##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K/A
 
 
 (Amendment No. 1)
 
 (Mark One)
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 1-9356
 Buckeye Partners, L.P.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    23-2432497(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification number)One Greenway PlazaSuite 600Houston, TX
    
    77046(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (832) 615-8600
 Securities registered pursuant to Section 12(b) of the Act:
 Name of each exchange onTitle of each class
    
    which registeredLimited partner units representing limited partnership interests
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
  þ  ̈
  ̈ þ
 þ  ̈
 þ  ̈
  ̈
  Large accelerated filer þAccelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o
  ̈ þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### Table of Contents



EXPLANATORY NOTE




---



##### 



TABLE OF CONTENTS
 
 PagePART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    23Item 1B.
    
    Unresolved Staff Comments
    
    
    35Item 2.
    
    Properties
    
    
    36Item 3.
    
    Legal Proceedings
    
    
    36Item 4.
    
    [Reserved]
    
    
    38PART IIItem 5.
    
    Market for the Registrants LP Units, Related Unitholder Matters, and Issuer Purchases
of LP Units
    
    
    38Item 6.
    
    Selected Financial Data
    
    
    40Item 7.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    41Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    70Item 8.
    
    Financial Statements and Supplementary Data
    
    
    74Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    142Item 9A.
    
    Controls and Procedures
    
    
    142Item 9B.
    
    Other Information
    
    
    142PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    142Item 11.
    
    Executive Compensation
    
    
    142Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Unitholder Matters
    
    
    143Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    143Item 14.
    
    Principal Accounting Fees and Services
    
    
    143PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    143EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
 
  1




---



##### Table of Contents



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 The information contained in this Annual Report on Form 10-K/A (this Report) include
forward-looking statements. All statements that express belief, expectation, estimates or
intentions, as well as those that are not statements of historical facts, are forward-looking
statements. Such statements use forward-looking words such as proposed, anticipate, project,
potential, could, should, continue, estimate, expect, may, believe, will, plan,
seek, outlook and other similar expressions that are intended to identify forward-looking
statements, although some forward-looking statements are expressed differently. These statements
discuss future expectations and contain projections. Specific factors that could cause actual
results to differ from those in the forward-looking statements include, but are not limited to: (1)
changes in federal, state, local and foreign laws or regulations to which we are subject, including
those that permit the treatment of us as a partnership for federal income tax purposes, (2)
terrorism, adverse weather conditions, including hurricanes, environmental releases, and natural
disasters, (3) changes in the marketplace for our products or services, such as increased
competition, better energy efficiency, or general reductions in demand, (4) adverse regional,
national or international economic conditions, adverse capital market conditions or adverse
political development, (5) shutdowns or interruptions at the source points for the products we
transport, store, or sell, (6) unanticipated capital expenditures in connection with the
construction, repair, or replacement of our assets, (7) volatility in the price of refined
petroleum products and the value of natural gas storage services, (8) nonpayment or nonperformance
by our customers, (9) our ability to realize efficiencies expected to result from our previously
announced reorganization, and (10) our ability to integrate acquired assets with our existing
assets and to realize anticipated cost savings and other efficiencies. These factors are not
necessarily all of the important factors that could cause actual results to differ materially from
those expressed in any of our forward-looking statements. Other known or unpredictable factors
could also have material adverse effects on future results. Consequently, all of the
forward-looking statements made in this document are qualified by these cautionary statements, and
we cannot assure you that actual results or developments that we anticipate will be realized or,
even if substantially realized, will have the expected consequences to or effect on us or our
business or operations. Also note that we provide additional cautionary discussion of risks and
uncertainties under the captions Risk Factors, Managements Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Report.
 
 
 The forward-looking statements contained in this Report speak only as of the date hereof.  Although the
expectations in the forward-looking statements are based on our current beliefs and expectations, caution should be
taken not to place undue reliance on any such forward-looking statements because such statements speak only as of
the date hereof.  Except as required by federal and state securities laws, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future events or any other
reason.  All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified
in their entirety by the cautionary statements contained or referred to in this Report and in our future periodic
reports filed with the U.S. Securities and Exchange Commission (SEC).  In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this Report may not occur.
 
 2




---



##### Table of Contents



PART I
 
 Item 1. Business
 Introduction
 we us our Partnership Buckeye
  
  
    3




---



##### Table of Contents



Operating
Subsidiaries
 
    
    Buckeye Pipe Line Company, L.P.(Buckeye Pipe Line), which owns an approximately
2,700-mile refined petroleum products pipeline system serving major population centers
in eight states. As a part of its service territory, Buckeye Pipe Line is the primary
jet fuel transporter to certain airports, including John F. Kennedy International
Airport (JFK Airport), LaGuardia Airport and Newark Liberty International Airport
(Newark Airport).
    
    Laurel Pipe Line Company, L.P.(Laurel), which owns an approximately 350-mile
refined petroleum products pipeline connecting four Philadelphia area refineries to ten
delivery points across Pennsylvania.
    
    Wood River Pipe Lines LLC(Wood River), which owns eight refined petroleum
products pipelines with aggregate mileage of approximately 1,250 miles located in
Illinois, Indiana, Missouri and Ohio.
    
    Buckeye Pipe Line Transportation LLC(BPL Transportation), which owns a refined
petroleum products pipeline system with aggregate mileage of approximately 500 miles
located in New Jersey, New York and Pennsylvania.
    
    Everglades Pipe Line Company, L.P.(Everglades), which owns an approximately
40-mile refined petroleum products pipeline connecting Port Everglades, Florida to Ft.
Lauderdale-Hollywood International Airport and Miami International Airport. Everglades
is the primary jet fuel transporter to Miami International Airport.
    
    Buckeye Pipe Line Holdings, L.P.(BPH), which, through certain of its
subsidiaries, owns (or in certain instances leases from our other Operating
Subsidiaries) 62 active refined petroleum and other products terminals (of which 59 are
included in our Terminalling & Storage segment and three are included in our Pipeline
Operations segment) with aggregate storage capacity of approximately 26.3 million
barrels and approximately 575 miles of pipelines in the Midwest and on the West Coast.
BPH operates, through its subsidiaries, terminals and pipelines for third parties. BPH
also holds noncontrolling stock interests in two Midwest refined petroleum products
pipelines.
    
    Buckeye Gas Storage LLC,which, through its subsidiary Lodi Gas Storage, L.L.C.
(Lodi Gas), owns a natural gas storage facility in northern California that currently
has approximately 29 Bcf of working natural gas storage capacity.
    
    Buckeye Energy Holdings LLC, which, through its subsidiary Buckeye Energy Services
LLC (BES), markets refined petroleum products in areas served by our pipelines and
terminals and also owns five refined petroleum product terminals with aggregate storage
capacity of 1.0 million barrels located in northeastern and central Pennsylvania.
    
    Buckeye Caribbean Holdings Limited, which, through its subsidiary, Buckeye Caribbean
Terminals LLC, owns the terminal in Puerto Rico that we acquired in December 2010 (see
2010 Developments below for further information), with an aggregate storage capacity
of approximately 4.6 million barrels, which is included in our Terminalling & Storage
segment.
    
    Buckeye Atlantic Holdings LLC, which, through its indirect subsidiary, Bahamas Oil
Refining Company International Limited (BORCO), owns a terminal facility in Freeport,
Grand Bahama, The
 4




---



##### Table of Contents



Bahamas, with an aggregate storage capacity of approximately 21.6 million barrels, which
is included in our Terminalling & Storage segment (see 2010 Developments below for
further information).
  
 
 *
    
    99.5% Limited Partner Interest and 0.5% General Partner Interest**
    
    MainLine Management LLC, as general partner of Buckeye GP Holdings L.P. has limited control rights. Buckeye GP LLC
controls Buckeye, and all of Buckeye GP LLCs directors are elected by the LP unitholders. 5




---



##### Table of Contents



Business Strategy
  
    
    Maximize utilization of our assets at the lowest cost per unit;
    
    Maintain stable long-term customer relationships;
    
    Operate in a safe and environmentally responsible manner;
    
    Optimize, expand and diversify our portfolio of energy assets; and
    
    Maintain a solid, conservative financial position and our investment-grade credit
rating.
  
    
    Acquiring, building and operating high quality, strategically located assets;
    
    Maintaining and enhancing the integrity of our pipelines, terminals and storage assets;
    
    Pursuing strategic cash flow-accretive acquisitions that:
 
    
    Complement our existing footprint;
    
    Provide geographic, product and/or asset class diversity; and
    
    Leverage existing management capabilities and infrastructure; and
 
    
    Providing superior customer service.
 2010 Developments
 Merger
   Acquisition of BORCO
   6




---



##### Table of Contents



Amendment to BES Credit Agreement
  Purchase of Additional Interest in West Shore Pipe Line Company
  Sale of Buckeye NGL Pipeline
  Terminal Acquisitions
  7




---



##### Table of Contents



Business Activities
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Revenue
    
    
    Percent
    
    
    Revenue
    
    
    Percent
    
    
    Revenue
    
    
    PercentPipeline Operations
    
    $
    400,926
    
    
    
    12.7
    %
    
    $
    392,667
    
    
    
    22.3
    %
    
    $
    387,267
    
    
    
    20.4
    %Terminalling & Storage
    
    
    175,000
    
    
    
    5.6
    %
    
    
    136,576
    
    
    
    7.7
    %
    
    
    119,155
    
    
    
    6.3
    %Natural Gas Storage
    
    
    95,337
    
    
    
    3.0
    %
    
    
    99,163
    
    
    
    5.6
    %
    
    
    61,791
    
    
    
    3.3
    %Energy Services
    
    
    2,481,566
    
    
    
    78.7
    %
    
    
    1,125,013
    
    
    
    63.5
    %
    
    
    1,295,925
    
    
    
    68.3
    %Development & Logistics
    
    
    37,696
    
    
    
    1.2
    %
    
    
    34,136
    
    
    
    1.9
    %
    
    
    43,498
    
    
    
    2.3
    %Intersegment
    
    
    (39,257
    )
    
    
    -1.2
    %
    
    
    (17,183
    )
    
    
    -1.0
    %
    
    
    (10,984
    )
    
    
    -0.6
    %Total
    
    $
    3,151,268
    
    
    
    100.0
    %
    
    $
    1,770,372
    
    
    
    100.0
    %
    
    $
    1,896,652
    
    
    
    100.0
    %
 Pipeline Operations Segment
   8




---



##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Volume
    
    Percent
    
    
    Volume
    
    Percent
    
    
    Volume
    
    PercentGasoline
    
    
    643.7
    
    
    
    49.3
    %
    
    
    650.1
    
    
    
    49.6
    %
    
    
    673.5
    
    
    
    48.7
    %Jet fuel
    
    
    338.5
    
    
    
    26.0
    %
    
    
    336.7
    
    
    
    25.7
    %
    
    
    354.7
    
    
    
    25.7
    %Middle distillates (1)
    
    
    301.3
    
    
    
    23.1
    %
    
    
    284.7
    
    
    
    21.7
    %
    
    
    304.2
    
    
    
    22.0
    %NGLs (2)
    
    
    
    
    
    
    0.0
    %
    
    
    13.9
    
    
    
    1.1
    %
    
    
    20.9
    
    
    
    1.5
    %Other products
    
    
    21.0
    
    
    
    1.6
    %
    
    
    24.5
    
    
    
    1.9
    %
    
    
    28.9
    
    
    
    2.1
    %Total (3)
    
    
    1,304.5
    
    
    
    100.0
    %
    
    
    1,309.9
    
    
    
    100.0
    %
    
    
    1,382.2
    
    
    
    100.0
    %
 
 (1)
    
    Includes diesel fuel, heating oil, kerosene and other middle distillates.(2)
    
    Represents volumes transported by the Buckeye NGL Pipeline, which we sold effective January
1, 2010.(3)
    
    Excludes local product transfers.  PennsylvaniaNew YorkNew Jersey
    IllinoisIndianaMichiganMissouriOhio
  9




---



##### Table of Contents



Other Refined Petroleum Products Pipelines
    Equity Investments
    10




---



##### Table of Contents



Terminalling & Storage Segment
     Year Ended December 31,2010
    
    2009
    
    2008Products throughput
(1)
    
    
    564,300
    
    
    
    471,900
    
    
    
    464,400
 
 (1)
    
    Reported quantities include volumes from our terminal located in Albany, New York. For the
years ended December 31, 2009 and 2008, we previously reported total products throughput of
444.9 thousand and 457.4 thousand barrels, respectively, which excluded volumes from the
Albany, New York terminal. 11




---



##### Table of Contents



StorageNumber of
    
    CapacityLocation
    
    Terminals (1)
    
    (000s Barrels)Bahamas (2)
    
    
    1
    
    
    
    21,612Connecticut
    
    
    1
    
    
    
    345Illinois
    
    
    9
    
    
    
    3,161Indiana
    
    
    10
    
    
    
    8,910Louisiana
    
    
    1
    
    
    
    135Massachusetts
    
    
    1
    
    
    
    106Michigan
    
    
    10
    
    
    
    3,908Missouri
    
    
    2
    
    
    
    345New York
    
    
    10
    
    
    
    4,111Ohio
    
    
    8
    
    
    
    2,871Pennsylvania
    
    
    4
    
    
    
    1,131Puerto Rico
    
    
    1
    
    
    
    4,623Wisconsin
    
    
    3
    
    
    
    734Total
    
    
    61
    
    
    
    51,992
 
 (1)
    
    In addition, we have three terminals which are included in the Pipelines Operations segment
for reporting purposes. There is a terminal in each of the states of California (with storage
capacity of 0.1 million barrels), Nevada (with storage capacity of 0.1 million barrels) and
Tennessee (with storage capacity of 0.3 million barrels). We also have five terminals, which
are included in the Energy Services segment for reporting purposes (as discussed below), in
Pennsylvania with aggregate storage capacity of approximately 0.5 million barrels.(2)
    
    In 2011, we acquired a Bahamian terminal facility with a total installed capacity of
approximately 21.6 million barrels. See   BORCO Acquisition below. BORCO Acquisition
    12




---



##### Table of Contents



Natural Gas Storage Segment
     13




---



##### Table of Contents



Energy Services Segment
   Year Ended December 31,2010
    
    2009
    
    2008Sales volumes
    
    
    1,139,100
    
    
    
    655,100
    
    
    
    435,200
  
    
    Wholesale Rack  liquid fuels and propane gas are delivered to distributors and large
commercial customers. These customers take delivery of the products using truck loading
equipment at storage facilities.
    
    Wholesale Delivered  liquid fuels are delivered, through third-party carriers, to
commercial customers, construction companies, school districts and trucking companies using
third-party carriers.
    
    Branded Gasoline  the Energy Services segment delivers, through third-party carriers,
gasoline and on-highway diesel fuel to independently owned retail gas stations under many
leading gasoline brands.
  Development & Logistics Segment
  14




---



##### Table of Contents



Competition and Customers
 Competitive Strengths
  
    
    We operate in a safe and environmentally responsible manner;
    
    We own and operate high quality assets that are strategically located;
    
    We have stable, long-term relationships with our customers;
    
    We own relatively predictable and stable fee-based businesses with opportunistic
revenue generating capabilities;
    
    We maintain a conservative financial position with an investment-grade credit
rating; and
    
    We believe the Merger lowered our cost of equity capital and thereby enables us to
compete for more accretive acquisitions.
 Pipeline Operations and Terminalling & Storage Segments
    15




---



##### Table of Contents



Natural Gas Storage Segment
  Energy Services Segment
  16




---



##### Table of Contents



Development & Logistics Segment
  Customers
  Seasonality
    Employees
  Capital Expenditures
    17




---



##### Table of Contents



Regulation
 General
   Rate Regulation
     18




---



##### Table of Contents



Environmental Regulation
    19




---



##### Table of Contents



Pipeline and Terminal Maintenance and Safety Regulation
    20




---



##### Table of Contents



21




---



##### Table of Contents



Environmental Hazards and Insurance
 
 
  
 
   
 
  
 
  
 
  
 22




---



##### Table of Contents



Tax Treatment of Operations
   Available Information
 www.sec.gov www.buckeye.com
 www.nyse.com
 
 Item 1A. Risk Factors
  Risks Inherent in our Business
 Changes in petroleum demand and distribution may adversely affect our business. In addition,
the current economic downturn could result in lower demand for a sustained period of time.
   23




---



##### Table of Contents



Competition could adversely affect our operating results .
        24




---



##### Table of Contents



Mergers among our customers and competitors could result in lower volumes being shipped on our
pipelines and stored in our terminals, thereby reducing the amount of cash we generate.
  We are a holding company and depend entirely on our Operating Subsidiaries distributions to
service our debt obligations and pay cash distributions to our Unitholders.
  We may incur unknown and contingent liabilities from assets we have acquired.
    A significant decline in production at certain refineries served by certain of our pipelines
and terminals could materially reduce the volume of refined petroleum products we transport and
adversely impact our operating results.
  25




---



##### Table of Contents



A substantial amount of the petroleum products handled by BORCO are exported from Venezuela,
which exposes us to political risks.
  Potential future acquisitions and expansions, if any, may affect our business by substantially
increasing the level of our indebtedness and contingent liabilities and increasing the risks of our
being unable to effectively integrate these new operations.
   The representations, warranties, and indemnifications made by each of First Reserve and Vopak
are limited in the BORCO sale and purchase agreements and our diligence of BORCO has been limited;
as a result, the assumptions on which our estimates of future results of BORCO have been based may
prove to be incorrect in a number of material ways, resulting in us not realizing the expected
benefits of the BORCO acquisition.
   
    
    unexpected operational events;
    
    adverse weather conditions;
    
    inadequate customer demand for, or interest in, flexible storage;
    
    regulatory hurdles;
    
    facility or equipment malfunctions or breakdowns;
    
    a shortage of skilled labor; and
    
    risks associated with subcontractors services, supplies, cost escalation and
personnel.
 Debt securities we issue are, and will continue to be, junior to claims of our Operating
Subsidiaries creditors.
  26




---



##### Table of Contents



Our rate structures are subject to regulation and change by the FERC.
     Climate change legislation or regulations restricting emissions of greenhouse gases or
setting fuel economy or air quality standards could result in increased operating costs or reduced
demand for the refined petroleum products, natural gas and other hydrocarbon products that we
transport, store or otherwise handle in connection with our business.
  27




---



##### Table of Contents



Environmental regulation may impose significant costs and liabilities on us.
  
    
    environmental laws, regulations and enforcement policies become more rigorous; or
    
    claims for property damage or personal injury resulting from our operations are
filed.
 Existing or future state or federal government regulations relating to certain chemicals or
additives in gasoline or diesel fuel could require capital expenditures or result in lower pipeline
volumes and thereby adversely affect our results of operations and cash flows.
  BORCO may be adversely affected by economic, political and regulatory developments.
   28




---



##### Table of Contents



DOT regulations may impose significant costs and liabilities on us.
  Our business is exposed to customer credit risk, and we may not be able to fully protect
ourselves against such risk.
   BORCO depends on a limited number of customers for substantially all of its revenue, and the
loss of any of them could adversely affect our results of operations and cash flow.
  29




---



##### Table of Contents



Terrorist attacks could adversely affect our business.
   
 Our operations are subject to operational hazards and unforeseen interruptions
for which we may not be insured or entitled to indemnification.
 
 
  
 Hurricanes could damage the facilities or disrupt our marine terminals or the operations of
their customers, which could have a material adverse effect on our business, financial results and
cash flow.
  Our natural gas storage business depends on third party pipelines to transport natural gas.
  A significant decrease in the production of natural gas could have a significant financial
impact on us.
  30




---



##### Table of Contents



Our results could be adversely affected by volatility in the value of natural gas storage
services, including hub services.
  Our results could be adversely affected by volatility in the price of refined petroleum
products.
  Our risk management policies cannot eliminate all commodity risk and any noncompliance with
our risk management policies could result in significant financial losses.
  Financing the BORCO acquisition substantially increased our leverage.
  31




---



##### Table of Contents



Risks Relating to Partnership Structure
 We may sell additional units, diluting existing interests of Unitholders.
  Our partnership agreement limits the liability of our general partner and its directors and
officers.
  Unitholders may not have limited liability in some circumstances.
    Tax Risks to Unitholders
 Our tax treatment depends on our status as a partnership for federal income tax purposes as
well as our not being subject to a material amount of entity-level taxation by individual states.
If the Internal Revenue Service (IRS) were to treat us as a corporation for federal income tax
purposes or we were to become subject to additional amounts of entity-level taxation for state tax
purposes, then our cash available for distribution to Unitholders would be substantially reduced.
   32




---



##### Table of Contents



If the IRS contests the federal income tax positions we take, the market for our LP Units may
be adversely impacted and the cost of any IRS contest will reduce our cash available for
distribution to you.
  You will be required to pay taxes on your share of our income even if you do not receive any
cash distributions from us.
  Tax gain or loss on the disposition of our LP Units could be more or less than expected.
  33




---



##### Table of Contents



Tax-exempt entities and non-U.S. persons face unique tax issues from owning our LP Units that
may result in adverse tax consequences to them.
  We treat each purchaser of LP Units as having the same tax benefits without regard to the
actual LP Units purchased. The IRS may challenge this treatment, which could adversely affect the
value of the LP Units.
  We prorate our items of income, gain, loss and deduction between transferors and transferees
of our LP Units each month based upon the ownership of our LP Units on the first day of each month,
instead of on the basis of the date a particular LP Unit is transferred. The IRS may challenge
this treatment, which could change the allocation of items of income, gain, loss and deduction
among our Unitholders.
  A Unitholder whose LP Units are loaned to a short seller to cover a short sale of LP Units
may be considered as having disposed of those LP Units. If so, he would no longer be treated for
tax purposes as a partner with respect to those LP Units during the period of the loan and may
recognize gain or loss from the disposition.
  The sale or exchange of 50% or more of our capital and profits interests during any
twelve-month period will result in the termination of our partnership for federal income tax
purposes.
  34




---



##### Table of Contents



As a result of investing in our LP Units, a Unitholder may become subject to state and local
taxes and return filing requirements in jurisdictions where we operate or own or acquire property.
  We have a subsidiary that is treated as a corporation for federal income tax purposes and
subject to corporate-level income taxes.
  BORCO is currently exempt from Bahamian taxation. If BORCOs tax status in The Bahamas were
to change, such that BORCO has more tax liability than we anticipate, our cash flow could be
materially adversely affected.
  
