May 6, 2011 [Reuters] - Buckeye Partners, L.P. will spend between $350 million and $400 million to add 7.9 million barrels (1,256,000 m3) of capacity at its BORCO storage facility in the Bahamas, the company said Friday.
Storage will come online incrementally, with the first phase starting this quarter with the aim of 3.5 million barrels (556,455 m3) brought online in the second half of 2012. The previous owners of the facility had also planned to expand it.
The first phase of the expansion will be for clean products such as gasoline, diesel and for dirtier products like fuel oil, a company spokeswoman said, adding it would be built as a flexible storage facility, allowing the storage mix to change in the future.
Currently, the 21.6 million barrel (3,4 Mm3) storage is divided with 64 percent fuel oil, 23 percent crude oil and 13 percent clean products, said Elycia Gauthier, a spokeswoman for Buckeye.
This year, Buckeye paid $1.7 billion in cash and equity to buy the Bahamas Oil Refining Company International Limited (BORCO), the largest terminal in the region.
The rapid expansion of Middle Eastern and Asian refinery capacity is lifting trade between regions, making the terminal location attractive. U.S. refiners have also increased exports significantly, adding to the trading opportunities.
The expansion idea has been in the works since the facility was owned by private equity firm First Reserve Corp. and Dutch partner Vopak, who planned to add clean products such as gasoline and diesel to the mix of crude oil and fuel oil currently stored there.
The expansion will include the installation of a new jetty which will be operational by the end of 2011, giving the facility a total of six offshore berths.
