BORCO terminal facility
BPL acquired the BORCO terminal facility in the Bahamas in 2011. Since the acquisition, BPL has invested more than $380 million to increase its storage capacity by 20% to 4.7 million barrels. The investment has also added features like deep water and inclement weather berthing capabilities to the terminal. Pumping rates and connectivity of the inter-tank and flow rates have also improved in the past year.
BPL has been making an effort to re-contract is facilities to improve the stability of its cash flows. Recently, the company has been able to re-contract the largest storage customers at BORCO on a multi-commodity long-term storage agreement at higher rates.
The Global Marine terminals business unit caters to the transport of crude oil, refined petroleum products, and other commodities between important international bulk storage and blending hubs. The assets include key hubs in the Caribbean, including the BORCO facility, the Yabucoa terminal (in Puerto Rico), and the St. Lucia (in the Caribbean) terminal. The Caribbean facilities are will benefit from the anticipated growth of crude oil production from the South American oil areas.
The other significant development in this segment is the acquisition of the Hess Corporation in December, 2013. Continue reading the following sections in this series to learn about the details and effect of the Hess acquisition.
BPL expects to see the effect of full-year cash flows from its investments in the Global Marine terminals in 2014. Adjusted EBITDA of the segment improved by 16.4% in 2013 over 2012. In 1Q14, product throughput in the Global Marine terminals segment increased by 11.8%.
Recently, the storage and terminalling services have encountered issues regarding backwardation in various commodity forward curves. In backwardation, forward prices are lower than the current market price, which gives producers few incentives to store because selling the product at the current market price would get higher profits. The company has been trying to shift its focus on clean product blending and handling capabilities. With that view, BPL has transformed its existing fuel oil service capacity at the BORCO facility and re-introduced its out of a service capacity in Port Reading (in the New York Harbor). In 2013, the Global Marine terminals segment was adversely impacted by certain tankage taken out of service to facilitate heavy crude volumes sourced from South America and potentially from Canada.
The flexibility of BPL’s operations, combined with the installations acquired both in the New York harbor and Caribbean, would count as some unique features to the services provided by an integrated midstream player in the crude oil market. The services, when fully operational, are expected to increase market share for Buckeye Partners (BPL).
Buckeye Partners L.P. (BPL) is a master limited partnership operating in the midstream energy space. Buckeye Partners is also part of the Alerian MLP ETF (AMLP) and the MLP ETF (MLPA). BPL is also a component of the JPMorgan Alerian MLP Index ETN (AMJ) and the ETRACS 2xMonthly Leveraged Long Alerian MLP Infrastructure Index (MLPL).