Exhibit 99.3

Item 8.		Financial Statements and Supplementary Data

		Page
Management’s Report On Internal Control Over Financial Reporting			78
Reports of Independent Registered Public Accounting Firm			79
Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007			81
Consolidated Balance Sheets as of December 31, 2009 and 2008			82
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007			83
Consolidated Statements of Partners’ Capital for the Years Ended December 31, 2009, 2008 and 2007			84
Notes to Consolidated Financial Statements:
1. Organization			85
2. Summary of Significant Accounting Policies			86
3. Reorganization			95
4. Acquisitions and Dispositions			95
5. Commitments and Contingencies			100
6. Inventories			102
7. Prepaid and Other Current Assets			103
8. Property, Plant and Equipment			103
9. Equity Investments			104
10. Goodwill and Intangible Assets			106
11. Other Non-Current Assets			107
12. Accrued and Other Current Liabilities			107
13. Debt Obligations			108
14. Other Non-Current Liabilities			111
15. Derivative Instruments, Hedging Activities and Fair Value Measurements			111
16. Pensions and Other Postretirement Benefits			117
17. Unit-Based Compensation Plans			122
18. Employee Stock Ownership Plan			127
19. Related Party Transactions			127
20. Cash Distributions			128
21. Earnings Per Partnership Unit			128
22. Business Segments			129
23. Supplemental Cash Flow Information			132
24. Quarterly Financial Data (Unaudited)			132

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     Management of MainLine Management LLC (“MainLine Management”), as general partner of Buckeye GP Holdings L.P. (“BGH”), is responsible for establishing and maintaining adequate internal control over financial reporting of BGH. Internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A company’s internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     Management evaluated MainLine Management’s internal control over financial reporting of BGH as of December 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (“COSO”). As a result of this assessment and based on the criteria in the COSO framework, management has concluded that, as of December 31, 2009, MainLine Management’s internal control over financial reporting of BGH was effective.

     BGH’s independent registered public accounting firm, Deloitte & Touche LLP, has audited MainLine Management’s internal control over financial reporting of BGH. Their opinion on the effectiveness of MainLine Management’s internal control over financial reporting of BGH appears herein.

/s/ FORREST E. WYLIE		/s/ KEITH E. ST.CLAIR
Forrest E. Wylie		Keith E. St.Clair
Chief Executive Officer		Chief Financial Officer

March 2, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Buckeye GP Holdings L.P.

We have audited the internal control over financial reporting of Buckeye GP Holdings L.P. and subsidiaries (“BGH”) as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. BGH’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on BGH’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, BGH maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2009 of BGH and our report dated March 2, 2010 expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding BGH’s change in its method of accounting for noncontrolling interests in 2009.

/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
March 2, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Buckeye GP Holdings L.P.

We have audited the accompanying consolidated balance sheets of Buckeye GP Holdings L.P. and subsidiaries (“BGH”) as of December 31, 2009 and 2008, and the related consolidated statements of operations, cash flows, and partners’ capital for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of BGH’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BGH and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, BGH changed its method of accounting for noncontrolling interests in 2009.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), BGH’s internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2010 expressed an unqualified opinion on BGH’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
March 2, 2010

BUCKEYE GP HOLDINGS L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit amounts)

		Year Ended December 31,
		2009				2008				2007
Revenues:
Product sales		$	1,125,653			$	1,304,097			$	10,680
Transportation and other services			644,719				592,555				508,667
Total revenue			1,770,372				1,896,652				519,347
Costs and expenses:
Cost of product sales and natural gas storage services			1,103,015				1,274,135				10,473
Operating expenses			275,930				281,965				245,271
Depreciation and amortization			54,699				50,834				40,236
Asset impairment expense			59,724				—				—
General and administrative			41,147				43,226				28,014
Reorganization expense			32,057				—				—
Total costs and expenses			1,566,572				1,650,160				323,994
Operating income			203,800				246,492				195,353
Other income (expense):
Investment income			453				1,553				1,490
Interest and debt expense			(75,147	)			(75,410	)			(51,721	)
Total other expense			(74,694	)			(73,857	)			(50,231	)
Income before earnings from equity investments			129,106				172,635				145,122
Earnings from equity investments			12,531				7,988				7,553
Net income			141,637				180,623				152,675
Less: net income attributable to noncontrolling interest			(92,043	)			(154,146	)			(129,754	)
Net income attributable to Buckeye GP Holdings L.P.		$	49,594			$	26,477			$	22,921
Earnings per partnership unit:
Basic		$	1.75			$	0.94			$	0.81
Diluted		$	1.75			$	0.94			$	0.81
Weighted average number of common units outstanding:
Basic			28,300				28,300				28,142
Diluted			28,300				28,300				28,300

See Notes to Consolidated Financial Statements.

BUCKEYE GP HOLDINGS L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands, except unit amounts)

		December 31,
		2009				2008
Assets:
Current assets:
Cash and cash equivalents		$	37,574			$	61,281
Trade receivables, net			124,165				79,969
Construction and pipeline relocation receivables			14,095				21,501
Inventories			310,214				84,229
Derivative assets			4,959				97,375
Assets held for sale			22,000				—
Prepaid and other current assets			104,251				75,406
Total current assets			617,258				419,761
Property, plant and equipment, net			2,238,321				2,241,612
Equity investments			96,851				90,110
Goodwill			432,124				433,892
Intangible assets, net			45,157				44,114
Other non-current assets			56,860				33,608
Total assets		$	3,486,571			$	3,263,097
Liabilities and partners’ capital:
Current liabilities:
Line of credit		$	239,800			$	96,000
Current portion of long-term debt			6,178				6,294
Accounts payable			56,723				42,098
Derivative liabilities			14,665				48,623
Accrued and other current liabilities			113,474				116,464
Total current liabilities			430,840				309,479
Long-term debt			1,500,495				1,453,425
Other non-current liabilities			102,942				101,359
Total liabilities			2,034,277				1,864,263
Commitments and contingent liabilities			—				—
Partners’ capital:
Buckeye GP Holdings L.P. capital:
General Partner (2,830 common units outstanding as of December 31, 2009 and 2008)			7				7
Limited Partners (27,771,213 and 27,766,817 common units outstanding as of December 31, 2009 and 2008, respectively)			236,545				226,565
Management (525,957 and 530,353 units outstanding as of December 31, 2009 and 2008, respectively)			3,225				3,037
Equity gains on issuance of Buckeye Partners, L.P. limited partner units			2,557				2,451
Total Buckeye GP Holdings L.P. capital			242,334				232,060
Noncontrolling interests			1,209,960				1,166,774
Total partners’ capital			1,452,294				1,398,834
Total liabilities and partners’ capital		$	3,486,571			$	3,263,097

See Notes to Consolidated Financial Statements.

BUCKEYE GP HOLDINGS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Year Ended December 31,
		2009				2008				2007
Cash flows from operating activities:
Net income		$	141,637			$	180,623			$	152,675
Adjustments to reconcile net income
to net cash provided by operating activities:
Value of ESOP shares released			1,641				2,202				4,470
Depreciation and amortization			54,699				50,834				40,236
Asset impairment expense			59,724				—				—
Gain on the sale of assets			—				—				(828	)
Net changes in fair value of derivatives			20,531				(24,228	)			—
Non-cash deferred lease expense			4,500				4,598				—
Earnings from equity investments of Buckeye Partners, L.P.			(12,531	)			(7,988	)			(7,553	)
Distributions from equity investments of Buckeye Partners, L.P.			9,660				5,113				7,418
Amortization of other non-cash items			8,257				4,643				2,197
Change in assets and liabilities, net of amounts related to acquisitions:
Trade receivables			(44,112	)			36,060				3,432
Construction and pipeline relocation receivables			7,406				(8,930	)			(382	)
Inventories			(177,309	)			(4,362	)			(863	)
Prepaid and other current assets			(28,937	)			(27,823	)			1,467
Accounts payable			14,569				(10,647	)			(6,282	)
Accrued and other current liabilities			(1,296	)			9,336				733
Other non-current assets			(9,916	)			9,520				1,999
Other non-current liabilities			(861	)			(10,394	)			(6,983	)
Total adjustments from operating activities			(93,975	)			27,934				39,061
Net cash provided by operating activities			47,662				208,557				191,736
Cash flows from investing activities:
Capital expenditures			(87,309	)			(120,472	)			(67,867	)
Acquisitions and equity investments, net of cash acquired			(58,313	)			(667,523	)			(40,726	)
Net proceeds (expenditures) for disposal of property, plant and equipment			1,419				(365	)			(12	)
Proceeds from the sale of Farm & Home retail operations			—				52,584				—
Net cash used in investing activities			(144,203	)			(735,776	)			(108,605	)
Cash flows from financing activities:
Net proceeds from issuance of Buckeye Partners, L.P. limited partner units			104,632				113,111				296,361
Proceeds from exercise of Buckeye Partners, L.P. unit options			3,204				316				2,497
Issuance of long-term debt			273,210				298,050				—
Repayment of long term-debt			(6,294	)			(6,289	)			(6,037	)
Borrowings under credit facilities			317,120				558,554				157,500
Repayments under credit facilities			(537,387	)			(260,288	)			(302,499	)
Net borrowings (repayments) under BES credit agreement			143,800				(4,000	)			—
Debt issuance costs			(4,691	)			(2,111	)			(178	)
Distributions paid to noncontrolling partners of Buckeye Partners, L.P.			(180,008	)			(159,306	)			(128,775	)
Settlement payment of interest rate swaps			—				(9,638	)			—
Distributions paid to partners			(40,752	)			(34,385	)			(27,734	)
Net cash provided by (used in) financing activities			72,834				494,014				(8,865	)
Net increase (decrease) in cash and cash equivalents			(23,707	)			(33,205	)			74,266
Cash and cash equivalents — Beginning of year			61,281				94,486				20,220
Cash and cash equivalents — End of year		$	37,574			$	61,281			$	94,486