 Item 1B. Unresolved Staff Comments
  35




---



##### Table of Contents



Item 2. Properties
     
 Item 3. Legal Proceedings
       36




---



##### Table of Contents



Broadbased
Equities v. Forrest E. Wylie, et. al.
 Henry James Steward v. Forrest E. Wylie,
et. al.
 JR Garrett Trust v. Buckeye GP Holdings L.P. et al.
 Broadbased Equities v. Forrest E. Wylie, et. al Henry James Steward v. Forrest E. Wylie, et. al. JR Garrett Trust v. Buckeye GP Holdings L.P.,
et al., Broadbased Equities v. Forrest E. Wylie, et al.
  37




---



##### Table of Contents



Item 4. [Reserved]
 
 PART II
 
 Item 5. Market for the Registrants LP Units, Related Unitholder Matters, and Issuer Purchases of LP Units
  2010
    
    2009Quarter
    
    High
    
    Low
    
    High
    
    LowFirst
    
    $
    61.50
    
    
    $
    51.68
    
    
    $
    43.25
    
    
    $
    32.00Second
    
    
    62.39
    
    
    
    45.00
    
    
    
    43.69
    
    
    
    35.01Third
    
    
    66.00
    
    
    
    57.19
    
    
    
    49.44
    
    
    
    41.43Fourth
    
    
    71.67
    
    
    
    62.00
    
    
    
    57.00
    
    
    
    47.51
   AmountRecord Date
    
    Payment Date
    
    Per LP UnitFebruary 12, 2009
    
    February 27, 2009
    
    $
    0.8875May 11, 2009
    
    May 29, 2009
    
    
    0.9000August 7, 2009
    
    August 31, 2009
    
    
    0.9125November 7, 2009
    
    November 28, 2009
    
    
    0.9250February 16, 2010
    
    February 26, 2010
    
    $
    0.9375May 17, 2010
    
    May 28, 2010
    
    
    0.9500August 16, 2010
    
    August 31, 2010
    
    
    0.9625November 15, 2010
    
    November 30, 2010
    
    
    0.9750
  38




---



##### Table of Contents



Recent Sales of Unregistered Securities
  Issuer Purchases of Equity Securities
  39




---



##### Table of Contents



Item 6. Selected Financial Data
   Year Ended December 31,2010
    
    2009
    
    2008
    
    2007
    
    2006Income Statement Data:Revenue (1)
    
    $
    3,151,268
    
    
    $
    1,770,372
    
    
    $
    1,896,652
    
    
    $
    519,347
    
    
    $
    461,760Depreciation and amortization
    
    
    59,590
    
    
    
    54,699
    
    
    
    50,834
    
    
    
    40,236
    
    
    
    39,629Equity plan modification expense
(2)
    
    
    21,058
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Asset impairment expense (2)
    
    
    
    
    
    
    59,724
    
    
    
    
    
    
    
    
    
    
    
    Reorganization expense (2)
    
    
    
    
    
    
    32,057
    
    
    
    
    
    
    
    
    
    
    
    Operating income (1) (2)
    
    
    279,501
    
    
    
    203,800
    
    
    
    246,492
    
    
    
    195,353
    
    
    
    164,873Interest and debt expense
    
    
    89,169
    
    
    
    75,147
    
    
    
    75,410
    
    
    
    51,721
    
    
    
    60,702Net income (2)
    
    
    201,008
    
    
    
    141,637
    
    
    
    180,623
    
    
    
    152,675
    
    
    
    111,800Net income attributable to
noncontrolling interests (3)
    
    
    (157,928
    )
    
    
    (92,043
    )
    
    
    (154,146
    )
    
    
    (129,754
    )
    
    
    (103,066
    )Net income attributable to Buckeye
Partners, L.P. (1)
    
    
    43,080
    
    
    
    49,594
    
    
    
    26,477
    
    
    
    22,921
    
    
    
    8,734Net income from August 9 to
December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,599Earnings per LP Unit  diluted (4)
    
    $
    1.65
    
    
    $
    2.49
    
    
    $
    1.33
    
    
    $
    1.15
    
    
    $
    0.13Distributions per LP Unit (5)
    
    $
    3.83
    
    
    $
    3.63
    
    
    $
    3.43
    
    
    $
    3.23
    
    
    $
    3.03
 December 31,2010
    
    2009
    
    2008
    
    2007
    
    2006Balance Sheet Data:Total assets (1)
    
    $
    3,574,216
    
    
    $
    3,486,571
    
    
    $
    3,263,097
    
    
    $
    2,354,326
    
    
    $
    2,212,585Total debt, including current
portion
    
    
    1,805,218
    
    
    
    1,746,473
    
    
    
    1,555,719
    
    
    
    869,463
    
    
    
    1,020,449Total Buckeye Partners, L.P.
capital (6)
    
    
    1,392,405
    
    
    
    242,334
    
    
    
    232,060
    
    
    
    238,330
    
    
    
    240,617Accumulated other
comprehensive loss (7)
    
    
    (21,259
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Noncontrolling interests (3)
    
    
    17,855
    
    
    
    1,209,960
    
    
    
    1,166,774
    
    
    
    1,066,143
    
    
    
    772,525
 
 (1)
    
    Substantial increase in revenue for the year ended December 31, 2010 compared to the year
ended December 31, 2009 is primarily attributable to increases in commodity prices and sales
volumes in our Energy Services segment. Substantial increases in revenue, operating income,
net income and total assets for the year ended December 31, 2007 through the year ended
December 31, 2008 resulted from the acquisitions of Lodi Gas and Farm & Home Oil Company LLC
(Farm & Home) in the first quarter of 2008. 40




---



##### Table of Contents



(2)
    
    Operating income and net income for the year ended December 31, 2010 include a non-cash
charge of $21.1 million related to the modification of an equity compensation plan (see Note
18 in the Notes to Consolidated Financial Statements). Operating income and net income for
the year ended December 31, 2009 include a non-cash charge of $59.7 million related to an
asset impairment (see Note 8 in the Notes to Consolidated Financial Statements) and $32.1
million of expenses incurred in connection with an organizational restructuring (see Note 3 in
the Notes to Consolidated Financial Statements).(3)
    
    Prior to the Merger, noncontrolling interests reported by BGH included equity interests in
Buckeye that were not owned by BGH. In connection with the Merger, amounts included in
noncontrolling interests in our consolidated balance sheet associated with certain third-party
ownership interests in Buckeye were reclassified as limited partners interests.(4)
    
    Earnings per LP Unit  diluted is presented only for the period since August 9, 2006, the
date BGH became a public company. Pursuant to the Merger, BGHs unitholders received a total
of approximately 20.0 million of Buckeyes LP Units in the aggregate in exchange for all
outstanding BGH common units and management units. As a result, the number of Buckeyes LP
Units outstanding increased from 51.6 million to 71.4 million. However, for historical
reporting purposes, the impact of this change was accounted for as a reverse split of BGHs
units of 0.705 to 1.0, together with the addition of Buckeyes existing LP Units. Therefore,
since BGH was considered the surviving accounting entity, the weighted average number of LP
Units outstanding used for basic and diluted earnings per LP Unit calculations are BGHs
historical weighted average common units outstanding adjusted for the reverse unit split and
the addition of Buckeyes existing LP Units. Amounts reflecting historical BGH unit and per
unit amounts included in this Report have been restated for the reverse unit split.(5)
    
    Cash distributions paid represent cash payments by Buckeye for distributions during each of
the periods presented.(6)
    
    Total Buckeye capital increased substantially in connection with the Merger with the
elimination of noncontrolling interests.(7)
    
    For periods prior to the Merger, amounts in accumulated other comprehensive loss were
included in noncontrolling interests. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    Overview of Business;
    
    General Outlook for 2011;
    
    2010 Developments  discusses major items impacting our results in 2010;
    
    Results of Operations  discusses material year-to-year variances in the
consolidated statements of operations;
    
    Liquidity and Capital Resources  addresses available sources of liquidity and
capital resources and includes a discussion of our capital spending;
    
    Critical Accounting Policies and Estimates  presents accounting policies that are
among the most critical to the portrayal of our financial position and results of
operations;
    
    Other Items  includes information related to contractual obligations, off-balance
sheet arrangements and other matters; and
    
    Recent Accounting Pronouncements  provides a description of certain new accounting
pronouncements that will or may affect our consolidated financial statements.
   41




---



##### Table of Contents



Merger
  
  
  Overview of Business
    General Outlook for 2011
    42




---



##### Table of Contents



2010 Developments
  Consolidated Statements of Operations
 
    
    We recognized $2.4 million of expenses related to the write-off in 2010 of a portion
of an outstanding receivable balance and other costs associated with a customer
bankruptcy.
    
    Following the Merger, BGH GP exchanged a portion of the LP Units it received in the
Merger for outstanding override units, which override units are part of an equity
compensation plan for certain members of BGH GPs senior management, who also served as
our senior management. This exchange represented a plan modification and resulted in a
non-cash charge of $21.1 million in the 2010 period. See Note 18 in the Notes to
Consolidated Financial Statements for further discussion.
    
    In December 2010, we entered into a sale and purchase agreement to acquire an 80%
interest in FRBCH, the indirect owner of BORCO, for $1.4 billion. While the
transaction closed in 2011, we recognized $6.1 million of expenses in 2010 in the
Terminalling & Storage segment, of which $4.1 million of transaction expenses were
included in total costs and expenses and $2.0 million of expenses were included in
interest and debt expense related to the Bridge Loans. In February 2011, we acquired
the remaining 20% interest in FRBCH from Vopak. See Item 1, 2010 Developments for
further information.
 Consolidated Balance Sheet and Capital Structure
 
    
    We incurred $16.4 million of costs associated with the Merger in 2010. We charged
these costs directly to partners capital. BGH is considered the surviving
consolidated entity for accounting purposes, while Buckeye is the surviving
consolidated entity for legal and reporting purposes. The Merger was accounted for as
an equity transaction. Therefore, changes in BGHs ownership interest as a result of
the Merger did not result in gain or loss recognition. See Note 2 in the Notes to
Consolidated Financial Statements for further information regarding financial statement
preparation.
    
    We completed two acquisitions in 2010 of refined petroleum product terminals from
Chevron and Shell for approximately $13.0 million and $32.6 million (net of $3.5
million of cash acquired), respectively, that were financed with borrowings under our
Credit Facility. Both acquisitions were included in our Terminalling & Storage
segment.
    
    We incurred capital expenditures for internal growth projects of $46.5 million.
    
    We amended the BES Credit Agreement to increase the total commitments for borrowings
available to BES up to $500.0 million, subject to an initial limitation of $350.0
million. See Note 13 in the Notes to Consolidated Financial Statements for further
information.
 43




---



##### Table of Contents



Results of Operations
 Consolidated Summary
   Year Ended December 31,2010
    
    
    2009
    
    
    2008Revenues
    
    $
    3,151,268
    
    
    $
    1,770,372
    
    
    $
    1,896,652Costs and expenses
    
    
    2,871,767
    
    
    
    1,566,572
    
    
    
    1,650,160Operating income
    
    
    279,501
    
    
    
    203,800
    
    
    
    246,492Earnings from equity investments
    
    
    11,363
    
    
    
    12,531
    
    
    
    7,988Interest and debt expense
    
    
    (89,169
    )
    
    
    (75,147
    )
    
    
    (75,410
    )Other income (expense)
    
    
    (687
    )
    
    
    453
    
    
    
    1,553Net income
    
    
    201,008
    
    
    
    141,637
    
    
    
    180,623Less: net income attributable to noncontrolling interests
    
    
    (157,928
    )
    
    
    (92,043
    )
    
    
    (154,146
    )Net income attributable to Buckeye Partners, L.P.
    
    $
    43,080
    
    
    $
    49,594
    
    
    $
    26,477Earnings per LP Unit  diluted (1)
    
    $
    1.65
    
    
    $
    2.49
    
    
    $
    1.33
 
 (1)
    
    Pursuant to the Merger, BGHs unitholders received a total of approximately 20.0 million of
Buckeyes LP Units in the aggregate in exchange for all outstanding BGH common units and
management units. As a result, the number of Buckeyes LP Units outstanding increased from
51.6 million to 71.4 million. However, for historical reporting purposes, the impact of this
change was accounted for as a reverse split of BGHs units of 0.705 to 1.0, together with the
addition of Buckeyes existing LP Units. Therefore, since BGH was the surviving accounting
entity, the weighted average number of LP Units outstanding used for basic and diluted
earnings per LP Unit calculations are BGHs historical weighted average common units
outstanding adjusted for the reverse unit split and the addition of Buckeyes existing LP
Units. Amounts reflecting historical BGH unit and per unit amounts included in this Report
have been restated for the reverse unit split. Adjusted EBITDA
  44




---



##### Table of Contents



.
   45




---



##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Adjusted EBITDA:Pipeline Operations
    
    $
    235,405
    
    
    $
    229,576
    
    
    $
    193,940Terminalling & Storage
    
    
    106,387
    
    
    
    72,588
    
    
    
    59,850Natural Gas Storage
    
    
    29,794
    
    
    
    41,950
    
    
    
    41,814Energy Services
    
    
    5,861
    
    
    
    19,335
    
    
    
    9,443Development & Logistics
    
    
    5,193
    
    
    
    6,718
    
    
    
    8,528Total Adjusted EBITDA
    
    $
    382,640
    
    
    $
    370,167
    
    
    $
    313,575GAAP Reconciliation:Net income
    
    $
    201,008
    
    
    $
    141,637
    
    
    $
    180,623Less: net income attributable to noncontrolling
interests
    
    
    (157,928
    )
    
    
    (92,043
    )
    
    
    (154,146
    )Net income attributable to Buckeye Partners, L.P.
    
    
    43,080
    
    
    
    49,594
    
    
    
    26,477Interest and debt expense
    
    
    89,169
    
    
    
    75,147
    
    
    
    75,410Income tax (benefit) expense
    
    
    (919
    )
    
    
    (343
    )
    
    
    801Depreciation and amortization
    
    
    59,590
    
    
    
    54,699
    
    
    
    50,834EBITDA
    
    
    190,920
    
    
    
    179,097
    
    
    
    153,522Net income attributable to noncontrolling interests
affected by Merger (for periods prior to Merger) (1)
    
    
    157,467
    
    
    
    90,381
    
    
    
    153,546Non-cash deferred lease expense
    
    
    4,235
    
    
    
    4,500
    
    
    
    4,598Non-cash unit-based compensation expense
    
    
    8,960
    
    
    
    4,408
    
    
    
    1,909Equity plan modification expense
    
    
    21,058
    
    
    
    
    
    
    
    Asset impairment expense
    
    
    
    
    
    
    59,724
    
    
    
    Reorganization expense
    
    
    
    
    
    
    32,057
    
    
    
    Adjusted EBITDA
    
    $
    382,640
    
    
    $
    370,167
    
    
    $
    313,575
 
 (1)
    
    Amounts represent portions of BGHs noncontrolling interests related to Buckeye that
were eliminated as a result of the Merger. Amounts are added back for the portion of 2010
prior to the Merger, and the 2009 and 2008 periods to provide consistency with the 2010
period. 46




---



##### Table of Contents



Segment Results
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Revenues:Pipeline Operations
    
    $
    400,926
    
    
    $
    392,667
    
    
    $
    387,267Terminalling & Storage
    
    
    175,000
    
    
    
    136,576
    
    
    
    119,155Natural Gas Storage
    
    
    95,337
    
    
    
    99,163
    
    
    
    61,791Energy Services
    
    
    2,481,566
    
    
    
    1,125,013
    
    
    
    1,295,925Development & Logistics
    
    
    37,696
    
    
    
    34,136
    
    
    
    43,498Intersegment
    
    
    (39,257
    )
    
    
    (17,183
    )
    
    
    (10,984
    )Total revenues
    
    $
    3,151,268
    
    
    $
    1,770,372
    
    
    $
    1,896,652Total costs and expenses:(1)Pipeline Operations
    
    $
    229,331
    
    
    $
    298,710
    
    
    $
    237,918Terminalling & Storage
    
    
    85,067
    
    
    
    75,492
    
    
    
    67,022Natural Gas Storage
    
    
    79,268
    
    
    
    68,589
    
    
    
    29,556Energy Services
    
    
    2,482,933
    
    
    
    1,111,927
    
    
    
    1,290,020Development & Logistics
    
    
    34,425
    
    
    
    29,037
    
    
    
    36,628Intersegment
    
    
    (39,257
    )
    
    
    (17,183
    )
    
    
    (10,984
    )Total costs and expenses
    
    $
    2,871,767
    
    
    $
    1,566,572
    
    
    $
    1,650,160Depreciation and amortization:Pipeline Operations
    
    $
    36,799
    
    
    $
    35,533
    
    
    $
    35,188Terminalling & Storage
    
    
    9,521
    
    
    
    7,258
    
    
    
    6,051Natural Gas Storage
    
    
    6,594
    
    
    
    5,971
    
    
    
    4,599Energy Services
    
    
    4,933
    
    
    
    4,204
    
    
    
    3,386Development & Logistics
    
    
    1,743
    
    
    
    1,733
    
    
    
    1,610Total depreciation and amortization
    
    $
    59,590
    
    
    $
    54,699
    
    
    $
    50,834Asset impairment expense:Pipeline Operations
    
    $
    
    
    
    $
    59,724
    
    
    $
    Reorganization expense:Pipeline Operations
    
    $
    
    
    
    $
    26,127
    
    
    $
    Terminalling & Storage
    
    
    
    
    
    
    2,735
    
    
    
    Natural Gas Storage
    
    
    
    
    
    
    495
    
    
    
    Energy Services
    
    
    
    
    
    
    1,207
    
    
    
    Development & Logistics
    
    
    
    
    
    
    1,493
    
    
    
    Total reorganization expense
    
    $
    
    
    
    $
    32,057
    
    
    $
    Operating income (loss):Pipeline Operations
    
    $
    171,595
    
    
    $
    93,957
    
    
    $
    149,349Terminalling & Storage
    
    
    89,933
    
    
    
    61,084
    
    
    
    52,133Natural Gas Storage
    
    
    16,069
    
    
    
    30,574
    
    
    
    32,235Energy Services
    
    
    (1,367
    )
    
    
    13,086
    
    
    
    5,905Development & Logistics
    
    
    3,271
    
    
    
    5,099
    
    
    
    6,870Total operating income
    
    $
    279,501
    
    
    $
    203,800
    
    
    $
    246,492
 
 (1)
    
    Total costs and expenses includes depreciation and amortization, asset impairment expense,
reorganization expense and equity plan modification expense. 47




---



##### Table of Contents



Year Ended December 31,2010
    
    2009
    
    2008Pipeline Operations (average bpd):Gasoline
    
    
    643,700
    
    
    
    650,100
    
    
    
    673,500Jet fuel
    
    
    338,500
    
    
    
    336,700
    
    
    
    354,700Diesel fuel
    
    
    234,400
    
    
    
    209,800
    
    
    
    230,400Heating oil
    
    
    66,900
    
    
    
    74,900
    
    
    
    73,800LPGs
    
    
    18,000
    
    
    
    16,500
    
    
    
    17,500NGLs
    
    
    
    
    
    
    13,900
    
    
    
    20,900Other products
    
    
    3,000
    
    
    
    8,000
    
    
    
    11,400Total Pipeline Operations
    
    
    1,304,500
    
    
    
    1,309,900
    
    
    
    1,382,200Terminalling & Storage (average bpd):Products throughput (1)
    
    
    564,300
    
    
    
    471,900
    
    
    
    464,400Energy Services (in thousands of gallons):Sales volumes
    
    
    1,139,100
    
    
    
    655,100
    
    
    
    435,200
 
 (1)
    
    Reported quantities include volumes from our terminal located in Albany, New York. For
the years ended December 31, 2009 and 2008, we previously reported total products throughput
of 444.9 thousand and 457.4 thousand barrels, respectively, which excluded volumes from the
Albany, New York terminal. Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 Consolidated
 Adjusted EBITDA .
  48




