Buckeye Partners Progresses With Nationwide Infrastructure Buildout

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Petroleum distribution company Buckeye Partners (NYSE:BPL) (Houston, Texas) is underway with growth projects in the U.S. Midwest and along the Gulf Coast in order to expand its distribution footprint. Industrial Info is tracking more than $1.5 billion in active and potential Buckeye Partners projects.

In the company's recent fourth-quarter earnings conference call, Chief Executive Officer Clark Smith and Khalid Muslih, president of Global Marine Terminals, discussed the progress of the company's projects.

Among the company's largest and most high-profile projects is the South Texas Gateway project, which is a large marine terminal project in Ingleside, Texas, on the Corpus Christi Bay. The terminal will have two deepwater docks capable of berthing Very Large Crude Carriers. Muslih said, "This terminal is one of the largest greenfield terminals for export of U.S.-produced crude oil that is currently under construction. The advantaged site benefits from its location in and out of the Corpus Christi Ship Channel, where it is ideally positioned to serve as a primary destination point and export outlet for Permian crude oil pipeline volumes that will be delivered to the Corpus Christi market, including the Gray Oak Pipeline."

The Gray Oak Pipeline is being constructed by Phillips 66 Partners (NYSE:PSXP) (Houston) and Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio). The pipeline will transport up to 900,000 barrels per day (BBL/d) of crude oil from the Permian Basin to locations along the Texas Gulf Coast. For more information, see Industrial Info's project report and February 11, 2019, article - With Strong 2018 Earnings, Phillips 66 Progresses With Capital Projects.

Speaking of the terminal, Muslih said, "Our current expectation is that we will commence and ramp up operations at the facility by middle-2020." Buckeye executives say they expect to spend between $115 million and $130 million on the project this year. The terminal has an estimated total investment value (TIV) of $400 million. For more information, see Industrial Info's project report.

The company may have further crude oil export projects in mind. Clark said, "In our Corpus Christi complex, we're evaluating enhancements and new opportunities around crude and LPG [liquefied petroleum gas] export capacity." Buckeye's Corpus Christi complex has three deepwater docks and 2.6 million barrels of storage capacity for crude oil, condensate, naphtha and fuel oil. For more information, see Industrial Info's plant profile.

Among Buckeye Partners' other projects is the conversion of the Laurel refined products pipeline in Michigan, Ohio and Pennsylvania into a bidirectional pipeline. The line currently runs from Philadelphia refineries west to the Pittsburgh area. Converting the line will allow Midwest refiners to move more gasoline and diesel from Michigan and Ohio into Pennsylvania.

Clark spoke of the project: "We continue to wait for FERC [Federal Energy Regulator Commission] to rule in our PDO, or Petition for Declaratory Order, related to the proposed tariff for interstate deliveries through the planned bidirectional operation of our Laurel Pipeline. Unfortunately, it is not possible to determine when FERC will issue a ruling, but importantly, we do not believe that the delay is related to issues with our specific request. ... We expect that we will complete the hydrotest and commence operations on the bidirectional pipeline within 60 to 90 days of receiving FERC approval. We are currently projecting that we'll be able to commence pipeline movements on this project by mid-2019, but that timing is subject to certain seasonal restrictions on when the hydrotest can be conducted and depending on receiving the FERC approval for our PDO."

Work on the bidirectional conversion began in the first half of last year. The pipeline runs about 350 miles. The project has an estimated TIV of $250 million. The company said it expects initial west-to-east flows on the pipeline to be approximately 40,000 BBL/d. For more information, see Industrial Info's project reports on the Ohio and Pennsylvania portions of the pipeline.

Buckeye Partners reported fourth-quarter 2018 net income of $482.5 million, compared with $126.3 million in fourth-quarter 2017. The boost in income was partly attributable to the $343 million gain upon closing the sale of pipeline and terminal assets during the quarter.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.