An Independent Evaluation of Phillips 66, its Business Strategy, and Execution
by Hugh Pickens, Ponca City Oklahoma
On May 1, 2012 ConocoPhillips split into two separate publicly-traded companies: an upstream company that will retain the name ConocoPhillips and concentrate on exploration and production, and a downstream company, to be named Phillips 66, that will include refining and marketing (R&M), chemicals, and midstream business segments. The refinery in Ponca City, with over 700 employees the single largest employer in Ponca City, is part of the R&M segment and will go into Phillips 66. Phillips 66 will be a publicly traded company (PSX) and a number of independent financial analysts will be following the company.
The purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the refinery in Ponca City, Oklahoma. Some of the conclusions I have reached after analysis of publicly available information on Phillips 66 include the following:
- The Refining and Marketing Business Segment will be more important to Phillips 66 than it was to ConocoPhillips.
- The refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips.
- The Refining and Marketing Business Segment is the least profitable Business Segment and will be de-emphasized with unprofitable refineries closed or sold off.
- There will be a reduction in the capital allocated to the Refining and Marketing Segment.
- Although Phillips 66 sold the Trainer refinery on May 1, 2012 and has tried to sell the Alliance refinery, the refinery in Ponca City is unlikely to be closed or sold for at least three to five years as margins have been strong in the Mid-Continent Segment and are expected to remain high for the medium term.
- Profits are presently very high for the Mid-Continent refineries of which the refinery at Ponca City forms a part. The Ponca City Refinery earned profits in excess of $500 million in 2011 and based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line. But these profits are due to the glut of crude oil pouring into the region from newly tapped shale oil like North Dakota’s Bakken and the high Brent to West Texas Intermediate differential and these high profits are not expected to persist for more than three to five years.
- Phillips 66 plans and strategy to increase profitability by moving away from the low COBE and cyclical Refining and Marketing Business Segment and making massive investments in the high COBE Chemical Business Segment and Midstream Business Segment appear sound. The question for Phillips 66 now becomes now becomes one of executing the plan.[1][2]
Ponca City and its Century-Old Oil Legacy and History
Before we evaluate the general strategies that Phillips 66 plans to employ in its Refining and Marketing Business Segment, we will take a close look at one of Phillips' most important and most profitable refineries - the refinery built by EW Marland in Ponca City, Oklahoma almost 100 years ago.
1911: Marland finds Oil near Ponca City
Over the past 100 years, Ponca City's history has been shaped for the most part by the ebb and flow of the petroleum industry. EW Marland decided to come to Ponca City after a relative introduced him to the Miller brothers whose famous 101 Ranch lay near Ponca City, Oklahoma. In 1908 E. W. journeyed to Ponca City and immediately decided that the surface geology indicated oil. Marland raised capital from financiers back in Pennsylvania and began drilling. Marland originally founded the 101 Ranch Oil Company, located on the Miller Brothers 101 Ranch, and after drilling seven dry holes, drilled his first successful oil well, called Willie Cries, in 1911 on land which he leased from the Ponca Tribe.[3][4]
1917: Marland Oil Founded and Marland Refinery Built
Marland Oil Company was founded in 1917, when Marland assembled his various holdings including the 101 Ranch Oil Company into one unit, forming Marland Oil Company. Later, on January 3, 1921 Marland incorporated the Marland Oil Company in Delaware to acquire through an exchange of stock control of the Marland Refining Corp. and Kay County Gas Co. By 1920 it is estimated that Marland and his partners controlled 10% of the worlds oil production (the equivalent of Saudi Arabia in 2006) and that Marland was worth $85 million.[5]
In 1918 Marland began construction of the Marland Refinery and the population of Ponca City doubled then trebled in a few months.[6]
From the outset Marland realized that to sustain long-range corporate growth he must form an integrated company encompassing drilling and production, storage and transportation, and refining, and retailing, similar to the very successful model used by the Standard Oil Company. The first step in this process was to dissolve the 101 Ranch Oil Company and replace it with the Marland Refining Company. Over the next several years Marland expanded his empire to include production in neighboring states, and by 1919 he had even started large-scale drilling operations in Mexico. The next step in bringing the feverish rate of growth under a more centralized and integrated operation came in early 1921 when Marland consolidated all of his oil operations under the auspices of the Marland Oil Company. Headquartered in Ponca City, where its major refining facility was located, the firm continued its phenomenal growth pattern by absorbing numerous small oil companies such as Comar Oil Company, Tom Jones Oil Company, Kenney-Cleary Oil Company, Francoma Oil Company, John S. Alcorn Oil Company, and many others whose highly competent executives Marland's company usually retained. Additionally, the company opened its first retail gasoline "filling station" in Pawhuska, Oklahoma, in 1920, and that aspect of the business began to experience rapid growth. Marland took a strong, paternal interest in his company and in his employees and provided numerous benefits not normally offered in that era. He furnished company housing at a nominal fee, provided free insurance to all employees, paid wages above the norm for the time, and is generally acknowledged to have provided the best employee benefits and working conditions in the state. Additionally, his donations to local charities and civic projects were enormous, and he sponsored legendary entertainment spectacles for both employees and the general public.[7]
According to an article appearing in Petroleum Age in 1922, the refinery in Ponca City was already one of the largest refineries in the world by 1920:
Located in the heart of the Mid-Continent oil field, the greatest known light oil field in the world, by 1920 the company controlled, with its subsidiaries, over 200,000 acres of proven and valuable oil land within a radius of 100 miles from Ponca City, the headquarters of the company. A study of the map of Marland properties in Northern Oklahoma proves easily the strong strategic position the company holds through its oil resources and large reserves in some of the best pools of this district. Marland oil opened in 1920 the famous Hickman, or now better known as Burbank pool, in the Western Osage; in 1921 the Tonkawa pool in Noble County, within fifteen miles of Ponca City, which promises to produce large quantities of high-gravity crude. It controls almost entirely the Ponca field, one of the oldest and best producing fields in the Mid-Continent, with five producing sands; holds large parcels of oil and gas lands in the Eastern and Western Osage fields, in the Garber, Noble, Newkirk, Deer-Creek and in the Pawnee Payne district. Marland draws its crude from eighteen producing fields with 244 wells and produces, with its affiliated companies, the Comar and Alcorn Oil Companies, over 12.000 barrels per day, sufficient crude for its own refinery demand. Pipe lines extending 271 miles, with thirteen modern equipped pumping stations, radiate in three directions from Ponca City and connect Marland's two refineries with oil fields which have ample unmined production to supply sufficient crude oil for many years to come. The company operates in Ponca City a 10,000-barrel complete refinery, and at Covington a 1,000-barrel skimming plant producing a well-known brand of high grade gasoline and lubricating oils. Nearly two million barrels of steel storage for crude and finished products give the company a strong position in the market, and enabled Marland to begin the storage of gasoline when the refinery price was as low as 12-1/2 cents. The recent raise, totaling so far 3 cents per gallon has greatly increased the value of the 250,000 to 300,000 barrels gasoline the company keeps i» storage against the coming summer demand.[8]
By 1922 nearly 600 Marland stations were found in 11 mid-continent states, from North Dakota to Oklahoma and as far east as Indiana. Growth required capital, however, and Marland was continually strapped. Turning to investment banker J.P. Morgan and Company, Marland was able to secure financial backing for continued expansion, but with expansion came a hefty price. By 1928 Marland had been forced out by Morgan interests who placed former Texaco executive Dan Moran in charge. With orders from Morgan and Company to put Marland Oil back in the black, Moran set out to acquire key assets that would round out the Marland operation, allowing for increased financial stability. With this in mind, Marland management began to look around for a partner, a company with complementary assets, an operation that would perhaps consider a merger.[9]
Marland's exploitation of oil reserves generated growth and wealth that were previously unimaginable on the Oklahoma prairie, and his company virtually built the city from the ground up. Mansions—including the Marland Mansion and Grand Home—were built by Marland and his associates. The "Roaring 20s" came to an end for Ponca City shortly before the Great Depression. After the takeover bid by J.P. Morgan Jr., son of financier J.P. Morgan, Marland Oil Co. merged with Continental Oil Co. (Conoco) in the late 1920s.[10] It was known as Conoco for more than 70 years. The company maintained its headquarters in Ponca City until the 1950s and continued to grow into a global corporation.[11] Marland was later elected the governor of Oklahoma and as a U.S. congressman.
