US Midwest-to-Northeast Fuel Pipeline Service to Start: Buckeye
The Federal Energy Regulation Commission has approved the bi-directional refined product pipeline service on Buckeye Partners’ Laurel Pipeline, allowing fuel produced by Midwest refineries to reach the Northeast markets beginning immediately, the company said Tuesday.
On Tuesday, Buckeye’s product pipeline tariff filed with the FERC has become effective. The tariffs are for refined products shipping from origin points in Michigan, Ohio and Pennsylvania to destinations in New York and Pennsylvania.
Buckeye issued a statement Tuesday saying it appreciates the FERC’s review and approval of its tariff to allow bi-directional refined products service on the eastern portion of the Laurel Pipeline.
“This approval aligns with the prior PA PUC ruling and reinforces the market-driven benefits of further diversifying fuel supply for regional consumers. We … look forward to safely commencing Phase 3 service immediately to serve customers across the markets supported by this project,” the U.S. pipeline and terminal operator said.
On July 16, the Pennsylvania Public Utility Commission denied a challenge by a group of Pennsylvania marketers including Monroe Energy, PBF Energy and Sheetz. The companies argued that the bi-directional service would “constitute a partial abandonment” of the east-to-west service on the Laurel Pipeline.
Buckeye’s Michigan/Ohio pipeline expansion project Phase 3 has expanded Laurel Pipeline’s service to move fuel from various Midwest sources to markets in eastern Pennsylvania and upstate New York through an existing pipeline that runs from Altoona to Sinking Spring in southeastern Pennsylvania.
At Sinking Spring, shippers would be able to access Buckeye’s Eastern Products pipeline system and have the option to supply New York Harbor, either with physical barrels or through swaps.
Buckeye has previously offered up to 80,000 b/d of incremental capacity and said it has received strong interest in the new capacity.
A trader said Buckeye’s new service is valuable, especially in the winter months when the Midwest tends to have an excess supply of refined products and the Midwest-to-Northeast arbitrage opens up.
The new pipeline service, allowing relatively cheaper Midwest refined products to reach the densely populated Northeast markets, comes at a time when Middle East supply disruptions have most likely reduced gasoline exports from Europe and Eastern Canada to the U.S. East Coast.
Northeast metropolitan areas currently also receive product supply from U.S. Gulf Coast refineries via the Colonial Pipeline. However, the Northeast is also competing against record-high U.S. exports to overseas markets amid strong demand and high crack spreads elsewhere.
The Northeast region currently has five only oil refineries, located in New Jersey, Pennsylvania and Delaware. A devastating 2019 fire permanently shut the 335,000 b/d Philadelphia Energy Solutions refinery in southern Pennsylvania, historically the largest East Coast refinery.
Buckeye completed the second phase of its Broadway project in 2019, enabling Laurel Pipeline to reverse its east-to-west flow from Philadelphia to Pittsburgh and allowing Midwest refiners, for the first time, to deliver products as far east as Altoona.
–Reporting by Frank Tang, ftang@opisnet.com; Editing by Dean Visser, dean.visser@dowjones.com
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