Phillips 66 has set its consolidated 2020 capital budget at $3.34 billion, comprising $2.15 billion of growth capital and $1.19 billion of sustaining capital, the company said last week.
Of the total, $1.92 billion is earmarked for the midstream segment, entailing $1.05 billion for Phillips 66 (PSX) and $867 million for Phillips 66 Partners (PSXP), which owns and operates pipelines to transport crude oil, refined products and natural gas liquids (NGL).
“The midstream budget, excluding Phillips 66 Partners, primarily reflects funding for the Liberty and Red Oak crude oil pipelines and 450,000 b/d of additional fractionation capacity at the Sweeny Hub,” the Houston-based company said.
Liberty Pipeline LLC, a 50/50 joint venture between PSX and Bridger Pipeline LLC announced in June, entails a $1.5 billion, 24-inch diameter oil pipeline that would move supply from the Rockies and Bakken Shale production areas to the oil hub at Cushing, OK, with a targeted in-service date of 1Q2021, according to a November investor presentation.
Red Oak Pipeline LLC, a 50/50 joint venture between PSX and Plains All American Pipeline, is a $2.5 billion oil pipeline system to move supply from Cushing and the Permian Basin in West Texas to the Texas coast, with multiple destination points in Corpus Christi, Ingleside, Houston and Beaumont. The system is set to begin service in the first half of 2021.
The Sweeny NGL hub in Old Ocean on the Texas coast currently has a single, 100,000 b/d fractionator. The second and third fractionators are due online in 4Q2020, each adding 150,000 b/d of capacity. A fourth fractionator slated to enter service in 2Q2021 would add another 150,000 b/d, bringing the complex’s total capacity to 550,000 b/d.
“The Phillips 66 Partners budget includes investments in the Gray Oak Pipeline, the C2G Pipeline, the South Texas Gateway Terminal and the Bakken Pipeline, as well as sustaining capital,” management said.
The Gray Oak oil pipeline is a 900,000 b/d conduit that would connect Permian and Eagle Ford Shale supply to the Texas coast, and it is scheduled to enter initial service by the end of this month, according to the November presentation. The C2G (Clemons to Gregory) ethane pipeline is designed to move supply from the Clemons Caverns NGL storage facility to petrochemical facilities in Gregory, near Corpus Christi.
The South Texas Gateway Terminal, an oil export facility, would include two deepwater docks with 800,000 b/d of throughput capacity.
Separate from the consolidated $3.34 billion spending, a proportionate share of capital spending by joint ventures DCP Midstream LLC, Chevron Phillips Chemical Co. LLC (CPChem) and WRB Refining LP is expected to be $1.2 billion, management said.
“Capital spending by these three major joint ventures is expected to be self funded.”
DCP’s capital budget is set $350 million, and would include funding for the two new fractionators at the Sweeny hub.
“CPChem’s growth capital will fund continued development of world-scale petrochemicals projects in the U.S. Gulf Coast and Qatar that would add ethylene and derivative capacity, as well as debottlenecking opportunities on existing units,” management said.
Meanwhile, “WRB’s expected capital spend will be directed to sustaining projects and distillate yield enhancement.”
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