Gasoline Prices Surge in Northwest After Canada Gas-Pipe Rupture



(Bloomberg) -- A natural gas pipeline rupture in British Columbia is forcing refineries in Washington to cut output, pushing gasoline prices higher in the Pacific Northwest.

Enbridge Inc.’s WestCoast Mainline ruptured near Prince George late Tuesday, the company said in a statement. The line carries gas to refineries in Washington state to operate units that process crude oil into gasoline, diesel and other fuels, as well as to utilities in the region.

The fire on the system’s BC Pipeline has been extinguished, Michael Barnes, a company spokesman, said Wednesday in an emailed statement. The line, along with an adjacent one, has been depressurized, and he said the company “cannot speculate about how long it will take to resolve the situation.”

Royal Dutch Shell Plc said it’s shutting units at its Puget Sound refinery north of Seattle after losing its gas supply and Phillips 66 shut its refinery in Ferndale, Washington, according to the local fire department. They’re among at least four refineries in the region that have been affected.

Wholesale gasoline in Portland, Oregon, jumped 11 cents Wednesday to 36 cents a gallon over New York-traded futures contracts, the highest level in more than a year, according to data compiled by Bloomberg. Markets farther down the coast are also getting stronger, with San Francisco climbing 5 cents a gallon.

It’s not just fuel prices being affected. Canadian crude sank to record lows relative to the U.S. benchmark, according to market participants. The refineries in northwest Washington receive oil from Alberta via the Trans Mountain pipeline, and any reduction would add to a glut in Canada.

‘No Cushion’

“The entire western Canadian system is in a very fragile place at this time because of the surplus,"  Kevin Birn, a director on the North American crude oil markets team at IHS Markit, said by phone. “There is no cushion left to absorb any bumps in the system.”

The Enbridge rupture is cutting flows to the Northwest Pipeline system, the primary artery for natural gas delivered to the U.S. Pacific Northwest and Intermountain region. Williams Cos., the conduit’s owner, said in a website notice that it’s asking customers to reduce loads to protect the integrity of the line.

The Enbridge pipeline is part of its Westcoast Energy network, and carries as much as 2.9 billion cubic feet of gas a day -- supplying half of the demand from Washington, Oregon and Idaho -- from the Fort Nelson processing plant in northern British Columbia to the U.S. border. The 1,751-mile (2,818-kilometer) line connects to gas fields as far north as the Yukon and Northwest Territories.

Gas Supplies

The shutdown also has the potential to cut gas supplies to as many as 700,000 Fortis Inc. customers in Vancouver and other parts of western Canada, Fortis said in a statement Wednesday. The company may seek to augment its supply from other pipelines. In Washington, Avista Corp. and Puget Sound Energy are both asking customers to curtail usage.

Marathon Petroleum Corp. is running units at its Anacortes facility at minimum rates, according to a person familiar with the situation. A spokesman for BP Plc’s Cherry Point had no immediate information. It was one of several companies that notified the Northwest Clean Air Agency that they have curtailed operations, Seth Preston, the agency’s spokesman, said by phone. Trailstone Group said its Tacoma refinery hasn’t been affected.

With assistance from Barbara Powell, Lucia Kassai, Robert Tuttle and Brian Eckhouse. To contact the reporter on this story: David Marino in New York at dmarino4@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Will Wade, Steven Frank.



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