UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 8-K/A

                                 CURRENT REPORT


     Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): January 3, 2001



                         KANEB PIPE LINE PARTNERS, L.P.
               (Exact name of registrant as specified in charter)


      Delaware                      001-5083                     75-2287571
(State of Incorporation)      (Commission File No.)           (I.R.S. Employer
                                                             Identification No.)



2435 North Central Expressway
Richardson, Texas                                             75080
(Address of Principal Executive Offices)                    (Zip Code)


       Registrant's telephone number, including area code: (972) 699-4000


<PAGE>
Item 2.   Acquisition or Disposition of Assets.

         On January 3, 2001, the Registrant  completed the  acquisition of Shore
Terminals LLC ("Shore Terminals"). Shore Terminals owns seven terminals, four in
California  (three in the San Francisco Bay area and one in Los Angeles) and one
each in Tacoma,  Washington,  Portland,  Oregon and Reno,  Nevada,  with a total
tankage capacity of 7.8 million  barrels.  All of the terminals handle petroleum
products and, with the exception of the Nevada terminal, have deep water access.
The purchase price was approximately $107,000,000 in cash and 1,975,090 units of
limited  partnership  interest of the Registrant.  The  acquisition,  which will
become a part of the ST Services terminaling operations of the Registrant,  will
significantly  increase ST Services'  presence on the West Coast.  Financing for
the cash  portion of the  purchase  price was  supplied  under the  Registrant's
$275,000,000  unsecured  revolving  credit with a bank group  headed by SunTrust
Bank.


Item 7.   Financial Statements and Exhibits.

(a)      Audited financial Statements of the acquired business.
                  Independent Auditors' Report.
                  Shore Terminals LLC Financial Statements
                      Balance  Sheets  -  December  31,  2000 and
                  1999 (As Restated)
                      Statements  of  Operations  -  Years  ended
                  December 31, 2000 and 1999 (As Restated)
                      Statements of Members  Equity - Years ended
                  December 31, 2000 and 1999 (As Restated)
                      Statements  of Cash  Flows  -  Years  ended
                  December 31, 2000 and 1999 (As Restated)
                      Notes to Financial Statements

(b)      Pro forma financial information.

(c)      Exhibit 23 - Consent of Deloitte & Touche LLP; filed herewith.






                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Dated:  March 19, 2001              KANEB  PIPE  LINE   PARTNERS,L.P.

                                    By:  KANEB PIPE LINE COMPANY,
                                         General Partner

                                    By:           //s//
                                    Name:   Ronald D. Scoggins
                                    Title:  Senior Vice President

<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Board of Managers of
Shore Terminals LLC
Martinez, California

We have audited the  accompanying  balance  sheets of Shore  Terminals  LLC (the
"Company") (an indirect majority owned subsidiary of Onyx Holdings,  Inc.) as of
December 31, 2000 and 1999, and the related  statements of operations,  members'
equity, and cash flows for the years then ended. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the  Company as of December  31, 2000 and
1999,  and the results of its  operations  and its cash flows for the years then
ended in conformity with accounting  principles generally accepted in the United
States of America.

As  discussed  in  Note  8 to  the  financial  statements,  the  1999  financial
statements have been restated.

As  discussed  in Note 9 to the  financial  statements,  the  Company  was  sold
effective January 1, 2001.


