Some of US cities supplied by the West Shore pipeline had to turn to unconventional supply sources this summer in order to meet area gasoline and diesel demand in the months since the indefinite closure of the Chicago-area refined products pipeline.
On July 6, the barge the GM 6506 arrived at the Port of Green Bay from Whiting, Indiana, at US Oil’s terminal carrying diesel. Green Bay is the northern-most city at the segment of the West Shore pipeline that has been shut since March, and has been importing approximately two barges per week of gasoline and diesel since May through the Michigan Great Lakes in order to supply the local markets.
“We were exporting diesel, gasoline and ethanol to the East Coast last year and the previous year, but this year we’ve flipped to an importer,” said Dean Haen, director of the Brown County Port and Resource Recovery Department.
The new reality is a result of West Shore Pipeline’s decision to indefinitely shut the northern stretch of its line, which connects Milwaukee to Green Bay. The 115-mile stretch of refined products line has been shut since March after “unique conditions” were discovered. In June its operator and part-owner Buckeye Partners LP announced that the closure would be indefinite as it evaluates alternatives to rebuilding the line.
The closure has forced the four-year-old Green Bay port to flip from being an exporter of upwards of 100,000 mt per year to an importer, Haen said. According to the county’s recovery department data, domestic exports of petroleum products are down 77%. By May 2015, the Port of Green Bay had exported 41,658 mt, or 300,000 barrels, of petroleum products, but so far this year it has only exported 9,741 mt.
The petroleum product flows switched to imports, of which they had none in all of 2015 and Haen said they had not done since the port opened. Through May 2016, the most recently available data, the port imported 5,135 mt.
Port of Green Bay petroleum product cargoes (metric tons)
|May 2015||May 2016||YTD 2015||YTD 2016||YTD %|
Haen said imports of gasoline and diesel have been coming from Montreal, New York and Toledo, and diesel can be shipped from Chicago.
Pricing points further down the supply chain from Green Bay, such as Michigan, have also been affected. In Michigan’s Energy Appraisal summer outlook for 2016, it explained that fuel is typically transported to Green Bay via the West Shore pipeline, then companies supply the city of Cheboygan, the Upper Peninsula of Michigan and northern Wisconsin.
“As a result of the pipeline loss, concerns have been raised regarding the supply of fuel to these regions,” the report states. “Using additional tanker trucks, rail cars, and in the case of Cheboygan, barges, the petroleum companies have thus far been able to provide an adequate supply of gasoline and diesel to the UP and Cheboygan markets despite the pipeline outage. However, as the summer driving season approaches and demand increases, supplies may become tight, resulting in price increases.”
As the point farthest removed from the rest of the Chicago pipeline complex, Green Bay diesel and gas prices have soared.
DTN, a rack data service provider, showed Green Bay gasoline has jumped 18 cents/gal in a week to $1.75/gal on July 4, the highest since November 2015. Diesel prices on Thursday were $1.67/gal, according to DTN, and unleaded gasoline in the region was valued at $1.575/gal on Thursday.
Wisconsin Governor Scott Walker issued a state of emergency in May to allow truckers transporting petroleum products to work longer hours following the shut down of the West Shore Pipeline, which he warned “may trigger widespread terminal outages and shortages of petroleum products in the Green Bay area.” Michigan Governor Rick Snyder declared a similar state of emergency in May and then extended it in June.
Haen said he has heard that it costs about 2 cents/gal to ship fuel on the West Shore pipeline, about 4 cents/gal to ship on barges and between 6 to 8 cents/gal to truck fuel.