UPDATE 3-NY energy hub mends, slowly, as fuel lines shrink

Mon Nov 5, 2012 5:58pm EST

* Gasoline lines shrink as terminals operations resume

* Supply worries remain in New York, New Jersey

* Leak reported at Phillips 66 Bayway refinery

* 10 of 57 terminals in Sandy's path still shut -Energy Dept

By Selam Gebrekidan

NEW YORK, Nov 5 (Reuters) - The New York Harbor energy network inched closer to recovery on Monday, one week after powerful storm Sandy ripped through one of the nation's biggest fuel trading hubs, and miles-long gasoline lines that infuriated drivers began to ebb.

More supplies arrived in the New York and New Jersey region aboard barges and restarted pipelines. Many of the fuel terminals that dot the harbor resumed service, although at least 10 of them remained shut.

There was no word on progress at two idled New Jersey refineries, which account for a quarter of the region's capacity.

Just as oil traders breathed easier as the wholesale market mended, motorists found some relief on the roads.

While travel group AAA estimated that more than a third of the region's retail outlets were still shut -- either because they did not have power or days of panic buying had drained them -- the outlook was improving by the day.

"By the end of this week we still won't be back to normal, but the situation should at least be manageable," said Ralph Bombardiere, head of Gasoline and Repair Shop Association of New York.

"While more (stations) now have power restored, the increased demand they're seeing is emptying the tanks faster than normal," he added.

Long lines persisted in northern New Jersey, where many gas stations do not have power and are not able to connect to generators. But in parts of the state just east of New York City, only a few dozen cars were lined up by gas stations.

In New York, between 60 percent to 65 percent of gas stations were open Monday, according to AAA's estimates, but they could hardly keep up with the growing demand. Some 55 percent to 60 percent were open in New Jersey.

Any progress made unraveling the supply issues could soon be undone by a cold storm charging toward the Northeast and expected to hit the coast on Wednesday.

Heating oil terminals were returning to service in the Bronx and Brooklyn boroughs of New York City. Barge supplies to a Brooklyn heating fuel terminal expected to arrive on Sunday night, were coming in on Monday, according to the New York Oil Heating Association.

"We're taking the supply situation one day at a time and we will have enough to last until mid-week," said John Maniscalco, who heads the association.

Hess Corp., one of the biggest retailers on the East Coast, took the unusual step on Sunday of publishing inventory levels - normally considered a commercial secret - at all of its regional stations to help motorists find gasoline.

BACK AFTER A BREAK

Suppliers in Linden, New Jersey, a major fuel hub that serves that state and New York, were revving up after mainline power returned on Sunday.

Colonial Pipeline started delivering to a third of its customer terminals from its Linden facility on Sunday, a spokesman said. Colonial expects five more customer terminals to resume operations this week.

Buckeye Pipeline said it had restarted pipelines that service New York City, northern New York state and New Jersey on Saturday. Nustar Energy LP hoped to restart deliveries from Linden "very soon," a spokesman said, with the actual timing still unclear.

The U.S. Coast Guard opened the Arthur Kill waterway to vessels on Monday on condition they move slowly along its waters. New York Harbor is also open to vessels so long as they can find safe harbor in one of the coastal terminals.

One tanker, the Glory Express, was on the waterway on Sunday afternoon headed to Kinder Morgan's Carteret terminal in New Jersey, according to Reuters shipping data.

Hess said on Sunday night that it was expecting its first barge and pipeline shipments at its Port Reading, New Jersey, terminal. Power was partly restored to the 70,000-bpd Port Reading refinery on Saturday.

POST-SANDY SPILLS

Only 10 of the 57 fuel terminals that were in Sandy's path were still shut on Monday afternoon, according to the U.S. Energy Department. But some of those were large facilities, such as Motiva's 5 million barrel Sewaren tank farm, where cleanup efforts were nearly complete after two tankers spilled 378,000 gallons of diesel into the Arthur Kill waterway.

By Monday, authorities had cleaned up 322,000 gallons of the leaked diesel, according to Larry Ragonese, a spokesman with the New Jersey Department of Environmental Protection.

The full extent of the damage Sandy wrought on the energy network was still emerging on Monday.

The U.S. Coast Guard said Phillips 66's Bayway refinery in Linden, New Jersey, leaked about 7,770 gallons (185 barrels) of fuel after the storm struck.

The 238,000-barrel-per-day refinery was shut ahead of Sandy's arrival and remained idle over the weekend while the company assessed the damage. Phillips 66 did not return emails and phone calls seeking comment on Monday.

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