DELOITTE & TOUCHE LLP


Des Moines, Iowa
March 16, 2001




<PAGE>
SHORE TERMINALS LLC

BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                              2000            1999
                                                                                          (As Restated,
ASSETS                                                                                     See Note 8)
<S>                                                                       <C>             <C>
CURRENT ASSETS:
  Cash and cash equivalents                                               $    258,990    $    112,790
  Accounts receivable, net of allowance of $39,833 and $0, respectively      2,226,497       2,506,863
  Inventories                                                                   57,969          65,891
  Prepaid expenses and other assets                                            516,279         699,560
                                                                           -----------     -----------
        Total current assets                                                 3,059,735       3,385,104
                                                                           -----------     -----------
PROPERTY:
  Land                                                                      13,775,846      13,328,481
  Buildings and improvements and equipment                                   2,088,918       1,836,530
  Tanks, pipeline and docks                                                 79,828,640      76,933,060
                                                                           -----------     -----------
                                                                            95,693,404      92,098,071
  Accumulated depreciation                                                  (8,064,840)     (4,054,926)
                                                                           -----------     -----------
        Property and equipment, net                                         87,628,564      88,043,145
                                                                           -----------     -----------
OTHER NONCURRENT ASSETS:
  Due from members                                                             266,873         236,085
  Debt origination costs, net of accumulated amortization of
     $437,148 and $219,703, respectively                                       695,222         848,612
  Other assets                                                                  22,143
                                                                           -----------     -----------
        Total other noncurrent assets                                          984,238       1,084,697
                                                                           -----------     -----------
TOTAL ASSETS                                                               $91,672,537     $92,512,946
                                                                           ===========     ===========

LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt                                     $ 7,176,471     $ 6,470,588
  Accounts payable                                                             838,538         726,264
  Accrued equity participation awards                                        6,551,615
  Accrued liabilities                                                        1,410,516       1,537,200
  Other liabilities                                                          4,410,000         501,000
                                                                           -----------     -----------
        Total current liabilities                                           20,387,140       9,235,052

LONG-TERM DEBT, NET OF CURRENT MATURITIES                                   29,123,529      41,029,412
OTHER LIABILITIES                                                            3,827,000       6,296,000
                                                                           -----------     -----------
        Total liabilities                                                   53,337,669      56,560,464
                                                                           -----------     -----------
MEMBERS' EQUITY:
  Capital contributions                                                     28,000,000      28,000,000
  Retained earnings                                                         10,334,868       7,952,482
                                                                           -----------     -----------
        Total members' equity                                               38,334,868      35,952,482
                                                                           -----------     -----------
TOTAL LIABILITIES AND MEMBERS' EQUITY                                      $91,672,537     $92,512,946
                                                                           ===========     ===========
</TABLE>


See notes to financial statements.

<PAGE>
SHORE TERMINALS LLC

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                    2000                       1999
                                                                                           (As Restated,
                                                                                            See Note 8)

<S>                                                             <C>                        <C>
OPERATING REVENUES                                              $ 33,353,998               $ 26,284,839
                                                                ------------               ------------
COSTS AND EXPENSES:
  Operating expenses                                              12,955,650                  9,674,174
  Selling, general, and administrative expenses                    3,495,348                  2,153,246
  Compensation expense related to equity participation awards      6,551,615
  Depreciation and amortization expenses                           4,264,893                  3,686,474
  Loss on disposal of property                                       198,579
                                                                ------------               ------------
          Total costs and expenses                                27,466,085                 15,513,894
                                                                ------------               ------------
INCOME FROM OPERATIONS                                             5,887,913                 10,770,945
                                                                ------------               ------------
OTHER INCOME (EXPENSE):
  Interest income                                                     10,055                     53,490
  Interest expense                                                (3,515,582)                (3,949,718)
                                                                ------------               ------------
          Total other expense                                     (3,505,527)                (3,896,228)
                                                                ------------               ------------
NET INCOME                                                      $  2,382,386               $  6,874,717
                                                                ============               ============


</TABLE>

See notes to financial statements.





<PAGE>
SHORE TERMINALS LLC

STATEMENTS OF MEMBERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                              Total
                                                 Capital        Retained     Members'
                                               Contributions    Earnings      Equity

<S>                                             <C>           <C>           <C>
Balance at January 1, 1999                      $23,000,000   $ 1,042,099   $24,042,099

Restatement of retained earnings (See Note 8)                      35,666        35,666
                                                -----------   -----------   -----------
Balance at January 1, 1999, as restated          23,000,000     1,077,765    24,077,765

Capital contributions                             5,000,000                   5,000,000

Net income, as restated (See Note 8)                            6,874,717     6,874,717
                                                -----------   -----------   -----------
Balance at December 31, 1999, as restated        28,000,000     7,952,482    35,952,482

Net income                                                      2,382,386     2,382,386
                                                -----------   -----------   -----------
Balance at December 31, 2000                    $28,000,000   $10,334,868   $38,334,868
                                                ===========   ===========   ===========

</TABLE>



See notes to financial statements.


