Phillips 66 is expanding its midstream and refining business in 2020 with projects in the works or under completion all along the Gulf Coast and beyond. The company said in its fourth-quarter 2019 earnings statement that its refining and chemicals business ran at 97 percent utilization.
Midstream
The company and its partners commenced initial operations on the 900,000 bpd Gray Oak pipeline, which is expected to reach full service in the second quarter of 2020.
Gray Oak will provide crude oil transportation from the Permian and Eagle Ford areas to the Texas Gulf Coast destinations, including Corpus Christi, the Sweeny area, and its Sweeny refinery, as well as access to the Houston market. Phillips 66 Partners have a 42.25 percent effective ownership in the pipeline.
The company reported that the Gray Oak Pipeline will connect to multiple terminals in Corpus Christi, including the South Texas Gateway Terminal being constructed by Buckeye Partners, L.P. The marine export terminal will have two deepwater docks, with storage capacity of 8.5 million barrels and up to 800,000 bpd of throughput capacity. Phillips 66 Partners owns a 25% interest in the terminal, which is expected to start up in the third quarter of 2020.
Phillips 66 is expanding the Sweeny Hub with the addition of three 150,000 bpd fractionators. Fracs 2 and 3 are anticipated to start up in the fourth quarter of 2020. Frac 4 is expected to be completed in the second quarter of 2021. Upon completion of Frac 4, the Sweeny Hub will have 550,000 bpd of fractionation capacity. Also at the Sweeny Hub, Phillips 66 Partners is adding 7.5 million barrels of storage capacity at Clemens Caverns. Upon completion in the fourth quarter of 2020, Clemens Caverns will have 16.5 million barrels of storage capacity. Phillips 66 Partners is also constructing the C2G Pipeline, a 16-inch ethane pipeline that will connect Clemens Caverns to petrochemical facilities in Gregory, Texas, near Corpus Christi. The project is backed by long-term commitments and is expected to be completed in mid-2021.
More than 2.2 million barrels of crude oil storage capacity will be added at its Beaumont terminal, it said in its earnings. Upon completion in the first quarter, the terminal will have 16.8 million barrels of total crude and product storage capacity. In addition, the company is adding a 200,000 bpd dock, bringing the terminal’s total dock capacity to 800,000 bpd. The project is expected to be completed in the third quarter of 2020.
Phillips 66 also reported that it is progressing the Liberty pipeline, which will provide crude oil transportation from the Rockies and Bakken production areas to Cushing, Oklahoma. Liberty is supported by long-term shipper commitments, and initial service is expected in the first half of 2021. Phillips 66 owns a 50 percent interest in Liberty and will construct and operate the pipeline.
The company is also advancing the Red Oak Pipeline system, which will provide crude oil transportation from Cushing and the Permian to multiple destinations along the Texas Gulf Coast, including Corpus Christi, Ingleside, Houston and Beaumont. Red Oak is supported by long-term shipper commitments, and initial service is expected in the first half of 2021. The company’s joint venture partner will construct and Phillips 66 will operate the pipeline. Phillips 66 owns a 50 percent interest in the venture.
Chemicals
CPChem and Qatar Petroleum are jointly pursuing the development of a petrochemical facility on the U.S. Gulf Coast that would add world-scale ethylene and derivative capacity to meet growing global demand. The U.S. Gulf Coast II Petrochemical Project is expected to include a 2 million metric tons per year ethylene cracker and two high-density polyethylene units, each with the capacity of 1 million metric tons per year. CPChem would own 51 percent and have responsibility for the construction, operation and management of the facility. A final investment decision is expected in 2021, with a targeted startup in 2024.
CPChem and Qatar Petroleum are also pursuing the development, construction, and operation of a petrochemicals complex in Qatar. The facility is expected to have a 1.9 million metric tons per year ethylene cracker and two high-density polyethylene derivative units with a combined capacity of 1.7 million metric tons per year. Pending final investment decision, the project is expected to start up in late 2025. CPChem will own a 30 percent share of the joint venture.
Refining
Phillips 66 is upgrading a fluid catalytic cracking (FCC) unit at the Sweeny refinery to increase the production of higher-value petrochemical products and higher-octane gasoline. The project is anticipated to be completed in the second quarter of 2020. At the Ponca City refinery, the company is upgrading an FCC unit to increase yields of higher-value products and process more advantaged feedstocks. The project is expected to be completed in the fourth quarter of 2020.
The company is developing renewable fuel projects that leverage existing infrastructure. Waste fats, recycled cooking oils, and other renewable feedstocks will be used for diesel production that complies with low-carbon fuel standards. The company has a renewable diesel project underway at the Humber refinery and is developing a renewable diesel project at the San Francisco refinery. Additionally, the company has supply and offtake agreements for two third-party renewable diesel facilities under construction in Nevada.