1929: Marland Loses Control of His Company and Marland Oil Acquires Continental Oil
Conoco Inc. was an American oil company founded in 1875 as the Continental Oil and Transportation Company. Based in Ogden, Utah, the company was a coal, oil, kerosene, grease and candles distributor in the West. Marland Oil Company (founded by exploration pioneer E. W. Marland) later acquired the assets (subject to liabilities) of Continental Oil Company, for a consideration of 2,317,266 shares of stock. On June 26, 1929, Marland Oil changed its name to Continental Oil Company and moved its headquarters to Ponca City, Oklahoma. The acquisition gave Conoco the red bar-and-triangle logo previously used by Marland. Conoco used the logo between 1930 and 1970, when the current red capsule logo was adopted. Ponca City remained the world headquarters of Conoco until the 1950s when the headquarters moved to Houston.
1950s - 1960s: High Water Mark for Conoco in Ponca City
Many consider the 1950s and 1960s as the high water mark for Conoco in Ponca City. "Your new job puts you right in the middle of Conoco's worldwide diversified operations," read a Conoco employee handbook published in 1967. "More Conocoans - 3,300 of the oil company's employees -work here than in any other single location. Ponca City is the 'Service Center of the Conoco World.' This is the center for our research, engineering, accounting, computer, pipe line, purchasing, and transportation activities. The oil industry is perhaps the most stable in the country. And the many companies of the Conoco family are right at the top of the industry."[12]
"Since 1950, Conoco's growth has been notably dynamic, moving from a position as a domestic regional company to the full rank of major international," continues the handbok. "Almost 'overnight,' Conco established a fully integrated petroleum operation in Africa and Europe. Conoco is a now company. Enjoying the best overall growth rate among the world's largest oil firms, Conoco is a billion-dollar corporation and interational in scope and operations. Its diversification activities include plastics, coal, plant foods, petrochemical, electronics, nuclear research, and cryogenics applied to worldwide transport of natural gas in liquid form."[13]
"Conco spends about $10 million annually on research and engineering through the efforts of more than 500 scientists and technicians at the company's multimillion dollar research center at Ponca City."[14]
1981: Dupont Acquires Conoco
In 1981, in what was called the largest acquisition in US history at that time, Conoco was purchased by DuPont Company, headquartered in Wilmington Deleware, over the July 4 weekend for $9.7 billion. At the time of the acquisition, DuPont announced that $2 billion in Conoco assets would be sold to reduce Conoco's debt. Dupont began by selling a west coast refinery for $100 million and a group of domestic properties were sold to Petro-Lewis for $750 million. At the time of the acquisition, Conoco was by far Ponca City's biggest employer with 828 employees at the refinery and an additional 3,805 employees working in support services including financial, research,engineering, and service organizations.[15] Thirty years later only the refinery employees remain.
1990: Conoco reaches Environmental Settlement with Ponca City
The NY Times reported in 1990 that Conoco had reached one of the largest settlements ever recorded at that time in a lawsuit over environmental contamination offering 400 families that are neighbors to the Conoco refinery a package of measures worth from $23 million to $27 million, according to various estimates that will allow them to move away "from the acrid odors that have come to signify sickness and death in many households." Conoco executives said the settlement would permit them to create an uninhabited buffer zone around the plant. "We didn't do this for the money, and people are not going to have a good time spending it," said Anna Sue Rafferty, a leader of Ponca City Toxic Concerned Citizens, a community group that helped organize the suit against Conoco. "This has been my home for 34 years. I raised four children here. I love this house, but all I want to do now is get out of it." In response to years of complaints, Federal and state officials along with Conoco executives repeatedly told the plant's neighbors that no toxic substances were evident and that they faced no health risk. But recent tests performed by Conoco on samples of water found underground showed traces of benzene, a known carcinogen, according to Dennis Parker, the refinery manager. Adrienne Anderson, Western regional director of the National Toxics Campaign, which provided technical assistance to people in the area, said privately commissioned tests on water that had seeped into basements regularly showed dangerous levels of benzene, arsenic and about 20 other potentially harmful chemicals. Conoco, a fully owned subsidiary of E. I. du Pont de Nemours & Company, did not acknowledge any wrongdoing in the settlement. In a statement Monday, Mr. Parker noted that the agreement says, "No party admits any fault, liability or responsibility for any claims, injuries or damages claimed by any adverse party." Grace Klinger, who learned the chemistry of hydrocarbons to find out what was happening in her neighborhood, said: "When I was growing up, everyone just figured the stink was just refinery stink and if the company said it was O.K. then it was O.K. Now we know better, and it doesn't matter what Conoco says because the truth is out."[16][17]
1993: Major Downsizing at Conoco
Ponca City was hit by major downsizing at Conoco in 1993 when approximately 1,400 jobs were cut, resulting in an annual payroll reduction of $40 million. This precipitated an economic slowdown in the city and county in 1993 and 1994. The unemployment rate, which had always been well below the national average of six percent, jumped to 12 percent and unemployment compensation claims more than doubled from the previous year. While Conoco once accounted for 50 percent of the jobs in Ponca City, after the downsizing Conoco accounted for just seven percent, or 1,400 jobs. According to a study by the International Economic Development Council, "the town’s psychology and identity was rocked by the downsizing of its one major employer."[18]
1998: DuPont Sells Off Stake making Conoco Independent
The NY Times reported in 1998 that in a move that many investors believe was long overdue, DuPont announced that it would divest itself of 20 percent of its $22 billion Conoco oil subsidiary in a tax-free stock offering that could bring in as much as $5 billion. Charles O. Holliday Jr., DuPont's chief executive, said he would dispose of the rest of Conoco "as soon as practical." DuPont bought Conoco in 1981 as insurance against the pricing and supply tactics of the Organization of Petroleum Exporting Countries. But oil prices have been far less volatile than it had feared, and DuPont continues to de-emphasize the petrochemical side of its business, so having Conoco as a captive source of raw material is of less strategic importance.[19] A successful road show kicked into gear to sell Conoco to the investment community, culminating in the largest IPO in history, nearly $4.4 billion. Many financial analysts were skeptical the deal would be pulled off, given tremendous upheaval in both the oil and stock markets and a dried-up appetite for public offerings. But company personnel, from top executives to support people, worked countless hours to make the IPO a success. On October 22, 1998, their efforts paid off: Conoco stock began trading again, using a new symbol, "COC," honoring the name it had held for so many years - Continental Oil Company.[20]
Creation of Phillips 66
Rationale for the ConocoPhillips Split
There are two ways to look at the decision to split off the downstream segment from ConocoPhillips with the creation of Phillips 66. According to Christopher Helman writing in Forbes magazine the ConocoPhillips’ split can be seen as the upstream guys seizing an opportunity to jettison their lower-returning downstream assets all at once rather than piecemeal, as they’ve been doing. On the other hand, the split "liberates downstream to pursue its own growth opportunities," according to incoming Philips 66 CEO Greg Garland. "As an integrated oil company we were pushing a lot of our capital to the Exploration and Production (E&P) space, which was the right thing to do as an integrated oil company."[21]
"If Phillips 66 has been left with the wrong end of the deal, then Greg Garland is putting in a spirited effort to persuade investors otherwise. He says the creation of Phillips 66 represents an opportunity to ensure that his company is in a strong position to make the best of the uncertain conditions in the downstream sector," writes Shaun Polczer in "The Petroleum Economist on May 25, 2012. "The company hopes that ...Phillips 66 will be better able to capitalise on its options to maintain a steady income stream from mid and downstream operations. "[22]
Simone Sebastian and Emily Pickrell writes in the Houston Chronicle that Mulva abandoned the super-major model that its retiring leader helped engineer a decade ago leaving behind "a more modest oil exploration and production company, streamlined by the aggressive asset sell-off that has defined his final years at the helm." Mulva is the last of a group of oil executives who orchestrated the model of building companies that delivered fuel from the ground to gas tanks through their own international networks of exploration, refining and distribution assets. "He appreciated the changing paradigm in the industry a decade ago when all the oil companies were combining," said Doug Terreson, head of energy research for ISI. "The oil industry is shifting toward a new competitive paradigm now and separation makes a great deal of logic."[23]
Rod Walker writes in the Tulsa World on April 28, 2012 that "the separation of ConocoPhillips and Phillips 66 is the final achievement of CEO Jim Mulva's eight-year reign atop the integrated company" although questions abound regarding the rationale behind the split one decade after the merger that created ConocoPhillips. "Why was it better to get bigger 10 years ago and not now?" asks Bruce DeShazo, assistant vice president and investment adviser at American Heritage Bank of Sapulpa. "I would think the reason they'd do something like this is to divest those losing assets. They're just having a hard time making money in refining." Outgoing ConocoPhillips CEO Jim Mulva wants to reduce the company's exposure to refining by spinning off Phillips 66. "We said sell non-core assets, position for growth. Essentially, 90 percent of our capital spending is directed towards exploration and production, and reduce our exposure to refining."[24]
