Major Energy Pipeline To US East Coast Shut Down After Cyberattack

A cyberattack has forced Colonial Pipeline to halt operations of its 5,500 miles of pipeline, which transports approximately 45% of all fuel consumed on the East Coast.

What Happened: Colonial Pipeline, one of the largest pipeline operators in the U.S., said in a statement that it took certain systems offline on Friday and temporarily halted all pipeline operations, after learning that it was a victim of a cyberattack.

Colonial has engaged a third-party cybersecurity firm to launch an investigation, and federal authorities and law enforcement have also been contacted. 

"At this time, our primary focus is the safe and efficient restoration of our service and our efforts to return to normal operation. This process is already underway, and we are working diligently to address this matter and to minimize disruption to our customers and those who rely on Colonial Pipeline," the statement read.

It is the biggest gasoline pipeline in the U.S., and the disruption could affect supplies of both gasoline and diesel fuel, according to Bloomberg. 

Bloomberg also reported that the attack has the hallmarks of a ransomware group called DarkSide, though Colonial has not confirmed this group was behind the attack.

Colonial Pipeline is a private company owned by CDPQ Colonial Partners, LP; IFM (US) Colonial Pipeline 2, LLC; KKR-Keats Pipeline Investors, LP; Koch Capital Investments Company, LLC; and Shell Midstream Operating, LLC, according to the company's website.

Publicly traded parent companies in that mix include private equity giant KKR & Co KKR and Royal Dutch Shell Plc RYDAF.

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Why It Matters: Colonial transports approximately 45% of all fuel consumed by the East Coast. A shutdown could hit energy markets in the coming days.

The company’s pipeline transports 2.5 million barrels each day, taking refined gasoline, diesel fuel and jet fuel from the Gulf Coast up to New York Harbor through 5,500 miles of pipelines.

The New York Times reported that there has as of yet been little effect on fuel prices. Gasoline and diesel futures rose about 1 percent on the New York Mercantile Exchange on Friday, and prices at gas stations in New York State were up just a penny today.

“It’s a serious issue,” NYT quoted Tom Kloza, analyst at Oil Price Information Service, as saying. “It could snarl things up because it is the country’s jugular aorta from moving fuel from the Gulf Coast up to New York.”

The company also had to shut down its gasoline and distillate lines during Hurricane Harvey, which hit the Gulf Coast in 2017.

Colonial Pipeline isn't the sole supplier of fuel to the East Coast. In addition to fuel from local refineries and shipments from outside the country, there is the Plantation pipeline owned by Kinder Morgan Inc KMI and Exxon Mobil Corporation XOM, Bloomberg said.

Photo by M Mitchell on Unsplash.

Story updated to add more details reported throughout the day.