Tennessee Unveils New Fuel Terminal

The U.S. fuel distribution network will soon increase its storage capacity thanks to a new Tennessee terminal. This week a BP and Buckeye partnership opened its fuel terminal in the heart of Tennessee, less than two hours from Memphis and less than an hour from Nashville. The $60 million facility will have the capacity for roughly 100 truckloads per day of diesel and gasoline of all grades.

The Tennessee supply point should benefit both rack gasoline and diesel loadings in the surrounding markets, which have previously experienced tightness. Traditional Nashville supply comes from Gulf Coast refiners via the Colonial Pipeline, with some ability for terminals to accept fuel via barges along the Cumberland River. The new facility will be fed by Chicago refiners some 400 miles away, who process cheaper Canadian crude. OPIS noted recently that Chicago fuel prices are around 4 cents cheaper for gasoline and 13 cents cheaper for diesel compared to Gulf Coast prices.

Over the last few years, gasoline demand in Tennessee has increased dramatically. Nashville is one of the most flourishing metropolitan areas in the U.S. The Tennessee market is expected to see even more growth from major retailers as they continue their expansion plans across the state.

At the ribbon-cutting ceremony, both BP and Buckeye leadership commented on several items worth sharing:

• The vision of this project started over 10 years ago
• There were zero injuries during the construction, which at its highest peak had over 400 individuals on-site.
• Construction of this facility used over 70% local Tennessee labor.

Like many new fuel projects, the terminal faced “NIMBY” (Not in My BackYard) objections from locals, who highlighted concerns of increased traffic and potential safety issues. Similar challenges have blocked construction projections of terminals, pipelines, and refiners in the past. For example, the US has not built a large refinery since 1977, despite significantly higher fuel demand over the past 45 years. This new fuel terminal is a win for the fuel industry and will help lower fuel costs and supply risk in a growing market.