According to Mulva in his presentation to financial analysts on July 14, 2011, the question is why would you spin out the downstream versus to stay integrated. "We believe more value is created in the formation of two very clear, standalone companies versus accomplishing our objectives of rationalizing our downstream within the integrated oil structure. There is generally greater external transparency of the business performance when the marketplace looks at the pure plays versus being accomplished in the integrateds. And we also believe there is more focus and attention and greater probability of success by the management team by having pure-play separate upstream and downstream companies. Our investors, we believe, have the better ability to adjust to overweight or underweight their views of investing in these segments of integration, upstream and downstream. And as I just said, there is greater management focus to customize strategies, both upstream and downstream. And we also believe with this, it really allows us to attract, retain and compensate the talent we need to create the highest probability of success upstream and downstream."[25][26]
"I think that world and that marketplace has pretty well changed. So if we look out the medium- and the long-term, we face this challenge, whether we are viewed as independent or viewed as an integrated company, the issue of competitive growth is the same, whether it is a company bigger than ourselves or it is an independent smaller than ourselves. So it doesn't change with the accomplishment of doing this transaction and spinning out the downstream. We are faced with the same challenge. Some also could argue that the larger you are, the more difficult it is, given the access issues, and in many places in the world, an emphasis of trying to move IOCs or independents more towards service contracts than it is taking equity interest. So all we are saying is whether we are classified as independent or classified as an integrated, or however we are classified and what we are structured, we still have the issue of how do we take our current reserve position and our production, how do we grow it and do it with competitive finding and development cost. So we have got the same challenge. Now, if we do that well, whether we are integrated or we are viewed as independent pure plays, if we do that well, it will be recognized in the marketplace. And that is really where we are coming from. We are not doing something cleverly just to get a higher PE multiple, but we do think the pure plays are better understood in the marketplace, and it is going to put a lot more focus on our management and our leadership to accomplish the objective, which is to convert the resources that we have. We like to always get more resource, but convert those resources to reserves, and do that really well with competitive finding and development cost, we will grow our production and we will do it in a value-creating way."[27][28]
"The other thing is we look at our Company in the marketplace, we have a number of investors that would say you are making the investment decision for us. You are putting us in both the upstream and downstream business, where we would like to make that investment decision ourselves. So by being separated, you can take your choice. You want to invest in the downstream, you want to invest in the upstream. So if you look at the integrated company, you can say, well, I think the downstream part of the company is holding back on the value creation and recognition of your E&P business. And then on the other hand, those people who are interested in the downstream would say, you are not getting recognition for the quality or the contribution of the downstream. And then there is another issue that we have seen, unfortunately. But from an enterprise risk management point of view, having two separate companies is -- we think is something that makes a lot of sense. And so it is for these different reasons and putting more focus both upstream and downstream at attention, and clear peer plays, not so much that the market can look and make the decision where they want to invest, but the leadership of the company knows clearly what business they are in and they dedicate their attention to doing it in a value-creating way."[29][30]
See also
- ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.[31]
- ConocoPhillips Analyst Meeting - Color Slides "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.[32]
Implementation of the ConocoPhillips Split
On May 1, 2012 Phillips 66 issued a press release announcing that Phillips 66 had emerged as an independent downstream energy company with industry-leading businesses in refining and marketing, midstream, and chemicals. Created through a spin-off of these assets from ConocoPhillips, Phillips 66 begins regular trading on the New York Stock Exchange this morning under the ticker symbol PSX. "Our strategic approach combines one of the world's most competitive refining and marketing operations with rapidly growing midstream and chemicals businesses," said CEO Greg Garland. "Phillips 66 will be clearly differentiated from pure-play refining companies with specific plans for enhancing returns and growing shareholder distributions. We have an exciting future ahead of us."[33]
On November 11, 2011 the Tulsa World reported that Phillips 66 would be the name for the new independent oil and gasoline refining and marketing firm, created as ConocoPhillips splits into two companies. ConocoPhillips will keep the current name of the company and will concentrate on the exploration and production side while Phillips 66 will include refining and marketing portions of the company. Each company will be run independently and will have different tocker names in the stock market. The refinery in Ponca City employs about 700 people while Bartlesville will be the global center for the Phillips 66 technology organization as well as the transaction services organizations for both companies.[34] ConocoPhillips CEO Jim Mulva will resign once the split is complete and Greg Garland will be the new CEO of Phillips 66.[35] The decision to name the new entity for Phillips 66 is because of name recognition and branding. "Phillips 66 has strong brand recognition and value, and it provides a link between our rich history and our exciting future," Garland said Thursday in a news release. "Our name reflects an independent spirit and drive."[36]
On April 4, 2012 ConocoPhillips' board of directors gave its final approval for the spin-off of its downstream businesses into Phillips 66.[37] ConocoPhillips executive vice president and CFO Jeffrey Sheets announced on April 23, 2012 that ConocoPhillips is putting its final touches on its spinoff of Phillips 66 this week, and the transaction will take place as scheduled on May 1, 2012.[38]
Garland Says the Spin-off of Phillips 66 Was Executed Flawlessly
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that spin-off of Phillips 66 was executed flawlessly. "I think it's a real tribute to the dedication and the capability of the Phillips 66 employees. They did a great job of getting our feet underneath this. The Company has stood up. We're ready to go. The systems are operating well. We've been running well and capturing good opportunities in the market.[39]
Decision to Name the Downstream Company Phillips 66
ConocoPhillips announced on November 11, 2011 that the new independent downstream company created through its previously announced strategic repositioning will be named Phillips 66. With a history that goes all the way back to petroleum industry "birthplace," in Bartlesville, Oklahoma in 1917, the company will be a leading independent company with refining, marketing, midstream and chemicals businesses operating across the globe. "Phillips 66 has strong brand recognition and value and it provides a link between our rich history and our exciting future," said Greg Garland, designated chairman and chief executive officer of Phillips 66. "Our name reflects an independent spirit and drive--two attributes of our future company."[40] According to the ConocoPhillips web site "the name Phillips 66 was chosen [for the new downstream company] because it has strong brand recognition and value, which allows us to link our rich history and our exciting future. The name represents the independent spirit and drive that will be part of the culture of Phillips 66."[41] The new company's name capitalizes on the public awareness and gives tribute to history, Garland added.[42]
The company launched a new Phillips 66 website: www.phillips66.com, that provides some history of the brand:
Frank and L.E. Phillips were two of the original experts in gas. They started prospecting for oil in 1903 and founded Phillips Petroleum Company in 1917. Since then, the company has grown considerably and has expanded its product offerings through its commitment to innovation and meeting customer needs. That’s fancy talk for "we keep making it better." Phillips 66® also has a history with US Highway 66. In 1927, on the "Mother Road" during a test drive of a newly developed high-octane gasoline, the vehicle reached a cruising speed of 66 mph. The new fuel was named Phillips 66. Even the logo was inspired by the road signs that dot the length of the historic highway. And the rest is history. And gas. Very High quality gas.[43]
The Houston Chronicle reported on November 10, 2011 that according to ConocoPhillips spokesman John Roper, while Phillips 66 products will retain the traditional logo, executives haven't decided whether to make it the corporate logo as well.[44]
The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that "the downstream energy company — named Phillips 66 in a tip of the cap to its product lineage begun right here in Bartlesville — will be a leading independent refining, marketing, midstream and chemicals business."[45]
Strategic Vision for Phillips 66
On April 9, 2012, Greg Garland, the designated CEO of Phillips 66, presented an overview of the new company and his plans for Phillips 66. There are three leading operating segments in the new company: Chemicals, Midstream, and Refining and Marketing.[47][48][49]
The basic Phillips 66 strategy to increase profitability is to focus on the business segments that have the highest return on capital invested which are the Chemical Business Segment and the Midstream Business Segment. This means that the Refining and Marketing Business Segment which has the lowest profitability will be de-emphasized. Capital allocations for the business segments with the highest profitability will be increased. Capital allocation for the R&M business segment will be reduced. Unprofitable refineries in the R&M Business Segment will be sold or closed. Ponca City falls into the Refining and Marketing business segment of Phillips 66.