See Notes to Consolidated Financial Statements.

BUCKEYE GP HOLDINGS L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(In thousands)

		Buckeye GP Holdings L.P. Unitholders
														Equity Gains
		General				Limited								on Issuance
		Partner				Partner								of Buckeye’s
		Common				Common				Management				Limited				Noncontrolling
		Units				Units				Units				Partner Units				Interests				Total
Partners’ capital — January 1, 2007		$	7			$	232,202			$	6,926			$	1,482			$	772,525			$	1,013,142
Net income*			—				22,921				—				—				129,754				152,675
Distributions paid to partners			—				(27,734	)			—				—				—				(27,734	)
Recognition of value of Management Units			—				—				1,179				—				—				1,179
Conversion of Management Units			—				4,949				(4,949	)			—				—				—
Recognition of unit-based compensation charges			—				590				—				—				—				590
Equity gains on issuance of Buckeye LP Units			—				—				—				757				(757	)			—
Net proceeds from issuance of 6.2 million of Buckeye’s limited partner units																			296,361				296,361
Amortization of Buckeye’s limited partner unit options			—				—				—				—				378				378
Exercise of limited partner unit options			—				—				—				—				2,497				2,497
Services Company’s non-cash ESOP distributions			—				—				—				—				(5,015	)			(5,015	)
Distributions paid to noncontrolling interests			—				—				—				—				(128,775	)			(128,775	)
Other			—				—				—				—				(825	)			(825	)
Partners’ capital — December 31, 2007			7				232,928				3,156				2,239				1,066,143				1,304,473
Net income*			—				25,981				496				—				154,146				180,623
Distributions paid to partners			—				(33,741	)			(644	)			—				—				(34,385	)
Recognition of unit-based compensation charges			—				1,397				29				—				—				1,426
Equity gains on issuance of Buckeye LP Units			—				—				—				212				(212	)			—
Net proceeds from issuance of 2.6 million of Buckeye’s limited partner units			—				—				—				—				113,111				113,111
Amortization of Buckeye’s limited partner unit options			—				—				—				—				486				486
Exercise of limited partner unit options			—				—				—				—				316				316
Services 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				1,398,834
Net income*			—				48,668				926				—				92,043				141,637
Distributions paid to partners			—				(39,990	)			(762	)			—				—				(40,752	)
Recognition of unit-based compensation charges			—				1,302				24				—				—				1,326
Equity gains on issuance of Buckeye LP Units			—				—				—				106				(106	)			—
Net proceeds from issuance of 3.0 million of Buckeye’s limited partner units			—				—				—				—				104,632				104,632
Amortization of Buckeye’s limited partner unit options			—				—				—				—				3,079				3,079
Exercise of limited partner unit options			—				—				—				—				3,204				3,204
Services 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				17,722
Amortization of interest rate swaps			—				—				—				—				961				961
Other			—				—				—				—				7,732				7,732
Partners’ capital — December 31, 2009		$	7			$	236,545			$	3,225			$	2,557			$	1,209,960			$	1,452,294

See Notes to Consolidated Financial Statements.

BUCKEYE GP HOLDINGS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Except for per unit amounts, or as otherwise noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands.

1. ORGANIZATION

     Buckeye GP Holdings L.P. is a publicly traded Delaware master limited partnership (“MLP”) organized on June 15, 2006. Our common units (“Common Units”) are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “BGH.” We own 100% of Buckeye GP LLC (“Buckeye GP”), which is the general partner of Buckeye Partners, L.P. (“Buckeye”). Buckeye is also a publicly traded Delaware MLP which was organized in 1986 and its limited partner units (“LP Units”) are separately traded on the NYSE under the ticker symbol “BPL.” Approximately 62% of our outstanding equity, which includes Common Units and management units (“Management Units”) are owned by BGH GP Holdings, LLC (“BGH GP”) and approximately 38% by the public. BGH GP is owned by affiliates of ArcLight Capital Partners, LLC (“ArcLight”), Kelso & Company (“Kelso”), and certain investment funds along with certain members of senior management of Buckeye GP. MainLine Management LLC, a Delaware limited liability company (“MainLine Management”), is our general partner and is wholly owned by BGH GP. As used in these Notes to Consolidated Financial Statements, unless the context requires otherwise, references to “we,” “us,” “our,” or “BGH” are intended to mean the business and operations of Buckeye GP Holdings L.P. on a consolidated basis, including those of Buckeye. References to “Buckeye” mean Buckeye Partners, L.P. and its consolidated subsidiaries.

     Our only business is the ownership of Buckeye GP. Buckeye GP’s only business is the management of Buckeye and its subsidiaries. At December 31, 2009, Buckeye GP owned an approximate 0.5% general partner interest in Buckeye.

     Buckeye owns and operates one of the largest independent refined petroleum products pipeline systems in the United States in terms of volumes delivered with approximately 5,400 miles of pipeline and 67 active products terminals that provide aggregate storage capacity of approximately 27.2 million barrels. In addition, Buckeye operates and maintains approximately 2,400 miles of other pipelines under agreements with major oil and chemical companies. Buckeye also owns and operates a major natural gas storage facility in northern California, which provides approximately 40 billion cubic feet (“Bcf”) of natural gas storage capacity (including pad gas), and is a wholesale distributor of refined petroleum products in the United States in areas also served by its pipelines and terminals.

     Buckeye Pipe Line Services Company (“Services Company”) was formed in 1996 in connection with the establishment of the Buckeye Pipe Line Services Company Employee Stock Ownership Plan (the “ESOP”). At December 31, 2009, Services Company owned approximately 3.2% of Buckeye’s LP Units. Services Company employees provide services to Buckeye’s operating subsidiaries. Pursuant to a services agreement entered into in December 2004 (the “Services Agreement”), Buckeye’s operating subsidiaries reimburse Services Company for the costs of the services provided by Services Company. Pursuant to the Services Agreement and an executive employment agreement, through December 31, 2008, executive compensation costs and related benefits paid to Buckeye GP’s four highest salaried officers were not reimbursed by Buckeye or its operating subsidiaries but were reimbursed to Services Company by us. Since January 1, 2009, Buckeye and its operating subsidiaries have paid for all executive compensation and benefits earned by Buckeye GP’s four highest salaried officers in return for an annual fixed payment from us of $3.6 million.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     We adhere to the following significant accounting policies in the preparation of our consolidated financial statements.

Basis of Presentation and Principles of Consolidation

     The consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”). The financial statements include our accounts on a consolidated basis. We have eliminated all intercompany transactions in consolidation. The consolidated financial statements also include the accounts of our wholly-owned subsidiaries, as well as the accounts of Buckeye and Services Company, on a consolidated basis.

Business Segments

     We operate and report in five business segments: Pipeline Operations; Terminalling and Storage; Natural Gas Storage; Energy Services; and Development and Logistics. We previously referred to the Development and Logistics segment as the Other Operations segment. We renamed the segment to better describe the business activities conducted within the segment. See Note 22 for a more detailed discussion of our business segments.

