Phillips 66 is planning to expand its midstream business with a liquefied petroleum gas (LPG) export terminal to be built at its existing marine terminal in Freeport, TX, the Houston-based company said.
"We are looking at a rapidly changing energy landscape that presents excellent opportunities in the natural gas liquids (NGL) piece of our Midstream business," said Tim Taylor, executive vice president, Phillips 66 Commercial, Marketing, Transportation and Business Development. "A liquefied petroleum gas terminal downstream of our Sweeny complex [at Old Ocean, TX] supports our growth strategy in Midstream and builds on our strong record of operating excellence, and there are attractive markets outside of the United States for products like butane and propane."
The proposed LPG export terminal would provide 4.4 million barrels per month of LPG export capacity, "the equivalent of eight very large gas carriers," and would utilize existing Phillips 66 midstream, transportation and storage infrastructure to supply petrochemical, heating and transportation markets globally, the company said.
Phillips 66 owns fractionation capacity at Gulf Coast Fractionators (GCF) and the Enterprise Mont Belvieu Fractionator in Texas, as well as the Conway Fractionator in Kansas. Phillips 66 is the operator of the GCF facility.
The Freeport LPG export terminal would be supplied with LPG from the Mont Belvieu area and from the Sweeny complex. In April, Phillips 66 said it planned to develop a 100,000 b/d 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 (see Shale Daily, April 4). 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. NGL feedstock for the 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.
The export terminal project is in the engineering design phase, which includes the process of filing for all applicable permits, the company said. Final project approval is anticipated during the first half of 2014, with startup planned for the middle of 2016.
Last month, Enterprise Products Partners LP (EPD) announced plans to construct its second LPG export terminal on the Gulf Coast, and Williams and Boardwalk Pipeline Partners LP said they had struck a joint venture (JV) for an LPG export facility of their own in the Lake Charles, LA, area. The Williams-Boardwalk facility would enable export of some of the liquids that would be carried from the Marcellus Shale by the proposed Bluegrass Pipeline, another project of the JV partners.
Phillips 66 last week reported 3Q2013 earnings of $535 million, compared with $1.6 billion in 3Q2012. Weaker refining margins had a significant impact on earnings, according to CEO Greg Garland.
Since 2009, Phillips 66 has generated half of its earnings from refining, 20% from marketing, 17% from chemicals and 13% from midstream, but the company has been talking aggressively about a timeline to transform to a midstream-focused company, according to analysts at Tudor Pickering Holt. That would seem to indicate that Phillips "could move from a majority refining marketing company to a majority midstream/chemicals company in the next three years, coinciding with the full startup of [Phillips'] signature midstream project, the integrated fractionation/export complex in Freeport, TX," the analysts said.