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Buckeye Partners LP Management Discusses Q2 2012 Results - Earnings Call Transcript

Next, I'd like to discuss some important developments for Buckeye since our last call. I'm pleased to announce that Buckeye has completed the construction of 1.1 million barrels of storage capacity and related infrastructure of BORCO on time and on budget. This storage represents the initial phase of our BORCO expansion plans, which ultimately will be adding a total of 4.7 million barrels of storage capacity to the facility. The initial 1.1 million barrels were operational on July 1 and are fully leased.

We continue to see strong customer interest in crude and other product storage at our BORCO facility. We have leased over 65% of the planned 4.7 million expansion barrels, which are expected to be placed in service in phases through the third quarter of 2013.

BORCO is a very strategic growth platform for Buckeye and is the hub of our marine terminal strategy. As part of our marine terminal strategy, on July 26, we completed the purchase of the Perth Amboy marine terminal from Chevron for $260 million. We are excited to be moving forward with our integration and commercialization plans for this facility. This terminal features 4 million barrels of storage, which increases Buckeye's total petroleum product storage capacity by approximately 6% to over 69 million barrels.

In addition, Perth Amboy has 4 docks on the Arthur Kill, as well as pipeline, rail and truck access. Chevron will continue to be a key customer at the terminal under multiyear storage and throughput commitments.

The Perth Amboy terminal provides Buckeye with both security and diversity of product supply. It will directly link our domestic pipeline and terminal network to an owned and operated marine terminal through a pipeline that we plan to build through our Linden complex. This will provide Buckeye with direct access to domestic and internationally sourced petroleum products, as well as provide our customers with storage at New York Harbor, a highly liquid NYMEX settlement point.

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