February 10, 2012 / 6:00 PM / 8 years ago

UPDATE 1-Buckeye says NJ terminal deal gives access to water

* Buckeye Pipeline buys Chevron’s NJ terminal

* Buckeye to pay $260 mln cash, deal to close in Q2

By Janet McGurty

NEW YORK, Feb 10 (Reuters) - Oil product pipeline and terminalling company Buckeye Pipeline Partners said on Friday it will get direct access to the New York Harbor with its purchase of Chevron’s Perth Amboy plant as the region ups imports of gasoline and diesel to fill the demand left by area refinery closures.

The Perth Amboy terminal is located on the Arthur Kill, the body of water separating New Jersey from the Borough of Staten Island, a part of New York city.

Buckeye on Friday said it will pay $260 million in cash for the terminal and expects the deal to close in the second quarter of 2012.

The New York Harbor is the delivery point of gasoline and heating oil futures contracts on the NYMEX. Linden, New Jersey, part of the Harbor region, is the terminus of the Colonial Pipeline, the nation’s largest product pipeline which carries gasoline and diesel from the U.S. Gulf to the Northeast.

The Perth Amboy facility has about 4 million barrels of tankage, with 2.7 million barrels of actively used tanks under contract to Chevron, a Buckeye spokesman said during an earnings conference call.

The remaining 1.3 million barrels will be refurbished and Buckeye will seek new customers for the space, the company said.

Buckeye has been seeking access to the water on the East Coast. Sources said that the company looked at the idled refineries in Pennsylvania.

The closure of two area refineries and the impending closure of a third has made changed the supply logistics of the Northeast region. Pipelines and terminals have gained in importance as it will be necessary to bring waterborne imports of gasoline and diesel into the area.

Buckeye, which owns over 6,000 miles of pipeline and over 100 liquid petroleum product terminals, will build a bi-directional six-mile line to connect the Perth Amboy terminal to its existing terminal in Linden, New Jersey.

“That’s really another very important feature that will help obviously drive volumes to the Buckeye main line system,” said Khalid Muslih, senior vice president of corporate development and strategic planning.

Buckeye’s main line system serves upstate New York as well as western Pennsylvania.

Perth Amboy has access to pipeline and rail as well as water access with three active marine docks currently in operation.

The acquisition also creates a link between the Northeast storage and Buckeye’s massive BORCO terminal in the the Bahamas.

In November, Buckeye Partners said it completed the first phase of its expansion of its 14.5-million-barrel BORCO storage facility on Grand Bahamas Island.

The planned expansion of the facility includes the completed inland dock, which can handle vessels from small barges up to Panamax size tankers.

BORCO has begun construction on the planned expansion of the offshore jetty to accommodate VLCC tankers, the company said.

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