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New York Harbor oil network slowly recovering after Sandy

(Reuters) - The New York area's energy network slowly resumed operations on Friday, five days after Hurricane Sandy shut down the pipelines, fuel terminals and refineries that serve the country's densest consuming region.

Phillips 66's 238,000 barrel-per-day Bayway refinery in Linden, New Jersey, could be weeks away from restarting due to heavy damage caused by salt water flooding, a source familiar with refinery operations said on Friday.

Power outages have kept Hess Corp's nearby 70,000 bpd plant in Port Reading, New Jersey, shut down. The company has used generator power to resume operating Port Reading's truck rack, and marine operations there have resumed on a limited basis while an assessment of the factory is being completed.

In an effort to reduce the impact of crippled fuel flows in the Northeast, U.S. Secretary of Homeland Security Janet Napolitano issued a temporary blanket waiver of the Jones Act on Friday. The move allows foreign oil tankers from the Gulf of Mexico to enter Northeastern ports to provide additional fuel resources, a service usually restricted to domestic vessels.

New York Governor Andrew Cuomo said on Friday that New York Harbor is now open to vessels carrying refined fuels to alleviate the shortage gripping the New York and New Jersey metropolitan areas.

About half of the region's gasoline and diesel comes from the Gulf Coast via the Colonial Pipeline or via tanker from overseas.

Despite some continued disruptions to supply, other critical terminals and refineries continued to reopen on Friday.

Colonial Pipeline, the 825,000 bpd conduit that ships fuel from the Gulf Coast to the East Coast, said it had restarted a large section of Line 3, its Northeast mainline that runs from Greensboro, North Carolina, to Linden, New Jersey, on Thursday. It also resumed deliveries at its key Linden junction to a connected Buckeye terminal.

"While Colonial's pipelines and facilities were spared significant damage, many of the terminals in the Linden area will require days if not weeks to fully recover," it said.

Kinder Morgan Energy Partners, one of a handful of companies operating dozens of oil terminals and storage tanks that are critical links in the supply chain, said it should resume shipments from its New York and New Jersey terminals in the next day or two. Other operators have indicated they should be able to resume shipments as soon as power is restored.

The storm damaged four diesel storage tanks at Motiva Enterprise's terminal at Sewaren, New Jersey, and two of them leaked fuel into the Arthur Kill waterway, which separates Staten Island from New Jersey.

PIPELINES, PORTS, TERMINALS, KEY POWER RESTARTS

* Kinder Morgan said on Thursday it would resume shipping from its New York and New Jersey terminals in the next day or two, after the company brought in generators to power pumps and other equipment. The terminals in Carteret and Perth Amboy in New Jersey and in Staten Island, New York, will begin to receive and move refined fuels in the next 24 to 48 hours.

* Royal Dutch Shell said Thursday that all its New York borough terminals were still down. Its Shell-branded network was 84 percent open in Connecticut, 47 percent open in New Jersey, 62 percent open in New York and 83 percent open in Pennsylvania.

* Motiva Enterprises said on Wednesday it reopened more of the fuel terminals it shut because of Hurricane Sandy, but four terminals in Sewaren and Newark, New Jersey, and Brooklyn and Long Island, New York, have no restart date.

* Magellan Midstream Partners, one of the largest U.S. pipeline and storage terminal companies, said it now has limited operational capacity to receive inbound vessels and barges at its New Haven terminal.

* U.S. pipeline and storage terminal company NuStar Energy said Wednesday its Paulsboro, New Jersey, terminal was back in operation, but that damage assessment showed significant high-water damage to the marine and storage terminal.

* NuStar's Piney Point, Andrews AFB and Baltimore terminals, in Maryland, were all back in operation, the company said on its website.

* NuStar said its Virginia Beach terminal was back in operation, while the Dumfries terminal, also in Virginia, was expected to be back by October 31 midnight.

* Buckeye Partners said its main New York Harbor area terminal in Linden, New Jersey, was reconnected to its power supply and fully operational by noon on Friday. The company expects its two other New York area terminals in Inwood and Long Island City to return to service by November 2 midnight. The company is supplying jet fuel to the three airports in the New York City area.

* Hess Corporation said on Friday that its Port Reading refinery was still without power, but an assessment of the refinery is under way with initial reports that there has been no damage to berths or docks. The Port Reading terminal has used generators to resume truck rack operations, and marine operations have continued there on a limited basis. Rack operations have also resumed at the company's Bronx and Roseton, New York, terminals, but operations at the company's other New York Harbor area terminals remain suspended due to flooding and power outages.

* Phillips 66's 238,000 barrel-per-day Bayway refinery in Linden, New Jersey, is weeks from restarting after damage caused by salt water flooding during Hurricane Sandy, a source familiar with refinery operations said. The company's Tremely Point, New Jersey, terminal remains shut down as well, but its Riverhead Terminal on Long Island has reopened and its Linden, New Jersey, terminal was to reopen at 2 p.m. Friday with limited services to aid emergency personnel.

(Reporting by Janet McGurty, Edward McAllister and Selam Gebrekidan in New York, Kristen Hays in Houston, Shruti Chaturvedi in Bangalore and Jeffrey Jones in Calgary; Editing by Phil Berlowitz, Marguerita Choy, Theodore d'Afflisio and Leslie Adler)

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