Colonial Pipeline Shippers Report Comms Outage

Colonial Pipeline Shippers Report Comms Outage
Fuel shipments haven't been disrupted, stated Colonial.

(Bloomberg) -- Colonial Pipeline, the crucial U.S. fuel pipeline that’s been trying to recover from a debilitating criminal hack 10 days ago, is once again facing network disruptions that left customers in the dark about fuel shipments.

The computer system that allows oil refiners and other clients to reserve space and monitor the status of fuel traveling through the pipeline was inaccessible as of Tuesday morning, Colonial confirmed in an email. The company sought to calm any concerns the outage may presage another disaster like the shutdown earlier this month that crippled gasoline and diesel deliveries across the U.S. Southeast.

Fuel shortages continue to plague some cities and towns as Colonial works to fully restore the pipeline that supplies almost half the East Coast’s fuel and was halted for the better part of a week. The latest server disruptions stemmed from efforts to harden its systems and “were not related to the ransomware or any type of reinfection,” according to the statement. Fuel shipments haven’t been interrupted, the company said.

The outage means fuel distributors will find it more difficult to funnel shipments to supply-choked locations, said Andy Milton, senior vice president of supply at Mansfield Energy Corp., a closely held firm that handles more than 3 billion gallons of fuel a year.

“Without that system, it’s very difficult to divert barrels manually,” Milton said. “Let’s say Charlotte becomes very tight and maybe we can divert barrels from Greensboro to Charlotte to help fill up in the market... If it’s not done quickly, those barrels may go right on past Charlotte and continue on towards Greensboro.”

Gasoline futures traded in New York jumped as much as 1% after Bloomberg News reported Colonial’s communication glitch. Those gains later faded as it became clear there’s been no impact on deliveries.

Deja Vu

“We are working diligently to bring our nomination system back online and will continue to keep our shippers updated,” the company said.

For some Colonial customers, Tuesday’s interruptions were uncannily similar to the early hours of what turned into the worst-ever cyberattack for a North American motor-fuel pipeline. On May 7, shippers began receiving notices of Colonial outages and within hours the company announced a total shutdown to combat the hack.

The company paid almost $5 million in ransom to hackers but managed to keep it under wraps for five days. In the meantime, gas stations from Virginia to Florida ran out of gasoline and diesel, stranding motorists and sending retail prices skyward. Major airlines took extraordinary steps like flying fuel cargoes to other cities to forestall shortages at airports.

The Colonial system, which transports roughly 2.5 million barrels of fuel daily from the Gulf Coast to the eastern seaboard, resumed service on May 12. The restoration of gasoline and diesel supplies has been hindered by a dearth of trucks and drivers to haul deliveries from distribution hubs to retail outlets.

The White House declined to comment on the latest outage. The Energy Department, Transportation Security Administration and Federal Energy Regulatory Commission had no immediate comment.

--With assistance from Jack Wittels and William Turton.

© 2021 Bloomberg L.P.



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