Asset Retirement Obligations

     We regularly assess our legal obligations with respect to estimated retirements of certain of our long-lived assets to determine if an asset retirement obligation (“ARO”) exists. GAAP requires that the fair value of a liability related to the retirement of long-lived assets be recorded at the time a legal obligation is incurred including obligations to perform an asset retirement activity in which the timing or method of settlement are conditional on a future event that may or may not be within the control of the entity. If an ARO is identified and a liability is recorded, a corresponding asset is recorded concurrently and is depreciated over the remaining useful life of the asset. After the initial measurement, the liability is periodically adjusted to reflect changes in the ARO’s fair value. Generally, the fair value of any liability is determined based on estimates and assumptions related to future retirement costs, future inflation rates and credit-adjusted risk-free interest rates.

     Other than assets in the Natural Gas Storage segment, our assets generally consist of underground refined petroleum products pipelines installed along rights-of-way acquired from land owners and related above-ground facilities and terminals that we own. We are unable to predict if and when our pipelines, which generally serve high-population and high-demand markets, will become completely obsolete and require decommissioning. Further, our rights-of-way agreements typically do not require the dismantling and removal of the pipelines and reclamation of the rights-of-way upon permanent removal of the pipelines from service. Accordingly, other than with respect to the Natural Gas Storage segment, we have recorded no liabilities, or corresponding assets, because the future dismantlement and removal dates of the majority of our assets, and the amount of any associated costs, are indeterminable.

     The Natural Gas Storage segment’s pipelines and surface facilities are located on land that is leased. An ARO asset and liability was established due to a requirement in the land leases to remove certain assets in the event that the site is abandoned. The ARO liability will be adjusted prospectively for costs incurred or settled, accretion expense, and any revisions made to the assumptions related to the retirement costs. See Note 8 for further discussion of our AROs.

Capitalization of Interest

     Interest on borrowed funds is capitalized on projects during construction based on the approximate average interest rate of our debt. Interest capitalized for the years ended December 31, 2009, 2008 and 2007 was $3.4

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

million, $2.3 million and $1.5 million, respectively. The weighted average rates used to capitalize interest on borrowed funds was 5.4% for the years ended December 31, 2009, 2008 and 2007.

Cash and Cash Equivalents

     Cash equivalents represent all highly marketable securities with original maturities of three months or less. The carrying value of cash equivalents approximates fair value because of the short term nature of these investments.

     Our consolidated statements of cash flows are prepared using the indirect method. The indirect method derives net cash flows from operating activities by adjusting net income to remove (i) the effects of all deferrals of past operating cash receipts and payments, such as changes during the period in inventory, deferred income and similar transactions, (ii) the effects of all accruals of expected future operating cash receipts and cash payments, such as changes during the period in receivables and payables, (iii) the effects of all items classified as investing or financing cash flows, such as gains or losses on sale of property, plant and equipment or extinguishment of debt, and (iv) other non-cash amounts such as depreciation, amortization and changes in the fair market value of financial instruments.

Construction and Pipeline Relocation Receivables

     Construction and pipeline relocation receivables represent valid claims against non-affiliated customers for services rendered in constructing or relocating pipelines and are recognized when services are rendered.

Contingencies

     Certain conditions may exist as of the date our consolidated financial statements are issued that may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, with input from legal counsel, assesses such contingent liabilities, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in proceedings, our management, with input from legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

     If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

     Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Cost of Product Sales and Natural Gas Storage Services

     Cost of product sales relates to sales of refined petroleum products, consisting primarily of gasoline, heating oil and diesel fuel, and includes the direct costs of product acquisition as well as the effects of hedges of such product acquisition costs and hedges of fixed-price sales contracts. In addition, costs related to hub service agreements, which consist of a variety of gas storage services under interruptible storage agreements, for which we will be required to make payment to a third party, are recognized as cost of natural gas storage services. These services principally include park and loan transactions. Parks occur when gas from a third party is injected and stored for a specified period. The third party then is obligated to withdraw its stored gas at a future date. Title to the gas remains with the third party. Loans occur when gas is delivered to a third party in a specified period. The third party then has the obligation to redeliver gas at a future date. Costs related to park and loan transactions for which we are required to make payment are recognized ratably over the term of the agreement.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Issuance Costs

     Costs incurred upon the issuance of our debt instruments are capitalized and amortized over the life of the associated debt instrument on a straight-line basis, which approximates the effective interest method. If the debt instrument is retired before its scheduled maturity date, any remaining issuance costs associated with that debt instrument are expensed in the same period. Deferred debt issuance costs were $18.1 million and $13.7 million at December 31, 2009 and 2008, respectively. Accumulated amortization was approximately $7.0 million and $4.8 million at December 31, 2009 and 2008, respectively.

Earnings per Partnership Unit

     Basic earnings per partnership unit is determined by dividing the net income attributable to us by the weighted average number of Common Units and vested Management Units outstanding for the period. Diluted earnings per partnership unit is calculated using the weighted average of all partnership units outstanding, including Common Units and Management Units.

Environmental Expenditures

     We accrue for environmental costs that relate to existing conditions caused by past operations, including, in some cases, pre-existing conditions related to acquired assets. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Environmental costs include initial site surveys and environmental studies of potentially contaminated sites, costs for remediation and restoration of sites determined to be contaminated and ongoing monitoring costs, as well as damages and other costs, when estimable. We monitor the balance of accrued undiscounted environmental liabilities on a regular basis. We record liabilities for environmental costs at a specific site when our liability for such costs is probable and a reasonable estimate of the associated costs can be made. Adjustments to initial estimates are recorded, from time to time, to reflect changing circumstances and estimates based upon additional information developed in subsequent periods. Estimates of our ultimate liabilities associated with environmental costs are particularly difficult to make with certainty due to the number of variables involved, including the early stage of investigation at certain sites, the lengthy time frames required to complete remediation alternatives available and the evolving nature of environmental laws and regulations. None of our estimated environmental remediation liabilities are discounted to present value since the ultimate amount and timing of cash payments for such liabilities are not readily determinable. Expenditures to mitigate or prevent future environmental contamination are capitalized. We maintain insurance which may cover certain environmental expenditures.

     At December 31, 2009 and 2008, our accrued liabilities for environmental remediation projects totaled $29.9 million and $27.0 million, respectively. These amounts were derived from a range of reasonable estimates based upon studies and site surveys. Unanticipated changes in circumstances and/or legal requirements could result in expenses being incurred in future periods in addition to an increase in expenditures required to remediate contamination for which we are responsible.

Equity Investments

     We account for investments in entities in which we do not exercise control, but have significant influence, using the equity method. Under this method, an investment is recorded at acquisition cost plus our equity in undistributed earnings or losses since acquisition, reduced by distributions received and amortization of excess net investment. Excess investment is the amount by which the initial investment exceeds the proportionate share of the book value of the net assets of the investment. We evaluate equity method investments for impairment whenever events or circumstances indicate that there is a loss in value of the investment which is other than temporary. In the event that the loss in value of an investment is other than temporary, we record a charge to earnings to adjust the carrying value to fair value. There were no impairments of our equity investments during the years ended December 31, 2009, 2008 or 2007.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimates

     The preparation of consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions. These estimates and assumptions, which may differ from actual results, will affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue and expense during the reporting periods.

Fair Value

     Cash and cash equivalents, trade receivables, construction and pipeline relocation receivables, margin deposits, prepaid and other current assets and all current liabilities are reported in the consolidated balance sheets at amounts which approximate fair value due to the relatively short period to maturity of these financial instruments. The fair value of our debt was calculated using interest rates currently available to us for issuance of debt with similar terms and remaining maturities and approximate market values on the respective dates. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a specified measurement date. Our Energy Services segment also has derivative assets and liabilities. These assets and liabilities consist of exchange–traded futures contracts and fixed-price sales contracts with customers. These assets and liabilities are measured and reported at fair values. We consider the impact of credit valuation adjustments with respect to the fixed-price sales contracts. See Note 15 for further discussion.

Financial Instruments

     We use financial instruments such as swaps, forwards, futures and other contracts to manage market price risks associated with inventories, firm commitments, interest rates and certain anticipated transactions. We recognize these transactions on our consolidated balance sheet as assets and liabilities based on the instrument’s fair value. Changes in fair value of financial instrument derivative contracts are recognized in the current period in earnings unless specific hedge accounting criteria are met. If the financial instrument is designated as a hedging instrument in a fair value hedge, gains and losses incurred on the instrument will be recorded in earnings to offset corresponding losses and gains on the hedged item. If the financial instrument is designated as a hedging instrument in a cash flow hedge, gains and losses incurred on the instrument are recorded in other comprehensive income. In both cases, any gains or losses incurred on the instrument that are not effective in offsetting changes in fair value or cash flows of the hedged item are recognized immediately in earnings. Gains and losses on cash flow hedges are reclassified from other comprehensive income to earnings when the forecasted transaction occurs or, as appropriate, over the economic life of the underlying asset or liability. A financial instrument designated as a hedge of an anticipated transaction that is no longer likely to occur is immediately recognized in earnings.

