Buckeye Partners LP (Buckeye) announced that its subsidiary, Buckeye Tank Terminals LLC, signed a definitive agreement with Chevron USA Inc (Chevron) to acquire a marine terminal facility for liquid petroleum products in New York Harbor for $260 million in cash.
The facility, which sits on approximately 250 acres on the Arthur Kill in Perth Amboy NJ has over four million barrels of tankage, four docks, and significant undeveloped land available for potential expansion. The facility has water, pipeline, rail, and truck access, and is located only six miles from Buckeye's Linden NJ complex. The acquisition, which is subject to certain closing conditions, is expected to close in the latter half of the second quarter of 2012.
"This is a milestone acquisition for Buckeye that is integral to our vision and strategy for positioning Buckeye for long-term success," says Clark C Smith, Buckeye's president and chief executive officer. "We believe that adding the Perth Amboy facility to our existing portfolio of assets will unlock significant long-term value across the Buckeye enterprise."
As a result of the acquisition, Buckeye's inland pipeline and terminal networks will have a direct connection to a Buckeye owned and operated marine facility with water access to petroleum products imported from international and Gulf Coast suppliers. Additionally, the Perth Amboy facility will provide a link between Buckeye's inland pipelines and terminals and Buckeye's BORCO facility in The Bahamas, improving service offerings for Buckeye's customers and providing further support to Buckeye's planned clean products tankage expansion at the BORCO facility.
Smith says Buckeye has near-term plans to transform the existing terminal operations at Perth Amboy into a highly-efficient, multi-product storage, blending, and throughput facility, through the investment of approximately $200-225 million of growth capital over the next three.
Robert A Malecky, senior vice-president of Buckeye and president of Buckeye's Domestic Pipelines and Terminals business unit, notes that Buckeye intends to expand its capabilities to serve the Northeast markets through the construction of a new 16-inch pipeline between the Perth Amboy facility and Buckeye's Linden complex and an expansion of Buckeye's existing pipelines running from Linden into the Pennsylvania and New York markets.