<PAGE>
SHORE TERMINALS LLC

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                      2000                       1999
                                                                                             (As Restated,
                                                                                              See Note 8)
<S>                                                               <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                      $  2,382,386               $  6,874,717
                                                                  ------------               ------------
  Adjustments  to  reconcile  net  income  to net
    cash  provided  by  operating activities:
    Depreciation and amortization                                    4,264,893                  3,686,474
    Loss on disposal of property                                       198,579
    Changes in:
      Accounts receivable                                              510,183                 (1,394,185)
      Inventories                                                        7,922                    (17,634)
      Prepaid expenses and other assets                                161,138                   (203,278)
      Accounts payable                                                 112,274                    399,576
      Accrued equity participation awards                            6,551,615
      Accrued liabilities                                             (126,684)                   574,570
      Other liabilities                                               (560,000)                  (258,000)
                                                                  ------------               ------------
            Total adjustments                                       11,119,920                  2,787,523
                                                                  ------------               ------------
            Net cash provided by operating activities               13,502,306                  9,662,240
                                                                  ------------               ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Due from members                                                     (30,788)                  (236,085)
  Purchases of property                                             (2,240,013)                (1,744,819)
  Payments for business acquisition                                                           (11,793,394)
  Proceeds from disposal of property                                   178,750
                                                                  ------------               ------------
            Net cash used in investing activities                   (2,092,051)               (13,774,298)
                                                                  ------------               ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt                          11,900,000                  8,026,250
  Repayments of long-term debt                                     (23,100,000)               (10,526,250)
  Proceeds from capital contributions                                                           5,000,000
  Payments of debt origination costs                                   (64,055)                   (98,540)
                                                                  ------------               ------------
            Net cash provided by (used in) financing activities    (11,264,055)                 2,401,460
                                                                  ------------               ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                146,200                 (1,710,598)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                           112,790                  1,823,388
                                                                  ------------               ------------
CASH AND CASH EQUIVALENTS, END OF YEAR                            $    258,990               $    112,790
                                                                  ============               ============

                                                                                              (continued)
</TABLE>

<PAGE>
SHORE TERMINALS LLC

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                      2000                       1999
                                                                                             (As Restated,
                                                                                              See Note 8)
<S>                                                               <C>                        <C>
SUPPLEMENTAL DISCLOSURE OF
  CASH FLOW INFORMATION:
  Interest paid                                                   $  3,197,355               $  4,372,241
                                                                  ============               ============
</TABLE>

SUPPLEMENTAL SCHEDULES OF NONCASH
   INVESTING AND FINANCING ACTIVITIES:
   In connection  with an  acquisition  of a business  during 1998,  the Company
   recorded  adjustments to the purchase price during 2000 and 1999 by recording
   additional  property and additional  other  liabilities of $2,000,000  during
   each year. These adjustments are the result of additional payments to be made
   during  2001  related  to  revenues  generated  during  2000  and 1999 by the
   facilities acquired.

   In connection  with an  acquisition  of a business  during 1998,  the Company
   recorded an adjustment to the purchase  price during 2000 by recording  other
   assets and a reduction in property of $229,817.  The adjustment is the result
   of a reimbursement  to be received during 2001 related to increased rent on a
   lease assumed in connection with the acquisition.

   The following assets were acquired and liabilities were assumed in connection
   with the acquisition of a business in 1999:

   Inventories                                               $     41,302
   Prepaid expenses and other assets                               35,636
   Property                                                    14,197,456
   Other liabilities, current                                    (319,000)
   Other liabilities, noncurrent                               (2,162,000)
                                                             ------------
                                                             $ 11,793,394
                                                             ============
                                                              (concluded)


See notes to financial statements.


