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Big Flames, Not A Lot Of Impact: California Tank Fire Contained, I-80 Reopens

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Big Flames, Not A Lot Of Impact: California Tank Fire Contained, I-80 Reopens

The big explosion in two petroleum storage tanks Tuesday afternoon, October 15, immediately adjacent to Interstate 80 near Crockett, California, east of San Francisco, appears to be far more spectacular than long-lasting in impact.

Initial reports described it as a refinery explosion. It was not. The explosion and fire were in two tanks at the NuStar Energy facility immediately adjacent to a refinery operated by Phillips 66 in Rodeo. The two are connected via pipeline. 

NuStar is a master limited partnership, a financial structure that has been used by various energy companies to spin off their midstream operations like the tank storage facility that was the site of the explosion. NuStar had been spun off from independent refiner Valero.

The two tanks that caught fire were holding ethanol, according to news reports. There were nearby tanks that the reports said had been cooled by firefighters to ensure they would not catch fire as well and the fire was reported contained by late evening. A shelter-in-place order was lifted, though local schools were closed Wednesday.

The cause of the explosions and subsequent blaze is not known, though reports that the cause might have been a somewhat significant earthquake that struck northern California Tuesday – a 4.7 magnitude quake with an epicenter south of San Jose – were mostly dismissed.

No operations at the Phillips 66 refinery in Rodeo were reported to be impacted.

The biggest impact for truckers was the closure of I-80 for almost seven hours. It runs right next to the Phillips 66 and NuStar facilities just west of the Carquinez Bridge that crosses the Carquinez Strait in the northeastern sector of San Francisco Bay. 

As far as price reaction, the explosion and fires occured after trading for the day would have concluded. There was no reaction in the broad product benchmarks overnight and into Wednesday on CME, where RBOB gasoline was lower and ultra low sulfur diesel was slightly higher. Physical trading in California markets would be ongoing as of Wednesday morning but it will take several hours to determine if it is moving higher as a result of the explosion and fire. 

Reaction in the wholesale rack market would take a day to be implemented, as those numbers key off the physical markets trading during the day on Wednesday. Price movements in the San Francisco rack market can be viewed through the ULSDR.SFO

On the surface, there is no reason to believe the market would react in any significant way to the explosion. The only loss is two tanks of ethanol (and reports were they weren't even full) and there is no loss to refinery operations at Phillips 66 Rodeo.

Image Sourced from Pixabay

Posted-In: California Freight Freightwaves truckingNews General

 

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