---



##### Table of Contents



Revenue
 
    
    an increase of $1,356.6 million in revenue from the Energy Services segment, resulting from an overall
increase in refined petroleum product prices and volumes of product sold during the year ended
December 31, 2010 as compared to the corresponding period in 2009.  The 484 million gallon increase
in sales volume resulted in an increase in revenue of approximately $831.2 million, and the increase in
the average sales price per gallon from $1.72 in 2009 to $2.18 in 2010, or approximately $0.46 per
gallon, contributed to an increase in revenue of approximately $525.4 million;
    
    an increase of $38.4 million in revenue from the Terminalling & Storage segment,
resulting from increased revenue from terminals acquired in November 2009 and in the
fourth quarter of 2010, increased throughput volumes, increased fees, increased storage
and rental revenue, including $5.0 million in storage fees from previously
underutilized tankage identified in connection with our best practices initiative and
other marketing opportunities, and favorable settlement experience;
    
    an increase of $8.2 million in revenue from the Pipeline Operations segment,
resulting primarily from the benefit of higher tariff rates, favorable settlement
experience and increased revenues from pipeline assets acquired in November 2009,
partially offset by the impact of slightly lower transportation volumes; and
    
    an increase of $3.6 million in revenue from the Development & Logistics segment,
resulting primarily from the sale of ammonia linefill and from the assignment of
certain service contracts from the Pipeline Operations segment to the Development &
Logistics segment in April 2010.
  
    
    a decrease of $3.9 million in revenue from the Natural Gas Storage segment,
resulting primarily from lower fees from hub services transactions recognized as
revenue.
 Total Costs and Expenses
 
    
    an increase in refined petroleum product prices, which, coupled with an increase in volume sold, resulted in
a $1,371.5 million increase in the Energy Services segments cost of product sales in 2010 as compared to
2009.  The average cost of product sold increased from approximately $1.66 per gallon in 2009 to
approximately $2.16 per gallon in 2010, or approximately $0.50 per gallon, resulting in an increase in cost
of product sold of approximately $568.6 million, and sales volumes increased 484 million gallons between
2009 and 2010, contributing $803.0 million to the increase in cost of product sold;
    
    an increase of $9.6 million in costs and expenses of the Terminalling & Storage
segment, resulting primarily from higher operating expense for terminals acquired in
November 2009 and in the fourth quarter of 2010, professional fees related to the BORCO
acquisition, higher integrity program expenses and higher bad debt expense, partially
offset by expenses recognized in 2009 for organizational restructuring, lower
environmental remediation expenses and lower payroll and benefits costs;
    
    an increase of $10.7 million in costs and expenses of the Natural Gas Storage
segment, resulting from higher costs associated with hub services transactions
recognized as expense caused primarily by general market conditions as discussed above;
    
    an increase of $5.4 million in costs and expenses of the Development & Logistics
segment, primarily resulting from $2.4 million of expenses related to the write-off in
the 2010 period of a portion of an outstanding receivable balance and other costs
associated with a customer bankruptcy and due to the assignment of certain service
contracts from the Pipeline Operations segment to the Development & Logistics segment
in April 2010;
    
    an increase of $4.9 million in depreciation and amortization, which is not a
component of Adjusted EBITDA as presented in the reconciliation above, primarily on
assets placed in service in the second
 49




---



##### Table of Contents



half of 2009 in connection with the Kirby Hills Phase II expansion project, on certain
internal-use software placed in service in the fourth quarter of 2009 and on assets
acquired in November 2009;
    
    an increase of $4.6 million in non-cash unit-based compensation expense, which is
not a component of Adjusted EBITDA as presented in the reconciliation above; and
    
    the recognition of $21.1 million of compensation expense in the 2010 period, which
is not a component of Adjusted EBITDA as presented in the reconciliation above, related
to the modification of an equity compensation plan (see Note 18 in the Notes to
Consolidated Financial Statements).
   
    
    a decrease of $69.4 million in costs and expenses of the Pipeline Operations
segment, resulting substantially from a decrease related to the asset impairment
expense and the organizational restructuring charges recognized in the 2009 period as
discussed above, lower contract service activities, lower payroll and benefits costs,
which were primarily attributable to the organizational restructuring that occurred in
2009 and resulted in reduced headcount, lower environmental remediation expenses and
lower operating power costs due to lower transportation volumes and power contract
renegotiations as part of our best practices initiative, partially offset by the
recognition of compensation expense related to the modification of an equity
compensation plan, higher property and other taxes, higher professional fees and
project costs and higher pipeline integrity program expenses.
 Income attributable to noncontrolling interests
 Consolidated net income attributable to unitholders
  Pipeline Operations
 Adjusted EBITDA
 50




---



##### Table of Contents



Revenue
 Total Costs and Expenses
   Operating Income
 Terminalling & Storage
 Adjusted EBITDA
 Revenue
 51




---



##### Table of Contents



Total Costs and Expenses
 Operating Income
 Natural Gas Storage
 Adjusted EBITDA
 Revenue
 Total Costs and Expenses
 52




---



##### Table of Contents



Operating Income
 Energy Services
 Adjusted EBITDA
 
 Revenue
 
 
 Total Costs and Expenses
 
 Operating Income (Loss)
 Development & Logistics
 Adjusted EBITDA
 53




---



##### Table of Contents



Revenue
 Total Costs and Expenses
 Operating Income
 Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Consolidated
 Adjusted EBITDA
   54




---



##### Table of Contents



Revenue
 
    
    a decrease of $170.9 million in revenue from the Energy Services segment, due to an
overall reduction in refined petroleum product prices during the year ended December
31, 2009 as compared to the corresponding period in 2008; and
    
    a decrease of $9.4 million in revenue from the Development & Logistics segment,
primarily due to decreased construction activities.
  
    
    an increase of $37.4 million in revenue from the Natural Gas Storage segment,
resulting primarily from increased activity from the commencement of operations of the
Kirby Hills Phase II expansion project;
    
    an increase of $17.4 million in revenue from the Terminalling & Storage segment,
resulting primarily from terminals acquired at various times in 2008 and in November of
2009, increased fees and storage and rental revenue growth; and
    
    an increase of $5.4 million in revenue from the Pipeline Operations segment,
primarily due to increased tariffs and more favorable settlement experience, partially
offset by lower volumes.
 Total Costs and Expenses
 
    
    a decrease in refined petroleum product prices, which resulted in a $178.1 million
decrease in the Energy Services segments cost of product sales in 2009 as compared to
2008, partially offset by increased volumes in 2009; and
    
    the effectiveness of overall cost management efforts we implemented in 2009.
 These decreases in total costs and expenses were partially offset by:
 
    
    a $59.7 million asset impairment expense, which is not a component of Adjusted
EBITDA as presented in the reconciliation above (see Note 8 in the Notes to
Consolidated Financial Statements);
    
    a $32.1 million reorganization expense, which is not a component of Adjusted EBITDA
as presented in the reconciliation above (see Note 3 in the Notes to Consolidated
Financial Statements);
    
    a $3.9 million increase in depreciation and amortization, which is not a component
of Adjusted EBITDA as presented in the reconciliation above, primarily due to
acquisitions made during 2008, the assets utilized with respect to the Kirby Hills
Phase II expansion project which were placed in service in the second half of 2009 and
software which was placed in service in the fourth quarter of 2009;
    
    increased operating costs for terminals acquired at various times in 2008 and in
November of 2009 in the Terminalling & Storage segment; and
    
    increased expenses associated with certain hub services transactions stemming from
delays in the Kirby Hills Phase II expansion project in the Natural Gas Storage segment
and general market conditions.
 Income attributable to noncontrolling interests
 55




---



##### Table of Contents



Consolidated net income attributable to unitholders
  Pipeline Operations
 Adjusted EBITDA
 Revenue
 Total Costs and Expenses
 Operating Income
 Terminalling & Storage
 Adjusted EBITDA
 56




---



##### Table of Contents



Revenue
 Total Costs and Expenses
 Operating Income
 Natural Gas Storage
 Adjusted EBITDA
 Revenue
 Total Costs and Expenses
 Operating Income
 57




---



##### Table of Contents



Energy Services
 Adjusted EBITDA
 
 Revenue
 
 
 Total Costs and Expenses
 
 Operating Income
 Development & Logistics
 Adjusted EBITDA
 Revenue
 Total Costs and Expenses
 Operating Income
 58




---



##### Table of Contents



Liquidity and Capital Resources
 General
     Debt
   
    
    $300.0 million of 4.625% Notes due 2013 (the 4.625% Notes);
    
    $275.0 million of 5.300% Notes due 2014 (the 5.300% Notes);
    
    $125.0 million of 5.125% Notes due 2017 (the 5.125% Notes);
    
    $300.0 million of 6.050% Notes due 2018 (the 6.050% Notes);
    
    $275.0 million of 5.500% Notes due 2019;
    
    $150.0 million of 6.750% Notes due 2033 (the 6.750% Notes);
    
    $1.5 million of Services Companys 3.60% Senior Secured Notes due March 28, 2011,
payable by the ESOP to a third-party lender (the 3.60% ESOP Notes);
    
    $98.0 million outstanding under the Credit Agreement; and
    
    $284.3 million outstanding under the BES Credit Agreement.
 59




---



##### Table of Contents



Equity
  Registration Statement
  Cash Flows from Operating, Investing and Financing Activities
  Year Ended December 31,2010
    
    2009
    
    2008Cash provided by (used in):Operating activities
    
    $
    292,479
    
    
    $
    47,662
    
    
    $
    208,557Investing activities
    
    
    (114,188
    )
    
    
    (144,203
    )
    
    
    (735,776
    )Financing activities
    
    
    (202,239
    )
    
    
    72,834
    
    
    
    494,014
 Operating Activities
 2010 Compared to 2009
 
    
    The net change in fair values of derivatives was a decrease of $45.6 million to cash
flows from operating activities for the year ended December 31, 2010, resulting from
the decrease in value related to futures contracts executed to hedge physical
inventory. The offsetting adjustment is made to the value of inventory by adjusting
inventory to current market prices.
 60




---



##### Table of Contents




    
    The net impact of working capital changes was an increase of $32.7 million to cash
flows from operating activities for the year ended December 31, 2010. The principal
factors affecting the working capital changes were:
 
    
    Accrued and other current liabilities increased by $30.4
million primarily due to increases in unearned revenue primarily in the Natural
Gas Storage segment as a result of increased hub services contracts during 2010
for which the customer is billed up front for services provided over the entire
term of the contract, an increase in liabilities primarily due to costs
incurred for the BORCO transaction and increases in property and other taxes,
partially offset by the payment of accrued ammonia purchases during 2010 and a
reduction in the reorganization accrual.
    
    Prepaid and other current assets decreased by $16.4 million
primarily due to a decrease in unbilled revenue within our Natural Gas Storage
segment reflecting billings to counterparties in accordance with terms of their
storage agreements, a decrease in margin deposits on futures contracts in our
Energy Services segment as a result of increased commodity prices during 2010
(increased commodity prices result in an increase in our broker equity account
and therefore less margin deposit is required) and a decrease in receivables
related to ammonia contracts.
    
    Accounts payable increased by $11.8 million primarily due to
higher payable balances at December 31, 2010 as a result of increased trading
activity at BES resulting from increased volumes and increased commodity prices
during 2010.
    
    Inventories decreased by $10.0 million due to a decrease in
volume of hedged inventory stored by the Energy Services segment. From time to
time, the Energy Services segment stores hedged inventory to attempt to capture
value when market conditions are economically favorable.
    
    Construction and pipeline relocation receivables decreased by
$7.3 million primarily due to a decrease in construction activity in 2010.
    
    Trade receivables increased by $43.1 million primarily due to
the timing of collections from customers, partially offset by increased
activity from our Energy Services segment due to higher volumes and higher
commodity prices during 2010.
 2009 Compared to 2008
 
    
    We recognized $32.1 million of reorganization expenses during the year ended
December 31, 2009.
    
    The net change in fair values of derivatives was an increase of $20.5 million to
cash flows from operating activities for the year ended December 31, 2009, resulting
from the decrease in value related to fixed-price contracts compared to a lower level
of opposite fluctuations in futures contracts purchased to hedge such fluctuations.
    
    The net impact of working capital changes was a decrease of $229.7 million to cash
flows from operating activities for the year ended December 31, 2009. The principal
factors affecting the working capital changes were:
 
    
    Inventories increased by $177.3 million due to an increase in
inventory purchases within the Energy Services segment which are hedged with
futures contracts that expire primarily in the winter months. As a result of
energy market conditions, we significantly increased our physical inventory
purchases in 2009.
    
    Trade receivables increased by $44.1 million primarily due to
increased activity from our Energy Services segment due to higher volumes in
2009.
    
    Prepaid and other current assets increased by $28.9 million
primarily due to increases in prepaid services and unbilled revenue within the
Natural Gas Storage segment and an increase in receivables due to a favorable
property tax settlement, partially offset by a decrease in a receivable related
to ammonia purchases and a decrease in margin deposits on futures contracts in
our Energy Services segment.
    
    Accrued and other current liabilities decreased by $1.3 million
primarily due to costs related to the reorganization.
 61




---



##### Table of Contents




    
    Accounts payable increased by $14.6 million due to activity
within the Energy Services segment.
    
    Construction and pipeline relocation receivables decreased by
$7.4 million primarily due to a decrease in construction activity in 2009.
 Investing Activities
 2010 Compared to 2009
 
    
    Capital expenditures decreased by $9.6 million for the year ended December 31, 2010
compared with the year ended December 31, 2009. See below for a discussion of capital
spending.
    
    We acquired additional shares of West Shore common stock from an affiliate of BP plc
for $13.5 million, resulting in an increase in our ownership interest in West Shore
from 24.9% to 34.6%.
    
    We contributed $3.9 million to WT LPG during the year ended December 31, 2009 for
our pro-rata share of an expansion project required to meet increased pipeline demand
caused by increased product production in the Fort Worth basin and East Texas regions.
    
    During the year ended December 31, 2010, we acquired two refined petroleum product
terminals from Chevron and Shell for approximately $13.0 million and $32.6 million (net
of $3.5 million of cash acquired), respectively, and we also acquired pipeline assets
for $1.3 million. During the year ended December 31, 2009, we acquired refined
petroleum product terminals and pipeline assets from ConocoPhillips for $54.4 million.
See Note 4 in the Notes to Consolidated Financial Statements for further information.
    
    Cash proceeds from the sale of the Buckeye NGL Pipeline were $22.0 million during
the year ended December 31, 2010.
 2009 Compared to 2008
 
    
    We acquired refined petroleum product terminals and pipeline assets from
ConocoPhillips for $54.4 million during the year ended December 31, 2009. During the
year ended December 31, 2008, cash used for acquisitions, net of cash acquired, was
$667.5 million, consisting of the following: (i) $438.8 million for the acquisition of
Lodi Gas, (ii) $143.3 million for the acquisition of Farm & Home and (iii) an aggregate
of $75.6 million for the acquisitions of four terminals in Albany, New York, Niles and
Ferrysburg, Michigan, and Wethersfield, Connecticut and the acquisition of the
remaining 50% member interest in WesPac San Diego that we did not already own. See
Note 4 in the Notes to Consolidated Financial Statements for further information.
    
    We contributed $3.9 million and $9.8 million to WT LPG during the years ended
December 31, 2009 and 2008, respectively.
    
    Capital expenditures decreased by $33.2 million for the year ended December 31, 2009
compared with the year ended December 31, 2008. See below for a discussion of capital
spending.
    
    Cash proceeds from the sale of the retail operations of Farm & Home were $52.6
million during the year ended December 31, 2008.
 62




---



##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Sustaining capital expenditures
    
    $
    31,244
    
    
    $
    23,496
    
    
    $
    28,936Expansion and cost reduction
    
    
    46,455
    
    
    
    63,813
    
    
    
    91,536Total capital expenditures, net
    
    $
    77,699
    
    
    $
    87,309
    
    
    $
    120,472
    Financing Activities
 2010 Compared to 2009
 
    
    We borrowed $298.4 million and $317.1 million and repaid $278.4 million and $537.4
million under the Credit Facility during the years ended December 31, 2010 and 2009,
respectively. Repayments under the Services Company 3.60% ESOP Notes were $6.2 million
and $6.3 million during the years ended December 31, 2010 and 2009, respectively.
There were no borrowings or repayments under the BGH unsecured revolving credit
facility (BGH Credit Agreement) in 2010 and 2009.
    
    Net borrowings under the BES Credit Agreement were $44.5 million and $143.8 million
during the years ended December 31, 2010 and 2009, respectively.
    
    We incurred $3.6 million of debt issuance costs during the year ended December 31,
2010 primarily related to the amendment to the BES Credit Agreement in June 2010 (see
Note 13 in the Notes to Consolidated Financial Statements).
    
    We received $271.4 million (net of debt issuance costs of $1.8 million) from the
issuance in August 2009 of $275.0 million in aggregate principal amount of the 5.500%
Notes in an underwritten public offering. Proceeds from this offering were used to
reduce amounts outstanding under the Credit Facility.
 63




---



##### Table of Contents




    
    We received $4.8 million and $3.2 million in net proceeds from the exercise of LP
Unit options during the years ended December 31, 2010 and 2009, respectively. We
received $104.6 million in net proceeds from an underwritten equity offering in March
and April of 2009 for the public issuance of 3.0 million LP Units.
    
    Cash distributions paid to partners of BGH increased by $9.0 million during the year
ended December 31, 2010 compared with the year ended December 31, 2009 due to an
increase in the quarterly cash distribution rate per unit. BGH paid cash distributions
of $49.8 million ($1.76 per unit) and $40.8 million ($1.44 per unit) during the years
ended December 31, 2010 and 2009, respectively.
    
    Distributions to noncontrolling partners of Buckeye, consisting primarily of
distributions to holders of LP Units, increased by $15.6 million during the year ended
December 31, 2010 due to an increase in the number of LP Units outstanding and an
increase in the quarterly cash distribution rate per LP Unit. Buckeye paid cash
distributions of $195.6 million ($3.825 per LP Unit) and $180.0 million ($3.625 per LP
Unit) to its noncontrolling partners during the years ended December 31, 2010 and 2009,
respectively.
    
    We paid $16.4 million of costs associated with the Merger during the year ended
December 31, 2010.
 2009 Compared to 2008
 
    
    We borrowed $317.1 million and $558.6 million and repaid $537.4 million and $260.3
million under the Credit Facility during the years ended December 31, 2009 and 2008,
respectively. Repayments under the Services Company 3.60% ESOP Notes were $6.3 million
and $6.3 million during the years ended December 31, 2009 and 2008, respectively.
There were no borrowings or repayments under the BGH Credit Agreement in 2009 and 2008.
    
    Net borrowings under the BES Credit Agreement were $143.8 million during the year
ended December 31, 2009, while net repayments under the BES Credit Agreement (and its
predecessor facility which was replaced in May 2008) were $4.0 million during the year
ended December 31, 2008.
    
    We received $271.4 million (net of debt issuance costs of $1.8 million) from the
issuance in August 2009 of $275.0 million in aggregate principal amount of the 5.500%
Notes in an underwritten public offering as discussed above. We received $298.0
million from the issuance in January 2008 of $300.0 million in aggregate principal
amount of the 6.050% Notes in an underwritten public offering. Proceeds from this
offering were used to partially pre-fund the Lodi Gas acquisition. In connection with
this debt offering, we settled two interest rate swaps associated with the 6.050%
Notes, which resulted in a settlement payment of $9.6 million that is being amortized
as interest expense over the ten-year term of the 6.050% Notes.
    
    We received $104.6 million in net proceeds from an underwritten equity offering in
2009 for the public issuance of 3.0 million LP Units as discussed above. In 2008, we
received $113.1 million in net proceeds from the public issuance of 2.6 million LP
Units.
    
    We received $3.2 million and $0.3 million in net proceeds from the exercise of LP
Unit options during the years ended December 31, 2009 and 2008, respectively.
    
    Cash distributions paid to partners of BGH increased by $6.4 million during the year
ended December 31, 2009 compared with the year ended December 31, 2008 due to an
increase in the quarterly cash distribution rate per unit. BGH paid cash distributions
of $40.8 million ($1.44 per unit) and $34.4 million ($1.215 per unit) during the years
ended December 31, 2009 and 2008, respectively.
    
