Buckeye Expands East as PADD 1 Distillates Hit Record Low


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- Buckeye Partners has begun expanded refined-products 
transportation service from Midwest origins toward eastern markets just as PADD 
1 distillate stocks hit record lows, regulatory filings showed Thursday (9/3).

   The Phase 3 expansion, effective September 1, extends Buckeye's west-to-east 
transportation capability beyond Altoona, Pennsylvania, providing physical 
connectivity into eastern Pennsylvania and upstate New York, according to 
Buckeye project materials and filings with the Federal Energy Regulatory 
Commission.

   It marks the latest milestone in the pipeline system's multi-year "Broadway" 
expansion program, which systematically reversed portions of the legacy Laurel 
Pipeline. The system originally moved refined products west from 
Philadelphia-area refineries toward Pittsburgh. Now, line reversals allow 
Midwest refiners to push surplus barrel volumes eastward into central and 
eastern Pennsylvania.

   The flexibility comes as East Coast fuel supplies remain severely depressed 
while Midwest stocks hold relatively steady heading into peak seasonal demand. 
U.S. Energy Information Administration data for the week ended August 28 showed 
PADD 1 distillate inventories down 33% from year-ago levels to a record low of 
19.3 million bbl. By contrast, Midwest distillate stocks stood at a more stable 
28.8 million bbl.

   With PADD 1 distillate buffers at critically low levels and Midwest gasoline 
stocks near multi-year seasonal lows, the expanded west-to-east artery offers 
critical logistical support for both regions ahead of autumn harvest demand and 
upcoming fall refinery turnarounds.

   Expansion of west-to-east takeaway capacity also offers a vital operational 
pressure valve for PADD 2 refiners when major intake arteries experience 
disruptions. During pipeline outages on Gulf Coast supply routes like the 
Explorer Pipeline -- which feeds refined products north into key Midwest 
distribution centers -- regional refiners often face immediate backups and 
localized inventory gluts.

   Geographically, the new route gives Midcontinent refiners the flexibility to 
capture the Chicago-to-New York Harbor arbitrage when PADD 2 product trades at 
a steep discount to East Coast benchmarks. Buckeye noted that the service also 
provides potential for virtual movements into the New York Harbor market, 
adding critical supply optionality between Midwest origins and Northeast 
destinations.

   Market participants, meanwhile, expect transit on the expanded route to 
remain selective. "I think it will happen strictly on a cycle-by-cycle basis," 
a Midwest fuels trader told DTN. "Flows will be determined by fluctuations in 
outright NYMEX pricing, given that there is only a small handful of shippers 
positioned to actually move barrels east."




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