DOE's $5.89M Northeast Home Heating Oil Reserve contract awarded to Buckeye Terminals for 3 years
Contract Overview
Contract Amount: $5,886,000 ($5.9M)
Contractor: Buckeye Terminals, LLC
Awarding Agency: Department of Energy
Start Date: 2024-03-29
End Date: 2027-03-31
Contract Duration: 1,097 days
Daily Burn Rate: $5.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR) STORAGE OF 300,000 BARRELS IN ULSD PORT READING, NJ &/OR PERTH AMBOY, NJ
Place of Performance
Location: HASBROUCK HEIGHTS, BERGEN County, NEW JERSEY, 07604
Plain-Language Summary
Department of Energy obligated $5.9 million to BUCKEYE TERMINALS, LLC for work described as: THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR) STORAGE OF 300,000 BARRELS IN ULSD PORT READING, NJ &/OR PERTH AMBOY, NJ Key points: 1. Contract value represents a significant investment in regional energy security. 2. Full and open competition suggests a potentially competitive pricing environment. 3. Fixed-price contract type offers cost certainty for the government. 4. Contract duration of three years allows for sustained operational readiness. 5. The award to a single entity may warrant scrutiny of market concentration. 6. Geographic focus on New Jersey highlights regional energy vulnerability.
Value Assessment
Rating: good
The contract value of $5.89 million for 300,000 barrels of storage over three years appears reasonable when benchmarked against typical commercial storage rates. While specific per-barrel costs are not provided, the firm fixed-price structure suggests the Department of Energy has negotiated a predictable cost for this critical reserve. Compared to ad-hoc emergency procurements, this contract offers better value through planned capacity and established provider relationships.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of four bids suggests a healthy level of interest and competition for this service. This competitive process is expected to have driven prices towards market rates and ensured the government secured a capable provider.
Taxpayer Impact: Taxpayers benefit from a competitive process that likely resulted in a more favorable price for securing this essential energy reserve compared to a sole-source or limited competition award.
Public Impact
Northeastern residents, particularly in New Jersey, benefit from enhanced energy security during winter months. The contract ensures the availability of 300,000 barrels of ultra-low sulfur diesel (ULSD) for emergency use. Geographic impact is concentrated in the Northeast, specifically New Jersey, addressing regional energy supply chain vulnerabilities. The contract supports the warehousing and storage sector, potentially creating or sustaining jobs in that industry.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price increases in future contract renewals if competition diminishes.
- Reliance on a single contractor for a critical national security asset.
- Geographic concentration of the reserve may not fully address broader regional supply disruptions.
Positive Signals
- Proactive measure to ensure energy security in a vulnerable region.
- Firm fixed-price contract provides budget certainty.
- Full and open competition suggests a fair market price was achieved.
Sector Analysis
The contract falls within the warehousing and storage sector, specifically supporting energy infrastructure. The market for large-scale fuel storage is dominated by specialized terminal operators. This contract represents a strategic government investment to ensure supply chain resilience for a critical commodity, complementing commercial storage capacity by providing a dedicated reserve.
Small Business Impact
The contract was awarded to Buckeye Terminals, LLC, a large commercial entity, and there is no indication of a small business set-aside. While the primary contract may not directly benefit small businesses, the prime contractor may engage small businesses for subcontracting opportunities related to logistics, maintenance, or support services, though this is not explicitly detailed.
Oversight & Accountability
The Department of Energy is responsible for the oversight of this contract. As a firm fixed-price definitive contract, the terms are clearly defined. Transparency is facilitated by the public nature of contract awards. Further oversight would typically involve performance reviews and audits by the agency to ensure compliance with storage requirements and operational readiness.
Related Government Programs
- Strategic Petroleum Reserve
- Northeast Home Heating Oil Reserve
- Energy Infrastructure Security
- Fuel Storage Contracts
Risk Flags
- Geographic Concentration Risk
- Contractor Performance Risk
- Physical Asset Risk
- Market Volatility Risk
Tags
energy, storage, fuel-reserve, department-of-energy, buckeye-terminals, new-jersey, firm-fixed-price, full-and-open-competition, definitive-contract, national-security, supply-chain-resilience
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $5.9 million to BUCKEYE TERMINALS, LLC. THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR) STORAGE OF 300,000 BARRELS IN ULSD PORT READING, NJ &/OR PERTH AMBOY, NJ
Who is the contractor on this award?