    Distributions to noncontrolling partners of Buckeye increased by $20.7 million
during the year ended December 31, 2009 due to an increase in the number of LP Units
outstanding and an increase in the quarterly cash distribution rate per LP Unit.
Buckeye paid cash distributions of $180.0 million ($3.625 per LP Unit) and $159.3
million ($3.425 per LP Unit) to its noncontrolling partners during the years ended
December 31, 2009 and 2008, respectively.
 Derivatives
  64




---



##### Table of Contents



Critical Accounting Policies
  Depreciation Methods, Estimated Useful Lives and Disposals of Property, Plant and Equipment
     Reserves for Environmental Matters
  65




---



##### Table of Contents



Fair Value of Derivatives
   66




---



##### Table of Contents



Measuring the Fair Value of Goodwill
     Measuring Recoverability of Long-Lived Assets and Equity Method Investments
  67




---



##### Table of Contents



Other Considerations
 Contractual Obligations
  Payments Due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsLong-term debt (1), (2)
    
    $
    1,524,525
    
    
    $
    1,525
    
    
    $
    398,000
    
    
    $
    275,000
    
    
    $
    850,000Interest payments (2), (3)
    
    
    639,864
    
    
    
    78,256
    
    
    
    150,088
    
    
    
    122,613
    
    
    
    288,907Operating leases: (4)Office space and other
    
    
    17,930
    
    
    
    2,042
    
    
    
    3,075
    
    
    
    3,285
    
    
    
    9,528Land leases (5)
    
    
    307,738
    
    
    
    3,117
    
    
    
    6,806
    
    
    
    7,224
    
    
    
    290,591Purchase obligations (6)
    
    
    22,887
    
    
    
    22,887
    
    
    
    
    
    
    
    
    
    
    
    Capital expenditure
obligations (7)
    
    
    2,032
    
    
    
    2,032
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    2,514,976
    
    
    $
    109,859
    
    
    $
    557,969
    
    
    $
    408,122
    
    
    $
    1,439,026
 
 (1)
    
    We have long-term payment obligations under our Credit Facility, our underwritten
publicly issued notes and the 3.60% ESOP Notes. Amounts shown in the table represent our
scheduled future maturities of long-term debt principal for the periods indicated. We have
assumed that the borrowings under our Credit Facility as of December 31, 2010 will not be
repaid until the maturity date of the facility. See Note 13 in the Notes to Consolidated
Financial Statements for additional information regarding our debt obligations.(2)
    
    On January 13, 2011, we sold the 4.875% Notes, which are due in 2021, which would
increase the Total and the More than 5 Years amounts by $650.0 million. Semi-annual
interest payments on these 4.875% Notes are due commencing August 2011, which would
increase the interest payments amounts presented for each category by $316.9 million, $15.8
million, $63.4 million, $63.4 million and $174.3 million, respectively.(3)
    
    Interest payments include amounts due on our notes and interest payments and commitment
fees due on our Credit Facility. The interest amount calculated on the Credit Facility is
based on the assumption that the amount outstanding and the interest rate charged both
remain at their current levels.(4)
    
    We lease certain property, plant and equipment under noncancelable and cancelable
operating leases. Amounts shown in the table represent minimum lease payment obligations
under our operating leases with terms in excess of one year for the periods indicated.
Lease expense is charged to operating expenses on a straight line basis over the period of
expected benefit. Contingent rental payments are expensed as incurred. Total rental
expense for the years ended December 31, 2010, 2009 and 2008 was $21.3 million, $21.2
million and $20.2 million, respectively.(5)
    
    We have leases for subsurface underground gas storage rights and surface rights in
connection with our operations in the Natural Gas Storage segment. We may cancel these
leases if the storage reservoir is not used for underground storage of natural gas or the
removal or injection thereof for a continuous period of 68




---



##### Table of Contents



two consecutive years. Lease
expense associated with these leases, which is being recognized on a
straight line basis over 44 years, was $7.1 million for the year ended December 31, 2010, including
$4.2 million recorded as an increase in our deferred lease liability. We estimate that the
deferred lease liability will continue to increase through 2032, at which time our deferred
lease liability is estimated to be approximately $64.7 million. Our deferred lease
liability will then be reduced over the remaining 19 years of the lease, since the expected
annual lease payments will exceed the amount of lease expense.(6)
    
    We have long and short-term purchase obligations for products and services with
third-party suppliers. The prices that we are obligated to pay under these contracts
approximate current market prices. The table shows our commitments and estimated payment
obligations under these contracts for the periods indicated. Our estimated future payment
obligations are based on the contractual price under each contract for products and
services at December 31, 2010.(7)
    
    We have short-term payment obligations relating to capital projects we have initiated.
These commitments represent unconditional payment obligations that we have agreed to pay
vendors for services rendered or products purchased.  Employee Stock Ownership Plan
    Off-Balance Sheet Arrangements
  Related Party Transactions
  Recent Accounting Pronouncements
  69




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk  Trading Instruments
  Market Risk  Non-Trading Instruments
  Commodity Risk
 Natural Gas Storage
   December 31,2010Assets:Hub service agreements
    
    $
    34,471Liabilities:Hub service agreements
    
    
    (19,942
    )Total
    
    $
    14,529
 Energy Services
   70




---



##### Table of Contents



December 31,2010Assets:Physical derivative contracts
    
    $
    1,522Futures contracts for refined products
    
    
    112Liabilities:Physical derivative contracts
    
    
    (3,900
    )Futures contracts for refined products
    
    
    (12,635
    )Futures contracts for natural gas
    
    
    (206
    )Total
    
    $
    (15,107
    )
   CommodityFinancialInstrumentResulting
    
    PortfolioScenario
    
    Classification
    
    Fair ValueFair value assuming no change in underlying
commodity prices (as is)
    
    Liability
    
    $
    (15,107
    )Fair value assuming 10% increase in underlying
commodity prices
    
    Liability
    
    $
    (47,239
    )Fair value assuming 10% decrease in underlying
commodity prices
    
    Asset
    
    $
    17,024
   71




---



##### Table of Contents



Interest Rate Risk
       72




---



##### Table of Contents



FinancialInstrumentResulting
    
    PortfolioScenario
    
    Classification
    
    Fair ValueFair value assuming no change in underlying
interest rates (as is)
    
    Asset
    
    $
    3,348Fair value assuming 10% increase in underlying
interest rates
    
    Asset
    
    $
    42,344Fair value assuming 10% decrease in underlying
interest rates
    
    Liability
    
    $
    (36,036
    )
 73




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 
 PageManagements Report On Internal Control Over Financial Reporting
    
    
    75Reports of Independent Registered Public Accounting Firm
    
    
    76Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009
and 2008
    
    
    78Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 2010, 2009 and 2008
    
    
    79Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    80Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009
and 2008
    
    
    81Consolidated Statements of Partners Capital for the Years Ended
December 31, 2010, 2009 and 2008
    
    
    82Notes to Consolidated Financial Statements:1. Organization
    
    
    832. Summary of Significant Accounting Policies
    
    
    843. Reorganization
    
    
    944. Acquisitions and Dispositions
    
    
    945. Commitments and Contingencies
    
    
    1006. Inventories
    
    
    1047. Prepaid and Other Current Assets
    
    
    1048. Property, Plant and Equipment
    
    
    1059. Equity Investments
    
    
    10610. Goodwill and Intangible Assets
    
    
    10811. Other Non-Current Assets
    
    
    10912. Accrued and Other Current Liabilities
    
    
    10913. Debt Obligations
    
    
    11014. Other Non-Current Liabilities
    
    
    11415. Accumulated Other Comprehensive Income (Loss)
    
    
    11416. Derivative Instruments, Hedging Activities and Fair Value Measurements
    
    
    11417. Pensions and Other Postretirement Benefits
    
    
    12118. Unit-Based Compensation Plans
    
    
    12619. Employee Stock Ownership Plan
    
    
    13220. Related Party Transactions
    
    
    13221. Partners Capital and Distributions
    
    
    13322. Earnings Per Limited Partner Unit
    
    
    13523. Business Segments
    
    
    13524. Supplemental Cash Flow Information
    
    
    13925. Quarterly Financial Data (Unaudited)
    
    
    14026. Subsequent Events
    
    
    140
 
 74




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   Internal Control-Integrated
Framework
  /s/ FORREST E. WYLIE
    
    /s/ KEITH E. ST.CLAIRForrest E. Wylie
    
    Keith E. St.ClairChief Executive Officer
    
    Chief Financial Officer
  75




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control
 Integrated Framework
    Internal Control
 Integrated Framework
   
 76




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal ControlIntegrated Framework
  
 77




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per limited partner unit amounts)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Revenues:Product sales
    
    $
    2,469,210
    
    
    $
    1,125,653
    
    
    $
    1,304,097Transportation and other services
    
    
    682,058
    
    
    
    644,719
    
    
    
    592,555Total revenue
    
    
    3,151,268
    
    
    
    1,770,372
    
    
    
    1,896,652Costs and expenses:Cost of product sales and natural gas storage services
    
    
    2,462,275
    
    
    
    1,103,015
    
    
    
    1,274,135Operating expenses
    
    
    278,245
    
    
    
    275,930
    
    
    
    281,965Depreciation and amortization
    
    
    59,590
    
    
    
    54,699
    
    
    
    50,834Asset impairment expense
    
    
    
    
    
    
    59,724
    
    
    
    General and administrative
    
    
    50,599
    
    
    
    41,147
    
    
    
    43,226Equity plan modification expense
    
    
    21,058
    
    
    
    
    
    
    
    Reorganization expense
    
    
    
    
    
    
    32,057
    
    
    
    Total costs and expenses
    
    
    2,871,767
    
    
    
    1,566,572
    
    
    
    1,650,160Operating income
    
    
    279,501
    
    
    
    203,800
    
    
    
    246,492Other income (expense):Earnings from equity investments
    
    
    11,363
    
    
    
    12,531
    
    
    
    7,988Interest and debt expense
    
    
    (89,169
    )
    
    
    (75,147
    )
    
    
    (75,410
    )Other income (expense)
    
    
    (687
    )
    
    
    453
    
    
    
    1,553Total other expense
    
    
    (78,493
    )
    
    
    (62,163
    )
    
    
    (65,869
    )Net income
    
    
    201,008
    
    
    
    141,637
    
    
    
    180,623Less: net income attributable to noncontrolling interests
    
    
    (157,928
    )
    
    
    (92,043
    )
    
    
    (154,146
    )Net income attributable to Buckeye Partners, L.P.
    
    $
    43,080
    
    
    $
    49,594
    
    
    $
    26,477Earnings per limited partner unit:Basic
    
    $
    1.66
    
    
    $
    2.49
    
    
    $
    1.33Diluted
    
    $
    1.65
    
    
    $
    2.49
    
    
    $
    1.33Weighted average number of limited partner units outstanding:Basic
    
    
    26,016
    
    
    
    19,952
    
    
    
    19,952Diluted
    
    
    26,086
    
    
    
    19,952
    
    
    
    19,952
  78




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (In thousands)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Net income
    
    $
    201,008
    
    
    $
    141,637
    
    
    $
    180,623Other comprehensive income (loss):Change in value of derivatives
    
    
    (14,357
    )
    
    
    
    
    
    
    Amortization of interest rate swaps
    
    
    964
    
    
    
    
    
    
    
    Amortization of benefit plan costs
    
    
    (1,149
    )
    
    
    
    
    
    
    Adjustment to funded status of benefit plans
    
    
    (5,870
    )
    
    
    
    
    
    
    Total other comprehensive  loss
    
    
    (20,412
    )
    
    
    
    
    
    
    Comprehensive income
    
    $
    180,596
    
    
    $
    141,637
    
    
    $
    180,623
  79




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except unit amounts)
 December 31,2010
    
    
    2009Assets:Current assets:Cash and cash equivalents
    
    $
    13,626
    
    
    $
    37,574Trade receivables, net
    
    
    167,274
    
    
    
    124,165Construction and pipeline relocation receivables
    
    
    6,803
    
    
    
    14,095Inventories
    
    
    351,605
    
    
    
    310,214Derivative assets
    
    
    1,634
    
    
    
    4,959Assets held for sale
    
    
    
    
    
    
    22,000Prepaid and other current assets
    
    
    85,689
    
    
    
    104,251Total current assets
    
    
    626,631
    
    
    
    617,258Property, plant and equipment, net
    
    
    2,305,884
    
    
    
    2,238,321Equity investments
    
    
    107,047
    
    
    
    96,851Goodwill
    
    
    432,124
    
    
    
    432,124Intangible assets, net
    
    
    44,067
    
    
    
    45,157Other non-current assets
    
    
    58,463
    
    
    
    56,860Total assets
    
    $
    3,574,216
    
    
    $
    3,486,571Liabilities and partners capital:Current liabilities:Line of credit
    
    $
    284,300
    
    
    $
    239,800Current portion of long-term debt
    
    
    1,525
    
    
    
    6,178Accounts payable
    
    
    68,530
    
    
    
    56,723Derivative liabilities
    
    
    17,285
    
    
    
    14,665Accrued and other current liabilities
    
    
    144,880
    
    
    
    113,474Total current liabilities
    
    
    516,520
    
    
    
    430,840Long-term debt
    
    
    1,519,393
    
    
    
    1,500,495Other non-current liabilities
    
    
    128,043
    
    
    
    102,942Total liabilities
    
    
    2,163,956
    
    
    
    2,034,277Commitments and contingent liabilities
    
    
    
    
    
    
    Partners capital:Buckeye Partners, L.P. capital:General Partner (0 and 1,995 units outstanding
as of December 31, 2010 and 2009, respectively)
    
    
    
    
    
    
    7Limited Partners (71,436,099 and 19,578,684 units
outstanding as of December 31, 2010 and 2009, respectively)
    
    
    1,413,664
    
    
    
    236,545Management (0 and 370,819 units outstanding
as of December 31, 2010 and 2009, respectively)
    
    
    
    
    
    
    3,225Equity gains on issuance of Buckeye Partners, L.P. limited partner units
    
    
    
    
    
    
    2,557Accumulated other comprehensive loss
    
    
    (21,259
    )
    
    
    Total Buckeye Partners, L.P. capital
    
    
    1,392,405
    
    
    
    242,334Noncontrolling interests
    
    
    17,855
    
    
    
    1,209,960Total partners capital
    
    
    1,410,260
    
    
    
    1,452,294Total liabilities and partners capital
    
    $
    3,574,216
    
    
    $
    3,486,571
  80




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    201,008
    
    
    $
    141,637
    
    
    $
    180,623Adjustments to reconcile net income to net cash provided
by operating activities:Value of ESOP shares released
    
    
    4,745
    
    
    
    1,641
    
    
    
    2,202Depreciation and amortization
    
    
    59,590
    
    
    
    54,699
    
    
    
    50,834Asset impairment expense
    
    
    
    
    
    
    59,724
    
    
    
    Net changes in fair value of derivatives
    
    
    (45,579
    )
    
    
    20,531
    
    
    
    (24,228
    )Non-cash deferred lease expense
    
    
    4,235
    
    
    
    4,500
    
    
    
    4,598Earnings from equity investments
    
    
    (11,363
    )
    
    
    (12,531
    )
    
    
    (7,988
    )Distributions from equity investments
    
    
    14,679
    
    
    
    9,660
    
    
    
    5,113Equity plan modification expense
    
    
    21,058
    
    
    
    
    
    
    
    Amortization of other non-cash items
    
    
    5,720
    
    
    
    8,257
    
    
    
    4,643Change in assets and liabilities, net of amounts related to acquisitions:Trade receivables
    
    
    (43,109
    )
    
    
    (44,112
    )
    
    
    36,060Construction and pipeline relocation receivables
    
    
    7,292
    
    
    
    7,406
    
    
    
    (8,930
    )Inventories
    
    
    9,955
    
    
    
    (177,309
    )
    
    
    (4,362
    )Prepaid and other current assets
    
    
    16,368
    
    
    
    (28,937
    )
    
    
    (27,823
    )Accounts payable
    
    
    11,808
    
    
    
    14,569
    
    
    
    (10,647
    )Accrued and other current liabilities
    
    
    30,416
    
    
    
    (1,296
    )
    
    
    9,336Other non-current assets
    
    
    9,528
    
    
    
    (9,916
    )
    
    
    9,520Other non-current liabilities
    
    
    (3,872
    )
    
    
    (861
    )
    
    
    (10,394
    )Total adjustments from operating activities
    
    
    91,471
    
    
    
    (93,975
    )
    
    
    27,934Net cash provided by operating activities
    
    
    292,479
    
    
    
    47,662
    
    
    
    208,557Cash flows from investing activities:Capital expenditures
    
    
    (77,699
    )
    
    
    (87,309
    )
    
    
    (120,472
    )Acquisition of additional interest in equity investment
    
    
    (13,512
    )
    
    
    
    
    
    
    Contributions to equity investments
    
    
    
    
    
    
    (3,870
    )
    
    
    (9,880
    )Acquisitions, net of cash acquired
    
    
    (46,915
    )
    
    
    (54,443
    )
    
    
    (657,643
    )Net proceeds (expenditures) for disposal of property, plant and equipment
    
    
    23,938
    
    
    
    1,419
    
    
    
    (365
    )Proceeds from the sale of Farm & Home retail operations
    
    
    
    
    
    
    
    
    
    
    52,584Net cash used in investing activities
    
    
    (114,188
    )
    
    
    (144,203
    )
    
    
    (735,776
    )Cash flows from financing activities:Net proceeds from issuance of limited partner units
    
    
    
    
    
    
    104,632
    
    
    
    113,111Proceeds from exercise of unit options
    
    
    4,789
    
    
    
    3,204
    
    
    
    316Issuance of long-term debt
    
    
    
    
    
    
    273,210
    
    
    
    298,050Repayment of long term-debt
    
    
    (6,178
    )
    
    
    (6,294
    )
    
    
    (6,289
    )Borrowings under credit facility
    
    
    298,400
    
    
    
    317,120
    
    
    
    558,554Repayments under credit facility
    
    
    (278,400
    )
    
    
    (537,387
    )
    
    
    (260,288
    )Net borrowings (repayments) under BES credit agreement
    
    
    44,500
    
    
    
    143,800
    
    
    
    (4,000
    )Debt issuance costs
    
    
    (3,551
    )
    
    
    (4,691
    )
    
    
    (2,111
    )Costs associated with agreement and plan of merger
    
    
    (16,427
    )
    
    
    
    
    
    
    Distributions paid to noncontrolling partners of Buckeye Partners, L.P.
    
    
    (195,564
    )
    
    
    (180,008
    )
    
    
    (159,306
    )Settlement payment of interest rate swaps
    
    
    
    
    
    
    
    
    
    
    (9,638
    )Distributions paid to partners of Buckeye GP Holdings L.P.
    
    
    (49,808
    )
    
    
    (40,752
    )
    
    
    (34,385
    )Net cash provided by (used in) financing activities
    
    
    (202,239
    )
    
    
    72,834
    
    
    
    494,014Net decrease in cash and cash equivalents
    
    
    (23,948
    )
    
    
    (23,707
    )
    
    
    (33,205
    )Cash and cash equivalents  Beginning of year
    
    
    37,574
    
    
    
    61,281
    
    
    
    94,486Cash and cash equivalents  End of year
    
    $
    13,626
    
    
    $
    37,574
    
    
    $
    61,281
  81




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
 
 CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
 (In thousands)
 Buckeye Partners, L.P. UnitholdersEquity Gainson Issuance
    
    
    Accumulatedof Buckeyes
    
    
    OtherGeneral
    
    
    Limited
    
    
    Management
    
    
    Limited
    
    
    Comprehensive
    
    
    NoncontrollingPartner
    
    
    Partners
    
    
    Units
    
    
    Partner Units
    
    
    Income (Loss)
    
    
    Interests
    
    
    TotalPartners capital  January 1, 2008
    
    $
    7
    
    
    $
    232,928
    
    
    $
    3,156
    
    
    $
    2,239
    
    
    $
    
    
    
    $
    1,066,143
    
    
    $
    1,304,473Net income
    
    
    
    
    
    
    25,981
    
    
    
    496
    
    
    
    
    
    
    
    
    
    
    
    154,146
    
    
    
    180,623Distributions paid to partners of BGH
    
    
    
    
    
    
    (33,741
    )
    
    
    (644
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,385
    )Recognition of unit-based compensation charges
    
    
    
    
    
    
    1,397
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,426Equity gains on issuance of Buckeyes LP Units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212
    
    
    
    
    
    
    
    (212
    )
    
    
    Net proceeds from issuance of Buckeyes LP
Units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,111
    
    
    
    113,111Amortization of Buckeyes unit-based
compensation awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    486
    
    
    
    486Exercise of Buckeyes LP Unit options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316
    
    
    
    316Services Companys non-cash ESOP distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,685
    )
    
    
    (5,685
    )Acquired noncontrolling interests not
previously owned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,537
    )
    
    
    (1,537
    )Distributions paid to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (159,306
    )
    
    
    (159,306
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (688
    )
    
    
    (688
    )Partners capital  December 31, 2008
    
    
    7
    
    
    
    226,565
    
    
    
    3,037
    
    
    
    2,451
    
    
    
    
    
    
    
    1,166,774
    
    
    
    1,398,834Net income
    
    
    
    
    
    
    48,668
    
    
    
    926
    
    
    
    
    
    
    
    
    
    
    
    92,043
    
    
    
    141,637Distributions paid to partners of BGH
    
    
    
    
    
    
    (39,990
    )
    
    
    (762
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,752
    )Recognition of unit-based compensation charges
    
    
    
    
    
    
    1,302
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,326Equity gains on issuance of Buckeyes LP Units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    (106
    )
    
    
    Net proceeds from issuance of Buckeyes LP
Units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,632
    
    
    
    104,632Amortization
of Buckeyes unit-based compensation awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,079
    
    
    
    3,079Exercise of Buckeyes LP Unit options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,204
    
    
    
    3,204Services Companys non-cash ESOP distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,073
    )
    
    
    (6,073
    )Distributions paid to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (180,008
    )
    
    
    (180,008
    )Change in value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,722
    
    
    
    17,722Amortization of interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    961
    
    
    
    961Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,732
    
    
    
    7,732Partners capital  December 31, 2009
    
    
    7
    
    
    
    236,545
    
    
    
    3,225
    
    
    
    2,557
    
    
    
    
    
    
    
    1,209,960
    
    
    
    1,452,294Net income
    
    
    
    
    
    
    42,175
    
    
    
    905
    
    
    
    
    
    
    
