August 3, 2015 [OPIS] - Buckeye Partners said on Friday that its new condensate splitter and refrigerated LPG storage capacity at Corpus Christi, Texas, will be operational in the third quarter of 2015.
Buckeye had previously said that both projects would be completed in mid-2015.
Once operational, these assets are expected to generate significant incremental cash flows,” said Clark Smith, CEO of Buckeye.
The Corpus Christi facilities have five vessel berths including three deep-water docks, and upon completion of initial development phase, will offer approximately 5.6 million bbl of liquid petroleum products storage capacity along with rail and truck loading/unloading capability.
A 50,000 b/d condensate splitter is currently under construction, and after completion, Buckeye Texas Partners will commence operations under a seven-year fixed-fee tolling agreement with Trafigura.
In addition, three field gathering facilities with associated storage and pipeline connectivity will allow Buckeye Texas Partners to move Eagle Ford crude and condensate production directly to the terminaling complex in Corpus Christi.
Buckeye also expects the Federal Energy Regulatory Commission to respond in the third quarter to the company’s proposed settlement with some airlines challenging the rates of jet fuel transportation from New Jersey to the three New York City-area airports.
Smith said the settlement is positive resolution for Buckeye. The complaints were made by Delta Air Lines, JetBlue Airways, United/Continental Air Lines and US Airways/American Airlines.
In resolving the complaints, Buckeye Pipe Line has agreed to reduce its jet fuel rates prospectively and make settlement payments to the airlines to close pending litigation. The prospective reduction in rates will not have a material impact on Buckeye’s operating results.
Meanwhile, Buckeye’s income from continuing operations for the second quarter of 2015 rose to $91.3 million from $61.9 million in the corresponding quarter of 2014.
Adjusted EBITDA from continuing operations for the second quarter of 2015 was $206.5 million, representing a record second-quarter adjusted EBITDA for Buckeye, compared to $150.8 million for the second quarter of 2014.
“Our Global Marine Terminals and Merchant Services segments drove significant improvement compared to the prior year. Our commercial and operating teams were successful in improving utilization and driving rate increases at our Global Marine Terminals segment, which also benefited from incremental cash flows from our interest in Buckeye Texas Partners LLC,” Smith said.
“Our Merchant Services segment continues to deliver positive contributions as our disciplined business strategy to optimize asset utilization and reduce commodity risk allowed us to capitalize on favorable market conditions in the quarter,” he said.
In the Pipelines & Terminals segment, Buckeye continued to benefit from growth capital investments that have expanded its domestic terminals network and increased its terminal throughput growth by nearly 10% year over year, Smith said.
Additionally, Buckeye saw solid performance from its pipelines producing volume growth of nearly 4% compared to prior year, he said.
In the second quarter, Global Marine Terminals posted solid income increase, and Merchant Services returned to the black. Income for Pipelines & Terminals and Development & Logistics were lower on year.
Operating income from Global Marine Terminals rose to $44.981 million versus $32.139 million a year ago, and Pipelines & Terminals were down to $80.628 million from $92.814 million.
Operating income from Merchant Services were at $899,000, up from a loss of $28.299 million a year ago. Development & Logistics dropped to $4.511 million from $5.512 million in 2014.