See also:
- Slide Presentation for Phillips 66 Investor Update
- Transcript of Phillips 66 Analyst Update
- Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
Benefits of Being an Independent Company
Garland talked about the benefits of Phillips 66 being an independent company. "As I think about the spin and really the strategy and the rationale behind the spin, it creates opportunity for Phillips 66 to create value that we just couldn't pursue as part of the integrated ConocoPhillips. Our existing R&M business, our Chemicals and Midstream business, all provide good, solid cash flow and we can use this cash flow to fund strategic growth. We can use it to improve returns, and also for distributions to shareholders. I think another benefit of the spin is you will see greater granularity regarding asset performance and the financial results in all three segments."[50][51][52]
Simon Moore wrote at Seeking Alpha on May 10, 2012 that ConocoPhillips was a slower, more lumbering entity but with Phillips 66 newly reduced size, its growth should accelerate.[53]
The Houston Business Journal reported on August 10, 2012 in a profile of Chevron Phillips CEO Pete Cella that with the ConocoPhillips split of its upstream and downstream business in May, Chevron Phillips makes up a more prominent part of the Phillips 66 business, which is good because the company gets more attention, said Cella.[54]
Laurie Winslow reported in the Tulsa World on October 3, 2012 that with Phillips 66 up 40.3 percent in the five months since its divestiture on May 1, 2012, the market has applauded the move by ConocoPhillips to split its exploration and production company from its refining business, creating Phillips 66. "In past years, refiners have been the dogs of the energy sector, and in 2012 they find themselves the darling of the energy sector. Phillips 66 really has spread its wings since the spinoff from ConocoPhillips, and it's gotten quite a bit of international attention," says Jake Dollarhide, CEO of Longbow Asset Management Co. "A lot of people felt that ConocoPhillips with all of the businesses together wasn't getting the market valuation it deserved."[55]
Enhance the Return on Capital Employed (ROCE)
ROCE (Return on Capital Employed) is a ratio used in finance, valuation, and accounting that compares earnings with capital invested in the company is used to prove the value the business gains from its assets and liabilities.[56] The three operating segments of Phillips 66 have very different ROCE's. In 2011 the ROCE of the Refining and Marketing segment was 12%, the ROCE of the Midstream segment was 30%, and the ROCE of the Chemical segment was 28%. Because the ROCE of the Chemical segments and the Midstream segments is so much higher than the ROCE in the R&M segment, Garland plans to plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company.
"Here's how we plan to enhance returns on capital," says Garland in the April9, 2012 financial analysts meeting. "I think you will see continued portfolio optimization, margin improvement from us. We will drive our capital employed to higher returning businesses. You can see on the chart on the right in 2012 we plan to high grade, to move more investment to Chemicals and Midstream. And by the way, these are our equity share of the investments in Chemicals and Midstream. While we're pursuing aggressive growth at both the DCP Midstream and the Chemicals Midstream, our view is that they're going to be self funding and at the same time they will dividend cash back to Phillips 66."
Allocation of Capital to More Profitable Business Segments
Garland says that long-term Phillips 66 has "a vision that about 50% of our capital employed will be directed towards the R&M segment. And the other 50% will be directed towards Midstream and Chemicals.We'll preferentially invest in the higher return businesses and we will be very selective in how we invest in the lower return businesses."
Garland told financial analysts at an investors conference on June 5, 2012 that Phillips 66 would keep investments in its refining assets to a minimum, instead focusing on expanding its chemical-and-logistics business and that Phillips 66 will spend $2 billion on capital projects in its midstream-logistics segment, including natural-gas-liquids processing and exports infrastructure.[57]
Differentiated Portfolio
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the three pieces of Phillips 66 business, the Refining and Marketing; the Midstream business, and the Chemicals business are more valuable together and that value is created through lower risk, lower cost of capital, the ability to see across the entire value chain. "We think we have a clear strategy in terms of capturing growth opportunities, margin enhancement opportunities, and driving return improvement in our business. I would also say that we are very purposeful and thoughtful. We're very purposeful and thoughtful about the assets that we've put in to Phillips 66 as we started the Company. We think that the three pieces of our business, the Refining and Marketing, Specialties, Transportation; the Midstream business, and the Chemicals business are more valuable together. We think value is created through lower risk, lower cost of capital, the ability to see across the entire value chain. We think it makes us better allocators of capital ultimately. We think you'll see the benefits of our management of these three businesses as we go forward."[58]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that a differentiated portfolio is a competitive advantage for Phillips. "I would just say over the last 3.5 years, about 40% of our adjusted earnings came out of R&M or specifically refining. Then you can see 60% came out of marketing specialties and other businesses, our Chemicals business and Midstream business. The point here, we have a differentiated portfolio. We like this portfolio. We think it's a competitive advantage for us."[59]
Plan to Aggressively Grow Chemicals and Midstream segments of Phillips 66
Garland plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company. "Over the past three years we've reduced refining capacity about 450,000 barrels a day. In our Chemicals segment we've been growing primarily through investments in the Middle East. In our Midstream segment, growth has come from expansions around the shale liquids and gas producing areas."[60][61][62] "The refining business is currently a difficult business and one where the outlook doesn't change a lot going forward," said Mark Gilman, an independent oil and gas analyst. "Phillips 66's asset quality in the refining space is, at best, kind of average."[63] The best performing divisions for Phillips 66 are expected to be its midstream joint venture and a petrochemicals company.[64]
Simon Moore wrote on Seeking Alpha on May 10, 2012 that now that Phillips 66 is no longer part of ConocoPhillips, management is planning a clear cut move to greater emphasis on Midstream and Chemicals Business Segments. "New management's long term plan is to move to 50% Refining and Marketing, 25% Chemicals, and 25% Midstream. These latter two businesses have a much higher ROCE (return on capital employed) for PSX."[65]
Governance of Phillips 66
Jim Mulva, Chairman and CEO of ConocoPhillips
Although Jim Mulva will not be a corporate officer of Phillips 66, Mulva was the chairman and chief executive officer of ConocoPhillips and conceived and executed the idea of splitting up ConocoPhillips which resulted in the creation of Phillips 66. Mulva plans to retire on May 1, 2012 when the split has been accomplished. Mulva served as president and chief executive officer of ConocoPhillips from 2002 to 2004. Prior to that, he served as chairman and chief executive officer of Phillips Petroleum Company from 1999 to 2002. Mulva served as Phillips’ president and chief operating officer beginning in May 1994 and executive vice president since January 1994. Mulva had been senior vice president in 1993 and chief financial officer since 1990, at which time he joined the company's management committee. Mulva began his career with Phillips in 1973.
