June 4 (Bloomberg) -- Magellan Midstream Partners L.P., a U.S. oil products distributor, shut its main pipeline system in Kansas City after a fire erupted in a gasoline storage tank, cutting supplies to consumers in Iowa and Nebraska.

The fire, which started after a lightning strike at 7:30 p.m. local time yesterday, ``has almost burned itself out,'' said Craig Duke, assistant fire chief for the Kansas City, Kansas, fire department. The pipeline system moves gasoline and diesel from regional refineries to Midwest consumers.

``We have, for safety reasons, discontinued operations of our main pipeline system into and out of our Kansas City terminal,'' Bruce Heine, a company spokesman, said by telephone from Baltimore. Magellan shut the pipeline when the fire broke out, he said.

The storage tank held 1.2 million gallons of gasoline at the time of the fire, Duke said. There were no injuries and the company also closed its loading racks as a safety precaution, meaning it can't take fuel products to trucks for distribution, Heine said. The site has 35 above-ground storage tanks.

The entire site will be closed until an assessment can be completed, Jeff Myers, Magellan's area supervisor, said in a telephone interview. Magellan is exploring alternatives for supplying sites north of the Kansas City terminal, Heine said.

Magellan has an 8,500-mile refined petroleum products pipeline system, a 1,100-mile ammonia pipeline network and more than 80 fuel terminals across the U.S., according to its Web site.

Refinery Impact

Sinclair Oil Corp. said the fire and pipeline shutdown had not reduced its refinery's output in Tulsa. The unit can produce 56,000 barrels a day of gasoline and diesel, according to plant manager Mike Bellinger.

``We have enough storage; we could go four or five days without any impact to our production,'' Bellinger said in a telephone interview.

Customers of Coffeyville Resources LLC's 108,000 barrel-a- day Kansas refinery ``have been told that they temporarily can't lift from that terminal,'' said Steve Eames, a spokesman for the Sugar Land, Texas-based company. He didn't say whether the refinery's production was affected.

ConocoPhillips doesn't expect the fire to reduce production at its Ponca City, Oklahoma, refinery, which can process about 185,000 barrels of crude oil a day, or its Wood River, Illinois, plant, which can process about 300,000 barrels of crude oil a day, according to Bill Graham, a spokesman for the Houston-based company.

``It doesn't sound like we will be impacted,'' Graham said. Both plants have multiple pipeline, truck and rail options, according to Graham.

To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net; Robert Tuttle in New York at rtuttle@bloomberg.net

Last Updated: June 4, 2008 11:45 EDT