    
    
    
    
    157,928
    
    
    
    201,008Costs associated with agreement and plan of
merger
    
    
    
    
    
    
    (6,750
    )
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    (9,549
    )
    
    
    (16,427
    )Distributions paid to partners of BGH
    
    
    
    
    
    
    (48,877
    )
    
    
    (931
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,808
    )Recognition of unit-based compensation charges
    
    
    
    
    
    
    21,916
    
    
    
    419
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,335Amortization of Buckeyes unit-based
compensation awards
    
    
    
    
    
    
    2,163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,040
    
    
    
    8,203Exercise of Buckeyes LP Unit options
    
    
    
    
    
    
    340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,449
    
    
    
    4,789Services Companys non-cash ESOP distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,385
    )
    
    
    (5,385
    )Distributions paid to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (195,564
    )
    
    
    (195,564
    )Amortization of benefit plan costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132
    )
    
    
    (1,017
    )
    
    
    (1,149
    )Adjustment to funded status of benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,870
    )
    
    
    
    
    
    
    (5,870
    )Change in value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,762
    
    
    
    (38,119
    )
    
    
    (14,357
    )Amortization of interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109
    
    
    
    855
    
    
    
    964Noncash accrual for distribution equivalent
rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (936
    )
    
    
    (936
    )Cancellation of 80,000 LP Units
in connection with the Merger
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,132
    
    
    
    3,132Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,031
    
    
    
    7,031Effect of Merger on partners capital
    
    
    (7
    )
    
    
    1,166,152
    
    
    
    (3,490
    )
    
    
    (2,557
    )
    
    
    (39,128
    )
    
    
    (1,120,970
    )
    
    
    Partners capital  December 31, 2010
    
    $
    
    
    
    $
    1,413,664
    
    
    $
    
    
    
    $
    
    
    
    $
    (21,259
    )
    
    $
    17,855
    
    
    $
    1,410,260
  82




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 1. ORGANIZATION
 we us our Buckeye
      83




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Basis of Presentation and Principles of Consolidation
   Year Ended December 31,2009
    
    
    2008Net income, as previously reported
    
    $
    146,900
    
    
    $
    189,881Adjustments:Depreciation and amortization (1)
    
    
    4,465
    
    
    
    4,465Costs and expenses (2)
    
    
    (9,108
    )
    
    
    (11,594
    )Other (3)
    
    
    (620
    )
    
    
    (2,129
    )Net income
    
    $
    141,637
    
    
    $
    180,623
 
 (1)
    
    Represents the amortization of the market value of LP Units issued in August 1997 in
connection with the restructuring of Services Companys ESOP. The market value of those LP
Units was $64.2 million, and this amount was recorded as a deferred charge and is being
amortized on a straight-line basis over 13.5 years.(2)
    
    Amounts include payroll and benefits costs, professional fees, certain state franchise
taxes, insurance costs and miscellaneous other expenses incurred by BGH.(3)
    
    Includes interest expense on Services Companys debt and commitment fees on BGHs
credit facility. See Note 13 for further information.   84




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Business Segments
  Asset Retirement Obligations
    Capitalization of Interest
  Cash and Cash Equivalents
   85




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Comprehensive Income
  Construction and Pipeline Relocation Receivables
  Contingencies
    Cost of Product Sales and Natural Gas Storage Services
  Debt Issuance Costs
  86




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Derivative Instruments
    Earnings per LP Unit
   Environmental Expenditures
  87




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Equity Investments
  Estimates
  Fair Value
  88




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Goodwill
  Income Taxes
     Intangible Assets
  Inventories
  89




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Long-Lived Assets
  Net Income Allocation
  Noncontrolling Interests
  Pensions
  Postretirement Benefits Other Than Pensions
  Property, Plant and Equipment
  90




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Life in YearsRight of way
    
    
    44-50Line pipe and fittings
    
    
    44-50Buildings
    
    
    50Wells
    
    
    44Pumping and compression equipment
    
    
    44-50Oil tanks
    
    
    50Office furniture and equipment
    
    
    18Vehicles and other work equipment
    
    
    11Servers and software
    
    
    5
 Recent Accounting Developments
 Fair Value Measurements
 Health Care Reform Acts
 Intangibles, Goodwill and Other
 91




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Business Combinations
 Regulatory Reporting
  Revenue Recognition
 Pipeline Operations segment
 Terminalling & Storage segment
 Natural Gas Storage segment
 92




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Energy Services segment
 Development & Logistics segment
 Trade Receivables and Concentration of Credit Risk
      Unit-Based Compensation
  93




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 3. REORGANIZATION
     Pipeline Operations
    
    $
    26,127Terminalling & Storage
    
    
    2,735Natural Gas Storage
    
    
    495Energy Services
    
    
    1,207Development & Logistics
    
    
    1,493Total reorganization expenses
    
    $
    32,057
 
 4. ACQUISITIONS AND DISPOSITIONS
 Business Combinations
   94




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Entry into Sale and Purchase Agreement to Acquire BORCO
  Opelousas Terminal Acquisition
  Puerto Rico Terminal Acquisition
  Current assets
    
    $
    172Inventory
    
    
    867Property, plant and equipment
    
    
    31,770Intangible assets
    
    
    3,363Other assets
    
    
    17,720Current liabilities
    
    
    (3,591
    )Other liabilities
    
    
    (17,720
    )Allocated purchase price
    
    $
    32,581
  95




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Refined Petroleum Products Terminals and Pipeline Assets Acquisition
  Inventory
    
    $
    7,287Property, plant and equipment
    
    
    44,400Intangible assets
    
    
    4,580Environmental and other liabilities
    
    
    (1,834
    )Allocated purchase price
    
    $
    54,433
 Lodi Gas
  Contractual purchase price
    
    $
    440,000Working capital adjustments and fees
    
    
    2,367Total purchase price
    
    $
    442,367
  Current assets
    
    $
    8,240Property, plant and equipment
    
    
    274,880Goodwill
    
    
    169,560Current liabilities
    
    
    (9,096
    )Other liabilities
    
    
    (1,217
    )Allocated purchase price
    
    $
    442,367
 96




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Farm & Home
  Current assets
    
    $
    79,144Inventory
    
    
    93,332Property, plant and equipment
    
    
    33,880Goodwill
    
    
    1,132Customer relationships
    
    
    38,300Other assets
    
    
    3,688Assets held for sale, net of liability of $0.7 million
    
    
    51,645Debt
    
    
    (100,000
    )Current liabilities
    
    
    (53,208
    )Other liabilities
    
    
    (1,740
    )Allocated purchase price
    
    $
    146,173
  97




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Albany Terminal
  Current assets
    
    $
    78Property, plant and equipment
    
    
    25,172Goodwill
    
    
    26,829Other assets
    
    
    1,920Other liabilities
    
    
    (7,144
    )Allocated purchase price
    
    $
    46,855
 Unaudited Pro forma Financial Results
  98




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)Year EndedDecember 31,2008Revenues:As reported
    
    $
    1,896,652Pro forma adjustments
    
    
    180,422Pro forma revenues
    
    $
    2,077,074Net income:As reported
    
    $
    180,623Pro forma adjustments
    
    
    768Pro forma net income
    
    $
    181,391Pro forma earnings per LP Unit:Basic
    
    $
    1.37Diluted
    
    $
    1.37Pro forma
weighted average number of LP Units outstanding:(1)Basic
    
    
    19,952Diluted
    
    
    19,952
 
 (1)
    
    Pro forma basic and diluted weighted average number of LP Units outstanding, which
previously reflected historical BGH unit and per unit amounts, have been restated for the
reverse unit split (see Note 2). Asset Acquisitions
   99




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Land
    
    $
    592Buildings
    
    
    1,621Machinery, equipment and office furnishings
    
    
    11,714Allocated purchase price
    
    $
    13,927
   Acquisition of Additional Interest in West Shore Pipe Line Company
  Sale of Buckeye NGL Pipeline
  
 5. COMMITMENTS AND CONTINGENCIES
 Claims and Proceedings
    100




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Broadbased Equities v. Forrest E. Wylie,
et. al.
 Henry James Steward v. Forrest E. Wylie,
et. al.
 JR Garrett
Trust v. Buckeye GP Holdings L.P. et al.
 Broadbased Equities v. Forrest E. Wylie, et. al Henry James Steward v. Forrest E. Wylie, et. al. JR Garrett Trust v. Buckeye GP Holdings L.P.,
et al., Broadbased Equities v. Forrest E. Wylie, et al.
 101




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Environmental Contingencies
  Ammonia Contract Contingencies
   102




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Customer Bankruptcy
  Leases Where We are Lessee
  Office space
    
    
    Landand other (1)
    
    
    Leases (2)
    
    
    Total2011
    
    $
    2,042
    
    
    $
    3,117
    
    
    $
    5,1592012
    
    
    1,513
    
    
    
    3,340
    
    
    
    4,8532013
    
    
    1,562
    
    
    
    3,466
    
    
    
    5,0282014
    
    
    1,615
    
    
    
    3,550
    
    
    
    5,1652015
    
    
    1,670
    
    
    
    3,674
    
    
    
    5,344Thereafter
    
    
    9,528
    
    
    
    290,591
    
    
    
    300,119Total
    
    $
    17,930
    
    
    $
    307,738
    
    
    $
    325,668
 
 (1)
    
    We lease certain other land and space in office buildings.(2)
    
    We have leases for subsurface underground gas storage rights and surface rights in
connection with our operations in the Natural Gas Storage segment. We may cancel these
leases if the storage reservoir is not used for underground storage of natural gas or the
removal or injection thereof for a continuous period of two consecutive years. Lease
expense associated with these leases, which is being recognized on a straight-line basis
over 44 years, was approximately $7.1 million, $7.4 million and $7.1 million for the years
ended December 31, 2010, 2009 and 2008, respectively. At December 31, 2010 and 2009, $4.2
million and $4.5 million, respectively, was recorded as an increase in our deferred lease
liability. We estimate that the deferred lease liability will continue to increase through
2032, at which time our deferred lease liability is estimated to be approximately $64.7
million. Our deferred lease liability will then be reduced over the remaining 19 years of
the lease, since the expected annual lease payments will exceed the amount of lease
expense. 103




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Leases  Where We are Lessor
  Years EndingDecember 31,2011
    
    $
    13,5812012
    
    
    13,5812013
    
    
    13,5812014
    
    
    11,5262015
    
    
    11,152Thereafter
    
    
    50,890Total
    
    $
    114,311
 
 6. INVENTORIES
  December 31,2010
    
    
    2009Refined petroleum products (1)
    
    $
    340,659
    
    
    $
    299,473Materials and supplies
    
    
    10,946
    
    
    
    10,741Total inventories
    
    $
    351,605
    
    
    $
    310,214
 
 (1)
    
    Ending inventory was 134.9 million and 141.7 million gallons of refined petroleum
products at December 31, 2010 and 2009, respectively.  
 7. PREPAID AND OTHER CURRENT ASSETS
  December 31,2010
    
    
    2009Prepaid insurance
    
    $
    8,865
    
    
    $
    7,088Insurance receivables
    
    
    8,886
    
    
    
    13,544Ammonia receivable
    
    
    1,295
    
    
    
    7,429Margin deposits
    
    
    18,833
    
    
    
    21,037Prepaid services
    
    
    24,359
    
    
    
    21,571Unbilled revenue
    
    
    3,263
    
    
    
    13,201Tax receivable
    
    
    120
    
    
    
    7,162Prepaid taxes
    
    
    5,417
    
    
    
    2,213Other
    
    
    14,651
    
    
    
    11,006Total prepaid and other current assets
    
    $
    85,689
    
    
    $
    104,251
 104




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 8. PROPERTY, PLANT AND EQUIPMENT
  December 31,2010
    
    
    2009Land
    
    $
    64,905
    
    
    $
    64,712Rights-of-way
    
    
    97,529
    
    
    
    97,309Pad gas
    
    
    29,346
    
    
    
    29,346Buildings and leasehold improvements
    
    
    109,585
    
    
    
    103,535Machinery, equipment and office furnishings
    
    
    2,251,027
    
    
    
    2,130,552Construction in progress
    
    
    66,642
    
    
    
    78,363Total property, plant and equipment
    
    
    2,619,034
    
    
    
    2,503,817Less: Accumulated depreciation
    
    
    (313,150
    )
    
    
    (265,496
    )Total property, plant and equipment, net
    
    $
    2,305,884
    
    
    $
    2,238,321
  Impairment of Long-Lived Assets and Assets Held for Sale
    Inventories
    
    $
    629Property, plant and equipment, net
    
    
    21,371Assets held for sale
    
    $
    22,000
  105




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 AROs
  ARO liability balance, January 1, 2009
    
    $
    919Accretion expense
    
    
    101ARO liability balance, December 31, 2009
    
    
    1,020Accretion expense
    
    
    92ARO liability balance, December 31, 2010 (1)
    
    $
    1,112
 
 (1)
    
    Amount is included in other non-current liabilities. 
 9. EQUITY INVESTMENTS
  December 31,Ownership (1)
    
    
    2010
    
    
    2009Muskegon Pipeline LLC
    
    
    40.0
    %
    
    $
    14,552
    
    
    $
    15,273Transport4, LLC
    
    
    25.0
    %
    
    
    341
    
    
    
    379West Shore (2)
    
    
    34.6
    %
    
    
    43,563
    
    
    
    30,320West Texas LPG Pipeline Limited Partnership
    
    
    20.0
    %
    
    
    48,591
    
    
    
    50,879Total equity investments
    
    
    
    
    
    $
    107,047
    
    
    $
    96,851
 
 (1)
    
    Represents ownership interest in equity investment at December 31, 2010.(2)
    
    See Note 4 for a discussion of the acquisition of an additional interest in West Shore.  Year Ended December 31,2010
    
    
    2009
    
    
    2008Muskegon Pipeline LLC
    
    $
    1,482
    
    
    $
    1,437
    
    
    $
    1,367Transport4, LLC
    
    
    162
    
    
    
    147
    
    
    
    70West Shore
    
    
    4,988
    
    
    
    4,809
    
    
    
    3,133West Texas LPG Pipeline Limited Partnership
    
    
    4,731
    
    
    
    6,138
    
    
    
    3,418Total earnings from equity investments
    
    $
    11,363
    
    
    $
    12,531
    
    
    $
    7,988
 106




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2010
    
    
    2009BALANCE SHEET DATA:Current assets
    
    $
    30,905
    
    
    $
    43,154Noncurrent assets
    
    
    206,076
    
    
    
    204,843Total assets
    
    $
    236,981
    
    
    $
    247,997Current liabilities
    
    $
    34,825
    
    
    $
    32,592Other liabilities
    
    
    9,111
    
    
    
    10,922Combined equity
    
    
    193,045
    
    
    
    204,483Total liabilities and combined equity
    
    $
    236,981
    
    
    $
    247,997
 Year Ended December 31,2010
    
    2009
    
    2008INCOME STATEMENT DATA:Revenues
    
    $
    139,355
    
    
    $
    134,786
    
    
    $
    127,885Costs and expenses
    
    
    79,584
    
    
    
    67,694
    
    
    
    86,273Non-operating expense
    
    
    12,290
    
    
    
    12,914
    
    
    
    9,036Net income
    
    
    47,481
    
    
    
    54,178
    
    
    
    32,576
 107




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 10. GOODWILL AND INTANGIBLE ASSETS
 Goodwill
  December 31,2010
    
    
    2009Pipeline Operations:Purchase of general partner interests in 2004
    
    $
    198,632
    
    
    $
    198,632Terminalling & Storage:Acquisition of six terminals in June 2000
    
    
    11,355
    
    
    
    11,355Purchase of general partner interests in 2004
    
    
    11,434
    
    
    
    11,434Acquisition of Albany Terminal in 2008
    
    
    26,829
    
    
    
    26,829Subtotal
    
    
    49,618
    
    
    
    49,618Natural Gas Storage:Acquisition of Lodi Gas in 2008
    
    
    169,560
    
    
    
    169,560Energy Services:Acquisition of Farm & Home in 2008
    
    
    1,132
    
    
    
    1,132Development & Logistics:Purchase of general partner interests in 2004
    
    
    13,182
    
    
    
    13,182Total goodwill
    
    $
    432,124
    
    
    $
    432,124
 Intangible Assets
  December 31,2010
    
    
    2009Customer relationships
    
    $
    41,663
    
    
    $
    38,300Accumulated amortization
    
    
    (8,600
    )
    
    
    (5,631
    )Net carrying amount
    
    
    33,063
    
    
    
    32,669Customer contracts
    
    
    16,380
    
    
    
    16,380Accumulated amortization
    
    
    (5,376
    )
    
    
    (3,892
    )Net carrying amount
    
    
    11,004
    
    
    
    12,488Total intangible assets
    
    $
    44,067
    
    
    $
    45,157
 108




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 11. OTHER NON-CURRENT ASSETS
  December 31,2010
    
    
    2009Prepaid services
    
    $
    5,836
    
    
    $
    11,640Unbilled revenue
    
    
    2,163
    
    
    
    Derivative assets
    
    
    3,892
    
    
    
    17,204Debt issuance costs
    
    
    11,184
    
    
    
    11,058Insurance receivables
    
    
    8,826
    
    
    
    7,265Indemnification asset (see Note 4)
    
    
    17,720
    
    
    
    Other
    
    
    8,842
    
    
    
    9,693Total other non-current assets
    
    $
    58,463
    
    
    $
    56,860
 
 12. ACCRUED AND OTHER CURRENT LIABILITIES
  December 31,2010
    
    
    2009Taxes  other than income
    
    $
    20,698
    
    
    $
    15,487Accrued employee benefit liability
    
    
    3,817
    
    
    
    3,287Environmental liabilities
    
    
    10,471
    
    
    
    10,799Interest payable
    
    
    30,700
    
    
    
    30,613Payable for ammonia purchase
    
    
    2,354
    
    
    
    7,015Unearned revenue
    
    
    18,776
    
    
    
    6,829Compensation and vacation
    
    
    13,134
    
    
    
    11,385Accrued capital expenditures
    
    
    2,032
    
    
    
    1,611Reorganization
    
    
    
    
    
    
    2,133Deferred consideration
    
    
    2,010
    
    
    
    1,675Customer deposits
    
    
    5,389
    
    
    
    2,518Other
    
    
    35,499
    
    
    
    20,122Total accrued and other current liabilities
    
    $
    144,880
    
    
    $
    113,474
 109




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 13. DEBT OBLIGATIONS
  December 31,2010
    
    
    2009BGH:BGH Credit Agreement (1)
    
    $
    
    
    
    
    Services Company:3.60% ESOP Notes due March 28, 2011
    
    
    1,531
    
    
    
    7,790Retirement premium
    
    
    (6
    )
    
    
    (87
    )Buckeye:4.625% Notes due July 15, 2013 (2)
    
    
    300,000
    
    
    
    300,0005.300% Notes due October 15, 2014 (2)
    
    
    275,000
    
    
    
    275,0005.125% Notes due July 1, 2017 (2)
    
    
    125,000
    
    
    
    125,0006.050% Notes due January 15, 2018 (2)
    
    
    300,000
    
    
    
    300,0005.500% Notes due August 15, 2019 (2)
    
    
    275,000
    
    
    
    275,0006.750% Notes due August 15, 2033 (2)
    
    
    150,000
    
    
    
    150,000Credit Facility
    
    
    98,000
    
    
    
    78,000BES Credit Agreement
    
    
    284,300
    
    
    
    239,800Total debt
    
    
    1,808,825
    
    
    
    1,750,503Other, including unamortized discounts and fair value hedges
    
    
    (3,607
    )
    
    
    (4,030
    )Subtotal debt
    
    
    1,805,218
    
    
    
    1,746,473Less: current portion of long-term debt
    
    
    (285,825
    )
    
    
    (245,978
    )Total long-term debt
    
    $
    1,519,393
    
    
    $
    1,500,495
 
 (1)
    
    On November 19, 2010, in conjunction with the Merger, the BGH Credit Agreement was
terminated.(2)
    
    We make semi-annual interest payments on these notes based on the rates noted above
with the principal balances outstanding to be paid on or before the due dates as shown
above.  Years EndingDecember 31,2011
    
    $
    285,8252012
    
    
    98,0002013
    
    
    300,0002014
    
    
    275,0002015
    
    
    Thereafter
    
    
    850,000Total
    
    $
    1,808,825
  Notes Offerings
  110




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Bridge Loans
  BGH
  Services Company ESOP Notes
  111




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Credit Facility
      BES Credit Agreement
  112




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Borrowings
    
    Minimum
    
    Minimum
    
    Maximumoutstanding on
    
    Consolidated Tangible
    
    Consolidated Net
    
    ConsolidatedBES Credit Agreement
    
    Net Worth
    
    Working Capital
    
    Leverage Ratio$150
    
    $
    40
    
    
    $
    30
    
    
    7.0 to 1.0Above $150 up to $200
    
    $
    50
    
    
    $
    40
    
    
    7.0 to 1.0Above $200 up to $250
    
    $
    60
    
    
    $
    50
    
    
    7.0 to 1.0Above $250 up to $300
    
    $
    72
    
    
    $
    60
    
    
    7.0 to 1.0Above $300 up to $350
    
    $
    84
    
    
    $
    70
    
    
    7.0 to 1.0Above $350 up to $400
    
    $
    96
    
    
    $
    80
    
    
    7.0 to 1.0Above $400 up to $450
    
    $
    108
    
    
    $
    90
    
    
    7.0 to 1.0Above $450 up to $500
    
    $
    120
    
    
    $
    100
    
    
    7.0 to 1.0
   113




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 14. OTHER NON-CURRENT LIABILITIES
  December 31,2010
    
