Downstream

The ConocoPhillips board of directors has given final approval to spin off the downstream businesses as Phillips 66 at close of business on April 30, which would result in ConocoPhillips becoming the largest pure-play, upstream independent in North America (see Daily GPI, July 15, 2011). The companies would be headquartered in Houston. Chairman and CEO Ryan Lance would lead ConocoPhillips. Phillips 66, to be traded on the New York Stock Exchange as “PSX,” would be led by Chairman and CEO Greg Garland and would comprise the refining and marketing; midstream and chemicals businesses.

To deal with growing midstream activity in western Oklahoma and the emerging Mississippi Lime, SemGroup Corp., Gavilon Midstream Energy LLC and an affiliate of Chesapeake Energy Corp. plan to construct a 210-mile crude oil pipeline to carry supplies to a 1 million bbl storage facility in Cushing, OK.

Royal Dutch Shell plc is joining its brethren in staking out liquids-rich shale development in North America while at the same time it works to leverage value from its extensive natural gas portfolio, executives said last week.

Tennessee will implement Imbalance Warnings in downstream market-area Zones 5 and 6 Saturday, saying it has limited operational flexibility to manage imbalances there over what is predicted to be a cold long holiday weekend. All delivery point operators in the zones will be required to keep actual daily takes out of the system equal to or less than scheduled quantities regardless of their cumulative imbalance position. Receipt point operators must keep actual daily receipts into the system equal to or greater than scheduled quantities regardless of their cumulative imbalance position.

ConocoPhillips, which is repositioning itself as a pure-play exploration and production (E&P) company, said its spun-off downstream company is to be named Phillips 66 and will house the refining, marketing, midstream and chemicals businesses. The repositioning is expected to be completed in 2Q2012; ConocoPhillips plans to file preliminary paperwork within the next week (see Daily GPI, Oct. 27). Both companies would be headquartered in Houston but would maintain a “significant” presence in Oklahoma, where the predecessor company was founded. Bartlesville, OK, is to be the global center for Phillips 66 technology, as well as the site of transaction services organizations for both companies. The ConocoPhillips E&P technology organization would remain in Houston.

Chevron Corp. spud its first well during the third quarter in Alberta’s promising Duvernay Formation, CFO Pat Yarrington said Friday.

Tennessee lifted Wednesday an Action Alert OFO for all balancing parties on Line 200 in Zone 4; on Line 300 in Zone 4 upstream of Station 315 (Wellsboro, PA); on Line 300 in Zone 4 downstream of Station 321 (West Clifford, PA); and in Zones 5 and 6. The OFO remained in effect for all balancing parties on Line 300 in Zone 4 between Stations 315 and 321, Tennessee said.

A day after lifting an Imbalance Warning on Line 300 downstream of Station 313, Tennessee cited mild weather and limited operational flexibility in saying it will implement a systemwide Imbalance Warning Saturday. It will require all delivery point operators to keep actual daily takes out of the system equal to or greater than scheduled quantities regardless of their cumulative imbalance position, and all receipt point operators to keep actual daily receipts into the system equal to or less than scheduled quantities regardless of their cumulative imbalance position.

Tennessee lifted Wednesday an Imbalance Warning on Line 300 downstream of Station 313 but asked customers to match physical flow with scheduled quantities. The pipeline also delayed a line abandonment project on its 523M-7300 and 523M-7600 lines, previously scheduled from Wednesday through Sept. 29, until Saturday through Oct. 2. The work will cause the suspension of flows at four Vermilion meters offshore Louisiana, but no additional service impact is anticipated.