135 refineries and 63,000 miles of pipelines used to ship gasoline, diesel and jet fuel from U.S. refineries to local regions, according to the Association of Oil Pipe Lines. The association said Americans consumed 142 billion gallons of gasoline in 2019. But fuel use fell sharply last year amid the pandemic shutdowns. While gasoline consumption is expected to rise this year, it is still forecast to be below 2019′s level, according to the U.S. Energy Information Agency.
Have local fuel supplies and prices been affected?
The ransomware attack may have only limited regional impact — if Colonial can get its system back online quickly. On Monday, the company said it has a “goal of substantially restoring operational service by the end of the week.”
AAA predicts gasoline prices in the region could rise three to seven cents per gallon this week, but that there also could be “limited fuel availability.” A spokeswoman cautioned that prices could go higher and shortages spread if the shutdown lingers.
The average prices for a gallon of regular unleaded in Georgia on Monday was $2.76, up 6 cents from a week ago.
In metro Atlanta, GasBuddy logged the price of a gallon at about $2.83, an increase of nearly 8 cents from the day before. And the company turned on its app’s “fuel availability tracker” feature for the Southeastern states, including Georgia, that it thinks might become the most impacted.
Retailers have been trying to line up alternative supplies for gasoline, including the possibility of buying fuel that is barged into Jacksonville, according to Angela Holland, the president of the Georgia Association of Convenience Stores. She said retailers have outlasted pipeline shutdowns in the past and she predicted shortages would be limited locally if consumers don’t panic.
Jet fuel carried by Colonial is used at Atlanta’s Hartsfield-Jackson International Airport. On Monday, the airport said it has yet to be affected and that it and airlines are coordinating with additional suppliers to augment the airport’s fuel inventory.
What are the basics on the company itself?
Colonial was founded in 1962 by nine oil companies and launched into a massive project to build a multi-state pipeline system. Colonial has been based in metro Atlanta for decades. In 2001, it moved its headquarters and, at the time, about 300 employees, to Alpharetta.
The company had operating revenue of $1.32 billion last year, down from $1.39 billion the year before, according to a Colonial filing last month with the Federal Energy Regulatory Commission. It had net income of $421.6 million, up from $404.7 million the year before.
Colonial’s current owners include CDPQ Colonial Partners, L.P., IFM (US) Colonial Pipeline 2, LLC, KKR-Keats Pipeline Investors, L.P., Koch Capital Investments Company, LLC and Shell Midstream Operating, LLC. Joe Blount has served as Colonial’s CEO since the fall of 2017.
Some shippers have pending complaints with the federal government claiming that Colonial’s rates are “unjust and unreasonable,” according to a filing by Colonial. The pipeline company said in a filing that it has “substantial defenses” to the complaints but if it fails, it could have “material adverse impact on the Company’s financial condition, its results of operations, and its overall liquidity.”
Have there been any past pipeline issues?
Colonial’s pipelines have suffered shutdowns and leaks in the past. It temporarily closed off pipes in the wake of flooding from Hurricane Harvey in 2017, for example, and after Hurricanes Katrina and Rita. In 2016, leaks and a fire caused problems on a line in Alabama that cut into supplies in metro Atlanta and prices spiked at local gas pumps.
The company in the past had proposed building another major pipeline to metro Atlanta. The $1-billion project, once slated for completion in 2010, ran into questions about demand and rising prices. The company suspended the project more than a decade ago, and in 2016 a Colonial spokesman said the project “was no longer viable,” according to an Atlanta Journal-Constitution story at the time.