Buckeye Partners, L.P.

International Directory of Company Histories, Volume 70 (1999) by Ed Dinger

Buckeye Partners, L.P.

5002 Buckeye Road Emmaus, Pennsylvania 18049-5347 U.S.A. Telephone: (484) 232-4000 Fax: (484) 232-4543 Web site: http://www.buckeye.com

Public Company Incorporated: 1986 Employees: 620 Sales: $272.9 million (2003) Stock Exchanges: New York Ticker Symbol: BPL NAIC: 486910 Pipeline Transportation of Refined Petroleum Products

Buckeye Partners, L.P., based in Emmaus, Pennsylvania, is a master limited partnership trading on the New York Stock Exchange. The company's main business, conducted through subsidiary Buckeye Pipe Line Company L.P., is a network of pipelines, terminals, and storage facilities serving major oil companies, refineries, and end users of petroleum products. All told, the company owns and operates 4,500 miles of pipelines and more than 100 delivery locations in a ten-state area, as well as operating another 1,200 miles of pipelines on a contract basis. Bulk storage terminals, capable of holding approximately five million barrels of refined petroleum, are located in Illinois, Indiana, Michigan, New York, Ohio, and Pennsylvania. The types of refined products Buckeye transports include gasoline, jet fuel, diesel fuel, heating oil, and kerosene. Since 1996 Buckeye has been majority-owned by management and employees.

Heritage Linked to 1800s Standard Oil

Buckeye was once part of the 19th-century industrial behemoth, Standard Oil Company. The company was launched in 1863 when John D. Rockefeller and a pair of partners bought a Cleveland refinery, at a time when the oil industry was in its infancy, western Pennsylvania fields were center stage, and the major petroleum product was kerosene, used as an illuminant. Rockefeller recognized that Cleveland, because of its links to railroads and Great Lakes shipping and proximity to Pennsylvania crude, was ideally situated to become a major hub for oil refining. In 1870 the business was incorporated and Rockefeller set out to consolidate, if not conquer, the industry—in the process displaying a keen business acumen as well as ruthlessness in getting his way. By the end of the decade Rockefeller and his partner, Henry Flagler, controlled almost all of the oil refining in the United States, but they were not content with Standard Oil as a horizontal monopoly, dominating one aspect of the oil industry. Instead, they began to expand the company's interests to include drilling as well as the sale of petroleum products, transforming Standard Oil into a vertical monopoly as well. In 1882 all of the assets were housed under the first trust in the United States. The Standard Oil Trust controlled 80 percent of the country's oil refineries and 90 percent of the oil pipelines, and was also a dominant player overseas.

Standard Oil launched the era of the trusts, becoming just one of a number of industry monopolies. The U.S. Congress, fearful of the power these firms wielded, passed the Sherman Anti-Trust Act in 1892. Two years later the Ohio Supreme Court ordered the breakup of Standard Oil, but the firm found a way to skirt the ruling by fleeing to New Jersey, where it was able to reform under a consolidated corporate structure as Standard Oil of New Jersey and continued to operate as a trust. The federal government sued Standard Oil and in 1906 it was declared a monopoly and ordered to dissolve. After the company appealed the decision, the matter was eventually taken up by the U.S. Supreme Court, which in 1911 ruled against Standard Oil and forced its breakup. As a result, Standard Oil was split into several "Baby Standards," and another two dozen smaller subsidiaries also were spun off, including Buckeye Pipe Line, which emerged as an independent, public company.

Moving Toward Refined Products After World War II

Through the end of World War II in 1945, Buckeye was primarily involved in crude oil transportation. Management now decided to expand its ability to move refined products, which were more stable than crude and thus a safer investment. In the 1940s Buckeye established its Midwest Products System, a pipeline that ran from Toledo to Lima, Ohio, and from Indianapolis to southeastern Illinois. Next, Buckeye launched its Eastern Products System in 1952. This unit built pipelines from the New York harbor refining and distribution complex, connecting New Jersey refineries to New York and Pennsylvania marketers. The system became operational in 1954. In the meantime, Buckeye continued to build up its Midwest assets, in 1954 completing construction on an eight-inch refined products pipeline that extended from Lima to Columbus refineries. A year later a link to Toledo's Wolverine Pipe Line Co. was completed as well as a number of other spurs. In addition, some of the crude oil lines were converted to refined products, although the transportation of crude products remained an important part of Buckeye's business. As a result of these changes, Buckeye enjoyed steady growth, improving revenues from $7 million in 1946 to $17 million in 1954.