<PAGE>
SHORE TERMINALS LLC

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Nature of Business - Shore Terminals LLC (the "Company") is engaged in the
      business of storage and terminaling of oil and other  petroleum  products.
      The Company operates facilities in or near Tacoma,  Washington;  Portland,
      Oregon;  Sparks,  Nevada; and Martinez,  Selby, Richmond, and Los Angeles,
      California.

      Business  Acquisitions - Effective  October 29, 1999, the Company acquired
      the Richmond,  Tacoma,  Portland,  and Sparks facilities for approximately
      $11,800,000.  In accordance with accounting  principles generally accepted
      in the United States of America,  the transaction was accounted for by the
      purchase method. The purchase price was allocated based on the fair values
      of the assets acquired and liabilities assumed at the date of acquisition.

      In connection with the acquisition of the Martinez, Selby, and Los Angeles
      facilities  during 1998,  the Company  entered into an agreement  with the
      seller  which  requires  the Company to pay the seller an amount  equal to
      combined annual  revenues of these  facilities in excess of $20,500,000 up
      to  $2,000,000  per year for the years ending  December 31, 1999 and 2000.
      During 2000 and 1999,  the  Company  accrued  $2,000,000  pursuant to this
      agreement and increased the cost of the Martinez,  Selby,  and Los Angeles
      properties.  The amount  payable under the agreement is due April 15, 2001
      and is included in other current liabilities in the accompanying  December
      31, 2000 balance sheet.

      Lancewood, Inc. owns approximately 97% of the Company.
      Onyx Holdings, Inc. owns 100% of Lancewood, Inc.

      See Note 9 regarding the sale of the Company during January 2001.

      Cash and Cash  Equivalents - For financial  statement  purposes,  cash and
      cash equivalents include currency and demand deposits.

      Inventories - Inventories  are stated at the lower of cost (average  cost)
      or market.

      Property  -  Property   is  stated  at  cost  and  (other  than  land)  is
      depreciated,   primarily  using  the  straight-line   method,  based  upon
      estimated useful lives of the assets which range from 3 to 20 years.

      Debt Origination  Costs - Debt origination  costs represent costs incurred
      in connection  with  obtaining  long-term  debt  financing.  The costs are
      amortized using the straight-line method, which approximates the effective
      interest method, over the term of the related financing agreement.

      Revenue  Recognition - Operating  revenues  include  amounts  earned under
      storage and terminaling  agreements.  Under these agreements,  the Company
      recognizes  revenue on a prorata fixed fee basis for barrels  stored up to
      an agreed upon volume. For throughput in excess of the agreed upon volume,
      revenue is recognized on a per barrel basis.

      Income Taxes - The Company was formed as a limited  liability  corporation
      which is  treated  similar  to a  partnership  for  income  tax  purposes;
      accordingly,  no income  taxes are  reported  in the  Company's  financial
      statements.

      Impairment  of Long Lived  Assets - The Company  reviews long lived assets
      for impairment  whenever events or changes in  circumstances  indicate the
      carrying  amount  of  an  asset  may  not  be  recoverable.  In  assessing
      impairment,  fair  value is based on  estimated  discounted  cash flows as
      determined  by  management.  As of December  31, 2000 and 1999 and for the
      years then ended, no impairment loss or reserve was recorded.

      Use of Estimates - The  preparation of financial  statements in conformity
      with  accounting  principles  generally  accepted in the United  States of
      America requires  management to make estimates and assumptions that affect
      the reported amounts of assets and  liabilities,  disclosure of contingent
      assets and  liabilities  at the dates of the financial  statements and the
      reported  amounts of revenues and expenses  during the reporting  periods.
      Actual results could differ from those estimates.

      Reclassifications - Certain 1999 amounts have been reclassified to conform
      with 2000 presentation.

      Statement  of  Financial  Accounting  Standards - Statement  of  Financial
      Accounting  Standards  No. 133 ("SFAS  133"),  Accounting  for  Derivative
      Instruments  and Hedging  Activities,  is  effective  for all fiscal years
      beginning  after  June  30,  2000.  SFAS  133,  as  amended,   establishes
      accounting and reporting standards for derivative  instruments,  including
      certain  derivative  instruments  embedded  in  other  contracts,  and for
      hedging  activities.  Under  SFAS  133,  certain  contracts  that were not
      formerly  considered   derivatives  may  now  meet  the  definition  of  a
      derivative.  The  Company  adopted  SFAS  133  on  January  1,  2001,  and
      determined  that SFAS 133 did not have a material  impact on the Company's
      financial position, results of operations, or cash flows.