Mulva graduated from the University of Texas in 1968 with a bachelor's degree and a master's degree in business administration finance in 1969.[68]
The Houston Chronicle reported on April 23, 2012 that Jim Mulva retired May 1, 2012 when ConocoPhillips' refining, pipelines and chemicals units spun off to form an independent, publicly traded company called Phillips 66.[69]
Rod Walton writes in the Tulsa World on April 28, 2012 that ConocoPhillips decided that bigger was better when Phillips Petroleum Co. and Conoco Inc. merged in 2002, but now has turned 180 degrees around in 10 short years now believing that smaller is what investors want. ConocoPhillips, the nation’s third-largest integrated energy firm, will now become known as a “pure play” independent when the refining and chemical side is spun off into a new company called Phillips 66. "Mulva helped oversee the 2002 merger as head of Phillips Petroleum and now walks offstage into retirement as the one company becomes two," writes Walton.[70] "Outgoing Chairman and CEO Jim Mulva, who has expertly led the company for a decade — and several years prior to that as Chairman and CEO of Bartlesville-based Phillips Petroleum Co. — steps into retirement having proven to be a true friend to the City of Bartlesville," editorialized the Bartlesville Examiner-Enterprise.[71]
The Detroit News reported on April 26, 2012 that Mulva has been asked to join the board of directors of General Motors. "Jim's extensive experience and expertise in the energy industry and in-depth background in finance will be invaluable to GM," said General Motors Co. CEO and Chairman Dan Akerson. Mulva already serves on the board for GE, which has a partnership with GM to accelerate deploying electric vehicle charging stations in China.[72] Your Houston News reported on September 4, 2012 that Mulva will be headlining the Adult Learning Program’s Fall Session at St. John Vianney Church in Houston by speaking on the oil industry and its future in Texas on September 25, 2012.[73]
Greg Garland, Chairman, President and CEO of Phillips 66
Greg Garland was designated the Chairman and CEO of Phillips 66, the new Downstream company created with the split-up of ConcoPhillips. Garland took charge on May 1, 2012. Greg Garland was senior vice president, Exploration and Production, Americas for ConocoPhillips at the time of the split.[74]
Garland received a Bachelor of Science degree in chemical engineering from Texas A&M University in 1980. Garland has more than 30 years of industry experience in technical and executive leadership positions with ConocoPhillips, its predecessor Phillips Petroleum Company, and Chevron Phillips Chemical Company. Garland has been with Phillips for his entire 32-year career.[75][76]
Garland was previously president and chief executive officer of Chevron Phillips, a joint venture between ConocoPhillips and Chevron. Before his election to that position, Garland served Chevron Phillips as senior vice president, Planning & Specialty Chemicals. His prior experience includes serving as general manager of Qatar/Middle East for Phillips, a position he assumed in 1997. From 1995 to 1997, he served as general manager of natural gas liquids after serving as manager of planning and development in planning and technology. From 1992 to 1994, he was manager of the K-Resin® business unit. Garland began his career with Phillips in 1980 as a project engineer for the Plastics Technical Center. He later worked as a sales engineer for Phillips' plastics resins, business service manager for advanced materials, business development director, and olefins manager for chemicals.[77]
Garland, who formerly headed Chevron Phillips Chemical, was selected to head the new company over Willy Chiang, senior vice president of ConocoPhillips' refining division.[78] Oxy reported on May 23, 2012 that Chiang left Phillips 66 and went to work as Executive Vice President, Operations at Occidental Petroleum Corporation with responsibility for oversight of Occidental’s Midstream businesses. Chaing will also be part of the Oxy's strategy, reserves, and corporate-wide capital allocation processes. "Willie brings to Oxy over 30 years of energy industry experience, a deep knowledge of the downstream and midstream sectors, and a proven track record for optimizing asset values through the supply and trading of a company’s commodity portfolio," said Occidental President and Chief Executive Officer Stephen I. Chazen. "Throughout his career he has demonstrated strategic vision and strong leadership of complex global operations. Willie will be an outstanding addition to Oxy’s senior management team.”[79]
The Tulsa World reported on September 12, 2012 that Garland spoke on September 11, 2012 at a packed Bartlesville Area Chamber of Commerce Forum at the city's community center downtown carrying on a tradition started several years ago by his predecessor, ConocoPhillips CEO Jim Mulva. Garland was adamant that Bartlesville's value as a global web center, combined with its heritage as home city of the original Phillips Petroleum Co. always make it important to the company's future plans. "We have deep roots here," Garland said adding that he visits the company's local operations several times a year. "It's a cost-efficient place for us to do business. I think we made the right decision." Garland noted that office space is almost maxed out locally, so he does not see more than "modest growth" adding to the 2,000 jobs Phillips 66 already has in Bartlesville. Garland was recruited out of Texas A&M by Phillips and lived many years in Bartlesville with his wife and four children.[80]
Bartlesville a Special Place for Garland
The Bartlesville Examiner-Enterprise reported on September 12, 2012 that Garland went to work for Phillips 66 as his first job out of college because of Bartlesville. “I picked this company because of Bartlesville,” Garland said. “Four times over the course of 32 years I’ve lived here. We have good memories of Bartlesville, Oklahoma, and it’s always going to be a very special place to me personally.” In one revealing anecdote, Garland told the assembled members of the Bartlesville Chamber of Commerce that when he was looking for his first job as a chemical engineer after graduating from Texas A&M in 1980, Garland interviewed with 17 companies but received only 16 job offers. Quoting by memory from the rejection letter he received shortly after his interview, Garland reported that the only one of the 17 companies that did not offer him a job was Conoco — an announcement that garnered laughter from his Bartlesville audience.[81]
John Lowe, Member of the Phillips 66 Board of Directors
Apart from Greg Garland, J.E. (John) Lowe is the only present or former employee of ConocoPhillips serving as a member of the Board of Directors of Phillips 66. Lower was executive vice president, planning, strategy and corporate affairs, of ConocoPhillips with responsibility for emerging businesses, as well as government affairs and communications. Lowe previously served as senior vice president, corporate strategy and development and was responsible for the forward strategy, development opportunities and public relations functions of Phillips Petroleum Company. Lowe was named to this position in 2001 after serving as senior vice president of planning and strategic transactions in 2000 and vice president of planning and strategic transactions in 1999. Lowe currently serves on the board of directors for Chevron Phillips Chemical Company, Duke Energy Field Services and the Houston Museum of Natural Science.
Lowe was born in 1959 in Oskaloosa, Iowa. Lowe received a bachelor of science degree in finance and accounting from Pittsburg State University in Pittsburg, Kansas, in 1981. Lowe is a certified public accountant.[82]
Board of Directors
On April 16, 2012 Phillips 66 announced the names of the seven members of its future board of directors. Greg Garland will serve as Phillips 66' chairman, president and CEO. He most recently served as senior vice president, Exploration and Production -- Americas for ConocoPhillips. The other members of the board will be:
- Greg Garland, Phillips 66 chairman, president and CEO
- John Lowe, who has served as assistant to the CEO of ConocoPhillips. Lower currently serves as assistant to the CEO of ConocoPhillips, a position he has held since 2008. He previously held a series of executive positions with ConocoPhillips, including executive vice president, Exploration & Production, from 2007 to 2008 and executive vice president, Commercial, from 2006 to 2007. He currently serves on the board of Agrium Inc.
- J. Brian Ferguson, retired chairman and CEO of Eastman Chemical Co. Ferguson served as chairman of Eastman Chemical Company (Eastman) in 2010 until his retirement and as CEO of Eastman in 2009. He became the chairman and CEO of Eastman in 2002. He currently serves on the boards of Owens Corning and NextEra Energy Inc.
- William Loomis Jr., an independent advisor who formerly served as CEO of Lazard LLC . Loomis has been an independent financial advisor since 2009. He was a general partner and managing director of Lazard Freres & Co. from 1984 to 2002, the CEO of Lazard LLC from 2000 to 2001 and a limited managing director of Lazard LLC from 2002 to 2004. He currently serves on the boards of Pacific Capital Bancorp and Limited Brands Inc., and is also a senior advisor to Lazard LLC and China International Capital Corporation.
