Phillips 66 may build Texas crude pipeline
Phillips 66 may build its own oil pipeline from the Eagle Ford shale in Texas to one of the company’s refineries and a liquid petroleum gas export facility under construction on the state’s coastline, Chief Executive Greg Garland told analysts on Wednesday.
In January, the company’s 247,000 barrels-per-day (bpd) refinery in Sweeny, Texas, started receiving crude and condensate from the Eagle Ford through a new 100,000 bpd pipeline connecting the plant to Kinder Morgan Energy Partners’ 300,000 bpd pipeline from the heart of the oil basin to Houston.
Garland said the additional pipeline would bring in another 200,000 bpd to both the refinery and the export facility about 25 miles (40 km) away in Freeport. The pipeline also could be expanded to more than 400,000 bpd, he said.
In an interview, Garland declined to say whether the company is seeking U.S government approval to export minimally processed condensate, though “it could be an option in the future for us.”
He said Phillips 66 is thinking of condensate-heavy Eagle Ford output in terms of access. Phillips 66 refineries in coastal Texas, Louisiana and New Jersey already are running about 200,000 bpd of Eagle Ford crude received via third-party pipeline or barge, and a proprietary pipeline will increase access, he said.
Phillips said third-quarter profit more than doubled as it benefited from cheap crudes produced by the domestic onshore shale oil boom.
Earlier this year, two other companies received U.S. government approvals to export condensate, a very light form of crude, if it had been minimally processed through a stabilizer that removes natural gas liquids and other contaminants.
Garland said Phillips 66 is considering condensate processing options, including a splitter at Sweeny, which provides more sophisticated processing than a stabilizer, but less than a refinery.
The Eagle Ford crude pipeline is part of company plans to beef up logistics operations, which it views as a growth source along with the chemical segment.
The company also expects to expand its newly acquired crude and refined product storage terminal in Beaumont, Texas, to 12 million barrels from 7.1 million barrels, Garland said on the company’s quarterly earnings call.
“Beaumont gives us deepwater access and at the capability to export crude and products up 600,000 barrels a day,” he said. “That more than doubles our current capacity.”
He said the terminal, which Phillips acquired from Chevron Corp, also provides the company’s Louisiana refineries more access to cheaper domestic crudes.
The terminal now has 4.7 million barrels of crude and 2.4 million barrels of product storage capacity.
On Tuesday the company announced that it had taken a 25 percent interest in two joint ventures with Energy Transfer Partners in two major pipelines to move North Dakota Bakken crude to the U.S. Gulf Coast. Energy Transfer will operate the 450,000 bpd Bakken-to-Illinois Dakota Access Pipeline and the up to 570,000 bpd Illinois-to-Texas Energy Transfer Crude Oil Pipeline.
The larger pipeline will deliver crude to Phillips 66’s Beaumont terminal as well as Sunoco Logistics Partners’ Nederland terminal. Phillips 66 also is building a 200,000 bpd crude rail loading terminal in the Bakken.
Garland said the company’s new 30,000 bpd crude by rail offloading facility at its 100,000 bpd refinery in Ferndale, Washington, is “in the commissioning phase” and expected to start up next month.
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