Is This the Right Time for Buckeye Partners?

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Part 3
Is This the Right Time for Buckeye Partners? PART 3 OF 11

How Hurricanes Have Impacted Buckeye Partners in the Past

Hurricanes Harvey and Irma

The US Gulf Coast, the Caribbean region, and some Latin countries are currently facing the Atlantic hurricane season. Hurricane Harvey hit the US Gulf Coast on August 25, 2017, which resulted in shutdowns of refineries and energy infrastructures in the region, including Buckeye Partners’ (BPL) Corpus Christi Terminal.

How Hurricanes Have Impacted Buckeye Partners in the Past

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As Hurricane Harvey subsided, the United States braced for another major hurricane —Irma, which hit Florida on Sunday, September 10, 2017, after pummeling the Caribbean islands. In response to Hurricane Irma, Buckeye Partners closed its 4.6 million barrel terminal in Puerto Rico. However, it’s planning to reopen the terminal now that the hurricane has left the region. According to industry sources, BPL has been in the process of shutting down its 26.2 million barrel Borco terminal in the Bahamas and its Florida terminals.

These hurricanes could likely drive BPL’s maintenance costs higher this quarter from damages to its Corpus Christi and Caribbean facilities. The shutdowns would most likely impact BPL’s terminal utilization in the quarter. The hurricanes could also likely impact NuStar Energy (NS), Magellan Midstream Partners (MMP), VTTI Energy Partners (VTTI), and TransMontaigne Partners (TLP). BPL owns 50.0% equity interest in VTTI’s GP (general partner).

Hurricane Mathew

Hurricane Matthew, which hit the Gulf Coast and surrounding areas in late September 2016, was a Category 4 storm. It resulted in damages to BPL’s Bahamas facilities, causing the partnership to incur $16.8 million in related costs during 4Q16 and $6.0 million in related maintenance capital expenditures.

In BPL’s 4Q16 earnings call, Khalid Muslih, president of BPL’s Global Marine Terminals, said, “In addition to these direct costs from the storm, we were also impacted by lost revenue opportunities, such as reduced berthing and other ancillary revenues as a result of the period of time that the facility was shut in from prior to hurricane landfall until initial recovery efforts were completed.” Hurricane Harvey and Hurricane Irma, which are much stronger storms than Hurricane Matthew, are likely to have a more severe impact on BPL’s financials in the third quarter of 2017. We’ll have to wait for those results to find out.

In the next part, we’ll look at the recent Eagle Ford activity and its impact on Buckeye Partners.


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