- Harold McGraw III, current chairman, president and CEO of The McGraw Hill Companies. McGraw currently serves as chairman, president and CEO of The McGraw-Hill Companies. Prior to his service as chairman, he served as president and CEO from 1998 to 2000 and president and chief operating officer from 1993 to 1998. He currently serves on the boards of The McGraw-Hill Companies, ConocoPhillips and United Technologies Corporation.
- Glen Tilton, chairman of the Midwest and was formerly chairman and CEO of United Airlines. Tilton currently serves as chairman of the Midwest of JPMorgan Chase & Co. He was chairman and CEO of United Airlines Inc. from 2002 to 2010, having previously spent more than 30 years in increasingly senior roles with Texaco Inc. including chairman and CEO in 2001. He currently serves on the boards of United Continental Holdings Inc. (as non-executive chairman), Abbot Laboratories and Corning Inc.
- Victoria Tschinkel, chairwoman of 1000 Friends of Florida. Tschinkel served as state director of the Florida Nature Conservancy from 2003 to 2006, was senior environmental consultant to Landers & Parsons, a Tallahassee, Florida law firm, from 1987 to 2002, and was the secretary of the Florida Department of Environmental Regulation from 1981 to 1987. She currently serves on the board of ConocoPhillips.
- Dr. Marna C. Whittington, chief executive officer of Allianz Global Investors Capital, a diversified global investment firm, from 2002 until her retirement in January 2012. Whittington was chief operating officer of Allianz Global Investors, the parent company of Allianz Global Investors Capital, from 2001 to 2011. Prior to that, she was managing director and chief operating officer of Morgan Stanley Asset Management. Whittington started in the investment management industry in 1992, joining Philadelphia-based Miller Anderson & Sherrerd. The election of Dr. Whittington on May 9, 2012 increases the total number of Phillips 66 directors to eight.[83]
"We have assembled a strong board of directors, consisting of individuals with appropriate skills and experiences to meet their governance responsibilities and contribute effectively to our company," said Garland. "Our board reflects a range of talents, diversity and expertise, particularly in the areas of accounting and finance, domestic and international markets, government and regulatory affairs, management and leadership and petroleum-related industries, sufficient to provide sound and prudent guidance with respect to our operations and interests."[84][85]
Management and Governance Effectiveness at Phillips 66
December 3, 2012: Standard and Poor Judges Management and Governance to be 'Fair' at Phillips 66
Standard and Poor reported on December 3, 2012 that they judged Phillips 66 Co.'s management and governance to be 'fair' based on a consolidated approach to the Phillips 66 entities. "While the best positioned of Phillips 66 Co.'s refineries are highly competitive, the overall quality of its operations is mixed, with some facilities being, in our view, candidates for divestiture or closure over the next few years."[86]
Financial Stability of Phillips 66
December 3, 2012: Standard and Poor Assigns BBB/Stable/A-2 Corporate Credit Rating, Judges Financial Risk Profile as 'Intermediate'
Standard and Poor reported on December 3, 2012 that they had assigned a BBB/Stable/A-2 corporate credit rating to Phillips 66 Co. based on a consolidated approach to the Phillips 66 entities. "The rating on Phillips 66 Co. reflects Standard & Poor's assessment of the company's business risk profile as 'satisfactory' and financial risk profile as 'intermediate' (as our criteria define these terms)," says the report prepared by Primary Credit Analyst Mark Habib. "We view the refining sector as having significantly higher-than-average industry risk, given its exceptional degree of volatility and fixed- and working-capital intensity. Notwithstanding the relatively favorable market conditions at times over the past year, we view long-range industry fundamentals as difficult given persisting excess production capacity globally and a secular decline in demand for some key transportation fuel products in developed markets."[87]
Government Relations
February 20, 2013: Phillips Retains Van Ness Feldman as New DC Lobbyists
Legal Times reported on February 20, 2013 that Phillips has retained Van Ness Feldman as their first outside firm to lobby in Washington to advocate for it on oil and gas industry matters, tax reform and the looming $85 billion in spending cuts known as the sequester, according to lobbying registration paperwork filed with Congress.[89]
February 20, 2013: Phillips Spent $1.5 million Lobbying Federal Government in 2012
Legal Times reported on February 20, 2013 that according to congressional records, Phillips has spent $1.5 million on federal government advocacy since it submitted lobbying registration paperwork to Congress in June 2012 and deployed three of its employees to lobby for it. In 2012 Phillips lobbied on U.S. Environmental Protection Agency issues concerning the oil and gas industry, the EPA's renewable fuel standard program and refinery rulemaking.[90]
November 14, 2012: Greg Garland Expects More Government Regulations During Second Obama Term
Fuel Fix reported on November 14, 2012 that Greg Garland expects President Barack Obama’s second term to bring a wave of regulations on their industry that portends another four years of policies that will reduce demand for their refineries’ petroleum-based fuels. “With the election now decided, I see a very active regulatory environment for the next four years,” says Garland. "There’s no question, between renewables and CAFE standards, over the next 10 to 20 years, you’re looking at a 10 to 20 percent reduction in gasoline demand. That’s something that concerns us.” Garland and Marathon Petroleum CEO Gary Heminger said new and expanded federal regulations, including the Renewable Fuel Standard and the Corporate Average Fuel Economy (CAFE) standards, have cost their companies billions over the years while cutting use of their products.[91]
July 30, 2012: Phil Brady Named Top Lobbyist for Phillips 66
The Detroit News reported on July 30, 2012 that Phil Brady, the president of National Automobile Dealers Association, has been named senior vice president of government affairs for Phillips 66. Brady, who will be based in Washington, will be responsible for the company's federal, state and international policy and governmental affairs efforts. Brady has previously served in senior White House positions for President Ronald Reagan and President George H.W. Bush and also served as general counsel at the U.S Transportation Department, and in senior positions with the U.S. Justice Department and Congress.[92] “It is important that our key constituents understand the economic value that energy companies like Phillips 66 bring to our country as a U.S. manufacturer, and Phil will help us to effectively share that story,” says Phillips 66 CEO Greg Garland. “Over just the past few months as an independent company, Phillips 66 has already put together an exceptional management team and strategy to grow in meeting the energy needs of this country,” says Brady. “I look forward to joining the team to help re-introduce this iconic energy company to our government leaders.”[93]
Public Relations and Media Relations
January 2, 2013: Gregg Laskoski at US News and World Report is Critical of Lack of Tranparency at Phillips 66
Gregg Laskoski wrote at US News and World Report on January 2, 2013 that after Reuters reported that some 7,700 gallons of fuel spilled from Phillips 66's Bayway refinery in Linden, N.J., after Hurricane Sandy in November, 2012, New Jersey environmental protection officials said they were not made aware of a major spill at the Bayway plant, and the refinery failed to respond to inquiries from Reuters reporters. "Too many times, history has shown us, the Phillips 66 response or lack thereof characterizes the standard practice of the oil industry. Refineries often fail or are slow to communicate problems that create significant disruptions to fuel supplies and spikes in retail gasoline prices. More often than not, scant information is provided reluctantly, if at all," writes Laskoski. "When such things occur is silence from refineries acceptable? Or does our government and the electorate who put them there have a right to know what's really going on? "[94]
November 5, 2012: Motor Trend Journalist Takes Money To Be Spokesperson For Phillip 66
Matt Hardigree reported on Jalopnik on November 5, 2012 that Motor Trend's Jessi Lang is being paid to represent oil company Phillips 66 as a spokesperson who is trying to help influence young people to buy their gas, "something Motor Trend doesn't appear to be telling its readers." Last month a PR firm hired by Phillips 66 reached out to reporters with the results of a survey designed to evaluate the buying habits of "millenials" and offered a quote from Lang, who they identified as a spokesperson and host of Motor Trend's weekly automotive news roundup "Wide Open Throttle" on YouTube. "Taking payment from a potential newsmaker is a generally frowned upon practice, but Lang, and the PR firm representing Phillips 66, say Motor Trend approves of her simultaneously representing an automotive publication and a company that's part of the automotive industry," writes Hardigree who asked Lang if it was proper for her to take money from Phillips 66 and work as a journalist for Motor Trend at the same time. "I get paid by Motor Trend to be a journalist and to help educate others and that doesn't at all call into question my integrity as a writer," said Lang adding that "anyone within a capitalist society" should be compensated for their work. Motor Trend's Editor-in-Chief Ed Loh declined to comment if there is a conflict of interest. "In the case of Lang, Motor Trend, and Phillips 66 it seems they've skipped ahead from trying to woo car writers with free trips to paying them outright," writes Hardigree.[95]
