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Phillips 66, Kinder Test Support for Permian-to-Houston Crude Route

Phillips 66 Partners and Kinder Morgan Inc. (KMI) are teaming up to offer a new route for transporting crude oil out of the Permian Basin to markets along the Gulf Coast, the companies announced Monday.

Phillips 66-owned Gray Oak Pipeline LLC and Kinder Morgan Crude & Condensates LLC (KMCC) began a joint open season Monday offering shippers long-term crude transportation from origin points on the Gray Oak Pipeline in the Permian to delivery points on KMCC’s system at or near the Houston Ship Channel. The open season proposes delivering crude from Gray Oak into Houston Ship Channel through a connection in South Texas.

In October, the Houston-based Phillips 66 announced that it was expanding Gray Oak’s capacity to 900,000 b/d in response to strong demand on the system, which is designed to link the Permian with the Eagle Ford Shale and the Gulf Coast.

Interested parties should contact Corey Leonard at GrayOak@p66.com or Justin Peltier at Justin_Peltier@Kindermorgan.com

Monday’s announcement is the latest development in what has been a flurry of recent midstream activity aimed at serving the Permian’s prodigious output.

Earlier this month, Epic Midstream Holdings LP, which is building dual oil and natural gas liquids (NGL) pipeline systems to move supply from the Permian to the Texas coast near Corpus Christi, said units of three major producers have taken stakes to support the projects.

MPLX LP plans to expand its operations in the Southwest to match growing activity in the Permian Basin and along the Gulf Coast as 2019 gets into high gear, management revealed during a recent 4Q2018 conference call.

Meanwhile, Houston-based KMI has also been busy making moves to accommodate the natural gas growth out of the Permian, including the 2.0 Bcf/d Gulf Coast Express project slated to enter service in the second half of this year.

During its recent rollout of 4Q2018 results, KMI revealed that it’s seeking shipper commitments for 100 MMcf/d of incremental capacity on its planned Permian Highway Project after fourth quarter 2018 natural gas transport volumes grew 15% year/year.

The $2 billion project is currently designed to transport up to 2.0 Bcf/d through 430 miles of 42-inch diameter pipeline from the Waha hub in West Texas to the Texas Coast and potentially on to Mexico markets. The pipeline is expected to be in service in late 2020.

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