The Colonial Pipeline transports more than 100 million gallons of fuel each day from Houston, Texas, to the New York Harbor. Hear how refined product moves across this 5,500-mile system, and how it comes back online after a disaster strikes.
John Eichberger, Executive Director, The Fuels Institute and Jeff Lenard, VP Strategic Industry Initiatives, NACS
About our Guest
Daniel Gordon, VP & Chief Commercial Officer, Colonial Pipeline Company
Daniel Gordon is Vice President, Chief Commercial Officer. In his role, Gordon leads Colonial’s commercial affairs functions by maximizing opportunities to grow the company and position Colonial for long-term success.
Gordon brings approximately 20 years of commercial affairs experience to his new role at Colonial, all focused in the energy industry. Most recently, he was Executive Vice President, Business Development for Delek US Holdings, Inc. He began his career with RaceTrac Petroleum. There he served as Executive Director of Supply and Distribution, where he oversaw the distribution of more than two billion gallons of refined fuels and directed supply and trading, scheduling, commercial, and transportation. In this role, he also gained valuable insight into Colonial Pipeline as a shipper on the system.
00:05 Introduction [Music]
You’re listening to Convenience Matters, brought to you by NACS. Whether it’s for food, fuels, drinks or snacks, about half of the US population shops at a convenience store every day. We talk about what we see at stores and what the future may hold for our industry.
00:16 John Eichberger
Welcome to Convenience Matters, my name is John Eichberger with NACS and I’m joined today by my co-host…
00:23 Jeff Lenard
Jeff Lenard, also with NACS.
You know, Jeff, today’s a great program. You know, we sell a lot of gas in the convenience industry. A lot of diesel fuel and the number.one method of moving product from this point of production to our stores is through the pipeline and I’m thrilled to have Dan Gordon from Colonial Pipeline on the on the program today who is part of the Fuels Institute Board of Advisors and we are going to chat about how the pipelines work, how they make sure the product gets where it needs to be, when it needs to be there so that we can rely upon dependable transportation energy at a reasonable price and always be able to get the product we need when we need it. So, Dan thank you very much for joining us on Convenience Matters today.
01:03 Dan Gordon
Thank you, I appreciate the invitation and opportunity to be here and speak with you all.
And I think it’s great that we have you on this program to talk about pipelines because you’ve got a retail background as well. So you understand the whole pipeline distribution retail, the whole 9 yards. Give us a quick summary of your background.
I do, you know, I was fortunate to start my career at a company called RaceTrac Petroleum. I’m sure many of your listeners are familiar with RaceTrac, based in Atlanta, has a very large retail presence throughout the Southeast. Started there actually out of school and I started in their finance group. But, after about five years moved over to their supply group and, you know, from there really got a chance to understand the logistics and the distribution of what it takes to buy a fuel from either the Gulf Coast, the refiner or even at the terminal level and get it to the stores and so.
That’s where my career – I spent 10 years ultimately with RaceTrac – but that’s where my career started in terms of the fuel industry. And then from there the next big move, I was with Delek. Delek is a merchant refiner that also in retail, as well as a terminal assets.
And so I got an opportunity to kind of have some perspective on the refining industry and then and then the terminal piece as well.
And after Delek, maybe about a year and a half ago or so, I joined Colonial Pipeline and so you know it’s been an opportunity for me to kind of see the energy industry from the refining through midstream, through retail and get a feel for how all those pieces are interconnected and obviously all play a critical role and at the end of the day delivering fuel to the consumer.
You know, Jeff, that’s funny because I worked in Capitol Hill, lobbying Congress for quite a while.
And there are some people in this country who still think that gas station owners are brilliant.
They’re able to put their store right over where gasoline was. They had no idea how it gets there, it’s amazing that the lack of awareness of how we get the products we have to rely on every day, actually become available for us, so it’s a great conversation to have.
Yeah, and the opposite of that – I was at a TV station and they were putting makeup on me and they spent a lot of time on it.
Yea, that’s always important!
Yea, yea, they needed to. But so one of these guys – and he wasn’t dumb, I think as a typical thought that – so the question was: There’s a hurricane. Why are all these refineries where the Hurricanes hit? Why don’t they just move them where the Hurricanes aren’t?