September 6, 2012: Motor Trend's Jessi Lang says Drivers Can Clean Thier Engines with Top Tier Gas Like Phillips 66
PR Newswire reported on September 6, 2012 that Jessi Lang, host of Motor Trend's "Wide Open Throttle" and Phillips 66 spokesperson, says that "millennials think they're saving money by seeking out cheaper gas, but what they don't realize is that the unbranded gasoline they're buying actually can cost them money in the long run by compromising their fuel economy and causing build-up in their engine. "By using branded TOP TIER gas like Phillips 66, 76 and Conoco, these drivers can clean up their engines and accrue significant savings over time -- especially now that these brands have had the detergent additive treat rate increased by more than 25 percent in all fuel grades."[96]
Litigation and Legal Issues
April 19, 2013: DCP Pipeline Awaits Approval in Colorado
Steve Block reported in the Trinidad Times on April 19, 2013 that a proposed 13.75-mile pipeline section planned to go through northeast Las Animas County, Colorado is awaiting approval from the county planning commission and then the county board. As designed, the pipeline has a capacity of 150,000 barrels per day, which could be readily expanded to approximately 230,000 barrels per day and could begin service in the fourth quarter of 2013. Permit land agent Mike Rutherford said the company thought it only needed a special-use permit from the county for the project, which it had in hand before the state gave its final approval. It later turned out that it also needed a 1041 permit under county regulations. “We thought it was just going to be an SUP only and we already had that,” Rutherford said. “I guess if we’d known it was going to be a full-blown 1041, we could have gotten that four or five months ago, and been through this temporary approval process months ago.” The permitting process requires public notice of the application, followed by a 30-day period for comment from interested parties to the county board. Meanwhile, the application must work its way through the planning department approval process. Fourteen days after that, the planning commission and county board can approve the application at the same time, thus speeding up the process. Dixie Newnam, county attorney, said the entire process could take 45 – 60 days from the time the application was submitted.[97]
April 2, 2013: DCP Midstream Withdraws Plan to Build Megatank in Searsport
Abigal Curtis reported in the Bangor Daily News on April 2, 2013 that DCP Midstream is withdrawing thire application to build a controversial liquid propane gas terminal and storage tank project at Mack Point in Searsport. “We really, really wanted to do business in Maine,” said Roz Elliott, spokesperson for Denver-based DCP Midstream, citing the Searsport Planning Board’s initial meetings last week to review the $40 million project before issuing a final decision later this spring. “It’s unfortunate, but with these local circumstances, we don’t forsee doing future capital development in Maine.” The board members found that certain elements of the project did not meet the town’s ordinances. “Very extensive time, resources, passion — we really believed in this,” Elliott said, adding that the company decided to withdraw the application “as a courtesy” to the Searsport Planning Board.[98]
January 2, 2013: California Sues Phillips for Environmental Violations at Gas Stations
Bloomberg reported on January 2, 2013 that California Attorney General Kamala Harris and and seven county district attorneys filed a complaint on January 2, 2013 in state court seeking an order to force ConocoPhillips and Phillips 66 to comply with California’s laws for underground gasoline storage tanks as well as unspecified civil penalties for violating the state’s health and safety code. “The state’s hazardous waste laws help protect our residents from contaminated groundwater,” Harris said in a statement. “This lawsuit safeguards public health by ensuring proper maintenance of the tanks that store fuel beneath many California communities.” The People v. Phillips 66, RG13661894, Superior Court of California, Alameda County (Oakland) accuses the two companies of improperly monitoring, inspecting and maintaining underground storage tanks.[99]
November 12, 2012: Proposed Consent Decree Reached over Contamination at Cahokia Site
The Madison Record reported on November 12, 2012 that the federal government last week sued and reached a proposed settlement with thePhillips 66 Pipeline LLC in St. Clair County seeking to recover some of the money it spent on cleaning up the Rogers Cartage Site in Cahokia after the Environmental Protection Agency (EPA) issued an enforcement action memorandum in 2011 noting the presence of polychlorinated biphenyls (PCBs) at the site and directing Phillips 66 to excavate and remove about 16,575 tons of soil. Rogers Cartage Co. and its corporate parent, Tankstar Inc., were listed as potentially responsible parties to the contamination in a 2009 EPA liability notice. Phillips 66 received the notice as the current owner of the site. In 2011, Phillips 66 sued Rogers Cartage for cost recovery and injunctive relief. Phillips 66 will amend its complaint to pursue a claim for contribution if the proposed decree is approved.[100]
October 24, 2012: Louisiana Supreme Court Asked to Review Phillips 66 I-10 Bridge Case
KPLC reported on October 24, 2012 that the Louisiana Department of Transportation and Development (DOTD ) hopes the Louisiana Supreme Court will reverse the decision by Judge Clayton Davis to postpone the trial against Phillips 66 on a lawsuit for spilling an estimated 1.7 million pounds of ethylene dichloride (EDC). Judge Clayton Davis continued the lawsuit until a three-year environmental impact study is done. DOTD officials have said when a new bridge is built, they must avoid hitting the underground plume of chemical contamination to avoid spreading it and estimates the state's damages from the spill are $235-million, including the increased cost of a bridge with spans long enough to bypass the spill. "DOTD would like to move forward with the case and get a trial date," said DOTD Attorney Patrick McIntire. "Phillips 66 believes the trial court's [original] ruling was well-reasoned and fair," said a spokesman for Phillips 66.[101]
October 6, 2012: Roxana School District Receives $10 million More in Property Tax Revenue from Reassessment of the Wood River Refinery
The Telegraph reported on October 6, 2012 that for the 2012 fiscal year, the Roxana School District received $10 million more in property tax revenue from the reassessment of the Wood River Refinery, operated by Phillips 66, with about $9.5 million of the increase attributable to the district's operating funds. The district still is working toward securing a long-term agreement with the refinery, said Superintendent Deb Kreutztrager.[102]
On March 31, 2012 the St. Louis Post-Dispatch reported that at issue is the completion of a $3.8 billion expansion at the Wood River Refinery in 2011. Phillips 66 sought to blunt an expected increase in its assessed valuation — on which property taxes are based — by claiming that the vast majority of its operation is dedicated to pollution control. A pollution control facility designation means significantly smaller assessment increases, which mean that school districts and other taxing bodies get smaller increases in revenue. Plaintiffs in the lawsuit include the village of Roxana and the school districts in Roxana, Wood River and East Alton. They say they were not initially aware of the move because the Pollution Control Board and Illinois EPA did not provide proper information and public access to meetings, in violation of the Open Meetings Act and Freedom of Information Act. As a result, the suit claims, the local governments have not been able to formally dispute what they say is an obviously suspect claim: that $3 billion of the project's $3.8 billion expansion was dedicated to pollution control rather than the business of refining fuel.[103]
The refinery and a larger group of affected taxing bodies negotiated an agreement in 2005 that established tax valuation through 2010. That agreement set the value at about $265 million — an increase of about $85 million — and provided for annual increases at a rate 1 percentage point below any increase of the Consumer Price Index. The refinery also agreed to supplemental payments of more than $3 million for previous tax years. In March 2012, the Madison County Board of Review set the 2011 assessed value at $402.2 million, reflecting a market value of $1.2 billion. It would affect taxes payable this year. That is up sharply from the 2010 valuation of $93.4 million, based on a market value of $280 million.[104][105]