2.    LONG-TERM DEBT

      As of  December  31,  2000,  long-term  debt  consisted  of a  $33,400,000
      revolving  note  payable  and a  $2,900,000  term  note  payable  to Fleet
      National  Bank,  N.A.  Pursuant to the terms of the  revolving  note,  the
      Company  could  borrow up to  $41,000,000  as of December  31,  2000.  The
      available  borrowings  under the revolving note are reduced on a quarterly
      basis by the amount of the scheduled  maturities  (ranging from $1,000,000
      to $1,750,000) with the remaining  balance due December 31, 2003. The term
      note is due in quarterly  payments with the remaining balance due December
      31, 2003.

      Interest is generally  payable  quarterly at a variable rate calculated as
      the higher of the lender's  published prime rate plus 0.5%  ($2,000,000 at
      10% at December 31, 2000) or 1% over the overnight Federal Funds effective
      rate,  or at the  option of the  Company,  a  eurodollar  rate plus  2.25%
      ($10,275,000  at 8.875% at December 31, 2000).  Effective  March 31, 1999,
      the  Company  entered  into an  interest  rate  swap  agreement.  The swap
      agreement  provides  for the  Company to pay  interest  at a fixed rate of
      7.78% on certain  outstanding  borrowings  ($21,125,000  at  December  31,
      2000). The swap agreement provides for quarterly  reductions (ranging from
      $500,000 to $750,000) in the principal amount subject to the interest rate
      swap until expiration of the swap agreement during September 2001.

      During  January 2001, the  outstanding  principal and interest under these
      debt agreements was repaid in connection with the sale of the Company, see
      Note 9.

3.    CONCENTRATIONS

      During 2000 and 1999, the Company had sales to two  significant  customers
      that  individually  exceeded 10% of total revenues.  During 2000 and 1999,
      the  Company  had  revenue  from these  customers  totaling  approximately
      $12,653,000  and  $16,578,000,  respectively.  As of December 31, 2000 and
      1999, the Company had accounts  receivable from these  customers  totaling
      approximately $358,000 and $1,000,000, respectively.

4.    OPERATING LEASES

      As Lessee:

      The Company leases certain  equipment under  cancelable  operating  leases
      with  terms of one year or less.  Rent  expense  under  these  leases  was
      approximately  $141,000 and $100,000 for the years ended December 31, 2000
      and 1999, respectively.

      The Company also leases certain land and wharf use rights from the Port of
      Los Angeles and the California State Lands Commission under  noncancelable
      operating  leases  with  terms in excess of one year.  Certain  leases are
      subject to periodic rate  adjustments  and certain leases contain  renewal
      options.  Rent expense under these leases was  approximately  $782,000 and
      $647,000 for the years ended December 31, 2000 and 1999, respectively.

      As of December 31, 2000 future minimum lease payments were as follows:

      Years Ending December 31:

        2001                                                $   713,045
        2002                                                    713,045
        2003                                                    713,045
        2004                                                    713,045
        2005                                                    713,045
        Thereafter                                            6,024,792
                                                            -----------
                                                            $ 9,590,017
                                                            ===========
      As Lessor:

      The Company has  noncancelable  storage  contracts with terms in excess of
      one year with its customers which expire over the next eleven years. As of
      December 31, 2000 future minimum lease receipts were as follows:

      Years Ending December 31:

        2001                                                $ 7,004,002
        2002                                                  4,748,218
        2003                                                  3,123,431
        2004                                                  2,033,804
        2005                                                    724,902
        Thereafter                                            1,199,450
                                                            -----------
                                                            $18,833,807
                                                            ===========

      For the years  ended  December  31, 2000 and 1999,  operating  revenues of
      approximately  $29,373,000 and $23,629,000,  respectively,  were generated
      from leasing activities.  Included in these amounts are contingent rentals
      of  approximately  $7,773,000  and $9,579,000 for the years ended December
      31,  2000 and 1999,  respectively,  which are  primarily  based on barrels
      stored and throughput.