And, yes, that’s a bigger discussion for another time.
But yeah, it’s the same kind of thing. We don’t locate gas stations where the gas is because it’s a little more complicated than that, and that’s what we’re going to talk about. Um, But I interrupted you, John. You were going with a question about talking about the extent of the pipeline, I believe.
No, I was actually just making a comment.
We published a paper a couple years ago on the distribution of fuel and trying to help people understand that we have a disruption in part of the system. When we have a hurricane hit the Gulf Coast. You have an ice storm hit the Gulf Coast, you know, ironically?
That has effect nationwide is not just isolated, because the system is so interconnected and one of the challenges that I think, you know, companies like Colonial have is, you know, you just have to be up and running.
You have to continue moving and you have to continue being able to service your customers regardless what’s going on around you. And I know in the last 10 years, 15 years, the pipeline industry has done a tremendous job of improving its resiliency and its reliability.
What are some of the things that Colonial has done to really make sure that we can count on, you know, the system to deliver the product when needed.
Yeah, that’s a that’s a great question and you know you just you take a step back and you look at the modes of transportation.
Maybe let’s just start there and you compare and contrast pipelines.
Pipelines are exceptionally efficient, exceptionally safe, and to your point, resilient. And you know, look at some other modes Whether maybe rail great, you know great mechanism for transporting products, but obviously being above ground and subject to the weather, and in particular gets a tremendous amount of delays from time to time in the winter up in the North part of the region, and parts of the world, so rail was used to transport some different products in the energy industry.
You know, another example might be barges or vessels, which, again, above ground and succumb to often delays because maybe it’s foggy – you see that quite a bit in the Gulf Coast or levels of water in various rivers.
And so then you look at pipelines which you know traditionally are below ground, and they tend to run consistently Now, having said that, a lot of work, effort, and resources are put into making that happen. You know at Colonial alone we spend approximately $200 million a year just in maintenance to ensure that that our pipeline is operating safely; to ensure that we’re operating efficiently and continuing to deliver. And, you know, as technology continues to enhance all pipeliners and other industries obviously are investing in that technology so that we can manage the system more effectively and to your point, distribute fuel to our customers.
You know at Colonial we serve, if you would call it, roughly just under, 50% or so of the fuel delivered to the East Coast and that fuel that goes to not just, you know, everyday households, but goes to the airports, right? Goes to various government facilities, goes to the retail convenience store chain, obviously.
And so, you know, and whether it’s in just sort of day-to-day use or even in times of crisis our emergency responders, count on fuel to meet the needs of the community in terms of whatever is going on.
It is critical that we are flowing and we’re providing that that resource to our customers and have it available when they need it.
So you know, having said that, we obviously rely on the sources of that fuel to be available, right? So we need the refineries at the origins and the terminals at the origins to be up and operational to obviously provide us the product.
So at Colonial, just to provide some context for the viewers, we are that distribution point between origin or the fuels made largely in Texas and Louisiana and our pipeline goes from that origin all the way up to New York Harbor and along the way we’re dropping off fuel at a variety of destinations.
So as you make your way up the coast, we’ve got various terminals that we delivered to, and then we’ve got what we call “stub lines” so, you know, lines off the main line if you will arteries that delivered to destinations.
For example, we go down to, you know, go up to Nashville and Knoxville and deliver fuel, so we’re delivering all along the way and then ultimately ending up in the New York Harbor area where we have connectivity to most of the terminal network up there, and in order for all that to work right, we need a constant flow of product to be pumped into the origins because we need product to push, product is essentially the way that works.
Yeah, and my job is more around communication, so in some cases, that trying to simplify things are overgeneralized very complex things.
So the normal person that that’s not steeped in this technology can understand it, but roughly 100 million gallons a day go through the colonial. If it were all gas, that’s roughly the equivalent of about 10 million fill ups in the country. Does between 30 and 40, so that gives you a sense of the volume that’s goes through there. But it’s not just gas.
It’s a lot of different product – several dozen.
And in with my limited knowledge of the pipeline, it is just astonishing how you have all these different fuel blends in there that move in.
