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Buckeye plans for heavy crude by rail at Perth Amboy for Canadian re-exports

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Buckeye plans for heavy crude by rail at Perth Amboy for Canadian re-exports


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Buckeye Partners may facilitate exports of Canadian crude to its BORCO terminal in the Bahamas from its Perth Amboy, New Jersey, terminal, where the company is rushing to make a new crude-by-rail unloading facility heavy-crude capable, CEO Clark Smith said Friday.

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"Customer demand has also accelerated the second phase of this rail project as we position the facility to handle heavier crude slates and facilitate exports of Canadian-sourced crude oil," Smith said on an earnings call. "Given this customer demand, we are adding certain equipment to fast track the completion of new infrastructure to handle the heavy crude oil slates."

The "re-export" of Canadian crudes from US ports is an increasingly discussed topic as more heavy crude production from Western Canada moves on pipelines and tank cars to the East and Gulf coasts.

For example, Texas-based Valero Energy has a license to re-export Canadian crude from the US to nine undisclosed locations, outgoing CEO Bill Klesse said during Valero's first-quarter earnings call on Tuesday.

The company has not yet used the export license, and received it to allow more flexibility in times when adverse weather conditions could delay shipments to its 265,000 b/d Jean Gaulin refinery in Quebec, Canada, Valero spokesman Bill Day said in an email Friday.

Smith said Buckeye anticipates the "possibility to complement" heavy crude exports of Canadian crude with its aggregation and blending services at BORCO, he said.

Late last year, Khalid Muslih, Buckeye's president of international pipelines and terminals, said during an earnings call that the company is setting up BORCO to become a staging and blending center for heavy Canadian crudes.

"We've obviously been doing some work around this, and feel like there is an attractive opportunity to bring Canadian crude through our crude-by-rail facilities, onto the water, down to BORCO and then again to other global refining centers," Muslih said at the time.

The crude-by-rail unloading facility at Perth Amboy is expected to open in the third quarter, Smith said Friday.

"Work on our crude oil rail facility also continues, [and] that will provide our customers with the ability to offload crude rail cars and store product and [give them] the optionality to deliver that product via ship, barge or pipeline," he said.

In refined products news, Smith said the company reached a "milestone" at Perth Amboy in recent days by putting in service a new "6-mile, high capacity" refined products pipeline between the Perth Amboy terminal and Buckeye's Linden, New Jersey, hub.

Company spokesman Kevin Goodwin on Friday declined to comment on the new pipeline's capacity, saying that Buckeye was not "providing capacity numbers at this point." The line will ship a "diverse slate of refined products," he said, but did not disclose specific products.

"We believe there will be more optionality now through Linden," he said. Linden is the company's "origination point for our eastern product system that delivers to markets in Western Pennsylvania, Upstate New York, New York City and points in between," Smith said.

--Bridget Hunsucker,
--Edited by Annie Siebert,