5.    BENEFIT PLAN

      The Company has a defined  contribution  profit  sharing plan  pursuant to
      Section 401(k) of the Internal Revenue Service Code. The plan is available
      to  substantially  all  full-time  employees of the  Company.  The Company
      matches 100% of participant  contributions  up to 2% of the  participant's
      compensation  and  provides  for  discretionary  employer  profit  sharing
      contributions. Total Company contributions were approximately $218,000 and
      $187,000 for the years ended December 31, 2000 and 1999, respectively.

6.    EQUITY PARTICIPATION AWARDS

      The Company granted equity  participation awards totaling 7.11% to certain
      key employees.  The awards entitle the employees to receive  distributable
      cash, as defined, of the Company in proportion to the equity participation
      percentage after the  distributable  cash of the Company reaches a certain
      level. All of the equity  participation awards vested upon the sale of the
      Company, see Note 9.

      The Company recognized  compensation  expense of approximately  $6,552,000
      during 2000 related to these equity participation awards which is recorded
      in accrued  liabilities  as of December 31,  2000.  As  attainment  of the
      required  level of  distributable  cash was not probable  during 1999,  no
      compensation cost was recognized by the Company during 1999.

7.    ENVIRONMENTAL CONTINGENCIES

      The Company's  operations are subject to extensive  environmental laws and
      regulations.  The Company is involved in various  environmental matters in
      the  normal  course  of  business.   Although  the  Company  believes  its
      operations are in compliance  with applicable  environmental  regulations,
      risks of additional  costs and liabilities are inherent in the operations,
      and there can be no assurance that significant  costs and liabilities will
      not be  incurred by the  Company.  More over,  it is  possible  that other
      developments,   such  as  increasingly   stringent   environmental   laws,
      regulations and enforcement policies thereunder, and claims for damages to
      property or persons  resulting  from the  operations  of the Company could
      result in substantial  costs and  liabilities to the Company.  The Company
      expenses payments related to existing  environmental  conditions resulting
      from past and  current  operations  and from  which no  current  or future
      benefit is  discernable.  It is the  Company's  policy to accrue for these
      matters if it is probable that a liability has been incurred and an amount
      is reasonably estimable. As of December 31, 2000 and 1999, liabilities for
      environmental  claims of  $4,106,000  and  $4,607,000,  respectively,  are
      accrued and are included in other liabilities in the accompanying  balance
      sheets. The Company's ultimate liability with respect to these matters may
      be affected  by several  uncertainties,  primarily  the  ultimate  cost of
      required  remediation  and the extent to which other  responsible  parties
      contribute.

8.    RESTATEMENT OF 1999 FINANCIAL STATEMENTS

      Subsequent to the issuance of the 1999 financial  statements,  the Company
      recorded environmental  liabilities relating to certain assets acquired in
      prior years.  The 1999  financial  statements  have been restated from the
      amounts  previously  reported  to properly  account for the  environmental
      liabilities as follows:

                                                 As Previously
                                                    Reported     As Restated

       At December 31:
         Property, net                            $83,285,159    $88,043,145
         Other liabilities, current                                  501,000
         Other liabilities, noncurrent              2,190,000      6,296,000
         Retained earnings:
           Beginning of year                        1,042,099      1,077,765
           End of year                              7,801,496      7,952,482

       For the year ended December 31:
         Operating expenses                         9,932,174      9,674,174
         Depreciation and amortization expenses     3,543,794      3,686,474
         Net income                                 6,759,397      6,874,717


9.    SUBSEQUENT EVENT

      Effective  January  1,  2001,  the  Company  was sold to Kaneb  Pipe  Line
      Partners,  L.P. (Kaneb). The sale price was approximately  $107,000,000 in
      cash and 1,975,000 units of limited  partnership  interest of Kaneb with a
      fair value of approximately $61,000,000.