You know exactly when it’s all going through this pipeline.
Somebody at a stub or a terminal knows exactly when to pull the right product to get that there when all on East Coast there’s different fuel blends required.
There might be diesel, there might be aviation fuel, there might be different – might be crude oil.
All these things going through there.
No, that’s absolutely right.
I think you highlighted something which is, you know, it’s a very complex system, and in fact it’s more than one pipeline.
So the reality is our what we call main line so that that line that runs from the Gulf Coast all the way up to New York Harbor is actually comprised of 4 lines. We’ve got lines one and two that are dedicated to, we’ll, call it clean products or that gasoline sort of type product and the other being more diesel-oriented and then lines three and four are smaller lines that go up into the harbor and to your point, we’ve got all these different blends that we’ve got to manage, and along the way we’ve got a sample, test, ensure that, you know, the product we get put in it meets the right quality spec and then the product that we give our customer at the end is the appropriate quality spec so it is a very complex system to manage throughout the throughout the network.
And one other thing, tagging on to that in talking about packing it.
So all these different products are next to each other and then they have to move.
There can’t be any error in the system obviously, but it has to be tight enough and go slow enough so that there’s not an overwhelming amount of mixture and the way I describe it to reporters like when a reporter says “well, there’s a refinery outage or something like that, how long will it take to get fuel from Houston to New York?
I said “we’ll walk it” and it’s like, “What??”
It’s like, well, it’s roughly walking pace, so that’s how fast a lot of time this fuel moves through the pipeline so it doesn’t become overly mixed. And if you want to know how long it’s going to take to get fuel in New York, walk to Houston.
And it’s like, “oh, that’s going to take a while.”
It just adds context because I think when these systems run without interruptions, it feels like magic.
And I think people in they expect the normal times to be magic when they’re not normal.
And I think the other thing is, I mean you can you describe the complexity and it is such a complex process, but it works so efficiently and right now in 2021 there is a lot of political chatter about pipelines. There’s concerns about safety. There’s the electric vehicle advocates who don’t want to see improvements in efficiency and delivery of liquid fuel products because their hydrocarbon and are bad for the environment under their arguments.
But quite frankly, I mean the consumers care about price. They care about being able to acquire affordable energy, and you know, of the 260 million light duty vehicles we have on the road, 259 million-plus run on liquid fuel. So when we start thinking about the importance of pipelines to our economy in our way of life, you can’t understate the importance.
But we have to focus on safety and we were talking before we came in and I got a photo of my daughter when she was3 years old hanging off of a Colonial sign because the pipeline is going right past the place where we lived.
Absolutely safe, no concerns.
How do you guys…what is your focus on safety and how do you ensure that the pipelines are operating as safe, as can possibly be?
Sure, great question. You know, a Colonial, we actually in 2019, which is the most recent year awarded. One API safety award. So, we’re really proud of our accomplishment there and in our history of safety. It’s not the first time we’ve ever won the award.
But you know, to answer your question. One, safety is part of our core values, right? And it’s something that we live that we train on that we focus on.
It’s built into our culture and you know, so it’s something that.
Regardless of the group, whether it’s at the corporate office or in the field, safety is a part of the discussion in terms of, you know, let’s, let’s say from a commercial point of view, great.
How do we bring this project to light and what are the considerations to ensure that we do so in a safe and effective way? But we’ve got honestly a number of different teams and processes in place in order to manage the safe operation day in and day out and just depending on what’s going on, there are all these protocols to ensure that we operate safely and pipelines, as a general rule, are among the safest means of transporting liquid fuels, hands down.
But you know, just give you a sense of a few examples.
All right, so from a right of way perspective. Obviously, our pipelines need right of way in order to lay the pipeline through, and which was done over the course of about 60 years ago, but all of those right of ways have planes that fly over them every at least once a week, and on top of that we have right of way teams that walk the right of way periodically and then we obviously put out a
lot of information to the various groups that live near the right of way.
You know, “see something, say something” so it’s this effort that is, call it multifaceted, with respect to just ensuring we don’t have encroachment or an issue on our right of way in order to keep the pipeline safe.