     To qualify as a hedge, the item to be hedged must expose us to risk and we must have an expectation that the related hedging instrument will be effective at reducing or mitigating that exposure. Certain other hedging requirements, such as documentation at inception as discussed below, must also be met.

     Documentation of all hedging relationships is completed at inception and includes a description of the risk-management objective and strategy for undertaking the hedge, identification of the hedging instrument, the hedged item, the nature of the risk being hedged, the method for assessing effectiveness of the hedging instrument in offsetting the hedged risk and the method of measuring any ineffectiveness. This process includes linking all derivatives that are designated as fair value or cash flow hedges to specific assets and liabilities on the consolidated balance sheets or to specific firm commitments or forecasted transactions. We also formally assess, both at the hedge’s inception and on an ongoing basis at least quarterly, whether the derivatives that are used in designated hedging relationships are highly effective in offsetting changes in fair values or cash flows of hedged items. If it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, we discontinue hedge accounting prospectively.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill

     Goodwill represents the excess of purchase price over fair value of net assets acquired. Our goodwill amounts are assessed for impairment (i) on an annual basis on January 1 of each year or (ii) on an interim basis if circumstances indicate it is more likely than not the fair value of a reporting unit is less than its fair value. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. A reporting unit is a business segment or one level below a business segment for which discrete financial information is available and regularly reviewed by segment management. Our reporting units are our business segments. A goodwill impairment assessment requires that the estimated fair value of the reporting unit to which the goodwill is assigned be determined and compared to its book value. If the fair value of the reporting unit including associated goodwill amounts is less than its book value, including associated goodwill amounts, a charge to earnings is recorded to reduce the carrying value of the goodwill to its implied fair value. We have not recognized any impairment losses related to goodwill for any of the periods presented.

Income Taxes

     For federal and state income tax purposes, we and our subsidiaries, including Buckeye, except for Buckeye Gulf Coast Pipe Lines, L.P. (“BGC”), a Buckeye operating subsidiary, are not taxable entities. Accordingly, our taxable income or loss, which may vary substantially from income or loss reported for financial reporting purposes, is generally includable in the federal and state income tax returns of our individual partners. The aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined because information regarding each partner’s tax attributes is not available to us.

     Effective August 1, 2004, BGC elected to be treated as a taxable corporation for federal income tax purposes. Accordingly, it has recognized deferred tax assets and liabilities for temporary differences between the amounts of assets and liabilities measured for financial reporting purposes and the amounts measured for federal income tax purposes. Changes in tax legislation are included in the relevant computations in the period in which such changes are effective. Deferred tax assets are reduced by a valuation allowance when the amount of any tax benefit is not expected to be realized. We recorded a deferred tax liability of $0.4 million and $0.8 million as of December 31, 2009 and 2008, respectively, which is recorded in non-current liabilities.

     Income tax benefit for the year ended December 31, 2009 was $0.3 million. Income tax expense for the years ended December 31, 2008 and 2007 was $0.8 million for both periods. Income tax benefit/expense is included in operating expenses in the consolidated statements of operations.

Intangible Assets

     Intangible assets with finite useful lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Intangible assets that have finite useful lives are amortized over their useful lives.

Inventories

     We generally maintain two types of inventory. Within our Energy Services segment, we principally maintain refined petroleum products inventory, which consists primarily of gasoline, heating oil and diesel fuel, which are valued at the lower of cost or market, unless such inventories are hedged.

     We also maintain, principally within our Pipeline Operations segment, an inventory of materials and supplies such as pipes, valves, pumps, electrical/electronic components, drag reducing agent and other miscellaneous items that are valued at the lower of cost or market based on the first-in, first-out method (see Note 6).

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-Lived Assets

     We assess the recoverability of our long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess recoverability based on estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposal. The measurement of an impairment loss, if recognition of any loss is required, is based on the difference between the carrying amount and fair value of the asset. During the year ended December 31, 2009, we recorded a non-cash charge of $59.7 million related to an asset impairment (see Note 8).

Noncontrolling Interests

     The consolidated balance sheets include noncontrolling interests that relate to the portions of Buckeye and Services Company that is not owned by us. Similarly, the consolidated statements of operations include noncontrolling interests that reflect amounts not attributable to us. On January 1, 2009, we adopted guidance that established accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. These accounting and reporting standards require entities that prepare consolidated financial statements to: (a) present noncontrolling interests as a component of equity, separate from the parent’s equity; (b) separately present the amount of consolidated net income attributable to noncontrolling interests in the income statement; (c) consistently account for changes in a parent’s ownership interests in a subsidiary in which the parent entity has a controlling financial interest as equity transactions; (d) require an entity to measure at fair value its remaining interest in a subsidiary that is deconsolidated; and (e) require an entity to provide sufficient disclosures that identify and clearly distinguish between interests of the parent and interests of noncontrolling owners. Accordingly, for all periods presented in our consolidated financial statements, we have reclassified our noncontrolling interests liability into partners’ capital on the consolidated balance sheets and have separately presented and allocated income attributable to noncontrolling interests on the consolidated statements of operations and consolidated statements of partners’ capital.

Pensions

     Services Company sponsors a defined contribution plan (see Note 16), defined benefit plans (see Note 16) and the ESOP (see Note 16) that provide retirement benefits to certain regular full-time employees. Certain hourly employees of Services Company are covered by a defined contribution plan under a union agreement (see Note 16).

Postretirement Benefits Other Than Pensions

     Services Company provides post-retirement health care and life insurance benefits for certain of its retirees. Certain other retired employees are covered by a health and welfare plan under a union agreement (see Note 16).

Property, Plant and Equipment

     We record property, plant and equipment at its original acquisition cost. Property, plant and equipment consist primarily of pipelines, wells, storage and terminal facilities, pad gas and pumping and compression equipment. Depreciation on pipelines and terminals is generally calculated using the straight-line method over the estimated useful lives ranging from 44 to 50 years. Plant and equipment associated with natural gas storage is generally depreciated over 44 years, except for pad gas. The Natural Gas Storage segment maintains a level of natural gas in its underground storage facility generally known as pad gas, which is not routinely cycled but, instead, serves the function of maintaining the necessary pressure to allow routine injection and withdrawal to meet demand. The pad gas is considered to be a component of the facility and as such is not depreciated because it is expected to ultimately be recovered and sold. Other plant and equipment is generally depreciated on a straight-line basis over an estimated life of 5 to 50 years.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Additions to property, plant and equipment, including major replacements or betterments, are recorded at cost. We charge maintenance and repairs to expense in the period incurred. The cost of property, plant and equipment sold or retired and the related depreciation, except for certain pipeline system assets, are removed from our consolidated balance sheet in the period of sale or disposition, and any resulting gain or loss is included in income. For our pipeline system assets, we generally charge the original cost of property sold or retired to accumulated depreciation and amortization, net of salvage and cost of removal. When a separately identifiable group of assets, such as a stand-alone pipeline system is sold, we will recognize a gain or loss in our consolidated statements of operations for the difference between the cash received and the net book value of the assets sold.

     The following table represents the depreciation life for the major components of our assets:

		Life in years
Right of way		44-50
Line pipe and fittings		44-50
Buildings		50
Wells		44
Pumping and compression equipment		44-50
Oil tanks		50
Office furniture and equipment		18
Vehicles and other work equipment		11
Servers and software		5

Recent Accounting Developments

     In June 2009, the Financial Accounting Standards Board (“FASB”) established the FASB Accounting Standards Codification (“ASC”). Beginning in the third quarter of 2009, the ASC became the single source for all authoritative nongovernmental GAAP recognized by the FASB and is required to be applied to financial statements issued for interim and annual periods ending after September 15, 2009. The ASC replaces other sources of authoritative GAAP with the exception of rules and interpretive releases of the SEC, which will continue to be authoritative. The issuance of the ASC is not intended to significantly change GAAP and did not impact our results of operations, cash flows or financial position.

     Consolidation of Variable Interest Entities (“VIEs”). In June 2009, the FASB amended consolidation guidance for VIEs. The objective of this new guidance is to improve financial reporting by companies involved with VIEs. This guidance requires companies to perform an analysis to determine whether the companies’ variable interest or interests give it a controlling financial interest in a VIE. The new guidance is effective as of the beginning of each reporting company’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. This guidance is effective for us on January 1, 2010. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements.