    
    2009Accrued employee benefit liabilities (see Note 17)
    
    $
    49,170
    
    
    $
    45,837Accrued environmental liabilities
    
    
    20,346
    
    
    
    19,053Deferred consideration
    
    
    16,415
    
    
    
    18,425Deferred rent
    
    
    13,393
    
    
    
    9,158Uncertain tax position liability (see Note 4)
    
    
    17,720
    
    
    
    Other
    
    
    10,999
    
    
    
    10,469Total other non-current liabilities
    
    $
    128,043
    
    
    $
    102,942
 
 15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  December 31,2010
    
    
    2009Adjustments to funded status of retirement income
guarantee plan and retiree medical plan
    
    $
    (10,323
    )
    
    $
    Amortization of interest rate swap
    
    
    (6,789
    )
    
    
    Derivative instruments
    
    
    3,144
    
    
    
    Accumulated amortization of retirement income guarantee plan and retiree medical plan
    
    
    (7,291
    )
    
    
    Total accumulated other comprehensive loss (1)
    
    $
    (21,259
    )
    
    $
    
 
 (1)
    
    For periods prior to the Merger, amounts related to AOCI were included in noncontrolling
interests. 
 16. DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
   114




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Interest Rate Derivatives
      Commodity Derivatives
  115




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     Volume (1)
    
    AccountingDerivative Purpose
    
    Current
    
    Long-Term
    
    TreatmentDerivatives NOT designated as hedging
instruments:Physical derivative contracts
    
    
    4,444
    
    
    
    
    
    
    Mark-to-marketFutures contracts for refined products
    
    
    21,492
    
    
    
    
    
    
    Mark-to-marketDerivatives designated as hedging instruments:Futures contracts for refined products
    
    
    126,882
    
    
    
    
    
    
    Fair Value HedgeFutures contracts for natural gas (BBtu) (2)
    
    
    210
    
    
    
    
    
    
    Cash Flow Hedge
 
 (1)
    
    Volume represents absolute value of net notional volume position.(2)
    
    BBtu represents one billion British thermal units. 116




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 31, 2010Derivatives
    
    
    Derivatives
    
    
    
    
    
    
    NettingNOT Designated
    
    
    Designated
    
    
    Derivative
    
    
    Balanceas Hedging
    
    
    as Hedging
    
    
    Net Carrying
    
    
    SheetInstruments
    
    
    Instruments
    
    
    Value
    
    
    Adjustment
    
    
    TotalPhysical derivative contracts
    
    $
    1,552
    
    
    $
    
    
    
    $
    1,552
    
    
    $
    (30
    )
    
    $
    1,522Futures contracts for refined
products
    
    
    36,916
    
    
    
    
    
    
    
    36,916
    
    
    
    (36,804
    )
    
    
    112Total current derivative assets
    
    
    38,468
    
    
    
    
    
    
    
    38,468
    
    
    
    (36,834
    )
    
    
    1,634Interest rate contracts
    
    
    
    
    
    
    5,351
    
    
    
    5,351
    
    
    
    (1,459
    )
    
    
    3,892Total long-term derivative
assets
    
    
    
    
    
    
    5,351
    
    
    
    5,351
    
    
    
    (1,459
    )
    
    
    3,892Physical derivative contracts
    
    
    (3,930
    )
    
    
    
    
    
    
    (3,930
    )
    
    
    30
    
    
    
    (3,900
    )Futures contracts for refined
products
    
    
    (21,368
    )
    
    
    (28,071
    )
    
    
    (49,439
    )
    
    
    36,804
    
    
    
    (12,635
    )Futures contract for natural gas
    
    
    
    
    
    
    (206
    )
    
    
    (206
    )
    
    
    
    
    
    
    (206
    )Interest rate contracts
    
    
    
    
    
    
    (2,003
    )
    
    
    (2,003
    )
    
    
    1,459
    
    
    
    (544
    )Total current derivative
liabilities
    
    
    (25,298
    )
    
    
    (30,280
    )
    
    
    (55,578
    )
    
    
    38,293
    
    
    
    (17,285
    )Net derivative
assets/(liabilities)
    
    $
    13,170
    
    
    $
    (24,929
    )
    
    $
    (11,759
    )
    
    $
    
    
    
    $
    (11,759
    )December 31, 2009Derivatives
    
    
    Derivatives
    
    
    
    
    
    
    NettingNOT Designated
    
    
    Designated
    
    
    Derivative
    
    
    Balanceas Hedging
    
    
    as Hedging
    
    
    Net Carrying
    
    
    SheetInstruments
    
    
    Instruments
    
    
    Value
    
    
    Adjustment
    
    
    TotalPhysical derivative contracts
    
    $
    4,959
    
    
    $
    
    
    
    $
    4,959
    
    
    $
    
    
    
    $
    4,959Futures contracts for refined
products
    
    
    7,594
    
    
    
    1,992
    
    
    
    9,586
    
    
    
    (9,586
    )
    
    
    Futures contract for natural gas
    
    
    
    
    
    
    312
    
    
    
    312
    
    
    
    (312
    )
    
    
    Total current derivative assets
    
    
    12,553
    
    
    
    2,304
    
    
    
    14,857
    
    
    
    (9,898
    )
    
    
    4,959Interest rate contracts
    
    
    
    
    
    
    17,204
    
    
    
    17,204
    
    
    
    
    
    
    
    17,204Total long-term derivative
assets
    
    
    
    
    
    
    17,204
    
    
    
    17,204
    
    
    
    
    
    
    
    17,204Physical derivative contracts
    
    
    (3,662
    )
    
    
    
    
    
    
    (3,662
    )
    
    
    
    
    
    
    (3,662
    )Futures contracts for refined
products
    
    
    (384
    )
    
    
    (20,517
    )
    
    
    (20,901
    )
    
    
    9,586
    
    
    
    (11,315
    )Futures contract for natural gas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    312
    
    
    
    312Total current derivative
liabilities
    
    
    (4,046
    )
    
    
    (20,517
    )
    
    
    (24,563
    )
    
    
    9,898
    
    
    
    (14,665
    )Net derivative
assets/(liabilities)
    
    $
    8,507
    
    
    $
    (1,009
    )
    
    $
    7,498
    
    
    $
    
    
    
    $
    7,498
 117




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2010
    
    
    2009Derivative assets
    
    $
    1,634
    
    
    $
    4,959Other non-current assets
    
    
    3,892
    
    
    
    17,204Derivative liabilities
    
    
    (17,285
    )
    
    
    (14,665
    )Total
    
    $
    (11,759
    )
    
    $
    7,498
   Gain (Loss) Recognizedin Income on DerivativesDerivatives NOT designated as
    
    
    
    Year Ended December 31,hedging instruments:
    
    Location
    
    2010
    
    2009Physical derivative contracts
    
    Product sales
    
    $
    3,032
    
    
    $
    (6,881
    )Futures contracts for
    
    Cost of product sales and natural gasrefined products
    
    storage services
    
    
    22,073
    
    
    
    15,653Derivatives designated as
fair value hedging instruments:Futures contracts for
    
    Cost of product sales and natural gasrefined products
    
    storage services
    
    $
    (61,235
    )
    
    $
    (47,012
    )
 118




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Gain (Loss) ReclassifiedFrom AOCI to Income (1)Derivatives designated as
    
    
    
    Year Ended December 31,cash flow hedging instruments:
    
    Location
    
    2010
    
    2009Futures contracts for natural gas
    
    Cost of product sales and natural gasstorage services
    
    $
    (428
    )
    
    $
    (462
    )Futures contracts for refined products
    
    Cost of product sales and natural gasstorage services
    
    
    
    
    
    
    (146
    )Interest rate contracts
    
    Interest and debt expense
    
    
    (964
    )
    
    
    (1,240
    )
 
 (1)
    
    For periods prior to the Merger, amounts related to AOCI were included in noncontrolling
interests. Change in Value Recognizedin OCI on DerivativesDerivatives designated as
    
    Year Ended December 31,cash flow hedging instruments:
    
    2010
    
    2009Futures contracts for natural gas
    
    $
    (929
    )
    
    $
    (164
    )Interest rate contracts
    
    
    (13,856
    )
    
    
    16,999
 Fair Value Measurements
   
    
    Level 1 inputs are based on quoted prices, which are available in active markets for
identical assets or liabilities as of the reporting date. Active markets are defined
as those in which transactions for identical assets or liabilities occur with
sufficient frequency and volume to provide pricing information on an ongoing basis.
 
    
    Level 2 inputs are based on pricing inputs other than quoted prices in active
markets and are either directly or indirectly observable as of the measurement date.
Level 2 fair values include instruments
 119




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 that are valued using financial models or other appropriate valuation methodologies
and include the following:
 
    
    Quoted prices in active markets for similar assets or liabilities.
    
    Quoted prices in markets that are not active for identical or similar assets or
liabilities.
    
    Inputs other than quoted prices that are observable for the asset or liability.
    
    Inputs that are derived primarily from or corroborated by observable market data
by correlation or other means.
 
    
    Level 3 inputs are based on unobservable inputs for the asset or liability.
Unobservable inputs are used to measure fair value to the extent that observable inputs
are not available, thereby allowing for situations in which there is little, if any,
market activity for the asset or liability at the measurement date. Unobservable
inputs reflect the reporting entitys own ideas about the assumptions that market
participants would use in pricing an asset or liability (including assumptions about
risk). Unobservable inputs are based on the best information available in the
circumstances, which might include the reporting entitys internally developed data.
The reporting entity must not ignore information about market participant assumptions
that is reasonably available without undue cost and effort. Level 3 inputs are
typically used in connection with internally developed valuation methodologies where
management makes its best estimate of an instruments fair value.
 Recurring
  December 31,2010
    
    
    2009Significant
    
    
    
    
    
    
    SignificantQuoted Prices
    
    
    Other
    
    
    Quoted Prices
    
    
    Otherin Active
    
    
    Observable
    
    
    in Active
    
    
    ObservableMarkets
    
    
    Inputs
    
    
    Markets
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 1)
    
    
    (Level 2)Financial assets:Physical derivative contracts
    
    $
    
    
    
    $
    1,522
    
    
    $
    
    
    
    $
    4,959Futures contracts for refined
products
    
    
    112
    
    
    
    
    
    
    
    
    
    
    
    Futures contracts for natural gas
    
    
    
    
    
    
    
    
    
    
    312
    
    
    
    Asset held in trust
    
    
    
    
    
    
    
    
    
    
    1,793
    
    
    
    Interest rate derivatives
    
    
    
    
    
    
    3,892
    
    
    
    
    
    
    
    17,204Financial liabilities:Physical derivative contracts
    
    
    
    
    
    
    (3,900
    )
    
    
    
    
    
    
    (3,662
    )Futures contracts for refined
products
    
    
    (12,635
    )
    
    
    
    
    
    
    (11,315
    )
    
    
    Futures contracts for natural gas
    
    
    (206
    )
    
    
    
    
    
    
    
    
    
    
    Interest rate derivatives
    
    
    
    
    
    
    (544
    )
    
    
    
    
    
    
    Fair value
    
    $
    (12,729
    )
    
    $
    970
    
    
    $
    (9,210
    )
    
    $
    18,501
  120




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Non-Recurring
  December 31,
    
    
    
    
    

    
    
    
    
    Total2009
    
    Level 1
    
    Level 2
    
    Level 3
    
    LossesAssets held for sale (1)
    
    
    $22,000
    
    
    
    $22,000
    
    

    $ 

    

    $ 

    

    $59,724
 
 (1)
    
    Represents inventory and plant, property and equipment included in assets held for sale at
December 31, 2009 (see Note 4).  
 17. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
 RIGP and Retiree Medical Plan
    121




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    RIGP
    
    
    Retiree Medical PlanYear Ended December 31,
    
    
    Year Ended December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    19,103
    
    
    $
    27,134
    
    
    $
    35,449
    
    
    $
    34,877Service cost
    
    
    263
    
    
    
    495
    
    
    
    295
    
    
    
    339Interest cost
    
    
    906
    
    
    
    1,182
    
    
    
    1,982
    
    
    
    1,941Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    295Part D reimbursement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    245Actuarial loss (gain)
    
    
    1,281
    
    
    
    4,399
    
    
    
    4,490
    
    
    
    (964
    )Curtailments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,091Settlements
    
    
    
    
    
    
    (13,977
    )
    
    
    
    
    
    
    Benefit payments
    
    
    (3,594
    )
    
    
    (130
    )
    
    
    (2,778
    )
    
    
    (2,375
    )Benefit obligation at end of year
    
    $
    17,959
    
    
    $
    19,103
    
    
    $
    39,835
    
    
    $
    35,449Change in plan assets:Fair value of plan assets at beginning
of year
    
    $
    5,427
    
    
    $
    10,433
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    244
    
    
    
    (358
    )
    
    
    
    
    
    
    Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    295Part D reimbursement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    245Employer contribution
    
    
    2,730
    
    
    
    9,459
    
    
    
    2,381
    
    
    
    1,835Settlements
    
    
    
    
    
    
    (13,977
    )
    
    
    
    
    
    
    Benefits paid
    
    
    (3,594
    )
    
    
    (130
    )
    
    
    (2,778
    )
    
    
    (2,375
    )Fair value of plan assets at end of year
    
    $
    4,807
    
    
    $
    5,427
    
    
    $
    
    
    
    $
    Funded status at end of year
    
    $
    (13,152
    )
    
    $
    (13,676
    )
    
    $
    (39,835
    )
    
    $
    (35,449
    )
 122




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  RIGP
    
    
    Retiree Medical PlanDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Liabilities:Accrued employee benefit liabilities  current
    
    $
    
    
    
    $
    
    
    
    $
    3,817
    
    
    $
    3,287Accrued employee benefit liabilities 
noncurrent
    
    $
    13,152
    
    
    $
    13,676
    
    
    $
    36,018
    
    
    $
    32,162AOCI:(1)Net actuarial loss
    
    $
    9,829
    
    
    $
    9,416
    
    
    $
    15,103
    
    
    $
    11,508Prior service credit
    
    
    
    
    
    
    (46
    )
    
    
    (7,318
    )
    
    
    (10,283
    )Total
    
    $
    9,829
    
    
    $
    9,370
    
    
    $
    7,785
    
    
    $
    1,225
 
 (1)
    
    For periods prior to the Merger, amounts related to AOCI were included in noncontrolling
interests.  RIGPDecember 31,2010
    
    2009Projected benefit obligation
    
    $
    17,959
    
    
    $
    19,103Accumulated benefit obligation
    
    
    11,119
    
    
    
    13,156Fair value of plan assets
    
    
    4,807
    
    
    
    5,427
  RIGP
    
    Retiree Medical PlanYear Ended December 31,
    
    Year Ended December 31,2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008Weighted average expense assumptions:Discount rate
    
    
    5.3
    %
    
    
    5.5
    %
    
    
    5.5
    %
    
    
    5.8
    %
    
    
    5.8
    %
    
    
    5.8
    %Expected return on plan assets
    
    
    6.0
    %
    
    
    7.5
    %
    
    
    8.5
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  RIGP
    
    Retiree Medical PlanDecember 31,
    
    December 31,2010
    
    2009
    
    2010
    
    2009Weighted average balance sheet
assumptions:Discount rate
    
    
    4.7
    %
    
    
    5.5
    %
    
    
    5.8
    %
    
    
    5.8
    %Rate of compensation increase
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    N/A
    
    
    
    N/A
 123




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    1%
    
    1%Increase
    
    (Decrease)Effect on total service cost and interest
cost components
    
    $
    121
    
    
    $
    (107
    )Effect on postretirement benefit obligation
    
    
    1,585
    
    
    
    (1,419
    )
  RIGP
    
    
    Retiree Medical PlanYear Ended December 31,
    
    
    Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Components of net periodic benefit
cost:Service cost
    
    $
    263
    
    
    $
    495
    
    
    $
    723
    
    
    $
    294
    
    
    $
    339
    
    
    $
    382Interest cost
    
    
    907
    
    
    
    1,182
    
    
    
    1,018
    
    
    
    1,982
    
    
    
    1,941
    
    
    
    1,947Expected return on plan assets
    
    
    (344
    )
    
    
    (570
    )
    
    
    (1,030
    )
    
    
    
    
    
    
    
    
    
    
    Recognized gain due to curtailments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (749
    )
    
    
    Amortization of prior service cost
benefit
    
    
    (46
    )
    
    
    (485
    )
    
    
    (454
    )
    
    
    (2,964
    )
    
    
    (3,240
    )
    
    
    (3,438
    )Actuarial loss due to settlements
    
    
    
    
    
    
    7,280
    
    
    
    1,371
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unrecognized losses
    
    
    967
    
    
    
    1,069
    
    
    
    296
    
    
    
    894
    
    
    
    1,016
    
    
    
    1,023Net periodic benefit costs
    
    $
    1,747
    
    
    $
    8,971
    
    
    $
    1,924
    
    
    $
    206
    
    
    $
    (693
    )
    
    $
    (86
    )Other changes in plan assets and
benefit
obligations recognized in OCI:Net actuarial loss (gain)
    
    $
    1,380
    
    
    $
    5,328
    
    
    $
    9,517
    
    
    $
    4,490
    
    
    $
    875
    
    
    
    (2,669
    )Amortization of net actuarial gain
    
    
    (967
    )
    
    
    (1,069
    )
    
    
    (296
    )
    
    
    (894
    )
    
    
    (1,016
    )
    
    
    (1,023
    )Actuarial loss due to settlements
    
    
    
    
    
    
    (7,280
    )
    
    
    (1,371
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    46
    
    
    
    485
    
    
    
    454
    
    
    
    2,964
    
    
    
    3,240
    
    
    
    3,438Total recognized in OCI
    
    $
    459
    
    
    $
    (2,536
    )
    
    $
    8,304
    
    
    $
    6,560
    
    
    $
    3,099
    
    
    $
    (254
    )Total recognized in net period benefit
cost and OCI
    
    $
    2,206
    
    
    $
    6,435
    
    
    $
    10,228
    
    
    $
    6,766
    
    
    $
    2,406
    
    
    $
    (340
    )
 124




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  RetireeMedicalRIGP
    
    PlanAmortization of unrecognized losses
    
    $
    1,080
    
    
    $
    1,151Amortization of prior service cost benefit
    
    
    
    
    
    
    (2,964
    )
  RetireeMedicalRIGP
    
    Plan2011
    
    $
    2,198
    
    
    $
    3,9132012
    
    
    1,568
    
    
    
    3,0232013
    
    
    1,405
    
    
    
    3,1112014
    
    
    1,415
    
    
    
    3,1292015
    
    
    1,667
    
    
    
    3,185Thereafter
    
    
    8,680
    
    
    
    15,000
   December 31,2010
    
    
    2009Quoted Prices
    
    
    
    
    
    
    Quoted Pricesin Active
    
    
    Unobservable
    
    
    in Active
    
    
    UnobservableMarkets
    
    
    Inputs
    
    
    Markets
    
    
    Inputs(Level 1)
    
    
    (Level 3)
    
    
    (Level 1)
    
    
    (Level 3)Mutual fund  equity securities (1)
    
    $
    609
    
    
    $
    
    
    
    $
    1,701
    
    
    $
    Mutual fund  money market
    
    
    760
    
    
    
    
    
    
    
    162
    
    
    
    Coal lease (2)
    
    
    
    
    
    
    3,438
    
    
    
    
    
    
    
    3,564Fair value of plan assets
    
    $
    1,369
    
    
    $
    3,438
    
    
    $
    1,863
    
    
    $
    3,564
 
 (1)
    
    This mutual fund generally seeks long-term growth of capital and income and invests in
a diversified portfolio consisting of approximately 80% in equities and the remainder in
income-providing securities, such as preferred stocks, high-grade bonds or money market
securities.(2)
    
    This value was determined using an expected present value of future cash flows
valuation model. This plan asset relates to a 20.8% interest in a coal lease, which
derives value from specified minimum royalty payments received from CONSOL Energy Inc.
related to coal reserves mined from two Pennsylvania mines owned by the lessor. The coal
lease extends through 2023. 125




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year EndedDecember 31,2010
    
    
    2009Beginning balance, January 1
    
    $
    3,564
    
    
    $
    4,365Lease payments received
    
    
    392
    
    
    
    381Unrealized loss
    
    
    (126
    )
    
    
    (801
    )Transfers out of Level 3
    
    
    (392
    )
    
    
    (381
    )Ending balance, December 31
    
    $
    3,438
    
    
    $
    3,564
  Retirement and Savings Plan
    
 18. UNIT-BASED COMPENSATION PLANS
   126




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Management Units
    BGH GPs Override Units
     127




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Number of Override UnitsTotal NumberOperating
    
    of UnitsValue A Units
    
    Value B Units
    
    Units
    
    AwardedUnvested at January 1, 2009
    
    
    1,763
    
    
    
    1,763
    
    
    
    1,245
    
    
    
    4,771Granted in 2009
    
    
    212
    
    
    
