Buckeye Partners LP
) has entered into a multi-year agreement with a subsidiary of
Irving Oil Limited ("Irving Oil"). As per the agreement, the
company will provide crude oil services from its 1.8 million barrel
storage facility located in Albany, New York.
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The terminal along the Hudson River is expected to begin services
from November 1, 2012 onwards. Apart from handling crude oil,
Buckeye Partners will also off-load unit-trains, storage, and
The Albany terminal has an active storage capacity of 1.8 million
barrels, two deep-water docks, and ethanol unit train offloading
capability. Buckeye Albany Terminal LLC has recently completed the
acquisition of an ethanol and petroleum products distribution
terminal located in Albany, New York from LogiBio Albany Terminal,
LLC, an affiliate of U.S. Oil Co., Inc. and LogiBio, LLC.
In order to proceed well with the agreement, the partnership
intends to make some modification to the Albany terminal.
Post-modification, the terminal will have the capability to handle
both crude oil and ethanol unit-trains with a total capacity of
more than 135,000 barrels per day.
Buckeye Partners is a publicly traded master limited partnership
that owns and operates one of the largest independent liquid
petroleum products pipeline systems in the United States in terms
of volumes delivered, with over 6,000 miles of pipeline. Buckeye's
flagship marine terminal in The Bahamas, BORCO, is one of the
largest crude oil and petroleum products storage facilities in the
world, serving the international markets as a premier global
In July this year, the partnership had completed the purchase of a
marine terminal facility for liquid petroleum products in New York
) for $260 million. The facility consists of more than four million
barrels of storage, four docks on the Arthur Kill, and pipeline,
rail, and truck access. This purchase increased the Buckeye
Partners' total liquid petroleum storage capacity by approximately
6% to over 68 million barrels.
Buckeye Partners' attractive portfolio of refined petroleum product
transportation assets in key geographical markets generates stable
and recurring fee-based revenue, providing an above-average level
of safety to its earnings and cash flows. Moreover, the partnership
has adopted the inorganic route to expand its operations in order
to cope with increased customer demand.
However, demand variability arising out of changes in economic
conditions, weather and transportation is a matter of concern. The
partnership presently retains a short-term Zacks #4 Rank (Sell). We
have a long-term Neutral recommendation on the stock.