     Fair Value Measurements. In August 2009, the FASB issued new guidance that clarifies how an entity should estimate the fair value of liabilities. If a quoted price in an active market for an identical liability is not available, a company must measure the fair value of the liability using one of several valuation techniques (e.g., quoted prices for similar liabilities or present value of cash flows). Our adoption of this new guidance on October 1, 2009 did not have any impact on our consolidated financial statements or related disclosures.

     In January 2010, the FASB issued new guidance that amends, clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This new guidance became effective for us on January 1, 2010. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications

     Certain prior year amounts have been reclassified in the consolidated statements of cash flows to conform to the current-year presentation. Specifically, we have separately disclosed cash flows from the issuance of long-term debt and borrowings under credit facilities for the year ended December 31, 2008. These amounts had been included within the same line item in the 2008 period. There were no issuances of long-term debt during the year ended December 31, 2007.

Regulatory Reporting

     The majority of our refined petroleum products pipelines are subject to regulation by the Federal Energy Regulatory Commission (“FERC”), which prescribes certain accounting principles and practices for the annual Form 6 Report filed with the FERC that differ from those used in these consolidated financial statements. Reports to FERC differ from the consolidated financial statements, which have been prepared in accordance with GAAP, generally in that such reports calculate depreciation over estimated useful lives of the assets as prescribed by FERC.

Revenue Recognition

     We recognize revenues as follows (by segment):

•

Pipeline Operations segment:

o

Revenue from the transportation of refined petroleum products is recognized as products are delivered.

•

Terminalling and Storage segment:

o

Revenues from terminalling, storage and rental operations are recognized as the services are performed.

•

Natural Gas Storage segment:

	o		Revenue from natural gas storage, which consists of demand charges, or lease revenues, for the reservation of storage space under firm storage agreements, is recognized over the term of the related storage agreement. The demand charge entitles the customer to a fixed amount of storage space and certain injection and withdrawal rights. Title to the stored gas remains with the customer.
	o		Revenues from hub services, which consist of a variety of other gas storage services under interruptible storage agreements, are recognized ratably over the term of the agreement. These services principally include park and loan transactions. Parks occur when gas from a customer is injected and stored for a specified period. The customer then has the obligation to withdraw its stored gas at a future date. Title to the gas remains with the customer. Loans occur when gas is delivered to a customer in a specified period. The customer then has the obligation to redeliver gas at a future date.

•

Energy Services segment:

o

Revenue from the sale of refined petroleum products, which are sold on a wholesale basis, is recognized when such products are delivered to the customer purchasing the products.

•

Development and Logistics segment:

o

Revenues from contract operation and construction services of facilities and pipelines not directly owned by us are recognized as the services are performed. Contract and construction services revenue typically includes costs to be reimbursed by the customer plus an operator fee.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Trade Receivables and Concentration of Credit Risk

     Trade receivables represent valid claims against non-affiliated customers and are recognized when products are sold or services are rendered. We extend credit terms to certain customers based on historical dealings and to other customers after a full review of various financial credit indicators, including the customers’ credit rating (if available), and verified trade references. Our allowance for doubtful accounts is determined based on specific identification and estimates of future uncollectible accounts. Our Energy Services segment has established an allowance for doubtful accounts, while our other segments do not maintain an allowance for doubtful accounts due to their favorable collections experience.

     Our Energy Services segment’s allowance for doubtful accounts was $1.5 million and $2.1 million at December 31, 2009 and 2008, respectively, and is included in trade receivables in the consolidated balance sheets. Our procedure for determining the allowance for doubtful accounts is based on (i) historical experience with customers, (ii) the perceived financial stability of customers based on our research, and (iii) the levels of credit the Energy Services segment grants to customers. In addition, the Energy Services segment may increase the allowance for doubtful accounts in response to the specific identification of customers involved in bankruptcy proceedings and similar financial difficulties. On a routine basis, we review estimates associated with the allowance for doubtful accounts to ensure that we have recorded sufficient reserves to cover potential losses.

     We have a concentration of trade receivables due from major integrated oil companies and their marketing affiliates, major petroleum refiners, major chemical companies, large regional marketing companies and large commercial airlines. Additionally, we have trade receivables from gas marketing companies, independent gatherers, investment banks that have established a trading platform, and brokers and marketers. These concentrations of customers may affect our overall credit risk in that the customers may be similarly affected by changes in economic, regulatory or other factors.

     For the years ended December 31, 2009 and 2008, no customer contributed more than 10% of consolidated revenue. For the year ended December 31, 2007, Shell Oil Products U.S. (“Shell”) contributed 10% of consolidated revenue. Approximately 3% of 2007 consolidated revenue was generated by Shell in the Pipeline Operations segment, and the remaining 7% of consolidated revenue generated by Shell was in the Terminalling and Storage segment.

     We manage our exposure to credit risk through credit analysis and monitoring procedures, and sometimes use letters of credit, prepayments and guarantees. The Pipeline Operations and Energy Services segments bill their customers on a weekly basis, and the Terminalling and Storage, Natural Gas Storage and Development and Logistics segments bill on a monthly basis. We believe that these billing practices may reduce credit risk.

Unit-Based Compensation

     We have Management Units and a GP Equity Compensation Plan (see Note 17 for a discussion of BGH GP’s override units). Buckeye formerly awarded options to acquire its LP Units to employees pursuant to a Unit Option and Distribution Equivalent Plan (the “Option Plan”). In addition, in March 2009, Buckeye’s 2009 Long-Term Incentive Plan (the “2009 LTIP”) became effective. All unit-based payments to employees under these plans, including grants of employee unit options, phantom units and performance units, are recognized in the consolidated statements of operations based on their fair values. See Note 17 for further discussion of unit-based compensation plans.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. REORGANIZATION

     On July 20, 2009, we announced the completion of a company-wide, “best practices” review. During the period ended June 30, 2009, we commenced a restructuring of our operations as a result of this review, including a reorganization of our field operations to combine five of our original pipeline and terminal districts into three districts, as well as a restructuring of certain corporate functions and related corporate support functions. These efforts redefined the roles and responsibilities of certain positions and called for the elimination of resources devoted to such activities. Approximately 230 positions have been affected as a result of these restructuring activities.

     As part of the restructuring efforts, we executed a reduction in force comprised of a Voluntary Early Retirement Plan (the “VERP”) and an involuntary plan. The terms of the VERP were agreed to by approximately 80 employees during the period ended June 30, 2009. An additional group of approximately 150 employees were impacted by the involuntary reduction in workforce under our ongoing severance plan. Affected employees receive severance benefits, post-employment benefits including extended medical and dental coverage, and other services including retirement counseling and outplacement services. Most terminations were effective as of July 20, 2009.

     For the year ended December 31, 2009, we recorded reorganization expense of $32.1 million for post-employment costs related to these restructuring activities which include: (1) termination benefits pursuant to voluntary and involuntary severance plans of $16.0 million; (2) post-retirement benefits of $6.4 million (see Note 16); and (3) other related costs of $9.7 million.

     The reorganization expenses incurred by segment, including certain allocated amounts, for the year ended December 31, 2009 were as follows:

Pipeline Operations		$	26,127
Terminalling and Storage			2,735
Natural Gas Storage			495
Energy Services			1,207
Development and Logistics			1,493
Total reorganization expenses		$	32,057

4. ACQUISITIONS AND DISPOSITIONS

Business Combinations

     Our 2009 acquisition of pipeline and terminal assets from ConocoPhillips and the 2008 acquisitions of Lodi Gas Storage, L.L.C. (“Lodi Gas”), Farm & Home and a terminal in Albany, New York (“Albany Terminal”) have been accounted for as business combinations. The total purchase price was allocated to the fair value of the assets acquired and the liabilities assumed based on an assessment of their fair values at the acquisition date, with amounts exceeding the fair values being recorded as goodwill. All goodwill recorded in these business combinations is deductible for tax purposes. The results of their operations have been included in our consolidated financial statements since their respective acquisition dates.