The obligated recipient is BUCKEYE TERMINALS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $5.9 million.
What is the period of performance?
Start: 2024-03-29. End: 2027-03-31.
What is Buckeye Terminals, LLC's track record with government contracts, particularly related to energy storage?
Buckeye Terminals, LLC has a significant history of operating large-scale liquid petroleum product terminals across the United States. While specific details on their past government contracts are not readily available in the provided data, their extensive commercial experience in storing and handling various fuel types, including ULSD, suggests a strong operational capability. Government agencies often leverage established commercial expertise for critical infrastructure needs. Further investigation into federal procurement databases (like SAM.gov or FPDS) would be necessary to ascertain the full scope and performance history of their prior government engagements, including any related to strategic reserves or emergency preparedness.
How does the cost per barrel for this reserve compare to commercial storage rates or other government reserves?
The provided data does not include a specific per-barrel cost, only the total contract value ($5.89 million) for 300,000 barrels over three years. To benchmark this, we can calculate an approximate annual cost: $5.89M / 3 years = ~$1.96M per year. This equates to roughly $6.53 per barrel per year, or about $0.018 per barrel per day. Commercial storage rates for fuel can vary significantly based on location, volume, duration, and services included. However, this calculated rate appears competitive, especially considering the strategic nature and dedicated capacity for emergency use. For comparison, the Strategic Petroleum Reserve (SPR) has different cost structures due to its scale and operational complexity, but this NEHHOR contract seems to represent a reasonable investment for its specific purpose and region.
What are the primary risks associated with maintaining the Northeast Home Heating Oil Reserve through this contract?
The primary risks include potential physical risks to the storage facility (e.g., leaks, natural disasters), operational risks (e.g., failure to maintain fuel quality, inability to quickly deploy fuel during an emergency), and market risks (e.g., significant price volatility that could impact the cost of replenishing the reserve). There's also a counterparty risk associated with the contractor, Buckeye Terminals, LLC, ensuring their continued financial stability and operational competence throughout the contract term. Furthermore, the geographic concentration in New Jersey, while addressing a specific regional need, means the reserve could be vulnerable to localized disruptions affecting both the facility and the surrounding distribution network.
How effective is this contract likely to be in ensuring energy security for the Northeast during a supply disruption?
This contract is likely to be highly effective in its stated goal of ensuring energy security for the Northeast, specifically concerning home heating oil (ULSD), during a supply disruption. By securing 300,000 barrels of dedicated storage capacity through a multi-year agreement with a reputable operator under a firm fixed-price structure, the Department of Energy has established a tangible buffer against short-term supply shortages. The full and open competition suggests a cost-effective approach to achieving this readiness. Its effectiveness hinges on the seamless integration with regional distribution plans and the ability to rapidly access and deploy the stored fuel when needed, mitigating the impact of potential disruptions like pipeline outages or refinery issues.
What are the historical spending patterns for the Northeast Home Heating Oil Reserve or similar initiatives?
Historical spending data specifically for the Northeast Home Heating Oil Reserve (NEHHOR) is not detailed in the provided information. However, the concept of maintaining strategic fuel reserves is not new for the federal government, exemplified by the much larger Strategic Petroleum Reserve (SPR). The SPR's budget fluctuates annually based on market conditions, storage needs, and administration priorities, often involving billions of dollars over its operational history. Contracts for maintaining and operating such reserves typically involve significant sums for storage capacity, logistics, and maintenance. This $5.89 million contract for NEHHOR appears to be a targeted, regional investment consistent with the government's broader strategy of ensuring energy supply chain resilience.
Industry Classification
NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage
Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: 89243524RCR000014
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Buckeye Terminals LLC
Address: 4200 WESTHEIMER RD, HOUSTON, TX, 77027
Business Categories: Category Business, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations
Financial Breakdown
Contract Ceiling: $7,956,000
Exercised Options: $5,886,000
Current Obligation: $5,886,000
Actual Outlays: $3,543,000
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2024-03-29
Current End Date: 2027-03-31
Potential End Date: 2028-03-31 00:00:00
Last Modified: 2026-03-27
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