                              * * * * * *

<PAGE>


         UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         The following  unaudited  pro forma  condensed  consolidated  financial
statements  (the "Pro  Forma  Statements")  for Kaneb Pipe Line  Partners,  L.P.
("KPP") have been derived from the audited  historical  financial  statements of
KPP and Shore  Terminals  LLC. The  unaudited pro forma  condensed  consolidated
statement of income  assumes that the  acquisition  of Shore  Terminals  LLC was
consummated  as  of  January  1,  2000.   The  unaudited  pro  forma   condensed
consolidated  balance  sheet assumes that the  acquisition  was  consummated  on
December 31, 2000.

         The  Pro  Forma  Statements  do not  purport  to be  indicative  of the
financial position or results of operations of KPP had the transactions referred
to  above  occurred  on the date  indicated,  nor are the Pro  Forma  Statements
necessarily indicative of the future financial position or results of operations
of KPP.  The Pro  Forma  Statements  should  be read  in  conjunction  with  the
consolidated financial statements of KPP and Shore Terminals LLC.



<PAGE>
                 KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES
              PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
                          YEAR ENDED DECEMBER 31, 2000
                    (In Thousands - Except Per Unit Amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>



                                                               Shore Acquisition
                                                     -------------------------------------
                                       Partnership     Shore       Pro Forma                Partnership
                                       Historical    Historical   Adjustments    Pro Forma   Pro Forma
                                       -----------   ----------   -----------    ---------  -----------
<S>                                     <C>          <C>          <C>            <C>          <C>
Revenues ..........................     $ 156,232    $  33,354    $    --        $  33,354    $ 189,586
                                        ---------    ---------    ---------      ---------    ---------
Costs and expenses:
    Operating costs ...............        69,653       13,154         --           13,154       82,807
    Depreciation and amortization .        16,253        4,265        3,043 (a)      7,308       23,561
    General and administrative ....        11,881        3,495       (1,757)(b)      1,738       13,619
    Compensation related to equity
      participation costs .........          --          6,552       (5,170)(c)      1,382        1,382
                                        ---------    ---------    ---------      ---------    ---------
         Total costs and expenses..        97,787       27,466       (3,884)        23,582      121,369
                                        ---------    ---------    ---------      ---------    ---------
Operating income ..................        58,445        5,888        3,884          9,772       68,217

Interest and other income .........         1,442           10         --               10        1,452
Interest expense ..................       (12,283)      (3,516)      (3,240)(d)     (6,756)     (19,039)
                                        ---------    ---------    ---------      ---------    ---------
Income before minority interest and
    income taxes ..................        47,604        2,382          644          3,026       50,630

Minority interest in net income ...          (467)        --            (30)(e)        (30)        (497)

Income tax provision ..............          (943)        --           --             --           (943)
                                        ---------    ---------    ---------      ---------    ---------

Net income ........................        46,194        2,382          614          2,996       49,190

General partners interest in net
    income ........................        (1,639)        --            (30)(f)        (30)      (1,669)
                                        ---------    ---------    ---------      ---------    ---------
Limited partners interest in net
    income ........................     $  44,555    $   2,382    $     584      $   2,966    $  47,521
                                        =========    =========    =========      =========    =========

Allocation of net income per unit..     $    2.43                                             $    2.34
                                        =========                                             =========
Weighted average number of
    Partnership units outstanding..        18,310                     1,975 (g)      1,975       20,285
                                        =========                 =========      =========    =========

</TABLE>

     See Notes to Pro Forma Condensed Consolidated Financial Information

                               14


<PAGE>

                 KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES
                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000
                           (Unaudited - In Thousands)


<TABLE>
<CAPTION>

                                                               Shore Acquisition
                                                     -------------------------------------
                                       Partnership     Shore       Pro Forma                Partnership
                                       Historical    Historical   Adjustments    Pro Forma   Pro Forma
                                       -----------   ----------   -----------    ---------  -----------

