April 17, 2021 [Houston Business Journal] – Houston-based Buckeye Partners LP’s push into the energy transition business didn’t start with its recent investment into Swift Current Energy, said the company’s top executive.
The midstream company’s growth strategy used to be centered around expansion and diversification within the petroleum business, said Clark Smith, the company’s president and CEO. But Buckeye conducted a strategic review that changed those plans in 2018, and it now has plans to invest more than $2 billion into its energy transition business.
“Over the last couple of years, the thing we recognized was that the world was changing,” Smith said. “It was evolving more into energy transition opportunities.”
Buckeye ended up going private with a buyout by IFM Investors in 2019. The company selected IFM in part because of the private equity firm’s proficiency with environmental, social and governance issues, something Buckeye had only just begun to advance, Smith said.
The decision to take the company private is what affords it the ability to branch out so broadly, Smith said. It gives the company a little more agility as it diversifies than it might have had as a publicly traded entity, he said.
By the time it made its investment into Swift in April, Buckeye had already begun to develop a solar power business of its own, building solar power generation using land inside its terminal fence lines. The business started with opportunistic projects on terminal land, but the company is looking to grow it into something more, said Todd Russo, executive vice president of the company’s energy transition business.
“The vision is to have a scalable platform of solar energy production,” Russo said. “It’s its own line of business, not just a side project with leftover land.”
Those solar assets are still under production right now. The Swift investment, wherein Buckeye jointly purchased an 85% stake in Swift alongside Nala Renewables, represents a chance to further accelerate Buckeye’s energy transition plans, particularly in solar power.
The company’s core business lines in the petroleum industry is still important to it. Smith said Buckeye is still looking for organic growth and acquisitions in that business. But Smith expects that the energy transition arm of the company will represent a substantial portion of the business, he said.
The more than $2 billion Buckeye plans to invest in the energy transition includes its investment in Swift, though Buckeye has not specified the size of that investment. That figure also includes some spending Buckeye plans to do on its own. The investment potential of the energy transition space is huge, Smith said, and could include liquefied natural gas, hydrogen, solar and — eventually — wind. Smith said he thinks the investment could be substantially over $2 billion.
“If you want to look out to 2030, we’re going to be a very sizable clean energy company as well as being in fossil fuels and petroleum products,” Smith said.
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