Colonial Pipeline Recovering; Paid Almost $5 Million Ransom

(Reuters) — After a six-day outage, the top U.S. fuel pipeline on Thursday moved some of the first millions of gallons of motor fuels after a crippling cyberattack led to fuel shortages across East Coast states.

The Colonial Pipeline, which carries 100 million gallons per day of gasoline, diesel and jet fuel, said on Thursday it had begun supplying some fuel to most regions along its 5,500 mile (8,850 km) route. It expanded to areas including Baltimore by mid-day, it said.

NBC News reported Colonial Pipeline paid the hackers who shut down some of its networks nearly $5 million in ransom, a U.S. official familiar with the matter said Thursday.

News of the payment was first reported by Bloomberg. The U.S. official did not say how or when the company paid.

U.S. President Joe Biden reassured U.S. motorists that fuel supplies should start returning to normal this weekend, even as more filling stations ran out of gasoline across the Southeast.

The pipeline resumed computer-controlled pumping late Wednesday after adding safety measures.

The shutdown caused gasoline shortages and emergency declarations from Virginia to Florida, led two refineries to curb production, and had airlines reshuffling some refueling operations.

The pipeline's restart should bring supplies to some hard-hit areas as soon as Thursday, said U.S. Energy Secretary Jennifer Granholm. She added that the fuel market should return to normal by the end of the weekend.

"Relief is coming," added Jeanette McGee, a spokeswoman for motor travel group AAA.

Motorists' tempers frayed as panic buying led stations to run out even where supplies were available. On Thursday about 70% of gas stations in North Carolina were without fuel, while around 50% of stations in Virginia, South Carolina and Georgia had outages, tracking firm GasBuddy said.

The average national gasoline price rose above $3.00 a gallon, the highest since October 2014, the American Automobile Association said, and prices in some areas jumped as much as 11 cents in a day.

Katlyn Norton, 29, a mother of two from Mobile, Alabama, was visiting Atlanta on Thursday and filled her GMC SUV at a Midtown Atlanta station that charged $3.43 a gallon for regular unleaded.

"We were supposed to head home today, but I'm not sure we'd get enough gas to make it," Norton said of the roughly five-hour, more than 300-mile trip.

Even as the pipeline resumes pumping, it will take time to replenish stocks. Gasoline inventories in the Northeast likely will fall to five-year lows this week, said Richard Joswick, an analyst with S&P Global Platts.

HACKERS RESURFACE

As FBI cybersleuths dug into an attack that paralyzed a large part of the U.S. energy infrastructure, the group believed to be responsible said it was publishing data from breaches at three other companies, including an Illinois technology firm.

It was not known how much money the hackers were seeking and the pipeline operator has declined to comment. Colonial has a type of insurance that typically covers ransom payments, three people familiar with the matter told Reuters on Thursday.

To stem fuel shortages, four states and federal regulators relaxed fuel driver restrictions to speed deliveries of fresh supplies.

The U.S. also issued a waiver to an undisclosed shipper allowing it to transport gasoline and diesel from the U.S. Gulf coast to East Coast ports on foreign-flagged vessels. The U.S. restricts deliveries between domestic ports to U.S.-built and crewed vessels.

Gulf Coast refiners that move fuel to market on the Colonial Pipeline had cut processing as an alternative pipeline filled to capacity last weekend. Total SE trimmed gasoline production at its Port Arthur, Texas, refinery and Citgo Petroleum pared back at its Lake Charles, Louisiana, plant.

Airlines began refueling planes at their destinations, instead of usual departure points. On Wednesday, Delta Air Lines Chief Executive Ed Bastian said more fuel would be available "hopefully by the end of the week and as long as those predictions come true, hopefully we'll be OK."

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