After More than 100 Years, Buckeye Pipeline Between Indiana and Iowa to Be Shut Down

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Researched by Industrial Info Resources (Sugar Land, Texas)--After more than 100 years of delivering refined products to terminals between Indiana and Iowa, the Norco section of the Buckeye pipeline, owned by Buckeye Partners LP (NYSE:BPL) (Houston, Texas), is scheduled to be shut down. The Buckeye pipeline has been plagued with leaks due to its age. As a result, Buckeye was ordered to either modernize the pipeline--a multi-million-dollar construction effort--or shut it down. Citing the costliness of repairing the old line, Buckeye elected to close it.

The shutdown of the Buckeye line has become a cause for concern for terminal operators and communities along its route. In the Peoria area of Illinois, two refined products terminals are slated to be closed in the next couple of weeks: Buckeye's Peoria Terminal and the Chillicothe Terminal, owned and operated by ARC Terminals LP, a wholly owned subsidiary of Lightfoot Capital Partners LP (New York, New York). Prior to the shutdown of the pipeline, the Chillicothe terminal was receiving between 100,000 and 150,000 barrels per month of diesel and gasoline.

Consumers are concerned that with the closure of these two terminals, gas prices in the area will go up. With the local terminals being shut down, suppliers expect an increase in cost to bring gasoline and diesel to their local stations from the terminal in Heyworth, which is owned and operated by Magellan Midstream Partners (NYSE:MMP) (Tulsa, Oklahoma).

Buckeye Partners originally was incorporated as a subsidiary to Standard Oil back in 1886. It was reorganized into its current form, a master limited partnership, in 1986. The line to be replaced runs from Hartsdale, Indiana, to Fort Madison, Iowa, and was put into service as a refined products pipeline after local production declined and many older crude pipelines were repurposed to refined products during the 1930s and 1940s.

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