    212
    
    
    
    212
    
    
    
    636Vested in 2009
    
    
    
    
    
    
    
    
    
    
    (422
    )
    
    
    (422
    )Forfeited in 2009
    
    
    (276
    )
    
    
    (276
    )
    
    
    (223
    )
    
    
    (775
    )Unvested at December 31, 2009
    
    
    1,699
    
    
    
    1,699
    
    
    
    812
    
    
    
    4,210Vested in 2010 (1)
    
    
    (1,699
    )
    
    
    
    
    
    
    (812
    )
    
    
    (2,511
    )Unvested at December 31, 2010
    
    
    
    
    
    
    1,699
    
    
    
    
    
    
    
    1,699
 Value A
    
    Value B
    
    Operating2009 Weighted average fair
value per unit granted
    
    $
    2.33
    
    
    $
    1.60
    
    
    $
    3.342008 Weighted average fair
value per unit granted
    
    
    2.11
    
    
    
    1.43
    
    
    
    2.98
 
 (1)
    
    On December 31, 2010, all outstanding unvested Value A Units and Operating Units vested
immediately. Vested override units were then exchanged for LP Units. Value B Units
remained outstanding.  128




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended December 31,2009
    
    2008Current equity value (in millions)
    
    $
    439.06
    
    
    $
    439.02Expected life in years
    
    
    3.4
    
    
    
    4.8Risk-free interest rate
    
    
    1.8
    %
    
    
    3.0
    %Volatility
    
    
    0.45
    
    
    
    0.35
 LTIP
     129




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Awards under the LTIP
    WeightedAverageGrant DateNumber of
    
    
    Fair ValueLP Units
    
    
    per LP Unit (1)
    
    
    Total ValueUnvested at January 1, 2010
    
    
    140,095
    
    
    $
    39.81
    
    
    $
    5,577Granted
    
    
    259,336
    
    
    
    56.26
    
    
    
    14,590Vested
    
    
    (18,642
    )
    
    
    39.20
    
    
    
    (731
    )Forfeited
    
    
    (15,876
    )
    
    
    49.50
    
    
    
    (786
    )Unvested at December 31, 2010
    
    
    364,913
    
    
    $
    51.11
    
    
    $
    18,650
 
 (1)
    
    Determined by dividing the aggregate grant date fair value of awards by the number of awards
issued. The weighted-average grant date fair value per LP Unit for forfeited and vested
awards is determined before an allowance for forfeitures.  Unit Option and Distribution Equivalent Plan
   130




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     Year EndedDecember 31, 2008Expected dividend yield
    
    
    6.3
    %Expected unit price volatility
    
    
    16.0
    %Risk-Free interest rate
    
    
    2.7
    %Expected life (in years)
    
    
    4.8Weighted-average fair value at grant date
    
    $
    2.89
   Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber of
    
    
    Strike Price
    
    
    Contractual
    
    
    IntrinsicLP Units
    
    
    ($/LP Unit)
    
    
    Term (in years)
    
    
    Value (1)Outstanding at January 1, 2010
    
    
    349,400
    
    
    $
    46.25Exercised
    
    
    (107,900
    )
    
    
    44.41Forfeited, cancelled or expired
    
    
    300
    
    
    
    58.96Outstanding at December 31, 2010
    
    
    241,800
    
    
    
    47.04
    
    
    
    5.8
    
    
    $
    4,785Exercisable at December 31, 2010
    
    
    142,000
    
    
    $
    45.97
    
    
    
    4.8
    
    
    $
    2,962
 
 (1)
    
    Aggregate intrinsic value reflects fully vested LP Unit options at the date indicated.
Intrinsic value is determined by calculating the difference between our closing LP Unit price
on the last trading day in 2010 and the exercise price, multiplied by the number of
exercisable, in-the-money options. 131




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 19. EMPLOYEE STOCK OWNERSHIP PLAN
   
 20. RELATED PARTY TRANSACTIONS
      132




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   
 21. PARTNERS CAPITAL AND DISTRIBUTIONS
  Summary of Changes in Outstanding Units
  General
    
    
    Limited
    
    
    ManagementPartner
    
    
    Partners
    
    
    Units
    
    
    Total (1)Units outstanding on January 1, 2008
    
    
    2,830
    
    
    
    27,766,817
    
    
    
    530,353
    
    
    
    28,300,000Issuance of common units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Units outstanding at December 31, 2008
    
    
    2,830
    
    
    
    27,766,817
    
    
    
    530,353
    
    
    
    28,300,000Conversion of management units to common units
    
    
    
    
    
    
    4,396
    
    
    
    (4,396
    )
    
    
    Units outstanding at December 31, 2009
    
    
    2,830
    
    
    
    27,771,213
    
    
    
    525,957
    
    
    
    28,300,000Cancellation of BGH units in connection with
Merger (2)
    
    
    (2,830
    )
    
    
    (27,771,213
    )
    
    
    (525,957
    )
    
    
    (28,300,000
    )Buckeye LP Units issued to BGH unitholders (2)
    
    
    
    
    
    
    19,951,498
    
    
    
    
    
    
    
    19,951,498Buckeye LP Units outstanding on date of Merger
    
    
    
    
    
    
    51,556,716
    
    
    
    
    
    
    
    51,556,716Cancellation of LP Units in connection with
Merger (3)
    
    
    
    
    
    
    (80,000
    )
    
    
    
    
    
    
    (80,000
    )LP Units issued pursuant to the LTIP
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    85LP Units issued pursuant to the Option Plan
    
    
    
    
    
    
    7,800
    
    
    
    
    
    
    
    7,800Units outstanding at December 31, 2010
    
    
    
    
    
    
    71,436,099
    
    
    
    
    
    
    
    71,436,099
 
 (1)
    
    Amounts presented through the date of the Merger represent historical BGH units
outstanding.(2)
    
    On November 19, 2010, in connection with the Merger, BGH units outstanding were
converted into LP Units at a ratio of 0.705 to 1.0. Buckeye issued approximately 20.0
million LP Units to BGHs unitholders. On November 19, 2010, Buckeye had approximately
51.6 million LP Units outstanding.(3)
    
    In connection with the Merger, 80,000 LP Units held by BGH were cancelled. 133




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Cash Distributions
  Amount
    
    
    Limited
    
    
    General
    
    
    Total CashRecord Date
    
    Payment Date
    
    Per LP Unit
    
    
    Partners
    
    
    Partner (1)
    
    
    DistributionsFebruary 5, 2008
    
    February 29, 2008
    
    $
    0.8375
    
    
    $
    38,289
    
    
    $
    9,130
    
    
    $
    47,419May 9, 2008
    
    May 30, 2008
    
    
    0.8500
    
    
    
    41,113
    
    
    
    9,939
    
    
    
    51,052August 8, 2008
    
    August 29, 2008
    
    
    0.8625
    
    
    
    41,721
    
    
    
    10,200
    
    
    
    51,921November 7, 2008
    
    November 28, 2008
    
    
    0.8750
    
    
    
    42,326
    
    
    
    10,461
    
    
    
    52,787Total
    
    
    
    
    
    
    
    $
    163,449
    
    
    $
    39,730
    
    
    $
    203,179February 12, 2009
    
    February 27, 2009
    
    $
    0.8875
    
    
    $
    42,930
    
    
    $
    10,721
    
    
    $
    53,651May 11, 2009
    
    May 29, 2009
    
    
    0.9000
    
    
    
    46,227
    
    
    
    11,686
    
    
    
    57,913August 7, 2009
    
    August 31, 2009
    
    
    0.9125
    
    
    
    46,877
    
    
    
    11,965
    
    
    
    58,842November 12, 2009
    
    November 30, 2009
    
    
    0.9250
    
    
    
    47,719
    
    
    
    12,251
    
    
    
    59,970Total
    
    
    
    
    
    
    
    $
    183,753
    
    
    $
    46,623
    
    
    $
    230,376February 16, 2010
    
    February 26, 2010
    
    $
    0.9375
    
    
    $
    48,425
    
    
    $
    12,543
    
    
    $
    60,968May 17, 2010
    
    May 28, 2010
    
    
    0.9500
    
    
    
    49,048
    
    
    
    12,835
    
    
    
    61,883August 16, 2010
    
    August 31, 2010
    
    
    0.9625
    
    
    
    49,778
    
    
    
    13,121
    
    
    
    62,899November 15, 2010
    
    November 30, 2010
    
    
    0.9750
    
    
    
    50,432
    
    
    
    13,402
    
    
    
    63,834Total
    
    
    
    
    
    
    
    $
    197,683
    
    
    $
    51,901
    
    
    $
    249,584
 
 (1)
    
    Includes amounts paid to our general partner for its incentive distribution rights.  Amount Per
    
    
    Total CashRecord Date
    
    Payment Date
    
    unit
    
    
    DistributionsFebruary 5, 2008
    
    February 29, 2008
    
    $
    0.285
    
    
    $
    8,066May 9, 2008
    
    May 30, 2008
    
    
    0.300
    
    
    
    8,490August 8, 2008
    
    August 29, 2008
    
    
    0.310
    
    
    
    8,773November 7, 2008
    
    November 28, 2008
    
    
    0.320
    
    
    
    9,056Total
    
    
    
    
    
    
    
    $
    34,385February 12, 2009
    
    February 27, 2009
    
    $
    0.330
    
    
    $
    9,339May 11, 2009
    
    May 29, 2009
    
    
    0.350
    
    
    
    9,905August 7, 2009
    
    August 31, 2009
    
    
    0.370
    
    
    
    10,472November 12, 2009
    
    November 30, 2009
    
    
    0.390
    
    
    
    11,036Total
    
    
    
    
    
    
    
    $
    40,752February 16, 2010
    
    February 26, 2010
    
    $
    0.410
    
    
    $
    11,603May 17, 2010
    
    May 28, 2010
    
    
    0.430
    
    
    
    12,169August 16, 2010
    
    August 31, 2010
    
    
    0.450
    
    
    
    12,735November 15, 2010
    
    November 30, 2010
    
    
    0.470
    
    
    
    13,301Total
    
    
    
    
    
    
    
    $
    49,808
 134




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 22. EARNINGS PER LIMITED PARTNER UNIT
    Year Ended December 31,2010
    
    
    2009
    
    
    2008Net income attributable to Buckeye Partners, L.P.
    
    $
    43,080
    
    
    $
    49,594
    
    
    $
    26,477Basic:Weighted average LP Units outstanding
    
    
    25,627
    
    
    
    19,578
    
    
    
    19,578Weighted average management units outstanding
    
    
    389
    
    
    
    374
    
    
    
    374Weighted average LP Units outstanding  basic
    
    
    26,016
    
    
    
    19,952
    
    
    
    19,952Earnings per LP Unit  basic
    
    $
    1.66
    
    
    $
    2.49
    
    
    $
    1.33Diluted:Weighted average LP Units outstanding  basic
    
    
    26,016
    
    
    
    19,952
    
    
    
    19,952Dilutive effect of LP Unit options and LTIP awards
granted
    
    
    70
    
    
    
    
    
    
    
    Weighted average LP Units outstanding  diluted
    
    
    26,086
    
    
    
    19,952
    
    
    
    19,952Earnings per LP Unit  diluted
    
    $
    1.65
    
    
    $
    2.49
    
    
    $
    1.33
 
 23. BUSINESS SEGMENTS
  Pipeline Operations
  135




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Terminalling & Storage
  Natural Gas Storage
  Energy Services
  Development & Logistics
  Adjusted EBITDA
   136




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     Year Ended December 31,2010
    
    
    2009
    
    
    2008Revenue:Pipeline Operations
    
    $
    400,926
    
    
    $
    392,667
    
    
    $
    387,267Terminalling & Storage
    
    
    175,000
    
    
    
    136,576
    
    
    
    119,155Natural Gas Storage
    
    
    95,337
    
    
    
    99,163
    
    
    
    61,791Energy Services
    
    
    2,481,566
    
    
    
    1,125,013
    
    
    
    1,295,925Development & Logistics
    
    
    37,696
    
    
    
    34,136
    
    
    
    43,498Intersegment
    
    
    (39,257
    )
    
    
    (17,183
    )
    
    
    (10,984
    )Total revenue
    
    $
    3,151,268
    
    
    $
    1,770,372
    
    
    $
    1,896,652Operating income (loss):Pipeline Operations
    
    $
    171,595
    
    
    $
    93,957
    
    
    $
    149,349Terminalling & Storage
    
    
    89,933
    
    
    
    61,084
    
    
    
    52,133Natural Gas Storage
    
    
    16,069
    
    
    
    30,574
    
    
    
    32,235Energy Services
    
    
    (1,367
    )
    
    
    13,086
    
    
    
    5,905Development & Logistics
    
    
    3,271
    
    
    
    5,099
    
    
    
    6,870Total operating income
    
    $
    279,501
    
    
    $
    203,800
    
    
    $
    246,492Depreciation and amortization:Pipeline Operations
    
    $
    36,799
    
    
    $
    35,533
    
    
    $
    35,188Terminalling & Storage
    
    
    9,521
    
    
    
    7,258
    
    
    
    6,051Natural Gas Storage
    
    
    6,594
    
    
    
    5,971
    
    
    
    4,599Energy Services
    
    
    4,933
    
    
    
    4,204
    
    
    
    3,386Development & Logistics
    
    
    1,743
    
    
    
    1,733
    
    
    
    1,610Total depreciation and amortization
    
    $
    59,590
    
    
    $
    54,699
    
    
    $
    50,834
 137




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Adjusted EBITDA:Pipeline Operations
    
    $
    235,405
    
    
    $
    229,576
    
    
    $
    193,940Terminalling & Storage
    
    
    106,387
    
    
    
    72,588
    
    
    
    59,850Natural Gas Storage
    
    
    29,794
    
    
    
    41,950
    
    
    
    41,814Energy Services
    
    
    5,861
    
    
    
    19,335
    
    
    
    9,443Development & Logistics
    
    
    5,193
    
    
    
    6,718
    
    
    
    8,528Total Adjusted EBITDA
    
    $
    382,640
    
    
    $
    370,167
    
    
    $
    313,575GAAP Reconciliation:Net income
    
    $
    201,008
    
    
    $
    141,637
    
    
    $
    180,623Less: net income attributable to noncontrolling
interests
    
    
    (157,928
    )
    
    
    (92,043
    )
    
    
    (154,146
    )Net income attributable to Buckeye Partners, L.P.
    
    
    43,080
    
    
    
    49,594
    
    
    
    26,477Interest and debt expense
    
    
    89,169
    
    
    
    75,147
    
    
    
    75,410Income tax (benefit) expense
    
    
    (919
    )
    
    
    (343
    )
    
    
    801Depreciation and amortization
    
    
    59,590
    
    
    
    54,699
    
    
    
    50,834EBITDA
    
    
    190,920
    
    
    
    179,097
    
    
    
    153,522Net income attributable to noncontrolling interests
affected by Merger (for periods prior to Merger) (1)
    
    
    157,467
    
    
    
    90,381
    
    
    
    153,546Non-cash deferred lease expense
    
    
    4,235
    
    
    
    4,500
    
    
    
    4,598Non-cash unit-based compensation expense
    
    
    8,960
    
    
    
    4,408
    
    
    
    1,909Equity plan modification expense
    
    
    21,058
    
    
    
    
    
    
    
    Asset impairment expense
    
    
    
    
    
    
    59,724
    
    
    
    Reorganization expense
    
    
    
    
    
    
    32,057
    
    
    
    Adjusted EBITDA
    
    $
    382,640
    
    
    $
    370,167
    
    
    $
    313,575
 
 (1)
    
    Amounts represent portions of BGHs noncontrolling interests related to Buckeye that
were eliminated as a result of the Merger. Amounts are added back for the portion of 2010
prior to the Merger, and the 2009 and 2008 periods to provide consistency with the 2010
period. 138




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Capital additions, net:(1)Pipeline Operations
    
    $
    46,036
    
    
    $
    34,461
    
    
    $
    40,469Terminalling & Storage
    
    
    19,491
    
    
    
    22,463
    
    
    
    28,680Natural Gas Storage
    
    
    8,328
    
    
    
    23,033
    
    
    
    47,257Energy Services
    
    
    2,961
    
    
    
    6,236
    
    
    
    4,185Development & Logistics
    
    
    883
    
    
    
    1,116
    
    
    
    (119
    )Total capital additions, net
    
    $
    77,699
    
    
    $
    87,309
    
    
    $
    120,472Total Assets:Pipeline Operations (2)
    
    $
    1,752,920
    
    
    $
    1,592,916
    
    
    $
    1,630,050Terminalling & Storage
    
    
    636,095
    
    
    
    532,971
    
    
    
    473,806Natural Gas Storage
    
    
    549,876
    
    
    
    573,261
    
    
    
    503,278Energy Services
    
    
    561,382
    
    
    
    482,025
    
    
    
    333,967Development & Logistics
    
    
    73,943
    
    
    
    74,476
    
    
    
    93,309Consolidating level (3)
    
    
    
    
    
    
    230,922
    
    
    
    228,687Total assets
    
    $
    3,574,216
    
    
    $
    3,486,571
    
    
    $
    3,263,097Goodwill:Pipeline Operations
    
    $
    198,632
    
    
    $
    198,632
    
    
    $
    198,632Terminalling & Storage (4)
    
    
    49,618
    
    
    
    49,618
    
    
    
    51,386Natural Gas Storage
    
    
    169,560
    
    
    
    169,560
    
    
    
    169,560Energy Services
    
    
    1,132
    
    
    
    1,132
    
    
    
    1,132Development & Logistics
    
    
    13,182
    
    
    
    13,182
    
    
    
    13,182Total goodwill
    
    $
    432,124
    
    
    $
    432,124
    
    
    $
    433,892
 
 (1)
    
    Amounts exclude $0.4 million, ($3.3) million and $2.0 million of non-cash changes in
accruals for capital expenditures for the years ended December 31, 2010, 2009 and 2008,
respectively (see Note 24).(2)
    
    All equity investments are included in the assets of the Pipeline Operations segment.(3)
    
    In connection with the Merger, consolidating level assets were allocated to our
business segments.(4)
    
    Goodwill decreased by $1.8 million as of December 31, 2009 from December 31, 2008, due
to the finalization of the purchase price allocation relating to the acquisition of a
terminal in Albany, New York in 2008; this $1.8 million was allocated to property, plant
and equipment. 
 24. SUPPLEMENTAL CASH FLOW INFORMATION
  Year Ended December 31,2010
    
    2009
    
    2008Cash paid for interest (net of capitalized interest)
    
    $
    83,852
    
    
    $
    66,264
    
    
    $
    63,647Cash paid for income taxes
    
    
    941
    
    
    
    2,316
    
    
    
    1,063Capitalized interest
    
    
    2,499
    
    
    
    3,401
    
    
    
    2,355Non-cash changes in assets and liabilities:Change in capital expenditures in accounts payable
    
    $
    421
    
    
    $
    (3,296
    )
    
    $
    1,957Environmental liability assumed in acquisition
    
    
    100
    
    
    
    1,480
    
    
    
    5,644
 139




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 25. QUARTERLY FINANCIAL DATA (UNAUDITED)
  First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Total2010Revenue
    
    $
    731,174
    
    
    $
    667,276
    
    
    $
    734,857
    
    
    $
    1,017,961
    
    
    $
    3,151,268Operating income (1)
    
    
    69,491
    
    
    
    71,939
    
    
    
    79,513
    
    
    
    58,558
    
    
    
    279,501Net income (1)
    
    
    50,642
    
    
    
    53,438
    
    
    
    60,962
    
    
    
    35,966
    
    
    
    201,008Net income attributable
to Buckeye Partners, L.P. (1)
    
    
    11,270
    
    
    
    11,507
    
    
    
    11,941
    
    
    
    8,362
    
    
    
    43,080Earnings per LP unit  basic (2)
    
    $
    0.56
    
    
    $
    0.58
    
    
    $
    0.60
    
    
    $
    0.19
    
    
    $
    1.66Earnings per LP unit  diluted (2)
    
    $
    0.56
    
    
    $
    0.58
    
    
    $
    0.60
    
    
    $
    0.19
    
    
    $
    1.652009Revenue
    
    $
    416,840
    
    
    $
    351,220
    
    
    $
    423,444
    
    
    $
    578,868
    
    
    $
    1,770,372Operating income (loss) (3)
    
    
    68,865
    
    
    
    (35,432
    )
    
    
    74,889
    
    
    
    95,478
    
    
    
    203,800Net income (loss) (3)
    
    
    53,696
    
    
    
    (48,384
    )
    
    
    58,370
    
    
    
    77,955
    
    
    
    141,637Net income attributable
to Buckeye Partners, L.P. (3)
    
    
    10,149
    
    
    
    9,772
    
    
    
    11,095
    
    
    
    18,578
    
    
    
    49,594Earnings per LP unit  basic and
diluted (2)
    
    $
    0.51
    
    
    $
    0.49
    
    
    $
    0.56
    
    
    $
    0.93
    
    
    $
    2.49
 
 (1)
    
    The fourth quarter of 2010 includes $21.1 million of non-cash compensation expense
related to the modification of an equity compensation plan (see Note 18).(2)
    
    Historical per unit amounts have been restated for the reverse unit split. Pursuant to
the Merger, BGHs unitholders received a total of approximately 20.0 million of Buckeyes
LP Units in the aggregate in exchange for all outstanding BGH common units and management
units. As a result, the number of Buckeyes LP Units outstanding increased from 51.6
million to 71.4 million. However, for historical reporting purposes, the impact of this
change was accounted for as a reverse split of BGHs units of 0.705 to 1.0, together with
the addition of Buckeyes existing LP Units. Therefore, since BGH was the surviving
accounting entity, the weighted average number of LP Units outstanding used for basic and
diluted earnings per LP Unit calculations are BGHs historical weighted average common
units outstanding adjusted for the reverse unit split and the addition of Buckeyes
existing LP Units. The sum of the per LP Unit amounts per quarter does not equal the
amount presented for the year ended December 31, 2010 due to the effect of the Merger on
the weighted average units outstanding calculation.(3)
    
    The second quarter of 2009 includes an impairment charge of $72.5 million related to
assets held for sale and reorganization expenses of $28.1 million. The fourth quarter of
2009 includes a reversal of $12.8 million of the previously recognized impairment charge.
See Notes 8 and 3, respectively. 
 26. SUBSEQUENT EVENTS
 BORCO Acquisition
  140




---



##### Table of Contents



BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     141




---



##### Table of Contents



Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
         
 Item 9B.
    
