A subsidiary of Buckeye Partners, L.P. has launched a binding open season to seek commitments from prospective petroleum shippers for the second phase of the Michigan/Ohio Pipeline Expansion Project.
The previous phase had entailed the transportation services between areas in Midwestern region and areas in the Pittsburgh region.
Importance of Open Season
Pipeline operators host open seasons to gauge market interest in their pipelines by allowing prospective petroleum shippers to sign up for a portion of the pipeline’s capacity rights. If a disappointing number of customers sign up, the company does not move forward with the project. For pipeline operators like Buckeye Partners, an open season offers better visibility on future revenues as it shields the company from incurring losses from a lack of customers. Instead, it ensures a definite stream of revenue from shippers who have signed up for capacity rights.
On completion, the Michigan/Ohio Pipeline Expansion Project will enable Buckeye Pipe Line Company, L.P. to increase passage of refined petroleum products from locations in Michigan, Ohio and Pennsylvania to the Altoona region of Pennsylvania. The open season commenced on Aug 31, 2016 and will continue up to Oct 14.
In addition to pipeline expansion, Buckeye Pipeline intends to reverse a portion of the existing Laurel pipeline to enable transportation of petroleum products from Pittsburgh to Central Pennsylvania.
The partnership expects to complete the construction of the Michigan/Ohio pipeline expansion project by fourth-quarter 2016. Buckeye Partners is presently exploring opportunities to increase its capacity to move products west to east.
Diverse Portfolio of Assets
Buckeye Partners holds an attractive diverse portfolio of refined petroleum-product transportation assets in key geographical markets. The partnership continues to pursue both organic and acquisition-driven growth strategies to expand its scale of operations. All of the partnership’s assets are secured by 7–10 year minimum volume commitments and storage, thereby adding stability to its long-term earnings.
Business conditions for storage are strong across the partnership’s domestic and international assets. In the reported quarter, Buckeye Partners contracted with customers for nearly 17 million barrels of storage capacity. Sensing the rise in demand for storage, the partnership expects to put around 600,000 barrels of storage capacity into service in the second half of 2016.
Similar Move by a Peer
Dakota Access LLC and Energy Transfer Crude Oil Company LLC ("ETCO"), an arm of Energy Transfer Partners, L.P. , together declared the supplemental binding open season for Bakken Pipeline. Both Dakota Access and ETCO are involved in the operation and development of the pipeline. The open season started on Aug 12, 2016.
Both Dakota Access and Energy Transfer Crude Oil Company revealed that the incremental carrying capacity for the pipeline will be decided on shippers’ commitment. (Read more: Energy Transfer Reveals Bakken Pipeline Open Season)
Zacks Rank & Key Picks
Buckeye Partners carries a Zacks Rank #3 (Hold). Some better-ranked stocks in same industry include CONE Midstream Partners LP and Enbridge Energy Partners, L.P. , both sporting a Zacks Rank #1 (Strong Buy)
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Buckeye Partners (BPL) Unit Launches Binding Open Season
A subsidiary of Buckeye Partners, L.P. has launched a binding open season to seek commitments from prospective petroleum shippers for the second phase of the Michigan/Ohio Pipeline Expansion Project.
The previous phase had entailed the transportation services between areas in Midwestern region and areas in the Pittsburgh region.
Importance of Open Season
Pipeline operators host open seasons to gauge market interest in their pipelines by allowing prospective petroleum shippers to sign up for a portion of the pipeline’s capacity rights. If a disappointing number of customers sign up, the company does not move forward with the project. For pipeline operators like Buckeye Partners, an open season offers better visibility on future revenues as it shields the company from incurring losses from a lack of customers. Instead, it ensures a definite stream of revenue from shippers who have signed up for capacity rights.
On completion, the Michigan/Ohio Pipeline Expansion Project will enable Buckeye Pipe Line Company, L.P. to increase passage of refined petroleum products from locations in Michigan, Ohio and Pennsylvania to the Altoona region of Pennsylvania. The open season commenced on Aug 31, 2016 and will continue up to Oct 14.
In addition to pipeline expansion, Buckeye Pipeline intends to reverse a portion of the existing Laurel pipeline to enable transportation of petroleum products from Pittsburgh to Central Pennsylvania.
The partnership expects to complete the construction of the Michigan/Ohio pipeline expansion project by fourth-quarter 2016. Buckeye Partners is presently exploring opportunities to increase its capacity to move products west to east.
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Diverse Portfolio of Assets
Buckeye Partners holds an attractive diverse portfolio of refined petroleum-product transportation assets in key geographical markets. The partnership continues to pursue both organic and acquisition-driven growth strategies to expand its scale of operations. All of the partnership’s assets are secured by 7–10 year minimum volume commitments and storage, thereby adding stability to its long-term earnings.
Business conditions for storage are strong across the partnership’s domestic and international assets. In the reported quarter, Buckeye Partners contracted with customers for nearly 17 million barrels of storage capacity. Sensing the rise in demand for storage, the partnership expects to put around 600,000 barrels of storage capacity into service in the second half of 2016.
Similar Move by a Peer
Dakota Access LLC and Energy Transfer Crude Oil Company LLC ("ETCO"), an arm of Energy Transfer Partners, L.P. , together declared the supplemental binding open season for Bakken Pipeline. Both Dakota Access and ETCO are involved in the operation and development of the pipeline. The open season started on Aug 12, 2016.
Both Dakota Access and Energy Transfer Crude Oil Company revealed that the incremental carrying capacity for the pipeline will be decided on shippers’ commitment. (Read more: Energy Transfer Reveals Bakken Pipeline Open Season)
Zacks Rank & Key Picks
Buckeye Partners carries a Zacks Rank #3 (Hold). Some better-ranked stocks in same industry include CONE Midstream Partners LP and Enbridge Energy Partners, L.P. , both sporting a Zacks Rank #1 (Strong Buy)
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>