Phillips 66 plans to spend up to $1.5 billion on infrastructure upgrades near its Houston Ship Channel facilities to serve the Permian Basin, hundreds of miles away, including natural gas liquids (NGL) fractionators, additional storage capacity and associated pipelines.

The Houston-based operator Wednesday said it is proceeding with an expansion of its Sweeny Hub by building two 150,000 b/d fractionators in Old Ocean in Brazoria County. The project is expected to begin commercial operations in late 2020.

Sweeny now has 100,000 b/d of fractionation capacity, 200,000 b/d of liquefied petroleum gas (LPG) export capability and access to 9 million bbl gross of NGL storage capacity at the Phillips 66 Partners LP (PSXP) Clemens Caverns. NGL storage capacity is expected to grow to 15 million bbl following the expansion.

CEO Greg Harland called the expansion "a key part of our midstream growth strategy that further optimizes our integrated NGL value chain. The Sweeny Hub is strategically positioned to provide fractionation capacity for rapidly growing Permian Basin NGL production and access to U.S. Gulf Coast petrochemical, fuels and liquefied petroleum gas export markets."

Last April, PSXP announced it would begin construction of the Gray Oak pipeline, which would transport Permian crude from Crane, Loving, Reeves and Winkler counties in West Texas to the Sweeny Hub and a new terminal in Corpus Christi, TX. At the time, PSXP had held an initial open season and had plans for a second one in late April. Depending on the results of the second open season, Gray Oak would initially transport up to 700,000 b/d-plus to downstream markets.