Refined Petroleum Products Terminals and Pipeline Assets

     On November 18, 2009, we acquired from ConocoPhillips certain refined petroleum product terminals and pipeline assets for approximately $47.1 million in cash. In addition, we acquired certain inventory on hand upon completion of the transaction for additional consideration of $7.3 million. The assets include over 300 miles of active pipeline that provide connectivity between the East St. Louis, Illinois and East Chicago, Indiana markets and three terminals providing 2.3 million barrels of storage tankage. ConocoPhillips entered into certain commercial contracts with us concurrent with our acquisition regarding usage of the acquired facilities. We believe the acquisition of these assets gives us greater access to markets and refinery operations in the Midwest and increases

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the commercial value to our customers by offering enhanced distribution connectivity and flexible storage capabilities. The operations of our combined assets will be reported in the Pipeline Operations and Terminalling and Storage segments. The purchase price has been allocated to the tangible and intangible assets acquired, on a preliminary basis, as follows:

Inventory		$	7,287
Property, plant and equipment			44,400
Intangible assets			4,580
Environmental and other liabilities			(1,834	)
Allocated purchase price		$	54,433

Lodi Gas

     On January 18, 2008, we acquired all of the member interests in Lodi Gas from Lodi Holdings, L.L.C. Lodi Holdings, L.L.C. was owned by affiliates of ArcLight, which owns an indirect interest in our general partner. The cost of Lodi Gas was approximately $442.4 million in cash and consisted of the following:

Contractual purchase price		$	440,000
Working capital adjustments and fees			2,367
Total purchase price		$	442,367

     Of the contractual purchase price, $428.0 million was paid at closing and an additional $12.0 million was paid on March 6, 2008 upon receipt of approval from the California Public Utilities Commission for an expansion project known as Kirby Hills Phase II. We believed the acquisition of Lodi Gas represented an attractive opportunity to expand and diversify our storage and throughput operations into a new geographic area, northern California, and a new commodity type, natural gas, and provides us a platform for growth in the natural gas storage industry. These advantageous factors resulted in the recognition of goodwill in the amount that the fair value of the assets acquired and the liabilities assumed at the acquisition date exceeded the total purchase price. The activities of Lodi Gas are reported in the Natural Gas Storage segment. The purchase price has been allocated to the tangible and intangible assets acquired, including goodwill, as follows:

Current assets		$	8,240
Property, plant and equipment			274,880
Goodwill			169,560
Current liabilities			(9,096	)
Other liabilities			(1,217	)
Allocated purchase price		$	442,367

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Farm & Home

     On February 8, 2008, we acquired all of the member interests of Farm & Home for approximately $146.2 million. We believed that the wholesale distribution operations of Farm & Home represented an attractive opportunity to further our strategy of improving overall profitability by increasing the utilization of our existing pipeline and terminal system infrastructure by marketing refined petroleum products in areas served by that infrastructure. These advantageous factors resulted in the recognition of goodwill in the amount that the fair value of the assets acquired and the liabilities assumed at the acquisition date exceeded the total purchase price. The operations of Farm & Home are reported in the Energy Services segment. The purchase price has been allocated to the tangible and intangible assets acquired, including goodwill, as follows:

Current assets		$	79,144
Inventory			93,332
Property, plant and equipment			33,880
Goodwill			1,132
Customer relationships			38,300
Other assets			3,688
Assets held for sale, net of liability of $0.7 million			51,645
Debt			(100,000	)
Current liabilities			(53,208	)
Other liabilities			(1,740	)
Allocated purchase price		$	146,173

     On April 15, 2008, we completed the sale of the retail operations of Farm & Home to a wholly-owned subsidiary of Inergy, L.P. for approximately $52.6 million. The retail assets sold consisted primarily of property, plant and equipment, inventory and receivables. We recorded no gain or loss on the sale of Farm & Home’s retail operations. The retail operations of Farm & Home were not an integral part of our core operations and strategy. Revenues from the retail operations for the period February 8, 2008 to April 15, 2008 were approximately $19.0 million. On July 31, 2008, Farm & Home was merged with and into its wholly owned subsidiary, Buckeye Energy Services LLC (“BES”), with BES continuing as the surviving entity of the merger.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Albany Terminal

     On August 28, 2008, we completed the purchase of the Albany Terminal, an ethanol and refined petroleum products terminal in Albany, New York, from LogiBio Albany Terminal, LLC. The purchase price for the terminal was $46.5 million in cash, with an additional $1.5 million payable if the terminal operations meet certain performance goals over the next three years. We also assumed environmental remediation costs for the Albany Terminal estimated to be $5.6 million. The Albany Terminal has an active storage capacity of 1.8 million barrels. The Albany Terminal’s operations are reported in the Terminalling and Storage segment. We believe that the Albany Terminal’s operations represented an attractive opportunity to increase our participation in the ethanol services market in the northeast United States. These advantageous factors resulted in the recognition of goodwill in the amount that the fair value of the assets acquired and the liabilities assumed at the acquisition date exceeded the total purchase price. The purchase price has been allocated to the tangible and intangible assets acquired, including goodwill, as follows:

Current assets		$	78
Property, plant and equipment			25,172
Goodwill			26,829
Other assets			1,920
Other liabilities			(7,144	)
Allocated purchase price		$	46,855

Unaudited Pro forma Financial Results

     The following unaudited summarized pro forma consolidated statements of operations information for the years ended December 31, 2008 and 2007 assumes that the acquisitions of Lodi Gas, Farm & Home and the Albany Terminal occurred as of the beginning of the years presented.

     The pro forma presentation below assumes that Buckeye’s equity offerings that were used in part to fund the acquisition of Lodi Gas occurred effective January 1, 2007. In the 2008 pro forma presentation, approximately $2.6 million of disposition-related expenses incurred by Lodi Gas in the period from January 1, 2008 to January 17, 2008 (prior to Buckeye’s ownership) have been excluded because these expenses were a nonrecurring item. For Farm & Home, the results of the retail operations have been excluded from both periods presented. These pro forma unaudited financial results were prepared for comparative purposes only and are not indicative of actual results that would have occurred if we had completed these acquisitions as of the beginning of the periods presented or the results that may be attained in the future:

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		Year Ended December 31,
		2008				2007
Revenues:
As reported		$	1,896,652			$	519,347
Pro forma adjustments			180,422				1,155,655
Pro forma revenue		$	2,077,074			$	1,675,002
Net income:
As reported		$	180,623			$	152,675
Pro forma adjustments			768				6,308
Pro forma net income		$	181,391			$	158,983
Pro forma earnings per partnership unit:
Basic		$	0.96			$	1.04
Diluted		$	0.96			$	1.03
Pro forma weighted average number of limited partner units outstanding:
Basic			28,300				28,142
Diluted			28,300				28,300

Asset Acquisitions

     The acquisitions noted below were accounted for as asset acquisitions. Accordingly, the total purchase price has been allocated to the fair value of the assets acquired and the liabilities assumed based on fair values at the acquisition date. We determined that substantially all of the value of these purchases relate to the physical assets acquired, which are generally depreciated over 50 years. The acquired pipelines and related assets were allocated to the Pipeline Operations segment and the acquired terminals and related assets were allocated to the Terminalling and Storage segment. See Note 22 for a summary of the allocation of acquisitions by segment.

     On February 19, 2008, we acquired a refined petroleum products terminal in Niles, Michigan and a 50% ownership interest in a refined petroleum products terminal in Ferrysburg, Michigan from an affiliate of ExxonMobil Corporation for approximately $13.9 million. The approximate fair value allocation of the acquired assets is as follows:

Land		$	592
Buildings			1,621
Machinery, equipment, and office furnishings			11,714
Allocated purchase price		$	13,927

     Effective May 1, 2008, we purchased the 50% member interest in WesPac Pipelines – San Diego LLC not already owned by us from Kealine LLC for $9.3 million. The operations of WesPac Pipelines – San Diego LLC are reported in the Pipeline Operations segment. The purchase price was allocated principally to property, plant and equipment.

     On June 20, 2008, we acquired a refined petroleum products terminal in Wethersfield, Connecticut from Hess Corporation for approximately $5.5 million. The purchase price was allocated principally to property, plant and equipment.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     On January 16, 2007, we acquired two refined petroleum products terminals located in Flint and Woodhaven, Michigan for approximately $22.2 million, including a deposit of $1.0 million that was paid in 2006. The fair value allocation of the acquired assets is as follows:

Land		$	8,663
Buildings			3,481
Machinery, equipment, and office furnishings			10,024
Allocated purchase price		$	22,168

     On February 27, 2007, we acquired a refined petroleum products terminal in Marcy, New York for approximately $2.3 million. The purchase price was allocated principally to property, plant and equipment.

     On March 15, 2007, we completed the acquisition of two refined petroleum products terminals located in Green Bay and Madison, Wisconsin and the purchase of a 50% interest in a third terminal located in Milwaukee, Wisconsin for approximately $15.2 million. The fair value allocation of the acquired assets is as follow:

Land		$	3,400
Buildings			1,100
Machinery, equipment, and office furnishings			10,660
Allocated purchase price		$	15,160

5. COMMITMENTS AND CONTINGENCIES

   Claims and Proceedings

     In the ordinary course of business, we are involved in various claims and legal proceedings, some of which are covered by insurance. We are generally unable to predict the timing or outcome of these claims and proceedings. Based upon our evaluation of existing claims and proceedings and the probability of losses relating to such contingencies, we have accrued certain amounts relating to such claims and proceedings, none of which are considered material.