So there’s not in any area of operation, whether it’s looking at the fuel moving, looking at the right away, looking at delivery or looking at Origin, there’s multiple processes, multiple steps that you’re taking as an organization to ensure that that product is safely being delivered.
Yeah, Jeff, Jeff and I worked here over 20 years.
He knows there’s certain things that trigger my angst pretty quickly, one of them is those who constantly complain or accuse entities of not doing the right thing or claiming that pipelines are not safe and that we can’t have pipelines.
You guys take safety…is this basically job one?
I mean you take it very seriously.
It’s not something new for you.
It’s not surprising that you guys do this.
For these entities that are saying we don’t need pipelines, they may be surprised to hear that focus, but at the same time, if they were to shut down the pipeline, [they’re] the first one to complain about prices and take it for granted what we have for our transportation needs and then just spout off the mouth and attack the very foundations of the infrastructure.
It makes our way life possible and they don’t even appreciate the amount of attention companies like Colonial, pay to making sure, the work you’re doing is the highest quality is the safest. Nobody wants to hurt a community. Nobody wants to have any environmental damage yet these antis, think you guys..all you wanna do you is you wanna go around and poke
holes in the pipeline, which is absolutely ridiculous.
So I’m went off on a soapbox – I’m allowed to do that
But, it just infuriates me with the lack of awareness and the blatant disregard for the care that companies like Colonial put into what you do. And it just drives me nuts and Jeff can say ok, John, now shut up.
Well, I think I think your daughter picked up on your passion for the industry because she doesn’t want to go to Build-A-Bear. She doesn’t want to go to Chuck E Cheese. She wants to go check out the Colonial Pipeline or go to a bulk terminal.
Can we watch the gas station until the truck comes in and fill up the UST’s? Are they double walled? Those are the kind of things that she’s looking at.
But no, unfortunately, as an industry, we probably have done a poor job collectively of just explaining what role energy plays and how efficient and effective we have become. You know, when you think about a barrel of oil, you know, let’s say coming out of the ground in the middle of Texas or North Dakota or Oklahoma – you name it 10,000 feet underground – pumped up, then delivered to a terminal, which is then further delivered to a refinery, processed turned into product, then delivered through pipeline to some other terminal to then be put on a truck to then go to a convenience store and then finally make its way, you know, as let’s say, gasoline into your tank, for obviously the price fluctuates, but you know $2.50 a gallon – whatever that number might be.
And then you know, you think about that journey and then compare that to a price that we’re willing to pay for a bottle of water at the same convenience store.
You know, I’m not saying water didn’t have a process, but it certainly wasn’t as robust as what it took to get that gallon of gasoline, so it’s an opportunity, I think, for the industry, particularly in the time of this, this will call it energy transition or discussion about energy to talk about how efficient we are, that doesn’t mean we can’t get better.
We should always be aiming to do better, but what we provide to the American people in terms of a product at a very low cost and what it and what it does for us.
Not just quote, unquote, the driving fuel, but fossil fuels in general right?
We need that energy and all those byproducts that they produce.
Chemicals, plastics, etc.
That we rely on for our day-to-day lives, you know, and unfortunately, I don’t think most people prefer to think that much.
Yeah, and in tying together What you were saying with what John was saying about safety that there – Maybe there’s a lack of understanding of how things work. Plus high focus on safety.
And when there’s a natural disaster of some sort – we had the ice storms in Texas and the line you saw in the news was ‘there’s a refinery down’ and when it’s phrased like that, or let’s just say there’s something about a pipeline is down, or whatever it is, it’s said to be down an I think that we all understand what that means.
But, I think the general public, when they hear that phrase, thinks something’s wrong. But what it is, is a very complex thought-out procedure to protect things so that whatever is occurring doesn’t get amplified by any safety concerns related to any of the infrastructure.
Are you be able to talk about that all Dan, and in terms of how that checklist works or the shut-offs or things like that that protective things that happen in extraordinary circumstances?
So yeah, I think you know you hit the nail on the head in terms of the industry is proactive.
So when we see events occur, and hurricanes are a great example.
Obviously you get a pretty good fair warning they can move in terms of their where they land, but the industry, whether it’s a refinery or even a pipeline.
