Both companies are interested in operating the oil storage terminal portion of HOVENSA’s business. The auction is being conducted under Section 363 of the bankruptcy code, after HOVENSA in September filed for Chapter 11 bankruptcy protection.

At that time, HOVENSA proposed Limetree Bay Holdings as the stalking horse bid for the 363 sale, which a judge later approved.

As the “stalking horse,” Limetree Bay made the initial bid – which includes $184 million cash for the oil storage terminal portion of HOVENSA’s business, plus $6 million for two tugboats from Hess Oil Virgin Islands Corp. – that any other potential buyer of the terminal had to improve upon to gain entry to the auction.

The deal between Limetree Bay and HOVENSA was arranged before HOVENSA filed for bankruptcy, which is common in 363 sales.

About a month into the bankruptcy, the judge approved proposed bidding procedures for the auction and sale, once objections had been resolved. Then, those interested in participating in an auction for HOVENSA were allowed to submit bids.

To gain entry into the auction, interested parties had to meet certain criteria and submit a minimum bid of $198.6 million, which represents the sum of the $190 million stalking horse bid plus a $4.7 million break-up fee; plus $1.9 million, which represents the expense reimbursement for the stalking horse bidder; and an additional $2 million “overbid” amount. Break-up fees and expense reimbursements are typical protections for stalking horse bidders in Section 363 sales.

At the bid deadline on Thursday, Buckeye submitted a $198.6 million bid.

During today’s auction, there likely will be additional bids – and the provisions of the stalking horse bid may be modified. The auction is in the offices of White & Case, LLP, an international law firm in New York and is not open to the public.

Limetree Bay Holdings is an affiliate of ArcLight Capital Partners, which was founded in 2001. According to information from ArcLight, the company helped pioneer an asset-based private equity approach to investing in the North American energy sector.

ArcLight said it has invested approximately $13 billion in 90 transactions since inception.

Bloomberg describes ArcLight as a “private equity and venture capital firm specializing in buyout and growth capital investments in the energy sector and infrastructure assets” that prefers to invest in power generation; production; midstream; electric transmission; and distribution. Within the midstream sector, it focuses on gathering; processing; storage, terminals, and transportation of oil; natural gas; coal; pipeline; and related products.

Buckeye, meanwhile, owns more than 120 liquid petroleum products terminals with an aggregate storage capacity of more than 110 million barrels.

It also is the company that in December 2013 bought Hess Corporation’s U.S. East Coast and St. Lucia oil storage terminal network for $850 million. That network included 20 facilities with a total storage capacity of approximately 39 million barrels.

The sale hearing – where HOVENSA will seek court approval of the successful bid from the auction, as well as a backup bid – is scheduled for Nov. 17 in bankruptcy court in Delaware.