     On December 10, 2009, we entered into a Stipulation and Order of Settlement with the Tax Commission of the City of New York and the Commissioner of Finance of the City of New York with respect to a dispute over property tax assessments related to the years 2004 through 2009. We had previously paid the taxes for those years but protested portions of those property taxes, as permitted by state law. As a result of this settlement, we agreed to withdraw the protest and are entitled to receive a refund of approximately $7.2 million of the previously paid property taxes.

     In March 2007, Buckeye was named as a defendant in an action entitled Madigan v. Buckeye Partners, L.P. filed in the U.S. District Court for the Central District of Illinois. The action was brought by the State of Illinois Attorney General acting on behalf of the Illinois Environmental Protection Agency. The complaint alleged that we violated various Illinois state environmental laws in connection with a product release from our terminal located in Harristown, Illinois on or about June 11, 2006 and various other product releases from our terminals and pipelines in the State of Illinois during the period of 2001 through 2006. Pursuant to a Consent Decree that was filed with the U.S. District Court for the Central District of Illinois on October 7, 2009, we agreed to settle and compromise the disputed claims without admitting any of the allegations set forth in the complaint. Under the terms of the Consent Decree, we paid approximately $0.4 million in October 2009 to the Illinois Environmental Protection Agency and agreed to continue to perform monitoring and certain remediation activities at the sites involved, and the State of Illinois agreed to release us from any further liability with respect to the claims involved.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Environmental Contingencies

     In accordance with our accounting policy, we recorded operating expenses, net of insurance recoveries, of $10.6 million, $10.1 million and $7.4 million during the years ended December 31, 2009, 2008 and 2007, respectively, related to environmental expenditures unrelated to claims and proceedings.

   Ammonia Contract Contingencies

     On November 30, 2005, BGC purchased an ammonia pipeline and other assets from El Paso Merchant Energy-Petroleum Company (“EPME”), a subsidiary of El Paso Corporation (“El Paso”). As part of the transaction, BGC assumed the obligations of EPME under several contracts involving monthly purchases and sales of ammonia. EPME and BGC agreed, however, that EPME would retain the economic risks and benefits associated with those contracts until their expiration at the end of 2012. To effectuate this agreement, BGC passes through to EPME both the cost of purchasing ammonia under a supply contract and the proceeds from selling ammonia under three sales contracts. For the vast majority of monthly periods since the closing of the pipeline acquisition, the pricing terms of the ammonia contracts have resulted in ammonia costs exceeding ammonia sales proceeds. The amount of the shortfall generally increases as the market price of ammonia increases.

     EPME has informed BGC that, notwithstanding the parties’ agreement, it will not continue to pay BGC for shortfalls created by the pass-through of ammonia costs in excess of ammonia revenues. EPME encouraged BGC to seek payment by invoking a $40.0 million guaranty made by El Paso which guaranteed EPME’s obligations to BGC. If EPME fails to reimburse BGC for these shortfalls for a significant period during the remainder of the term of the ammonia agreements, then such unreimbursed shortfalls could exceed the $40.0 million cap on El Paso’s guaranty. To the extent the unreimbursed shortfalls significantly exceed the $40.0 million cap, the resulting costs incurred by BGC could adversely affect our financial position, results of operations and cash flows. To date, BGC has continued to receive payment for ammonia costs under the contracts at issue. BGC has not called on El Paso’s guaranty and believes only BGC may invoke the guaranty. EPME, however, contends that El Paso’s guaranty is the source of payment for the shortfalls, but has not clarified the extent to which it believes the guaranty has been exhausted. Given the uncertainty of future ammonia prices and EPME’s future actions, we are unable to estimate the amount of any such losses we might incur in the future. We are assessing our options, including potential recourse against EPME and El Paso, with respect to this matter.

   Leases —Where We are Lessee

     We lease certain property, plant and equipment under noncancelable and cancelable operating leases. 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, 2009, 2008 and 2007 was $21.2 million, $20.2 million and $11.7 million, respectively. The following table presents minimum lease payment obligations under our operating leases with terms in excess of one year for the years ending December 31:

		Office space				Land
		and other (1)				Leases (2)				Total
2010		$	1,528			$	2,945			$	4,473
2011			1,536				3,059				4,595
2012			1,539				3,282				4,821
2013			1,563				3,409				4,972
2014			1,615				3,542				5,157
Thereafter			11,197				295,510				306,707
Total		$	18,978			$	311,747			$	330,725

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 is being recognized on a straight-line basis over 44 years. For the years ended December 31, 2009 and 2008, the Natural Gas Storage segment’s lease expense was approximately $7.4 million and $7.1 million, respectively. At December 31, 2009 and 2008, $4.5 million and $4.6 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.

   Leases — Where We are Lessor

     We have entered into capacity leases with remaining terms from 5 to 13 years that are accounted for as operating leases. All of the agreements provide for negotiated extensions. Future minimum lease payments to be received under such operating leasing arrangements as of December 31, 2009 are as follows:

		Years Ending
		December 31,
2010		$	8,839
2011			8,839
2012			8,839
2013			8,839
2014			6,819
Thereafter			48,446
Total		$	90,621

6. INVENTORIES

     Our inventory amounts were as follows at the dates indicated:

		December 31,
		2009				2008
Refined petroleum products (1)		$	299,473			$	69,568
Materials and supplies			10,741				14,661
Total inventories		$	310,214			$	84,229

     At December 31, 2009 and 2008, approximately 99% and 78%, respectively, of our inventory was hedged. Hedged inventory is valued at current market prices with the change in value of the inventory reflected in the consolidated statements of operations. At December 31, 2009 and 2008, 0% and 17%, respectively, of our inventory was committed against fixed-priced sales contracts and such inventory was valued at the lower of cost or market.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. PREPAID AND OTHER CURRENT ASSETS

     Prepaid and other current assets consist of the following at the dates indicated:

		December 31,
		2009				2008
Prepaid insurance		$	7,088			$	7,889
Insurance receivables			13,544				5,101
Ammonia receivable			7,429				12,058
Margin deposits			21,037				32,345
Prepaid services			21,571				—
Unbilled revenue			13,201				1,074
Tax receivable			7,162				—
Other			13,219				16,939
Total prepaid and other current assets		$	104,251			$	75,406

8. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of the following at the dates indicated:

		December 31,
		2009				2008
Land		$	64,712			$	62,139
Rights-of-way			97,309				97,724
Pad gas			29,346				29,346
Buildings and leasehold improvements			103,535				92,668
Machinery, equipment and office furnishings			2,130,552				2,009,591
Construction in progress			78,363				173,691
Total property, plant and equipment			2,503,817				2,465,159
Less: Accumulated depreciation			(265,496	)			(223,547	)
Total property, plant and equipment, net		$	2,238,321			$	2,241,612

     Depreciation expense was $50.9 million, $47.4 million and $39.6 million for the years December 31, 2009, 2008 and 2007, respectively.

   Impairment of Long-Lived Assets and Assets Held for Sale

     We owned and operated an approximately 350-mile natural gas liquids pipeline (the “Buckeye NGL Pipeline”) that runs from Wattenberg, Colorado to Bushton, Kansas. During the second quarter of 2009, we received notification that several of our shippers, which were then using the Buckeye NGL Pipeline, intended to migrate their business to a competing pipeline that recently went into service. In connection with this notification, there was a significant decline in shipment volumes as compared to historical averages. This significant loss in the customer base utilizing Buckeye’s NGL pipeline, in conjunction with the authorization of the Board of Directors of Buckeye GP to pursue the sale of Buckeye NGL Pipe Lines LLC (“Buckeye NGL”), the entity which owned the Buckeye NGL Pipeline, triggered an evaluation of a potential asset impairment that resulted in a non-cash charge to earnings in the second quarter of 2009 of $72.5 million in the Pipeline Operations segment.

     We ceased depreciation of the assets as of July 1, 2009 and reclassified the assets of Buckeye NGL to “Assets held for sale” on the December 31, 2009 consolidated balance sheet. Effective January 1, 2010, we sold our

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ownership interest in Buckeye NGL for $22.0 million. The sales proceeds exceeded the previously impaired carrying value of the Buckeye NGL Pipeline by $12.8 million, resulting in the reversal of $12.8 million of the previously recorded asset impairment expense in the fourth quarter of 2009, yielding a net impairment of $59.7 million for the year ended December 31, 2009. This impairment and the reversal are reflected within the category “Asset Impairment Expense” on our consolidated statements of operations.

