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Phillips 66 Gulf Coast Fractionator to Bypass Mont Belvieu

In its efforts to maximize the opportunities provided by the domestic shale oil and gas boom, Houston-based Phillips 66 said it plans to develop a 100,000 b/d natural gas liquids (NGL) fractionator in Old Ocean, TX, which would provide an alternative for suppliers wary of congestion at facilities located in and around Mont Belvieu, TX.

To be located close to the company's Sweeny Refinery, the Old Ocean fractionator would create more than 25 full-time jobs and hundreds of temporary construction jobs, the company said. If approved internally and all permits are received, Phillips 66 expects construction to begin in the first half of 2014 with startup expected by the second half of 2015.

Phillips 66 CEO Greg Garland said the project would enable the company to take advantage of strong existing midstream transportation and storage infrastructure.

"We see excellent market-facing opportunities to grow the natural gas liquids business, and the chance to supply purity NGLs and liquefied petroleum gas to the petrochemical industry and heating markets," Garland added.

Phillips 66 currently owns fractionation capacity at the Gulf Coast Fractionators (GCF) and Enterprise fractionators in Mont Belvieu, as well as the Conway fractionator in Kansas. The company operates the GCF facility for the joint venture.

NGL feedstock for the Old Ocean fractionator project would be supplied by several nearby pipelines to avoid the Mont Belvieu congestion, and purified products produced by the fractionator would be marketed primarily to petrochemical customers in the region with access to Mont Belvieu, the company said. Phillips 66 spokesman Dennis Nuss told NGI's Shale Daily that the NGLs would flow from the Eagle Ford Shale, among other unconventional plays.

The project is currently in the engineering design phase, and the company is in the process of filing for all applicable permits.

The move comes weeks after Phillip 66 inked a number of deals to increase supplies of cost-advantaged North American unconventional crude oil to its U.S. refineries (see Shale Daily, March 21). The company reached three separate agreements, financial terms undisclosed, with several logistics providers for rail loading, terminaling services and a pipeline project, all of which the company said would support a rapidly changing domestic energy landscape and energy security. The deals are to tap unconventional crude production from the Bakken Shale of North Dakota and the Mississippian Lime of Oklahoma and Kansas, among other plays.

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