Still, look at that and say, “OK, that’s coming,” and how do we proactively protect the assets but also protect the people, number one, and the community that we operate in?
And obviously, you know, nature itself, right?
And so let’s say as an example, what we might do – if it’s a hurricane. You kind of look at and assess individually, but we might say, OK, this hurricane is going to come into this particular area.
We need set up with our powered backup generation, which we have a lot of across our system, but are we ready to go there? Great.
Do we have people in place to respond to an event should an event occur and are they in a safe place so that when the storm passes over we can get to where we need to go to address an event.
Obviously all the technological components you know we’re testing to make sure we’ve got connectivity so you know it’s an ongoing thing, but you know, you double check, say, hey.
So we got all the readings from all the different.
Uh, components we have in the field and then we might go so far as to say, depending on our line relative to where the storm is coming, perhaps we want to shut down a segment of that line.
And we want to shut it down proactively and then we want to manage engage the pressure, right?
So we watch the pressure in that line and if we see a deviation, you know, perhaps that there was an event and if you don’t see a deviation it gives you more comfort that there wasn’t an event before you open that line back up, you go through a series of tests and protocols to make sure that everything is OK and so you know a lot of planning goes into every hurricane that comes, you know essentially we stand up an emergency response team for every hurricane that comes and so refineries are going to be the same way.
They’re looking proactively say.
How do we ensure that those assets remain stable, remain safe, and then they want to get them operational as soon as it’s practical and safe to do so.
Yeah, and that’s a complicated checklist, too and in the classic example, just even thinking about the Super Bowl a couple years ago supposedly was because Beyoncé blew out the sound system, but they had a power outage in the Superdome and it took a good 20 minutes to get power back on.
It wasn’t because somebody couldn’t find the power and just flip it back on.
It’s a complicated checklist that you have to go in order.
And when you’re talking about things that are as massive as the petroleum infrastructure, it’s a very complicated checklist and you want to make sure it’s all correct.
Yeah, it’s not done by the hip, I can tell you that.
You know, Jeff? I think that power outage in the Super Bowl was just the anti-49ers groups and I understand having been a niners fan my whole life and I just think there’s a lot of haters out there hating, hating, hating. And I think that’s what caused the delay at the Super Bowl. Disrupted their chance of winning it completely, but you know, Dan, going back, you said the industry has done a poor job of communicating what we do.
I mean, I’m on the board of a group called Consumer Energy Alliance. And there’s a campaign we have called Pipelines for America all about educating consumers about what’s going on.
You know, listeners, if you wanna look at Consumerenergyalliance.org. Check out Pipelines for America and, Dan, if people want to know more about what Colonial’s doing, the operation…what’s the website they can go to to find a little bit more about the Colonial system?
Well obviously Colonial has a website and we have a tremendous amount of information on the Colonial website, so I would, you know, certainly start there.
I don’t know that that we have information posted elsewhere.
There are a lot of industry groups such as the one that you’ve mentioned that have information.
But yeah, I don’t know what the answer is, but I do feel like, everybody gets caught up in their day-to-day lives and, to your point, you made earlier…we flip a switch and we expect the electricity to come on, and only when it doesn’t, do we stop to ask a question. And so I think we’ve been such a reliable industry for so long that we haven’t taken the time to educate, or fully educate, the average consumer about what’s going on and how it works.
So it’s an opportunity.
I don’t know what the answer is, and it’s probably somewhere where we need to focus some energy and effort in the coming years.
Yeah, well, hopefully this podcast is a first step in the right direction trying to raise a discussion to a broader audience.
So, Dan I wanna thank you for joining us on Convenience Matters.
Jeff, any final comments from you?
Nope, amen to what you just said and thank you all for listening to Convenience Matters!
27:29 Closing [music]
Convenience Matters is brought to you by NACS and produced in partnership with human factor. For more information visit convenience.org.
Interview with Daniel Gordon, VP & Chief Commercial Officer, Colonial Pipeline Company
Consumer Energy Alliance Pipelines for America
How Refineries and Pipelines Resume Operations
NACS Fuels Resource Center
Fuels Market News