April 05, 2013 [OPIS] - Buckeye Partners LP's marine oil products terminal at Perth Amboy, N.J., will be ready to begin gasoline and ethanol blending and storage operations in June-July for the first time since the logistics company took over that New York Harbor facility in July 2012, industry sources told OPIS on Thursday.
Buckeye bought the storage facility from Chevron for $260 million in cash. The Perth Amboy terminal has 4 million bbl of product tankage, of which 2.7 million bbl is active, while another 1.3 million bbl is refurbishable. The active storage capacity is currently used for distillates only.
This summer, the terminal will have gasoline blending, rail and distribution capabilities for the tanks and racks.
Also, in conjunction with the gasoline service launch, the terminal is expected to bring on the first refurbished storage tank. This will increase the total active storage capacity.
However, refurbishment of all inactive tanks on site is a long-term project, which is expected to take a few years.
Buckeye is also targeting a total capacity to 5 million bbl at Perth Amboy in the future.
OPIS reported last year that Buckeye plans to invest $200 million to $225 million in the facility over the next few years, with dock improvements, blending upgrades, and a planned construction of a 16-inch line that would move waterborne material to the Linden complex.
Buckeye would then be able to capitalize on any increase in imports expected through the decade. The Perth Amboy facility sits on about 250 acres in Perth Amboy, N.J., and is located only six miles from Buckeye’s Linden, N.J., complex.
Chevron will continue to be a key customer at the Perth Amboy terminal under multi-year storage and throughput commitments.
Meanwhile, arbitrage flow of European gasoline to the New York Harbor remain sporadic, with the trans-Atlantic window for importing incremental barrels seen unpredictable.
The arbitrage economics, which include blending costs, cargo costs, time money value, forward price curve and freight, have been volatile, but overall, the import trend has been sluggish.
Since June 2011, the weekly gasoline import volume has cracked the 1 million b/d mark only twice. This is compared with imports surpassing 1 million b/d consistently prior to 2008.
The Northeast is well supplied by Colonial Pipeline, which is continuing to expand its south-north delivery capacity. Also, Northeast refiners are enjoying relatively stronger refining economics as more price-advantaged crude makes its way from the Midcon to the East Coast via rail or barges.