     The carrying amounts of the major classes of assets held for sale by Buckeye NGL at December 31, 2009 were as follows:

Inventories		$	629
Property, plant and equipment, net			21,371
Assets held for sale		$	22,000

     Revenues for Buckeye NGL for the year ended December 31, 2009 were $9.3 million.

AROs

     The following table presents information regarding our AROs:

ARO liability balance, January 1, 2008		$	—
Liabilities assumed with Lodi Gas acquisition			665
Additional ARO for Kirby Hills Phase II			194
Accretion expense			60
ARO liability balance, December 31, 2008			919
Accretion expense			101
ARO liability balance, December 31, 2009 (1)		$	1,020

9. EQUITY INVESTMENTS

     We own interests in related businesses that are accounted for using the equity method of accounting. The following table presents our equity investments, all included within the Pipeline Operations segment, at the dates indicated:

						December 31,
		Ownership				2009				2008
Muskegon Pipeline LLC			40.0	%		$	15,273			$	14,967
Transport4, LLC			25.0	%			379				332
West Shore Pipe Line Company			24.9	%			30,320				30,340
West Texas LPG Pipeline Limited Partnership			20.0	%			50,879				44,471
Total equity investments						$	96,851			$	90,110

     During the years ended December 31, 2009, 2008 and 2007, we invested an additional $3.9 million, $9.8 million and $0.9 million, respectively, in West Texas LPG Pipeline Limited Partnership (“WT LPG”) as our pro-rata contribution for an expansion project that was required to meet increased pipeline demand caused by increased product production in the Fort Worth basin and East Texas regions. The expansion project consists of the construction of 39 miles of 12-inch pipeline and installation of multiple booster stations. The WT LPG expansion project became operational in February 2009. Affiliates of Chevron Corporation own the remaining 80% interest in, and operate, WT LPG.

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following table presents earnings from equity investments for the periods indicated:

		Year Ended December 31,
		2009				2008				2007
Muskegon Pipeline LLC		$	1,437			$	1,367			$	1,385
Transport4, LLC			147				70				43
West Shore Pipe Line Company			4,809				3,133				3,511
WT LPG			6,138				3,418				2,614
Total earnings from equity investments		$	12,531			$	7,988			$	7,553

     Combined balance sheet data as of the dates indicated and income statement data for the periods indicated for our equity method investments are summarized below:

		December 31,
		2009				2008
BALANCE SHEET DATA:
Current assets		$	43,154			$	65,919
Noncurrent assets			204,843				195,478
Total assets		$	247,997			$	261,397
Current liabilities		$	32,592			$	57,554
Other liabilities			10,922				11,742
Combined equity			204,483				192,101
Total liabilities and combined equity		$	247,997			$	261,397

		Year Ended December 31,
		2009				2008				2007
INCOME STATEMENT DATA:
Revenues		$	134,786			$	127,885			$	122,622
Costs and expenses			67,694				86,273				80,977
Non-operating expense			12,914				9,036				10,559
Net income			54,178				32,576				31,086

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. GOODWILL AND INTANGIBLE ASSETS

   Goodwill

     Goodwill represents the excess of the purchase price of an acquired business over the amounts assigned to assets acquired and liabilities assumed in the transaction. Goodwill is not amortized; however, it is subject to annual impairment testing. The following table summarizes our goodwill amounts by segment at the dates indicated:

		December 31,
		2009				2008
Pipeline Operations:
Purchase of general partner interests in 2004		$	198,632			$	198,632
Terminalling and Storage:
Acquisition of six terminals in June 2000			11,355				11,355
Purchase of general partner interests in 2004			11,434				11,434
Acquisition of Albany Terminal in 2008 (1)			26,829				28,597
Subtotal			49,618				51,386
Natural Gas Storage:
Acquisition of Lodi Gas in 2008			169,560				169,560
Energy Services:
Acquisition of Farm & Home in 2008			1,132				1,132
Other Operations:
Purchase of general partner interests in 2004			13,182				13,182
Total goodwill		$	432,124			$	433,892

   Intangible Assets

     Intangible assets include customer relationships and contracts. These intangible assets have definite lives and are being amortized on a straight-line basis over their estimated useful lives ranging from 5 to 25 years. The weighted average useful life of intangible assets is 14 years. Our amortizable customer contracts are contracts that were acquired in connection with the acquisition of BGC in March 1999, the acquisition of the Taylor, Michigan terminal in December 2005 and the acquisition of certain pipeline and terminal assets from ConocoPhillips in November 2009. The customer contracts are being amortized over their contractual life, 5 years in the case of the acquisition of certain pipeline and terminal assets from ConocoPhillips. The customer relationships resulted from the acquisition of Farm & Home (see Note 4 for further discussion). We determined, through an analysis of historical customer attrition rates at Farm & Home, that an appropriate recovery period for customer relationships is approximately 12 years. Intangible assets consist of the following at the dates indicated:

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		December 31,
		2009				2008
Customer relationships		$	38,300			$	38,300
Accumulated amortization			(5,631	)			(2,662	)
Net carrying amount			32,669				35,638
Customer contracts			16,380				11,800
Accumulated amortization			(3,892	)			(3,324	)
Net carrying amount			12,488				8,476
Total intangible assets		$	45,157			$	44,114

     For the years ended December 31, 2009, 2008, and 2007, amortization expense related to intangible assets was $3.5 million, $3.2 million and $0.5 million, respectively. Amortization expense related to intangible assets is expected to be approximately $4.8 million for each of the next five years.

11. OTHER NON-CURRENT ASSETS

     Other non-current assets consist of the following at the dates indicated:

		December 31,
		2009				2008
Prepaid services		$	11,640			$	—
Long-term derivative assets			17,204				6,273
Debt issuance costs			11,058				8,944
Insurance receivables			7,265				6,518
Other			9,693				11,873
Total other non-current assets		$	56,860			$	33,608

12. ACCRUED AND OTHER CURRENT LIABILITIES

     Accrued and other current liabilities consist of the following at the dates indicated:

		December 31,
		2009				2008
Taxes — other than income		$	15,487			$	14,092
Accrued employee benefit liability			3,287				2,297
Environmental liabilities			10,799				12,337
Interest payable			30,613				25,551
Payable for ammonia purchase			7,015				9,373
Unearned revenue			6,829				12,186
Compensation and vacation			11,385				15,642
Accrued capital expenditures			1,611				4,902
Reorganization			2,133				—
Deferred consideration			1,675				—
Other			22,640				20,084
Total accrued and other current liabilities		$	113,474			$	116,464

BUCKEYE GP HOLDINGS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. DEBT OBLIGATIONS

     Long-term debt consists of the following at the dates indicated:

		December 31,
		2009				2008
BGH:
BGH Credit Agreement		$	—			$	—
Services Company:
3.60% ESOP Notes due March 28, 2011			7,790				14,255
Retirement premium			(87	)			(258	)
Buckeye:
4.625% Notes due July 15, 2013 (1)			300,000				300,000
5.300% Notes due October 15, 2014 (1)			275,000				275,000
5.125% Notes due July 1, 2017 (1)			125,000				125,000
6.050% Notes due January 15, 2018 (1)			300,000				300,000
5.500% Notes due August 15, 2019 (1)			275,000				—
6.750% Notes due August 15, 2033 (1)			150,000				150,000
Borrowings under the Credit Facility			78,000				298,267
BES Credit Agreement			239,800				96,000
Total debt		$	1,750,503			$	1,558,264
Other, including unamortized discounts and fair value hedges			(4,030	)			(2,545	)
Subtotal debt			1,746,473				1,555,719
Less: current portion of long-term debt			(245,978	)			(102,294	)
Total long-term debt		$	1,500,495			$	1,453,425

     The following table presents the scheduled maturities of principal amounts of our debt obligations for the next five years and in total thereafter:

		Years Ending
		December 31,
2010		$	245,978
2011			1,525
2012			78,000
2013			300,000
2014			275,000
Thereafter			850,000
Total		$	1,750,503

     The fair values of our aggregate debt and credit facilities were estimated to be $1,769.8 million and $1,381.2 million at December 31, 2009 and 2008, respectively. The fair values of the fixed-rate debt at December 31, 2009 and 2008 were estimated by market-observed trading prices and by comparing the historic market prices of our publicly-issued debt with the market prices of other MLPs’ publicly-issued debt with similar credit ratings and terms. The fair values of the variable-rate debt are their carrying amounts as the carrying amount reasonably approximates fair value due to the variability of the interest rate.