      Assets
<S>                                     <C>          <C>          <C>            <C>          <C>
Current assets:
    Cash and cash equivalents .......   $   4,758    $     259    $   --         $     259    $   5,017
    Accounts receivable .............      21,091        2,226                       2,226       23,317
    Prepaid expenses ................       5,291          575                         575        5,866
                                        ---------    ---------    ---------      ---------    ---------
      Total current assets ..........      31,140        3,060        --             3,060       34,200

Net property and equipment ..........     321,355       87,629       82,899 (h)    170,528      491,883

Investment in affiliates ............      22,568                                    --          22,568

Other noncurrent assets .............        --            984         (984)(h)      --           --
                                        ---------    ---------    ---------      ---------    ---------
                                        $ 375,063    $  91,673    $  81,915      $ 173,588    $ 548,651
                                        =========    =========    =========      =========    =========

      Liabilities and Partners' Capital
Current liabilities:
    Current maturities of long-term
      debt .........................    $    --      $   7,176    $  (7,176)(d)  $   --       $    --
    Accounts payable and accrued
      expenses .....................       17,491        2,249         (455)(d)      1,794       19,285
    Equity participation awards ....         --          6,552       (6,552)(c)      --            --
    Accrued distributions payable ..       13,372         --           --            --          13,372
    Payable to general partner .....        1,889         --           --            --           1,889
    Other current liabilities ......         --          4,410         --            4,410        4,410
                                        ---------    ---------    ---------      ---------    ---------
      Total current liabilities ....       32,752       20,387      (14,183)         6,204       38,956

Long-term debt .....................      166,900       29,124       77,945 (d)    107,069      273,969

Other liabilities and deferred taxes.      13,676        3,827                       3,827       17,503

Minority interest ...................         968         --                         --             968

Total partners' capital .............     160,767       38,335       18,153 (g)     56,488      217,255
                                        ---------    ---------    ---------      ---------    ---------
                                        $ 375,063    $  91,673    $  81,915      $ 173,588    $ 548,651
                                        =========    =========    =========      =========    =========
</TABLE>

     See Notes to Pro Forma Condensed Consolidated Financial Information

                               15
<PAGE>
         KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES
     PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                        DECEMBER 31, 2000
                           (Unaudited)



The following pro forma entries have been applied in the  preparation of the Pro
Forma Statements:

(a)      Represents adjustments to depreciation and amortization of the acquired
         assets  based  on  the   preliminary   allocation  of  purchase  price.
         Depreciation  of terminals  and related  assets  acquired is based on a
         useful life of approximately 20 - 25 years.

(b)      Represents  adjustment of payroll and related costs associated with the
         Shore employees not retained by KPP.

(c)      Represents  adjustment of compensation  related to equity participation
         awards  for  employees  of Shore  that have not been  retained  by KPP.
         Additionally,  the accrued  liability  related to equity  participation
         awards,  which  was  paid at the  Acquisition  closing  date,  has been
         eliminated.

(d)      Represents  adjustments to reflect the repayment of existing Shore bank
         debt ($36.3 million) and accrued interest ($455,000) at the Acquisition
         date and to record KPP  Acquisition  debt of $107.1  million.  Interest
         expense has been adjusted to reflect Acquisition debt interest at 6.31%
         per annum.  A 1/8% change in interest  rates would result in a $134,000
         annual change in interest expense.

(e)      Represents  the  General  Partner's  1%  interest  in Kaneb  Pipe  Line
         Operating Partnership, L.P.

(f)      Represents the General Partner's 1% interest in KPP.

(g)      Represents 1,975,090 units issued in connection with the Acquisition at
         a value of $28.60 per unit ($56.5  million) and  elimination of Shore's
         historical Members' Equity.

(h)      Represents  the  preliminary  allocation of the estimated fair value of
         the acquired assets and  liabilities,  however,  the final valuation of
         the  assets  and  liabilities  is not  complete  as of the  date of the
         filing.  KPP does  not  expect  any  significant  modifications  to the
         preliminary purchase price allocation that would have a material effect
         to the Pro Forma Statements presented.

<PAGE>

                                 EXHIBIT INDEX

Exhibit No.         Description

    23              Consent of Deloitte & Touche LLP