    Other Information
  
 PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
  
 Item 11.
    
    Executive Compensation
  142




---



##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Unitholder
Matters
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accounting Fees and Services
  
 PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
  (1)
    
    Financial Statements  see Index to Consolidated Financial Statements.(2)
    
    Financial Statement Schedules  None.(3)
    
    Exhibits, including those incorporated by reference. The following is a list of
exhibits filed as part of this Report.
 ExhibitNumber
    
    Description2.1
    
    
    Purchase and Sale Agreement, dated as of July 24, 2007, by and between
Lodi Holdings, L.L.C., as seller, and Buckeye Gas Storage LLC, as
buyer (Incorporated by reference to Exhibit 10.1 of Buckeye Partners,
L.P.s Current Report on Form 8-K filed on July 24, 2007).2.2
    
    
    Amendment No. 1 to the Purchase and Sale Agreement, dated as of
October 31, 2007, by and between Lodi Holdings, L.L.C. and Buckeye Gas
Storage LLC (Incorporated by reference to Exhibit 2.2 of Buckeye
Partners, L.P.s Current Report on Form 8-K filed on January 18,
2008).2.3
    
    
    Amendment No. 2 to the Purchase and Sale Agreement, dated as of
November 13, 2007, by and between Lodi Holdings, L.L.C. and Buckeye
Gas Storage LLC (Incorporated by reference to Exhibit 2.3 of Buckeye
Partners, L.P.s Current Report on Form 8-K filed on January 18,
2008).2.4
    
    
    Purchase Agreement, dated as of December 21, 2007, by and among Farm &
Home Oil Company, Richard A. Longacre, as sellers representative and
Buckeye Energy Holdings LLC (Incorporated by reference to Exhibit 10.1
of Buckeye Partners, L.P.s Current Report on Form 8-K filed on
December 21, 2007).2.5
    
    
    First Amended and Restated Agreement and Plan of Merger, dated August
18, 2010, by and among Buckeye Partners, L.P., Buckeye GP LLC, Buckeye
GP Holdings L.P., MainLine Management LLC and Grand Ohio, LLC
(Incorporated by reference to Annex A to Buckeye Partners, L.P.s
Registration Statement on Form S-4/A filed on August 19, 2010).
 143




---



##### Table of Contents



2.6
    
    
    First Amendment to First Amended and Restated Agreement and Plan
of Merger, dated October 29, 2010, by and among Buckeye Partners,
L.P., Buckeye GP LLC, Buckeye GP Holdings L.P., MainLine
Management LLC and Grand Ohio, LLC (Incorporated by reference to
Exhibit 2.1 of Buckeye Partners, L.P.s Current Report on Form 8-K
filed on November 3, 2010).2.7
    
    
    Sale and Purchase Agreement by and among FR XI Offshore AIV, L.P.,
FR Borco GP Ltd., and Buckeye Atlantic Holdings LLC of FR Borco
L.P. dated as of December 18, 2010 (Incorporated by reference to
Exhibit 2.1 of Buckeye Partners, L.P.s Current Report on Form 8-K
filed on December 21, 2010). 2.8
    
    
    Sale and Purchase Agreement by and among Vopak Bahamas B.V.,
Koninklijke Vopak N.V. and Buckeye Atlantic Holdings LLC dated as
of February 15, 2011 (Incorporated by reference to Exhibit 2.1 of
Buckeye Partners, L.P.s Current Report on Form 8-K filed on
February 22, 2011). 3.1
    
    
    Amended and Restated Certificate of Limited Partnership of Buckeye
Partners, L.P., dated as of February 4, 1998 (Incorporated by
reference to Exhibit 3.2 of Buckeye Partners, L.P.s Annual Report
on Form 10-K for the year ended December 31, 1997).3.2
    
    
    Certificate of Amendment to Amended and Restated Certificate of
Limited Partnership of Buckeye Partners, L.P., dated as of April
26, 2002 (Incorporated by reference to Exhibit 3.2 of Buckeye
Partners, L.P.s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2002).3.3
    
    
    Certificate of Amendment to Amended and Restated Certificate of
Limited Partnership of Buckeye Partners, L.P., dated as of June 1,
2004, effective as of June 3, 2004 (Incorporated by reference to
Exhibit 3.3 of the Buckeye Partners, L.P.s Registration Statement
on Form S-3 filed June 16, 2004).3.4
    
    
    Certificate of Amendment to Amended and Restated Certificate of
Limited Partnership of Buckeye Partners, L.P., dated as of
December 15, 2004 (Incorporated by reference to Exhibit 3.5 of
Buckeye Partners, L.P.s Annual Report on Form 10-K for the year
ended December 31, 2004).3.5
    
    
    Amended and Restated Agreement of Limited Partnership of Buckeye
Partners, L.P., dated as of November 19, 2010 (Incorporated by
reference to Exhibit 3.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed November 22, 2010).3.6
    
    
    Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of Buckeye Partners, L.P., dated as of January 18,
2011 (Incorporated by reference to Exhibit 3.1 of Buckeye
Partners, L.P.s Current Report on Form 8-K filed on January 20,
2011).4.1
    
    
    Indenture dated as of July 10, 2003, between Buckeye Partners,
L.P. and SunTrust Bank, as Trustee (Incorporated by reference to
Exhibit 4.1 of Buckeye Partners, L.P.s Registration Statement on
Form S-4 filed September 19, 2003).4.2
    
    
    First Supplemental Indenture dated as of July 10, 2003, between
Buckeye Partners, L.P. and SunTrust Bank, as Trustee (Incorporated
by reference to Exhibit 4.2 of Buckeye Partners, L.P.s
Registration Statement on Form S-4 filed September 19, 2003).4.3
    
    
    Second Supplemental Indenture dated as of August 19, 2003, between
Buckeye Partners, L.P. and SunTrust Bank, as Trustee (Incorporated
by reference to Exhibit 4.3 of Buckeye Partners, L.P.s
Registration Statement on Form S-4 filed September 19, 2003).4.4
    
    
    Third Supplemental Indenture dated as of October 12, 2004, between
Buckeye Partners, L.P. and SunTrust Bank, as Trustee (Incorporated
by reference to Exhibit 4.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on October 14, 2004).4.5
    
    
    Fourth Supplemental Indenture dated as of June 30, 2005, between
Buckeye Partners, L.P. and SunTrust Bank, as Trustee (Incorporated
by reference to Exhibit 4.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on June 30, 2005).4.6
    
    
    Fifth Supplemental Indenture dated as of January 11, 2008, between
Buckeye Partners, L.P. and U.S. Bank National Association
(successor to SunTrust Bank), as Trustee (Incorporated by
reference to Exhibit 4.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on January 11, 2008).
 144




---



##### Table of Contents



4.7
    
    
    Sixth Supplemental Indenture dated as of August 18, 2009, between
Buckeye Partners, L.P. and U.S. Bank National Association
(successor-in-interest to SunTrust Bank), as Trustee (Incorporated
by reference to Exhibit 4.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on August 24, 2009).4.8
    
    
    Seventh Supplemental Indenture dated as of January 13, 2011,
between Buckeye Partners, L.P. and U.S. Bank National Association
(successor-in-interest to SunTrust Bank), as Trustee (Incorporated
by reference to Exhibit 4.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on January 20, 2011).4.9
    
    
    Registration Rights Agreement, by and among Buckeye Partners,
L.P., BGH GP Holdings, LLC, ArcLight Energy Partners Fund III,
L.P., ArcLight Energy Partners Fund IV, L.P., Kelso Investment
Associates VIII, L.P. and KEP VI, LLC (Incorporated by reference
to Exhibit 10.2 of Buckeye Partners, L.P.s Current Report on Form
8-K filed on June 11, 2010).4.10
    
    
    Registration Rights Agreement by and among Buckeye Partners, L.P.,
FR XI Offshore AIV, L.P. and the other investors named therein,
dated as of December 18, 2010 (Incorporated by reference to
Exhibit 10.4 of Buckeye Partners, L.P.s Current Report on Form
8-K filed on December 21, 2010).4.11
    
    
    Registration Rights Agreement by and among Buckeye Partners, L.P.
and the investors named therein, dated as of December 18, 2010
(Incorporated by reference to Exhibit 10.5 of Buckeye Partners,
L.P.s Current Report on Form 8-K filed on December 21, 2010).4.12
    
    
    Registration Rights Agreement by and between Buckeye Partners,
L.P. and Vopak Bahamas B.V. dated as of February 15, 2011
(Incorporated by reference to Exhibit 10.2 of Buckeye Partners,
L.P.s Current Report on Form 8-K filed on February 22, 2011).10.1
    
    
    Second Amended and Restated Agreement of Limited Partnership of
Buckeye GP Holdings L.P., dated as of November 19, 2010
(Incorporated by reference to Exhibit 10.1 of Buckeye Partners,
L.P.s Current Report on Form 8-K filed on November 22, 2010).10.2
    
    
    Services Agreement dated as of December 15, 2004, among Buckeye
Partners, L.P., the Operating Subsidiaries and Services Company
(Incorporated by reference to Exhibit 10.3 of Buckeye Partners,
L.P.s Current Report on Form 8-K dated December 20, 2004).10.3
    
    
    First Amendment to Services Agreement, dated as of October 15,
2008, among Buckeye Partners, L.P., Buckeye Pipe Line Services
Company, and the subsidiary partnerships and limited liability
companies of Buckeye set forth on the signature pages thereto
(Incorporated by reference to Exhibit 10.2 of Buckeye Partners,
L.P.s Current Report on Form 8-K dated October 16, 2008).10.4
    
    
    Fifth Amended and Restated Exchange Agreement, dated as of October
15, 2008, among Buckeye GP Holdings L.P., Buckeye GP LLC, Buckeye
Partners, L.P., MainLine L.P., Buckeye Pipe Line Company, L.P.,
Laurel Pipe Line Company, L.P., Everglades Pipe Line Company,
L.P., and Buckeye Pipe Line Holdings, L.P. (Incorporated by
reference to Exhibit 10.6 of Buckeye Partners, L.P.s Annual
Report on Form 10-K for the year ended December 31, 2008).*10.5
    
    
    Severance Agreement, dated as of November 10, 2008, by and among
Buckeye Partners, L.P., Buckeye GP Holdings L.P., Buckeye Pipe
Line Services Company, and Keith E. St.Clair (Incorporated by
reference to Exhibit 10.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on November 10, 2008).*10.6
    
    
    Severance Agreement, dated as of February 17, 2009, by and among
Buckeye Partners, L.P., Buckeye Pipe Line Services Company, and
Clark C. Smith (Incorporated by reference to Exhibit 10.1 of
Buckeye Partners, L.P.s Current Report on Form 8-K filed on
February 17, 2009).*10.7
    
    
    Amended and Restated Unit Option and Distribution Equivalent Plan
of Buckeye Partners, L.P., dated as of April 1, 2005 (Incorporated
by reference to Exhibit 10.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on April 4, 2005).*10.8
    
    
    Buckeye Partners, L.P. 2009 Long-Term Incentive Plan, as amended
(Incorporated by reference to Exhibit 10.1 of Buckeye Partners,
L.P.s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2009).
 145




---



##### Table of Contents



*10.9
    
    
    Buckeye Partners, L.P. Annual Incentive Compensation Plan, as
amended and restated, effective as of January 1, 2010
(Incorporated by reference to Exhibit 10.13 of Buckeye Partners,
L.P.s Annual Report on Form 10-K for the year ended December 31,
2009).*10.10
    
    
    Buckeye Partners, L.P. Annual Incentive Compensation Plan, as
Amended and Restated, effective as of May 6, 2010 (Incorporated by
reference to Exhibit 10.15 of Buckeye Partners, L.P.s
Registration Statement on Form S-4 filed on July 14, 2010).*10.11
    
    
    Buckeye Partners, L.P. Annual Incentive Compensation Plan, as
Amended and Restated, effective as of January 1, 2011
(Incorporated by reference to Exhibit 10.1 of Buckeye Partners,
L.P.s Current Report on Form 8-K filed on January 19, 2011).*10.12
    
    
    Deferral Unit and Incentive Plan (Incorporated by reference to
Exhibit 10.1 of Buckeye Partners, L.P.s Current Report on Form
8-K filed on December 17, 2009).10.13
    
    
    Credit Agreement, dated November 13, 2006, among Buckeye Partners,
L.P., as borrower, SunTrust Bank, as administrative agent, and the
lenders signatory thereto (Incorporated by reference to Exhibit
10.1 of Buckeye Partners, L.P.s Current Report on Form 8-K filed
on November 16, 2006).10.14
    
    
    First Amendment to Credit Agreement, dated as of May 18, 2007, by
and among Buckeye Partners, L.P., as borrower, SunTrust Bank, as
administrative agent, and the lenders signatory thereto
(Incorporated by reference to Exhibit 10.1 of Buckeye Partners,
L.P.s Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2007).10.15
    
    
    Second Amendment to Credit Agreement, dated August 24, 2007, among
Buckeye Partners, L.P., SunTrust Bank, as administrative agent,
and the lenders signatory thereto (Incorporated by reference to
Exhibit 10.1 of Buckeye Partners, L.P.s Form Current Report on
8-K filed on August 28, 2007).10.16
    
    
    Third Amendment to Credit Agreement, dated January 23, 2008, among
Buckeye Partners, L.P., SunTrust Bank, as administrative agent,
and the lenders signatory thereto (Incorporated by reference to
Exhibit 10.1 of Buckeye Partners, L.P.s Current Report on Form
8-K filed on January 28, 2008).10.17
    
    
    Fourth Amendment to Credit Agreement, dated August 21, 2009, among
Buckeye Partners, L.P., SunTrust Bank, as administrative agent,
and the lenders signatory thereto (Incorporated by reference to
Exhibit 10.2 of Buckeye Partners, L.P.s Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2009).10.18
    
    
    Fifth Amendment to Credit Agreement, dated May 28, 2010 among Buckeye Partners, L.P., SunTrust Bank, as
administrative agent, and the lenders signatory thereto (Incorporated by reference to Exhibit 10.18 of Buckeye
Partners, L.P.s Annual Report on Form 10-K for the year ended December 31, 2010).10.19
    
    
    Sixth Amendment to Credit Agreement, dated September 29, 2010,
among Buckeye Partners, L.P., SunTrust Bank, as administrative
agent, and the lenders signatory thereto (Incorporated by
reference to Exhibit 10.1 of Buckeye Partners, L.P.s Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2010).10.20
    
    
    Seventh Amendment to Credit Agreement, dated December 13, 2010, among Buckeye Partners, L.P., SunTrust
Bank, as administrative agent, and the lenders signatory thereto (Incorporated by reference to Exhibit 10.20 of
Buckeye Partners, L.P.s Annual Report on Form 10-K for the year ended December 31, 2010).10.21
    
    
    Eighth Amendment of Credit Agreement, dated December 18, 2010,
among Buckeye Partners, L.P., its subsidiaries, SunTrust Bank, as
administrative agent, and the lenders signatory thereto
(Incorporated by reference to Exhibit 10.6 of Buckeye Partners,
L.P.s Current Report on Form 8-K filed on December 21, 2010).10.22
    
    
    Credit Agreement, dated as of May 20, 2008, by and among Farm &
Home Oil Company LLC, Buckeye Energy Services LLC, BNP Paribas and
other lenders party thereto (Incorporated by reference to Exhibit
10.1 of Buckeye Partners, L.P.s Current Report on Form 8-K filed
on May 23, 2008).10.23
    
    
    First Amendment, dated as of July 18, 2008, to the Credit
Agreement, dated as of May 20, 2008, among Farm & Home Oil Company
LLC, Buckeye Energy Services LLC, BNP Paribas and other lenders
party thereto (Incorporated by reference to Exhibit 10.1 of
Buckeye Partners, L.P.s Current Report on Form 8-K filed on July
22, 2008).
 146




---



##### Table of Contents



10.24
    
    
    Second Amendment and Increase Agreement, dated as of September 15, 2008, to
the Credit Agreement, dated as of May 20, 2008, among Farm & Home Oil Company
LLC, Buckeye Energy Services LLC, BNP Paribas and other lenders party thereto
(Incorporated by reference to Exhibit 10.20 of Buckeye Partners, L.P.s Annual
Report on Form 10-K for the year ended December 31, 2008).10.25
    
    
    Third Increase Agreement and Waiver, dated as of August 12, 2009, to the
Credit Agreement, dated as of May 20, 2008, among Buckeye Energy Services LLC,
BNP Paribas and other lenders party thereto (Incorporated by reference to
Exhibit 10.1 of Buckeye Partners, L.P.s Current Report on Form 8-K filed on
August 14, 2009).10.26
    
    
    Amended and Restated Credit Agreement, dated as of June 25, 2010, among
Buckeye Energy Services LLC, BNP Paribas and other lenders party thereto
(Incorporated by reference to Exhibit 10.1 of Buckeye Partners, L.P.s Current
Report on Form 8-K filed on July 1, 2010).10.27
    
    
    Support Agreement, by and among Buckeye Partners, L.P., BGH GP Holdings, LLC,
ArcLight Energy Partners Fund III, L.P., ArcLight Energy Partners Fund IV,
L.P., Kelso Investment Associates VIII, L.P. and KEP VI, LLC (Incorporated by
reference to Exhibit 10.1 of Buckeye Partners, L.P.s Current Report on Form
8-K filed on June 11, 2010).10.28
    
    
    Unit Purchase Agreement by and between Buckeye Partners, L.P. and FR XI
Offshore AIV, L.P. dated as of December 18, 2010 (Incorporated by reference to
Exhibit 10.1 of Buckeye Partners, L.P.s Current Report on Form 8-K filed on
December 21, 2010).10.29
    
    
    LP Unit Purchase Agreement by and among Buckeye Partners, L.P. and purchasers
named therein dated as of December 18, 2010 (Incorporated by reference to
Exhibit 10.2 of Buckeye Partners, L.P.s Current Report on Form 8-K filed on
December 21, 2010).10.30
    
    
    Class B Unit Purchase Agreement by and among Buckeye Partners, L.P. and
purchasers named therein dated as of December 18, 2010 (Incorporated by
reference to Exhibit 10.3 of Buckeye Partners, L.P.s Current Report on Form
8-K filed on December 21, 2010).10.31
    
    
    Unit Purchase Agreement by and between Buckeye Partners, L.P. and Vopak
Bahamas B.V. dated as of February 15, 2011 (Incorporated by reference to
Exhibit 10.1 of Buckeye Partners, L.P.s Current Report of Form 8-K filed on
February 22, 2011).10.32
    
    
    Transition Support Agreement by and among Buckeye Atlantic Holdings LLC, Vopak
Bahamas B.V., FR Borco Topco L.P., FR Borco Coop Holdings, L.P., FR Borco Coop
Holdings GP Limited, Bahamas Oil Refining Company International Limited and
Vopak Koninklijke N.V. dated as of February 15, 2011 (Incorporated by
reference to Exhibit 10.1 of Buckeye Partners, L.P.s Current Report of Form
8-K filed on February 22, 2011).12.1
    
    
    Computation of Ratio of Earnings to Fixed Charges (Incorporated by reference to Exhibit 12.1 of Buckeye Partners,
L.P.s Annual Report on Form 10-K for the year ended December 31, 2010).21.1
    
    
    List of Subsidiaries of Buckeye Partners, L.P. (Incorporated by reference to Exhibit 21.1 of Buckeye Partners, L.P.s
Annual Report on Form 10-K for the year ended December 31, 2010).**23.1
    
    
    Consent of Deloitte & Touche LLP.**31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the
Securities Exchange Act of 1934.**31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.**32.1
    
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.**32.2
    
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 147




---



##### Table of Contents



*
    
    Represents management contract or compensatory plan or arrangement.**
    
    Filed herewith.
    
    Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Buckeye agrees to
furnish supplementally a copy of the omitted schedules to the SEC upon request.(a)     Exhibits  See Item 15(a)(3) above. 148




---



##### Table of Contents



Buckeye Partners, L.P.
 Dated: April 12, 2011
    By:
    /s/ Forrest E. WylieForrest E. WylieChief Executive Officer
(Principal Executive Officer) 
 
 149