May 11, 2018 [Houston Business Journal] - Houston-based Buckeye Partners LP has cancelled its open season for space on the massive South Texas Gateway pipeline project as it focuses in on a similarly named joint venture with Phillips 66 Partners and San Andeavor.
The trio of companies will work together on Buckeye’s South Texas Gateway Terminal project, which Buckeye CEO Clark Smith said will be the primary outlet for Phillips 66 Partners’ Gray Oak Pipeline joint venture project. Smith was speaking on the company’s first-quarter earnings call.
Buckeye won’t have interest in the Gray Oak Pipeline, but Smith said the company’s existing Buckeye Texas Hub and the Gateway Terminal gives the company enough of a stake in the crude and petroleum products export market.
While the cancellation of the open season certainly isn’t good news for the prospects of the Gateway pipeline, it wouldn’t be unprecedented if the project is resurrected with another open season down the road, said John Auers, executive vice president at Dallas-based consulting engineering firm Turner, Mason and Co.
Auers said that unlike some other ill-fated projects, he doesn’t think the Gateway pipeline is suffering from an inhospitable market — there’s a need for more pipeline capacity to carry crude out of the Permian Basin.
“(But) whenever you have demand for something like pipeline space, a lot of projects are going to get proposed,” Auers said. “Not all of them are going to get built.”
Buckeye will own 50 percent of the Gateway Terminal and will be its operator, while Houston-based Phillips 66 Partners and San Antonio’s Andeavor will hold 25 percent each.
The terminal itself will sit at the entrance to the Port of Corpus Christi in Ingleside, Texas.
It’s planned to have capacity for 3.4 million barrels of crude and two deep-water docks, according to a press release. The company could look to expand the terminal beyond the base storage capacity depending on how much of that capacity Buckeye can find commitments for, said, the president of Buckeye’s global marine terminals division.
“We are actively engaged with various customers to basically ink some new commercial agreements,” Muslih said. “We actually see some very robust demand.” Buckeye declined to comment on the fate of the Gateway pipeline beyond the fact that it ended the open season.
Financial results, first quarter 2018
- Revenue: $1.18 billion
- Net income: $117.09 million
Buckeye now expects to spend between $335 million and $385 million on growth in 2018, company CFO Keith St. Clair said on the call. That’s up from the range of $275 million to $325 million that St. Clair gave in February during the company’s fourth-quarter call as a result of a number of new projects announced since then.
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