The huge expansion increased the refinery's oil-processing capacity by about a third, to 356,000 barrels per day, and enabled it to process heavy crude from the oil sands of Alberta, Canada. The oil arrives via the 2,100-mile-long Keystone Pipeline, which opened last year. Melissa Erker, a spokeswoman for the refinery, would not comment on litigation specifics but said the pollution control exceptions are part of the state's tax code and "allow us to remain competitive relative to property taxes as compared to other refineries in the Midwest."[106]
September 19, 2012: Phillips Sues Yellowstone County over Property Taxes on Billing Refinery
Equities.com reported on September 19 that Phillips 66 has taken its property tax protest involving its Billings refinery to court in Yellowstone County filing a complaint that the Montana Department of Revenue illegally or improperly raised the refinery's market value for 2010, resulting in a tax bill that was $623,715 higher. Phillips asked Yellowstone District Judge Ingrid Gustafson to block its revised tax assessment, saying it will "suffer irreparable injury absent the issuance of a preliminary injunction." The complaint also said Montana is improperly trying to retroactively raise the refinery's tax assessment from 2003 through 2010 in order to collect more taxes. The refinery's market value in 2010 should be $379,718,534, said Phillips, not the department's retroactive change to $508,333,155. Revenue Department officials in Helena says they conducted a routine audit in July and found that Phillips 66 refinery property that had “either escaped assessment, been erroneously assessed or omitted from taxation” from 2003 to 2010, said department spokeswoman Mary Ann Dunwell. Revenue Department officials in Helena said that they are reviewing the complaint and plan to file a response by the end of next week.[107]
September 7, 2012: Maine Fuel Board Approves Permit for DCP Midstream's Searsport Megatank
The Free Press reported on September 7, 2012 that the Maine Fuel Board has issued a permit to DCP Midstream to build a 22.7 million gallon propane storage tank in Searsport, the final permitting hurdle at the state and federal levels. The next step is for the company to submit the complete site application, including all state and federal permits, to the Searsport planning board for review.[108]
July 14, 2012: Phillips Protests Property Tax for Billings Refinery
The Missoulian reported on July 14 that Phillips is one of seven refinery, utility and communications companies in Yellowstone County that is protesting their property tax bill for the 2011 tax year. When a company protests its tax bill, the money is placed in an escrow account, earning interest, until the argument is settled. Schools and other taxing entities who were counting on the funds can tap into these “frozen” taxes, but must repay some or all of the money with interest if the taxpayer wins the protest.[109]
June 26, 2012: Court Hearing held on I-10 Bridge contamination from Chemical Spill that Caused $235 million Damage twenty years ago
KPIC.TV reported on June 272, 2012 that there's been almost no progress on a new I-10 calcasieu river bridge because state highway officials say they need to avoid hitting the underground plume of chemical contamination from a chemical spill nearly twenty years ago for which Conoco Phillips and Sasol are responsible and the State Department of Transportation and Development estimates the state's damages from the spill are $235 million including the increased cost of a bridge with spans long enough to bypass the spill. They don't want to drive pilings through the plume for fear of spreading the contamination. The state has filed suit to get that added cost and the jury trial is set for October. "There's contamination in the ground and the groundwater where we need to build the bridge. It's going to cost extra to stay out of the contamination when the bridge is built and that's the damages that the state is requesting that be awarded in the lawsuit. The state would like to stay out of the contamination and span the contamination and that's what drives up the extra cost," says Attorney Patrick McIntire representing the state of Lousiana.[110]
Conoco Phillips and Sasol say it's uncertain what kind of bridge should be built--and that the trial on that part of damages should be delayed until an environmental impact study which will take at least three years. "We are a valued member of this community, and are committed to being a part of the solution for this project in a manner that is consistent with the on-going federal environmental review process. The resolution of the motion presented today will not delay this project in any way," says Phillips 66 in an official statement.[111]
June 1, 2012: Plan for DCP Midstream's Giant Propane Gas Tank in Maine Generates Opposition
The Maine Public Broadcasting Company reported on June 1, 2012 that DCP Midstream's plan to build a 137-foot high, 23-million gallon liquid propane gas tank next to the Mack Point industrial area has generated heated opposition in communities along the midcoast as selectmen on the island community of Islesboro added their names to the list of people raising concerns about the tank. "Concerns about the project on the mainland have fallen into several categories," writes Jay Field. "There are those who say the tank is simply an eyesore that dwarfs all other industrial facilities in the area and threatens the sense of place on the midcoast. Others dread the large increase in truck traffic on Route 1 that will come if the project moves forward. Still others worry about the safety hazards of storing so much highly-flammable, liquid petroleum gas in one place." Even if it's approved, the project is all but certain to be challenged in court by opponents for years to come.[112]
May 29, 2012: Illinois’ Attorney General Sues Owners of Wood River Refinery for Ground Water Pollution
Saint Louis Today reported on May 29, 2012 that Illinois’ Attorney General Lisa Madigan is suing the current and past owners of the Wood River Refinery in Roxana, Illinois claiming they're responsible for polluted groundwater around the refinery. The suit comes just months after the Village of Roxana filed a similar lawsuit alleging contamination from the plant. The lawsuit claims the companies have allowed oil, gasoline and other toxins to permeate the groundwater and spread beyond the plant’s property line. "These companies must be held accountable for the environmental and public health damage caused by this contamination,” said the attorney general in a statement. The refinery is jointly owned by Cenovus Energy and Phillips 66, which operates the plant. Melissa Erker, a Phillips 66 spokeswoman, said the company has been working with Shell and state environmental regulators to allow access for remediation of historical contamination. "It is our belief that we are named because of our direct relationship with the former owner," Erker said.[113][114][115]
May 26, 2012: Oklahoma Property Owners Fight DCP's Gas Pipeline
The Daily Oklahoman reported on June 18, 2012 that DCP Midstream has filed lawsuits in district court that seek eminent domain judgments against 14 property owners in Oklahoma County as landowners have rejected DCP offers to pay for a portion of their land and say they will fight to keep the company off their land. “It’s not a matter of money for most of us, it’s a matter of principle,” says Joe Freund, a retired physician who lives on 40 acres of forestland about a mile east of Arcadia who is concerned that clearing a 75-foot wide strip of forest that runs the length of his property would tarnish the aesthetics that attracted him to this plot in the first place. “They claim that it’s for the public good and perhaps it is, but they won’t even move their pipeline one inch to avoid taking down trees a hundred years old.” DCP Midstream says the pipeline would tie gathering and processing systems across central and western Oklahoma to their existing line and is part of $2 billion in capital investments currently under development by DCP. “It’s about de-bottlenecking for the producers and finally giving them an opportunity to get their product to market," says Roz Elliott, vice president at DCP Midstream, adding that DCP hopes to run 250 million cubic feet of liquid natural gas to coastal markets every day by the middle of 2013.[116]
New Phillips 66 Headquarters
September 12, 2012: Phillips Selects Site for New Global Headquarters
Phillips reported on September 9, 2012 that the company will build its new global headquarters at a 14-acre site located off Beltway 8 West, between Westheimer Road and Briar Forest Drive. “We searched for several months for the right site to build a headquarters campus where our employees and future employees can come together to work, and develop their skills and talents,” said Greg C. Garland, chairman and chief executive officer of Phillips 66. “This property is conveniently located in the Westchase District and a location that aligns with our commitment to making our company a great place to work.” Once ground is broken at the new site, construction is expected to take between 24-36 months.[117]
July 9, 2012: Interim Headquarters Selected
CSPNet reported on July 9, 2012 that Janet Grothe, senior adviser for health, safety and the environment at Phillips 66, confirmed that Phillips 66 has settled on a temporary headquarters in the Pinnacle Westchase building near ConocoPhillips' home office in the Houston "Energy Corridor." ConocoPhillips' headquarters is about eight miles away. In March, 2012 it sent an email to employees that said the new headquarters would be constructed near Interstate 10, within 10 miles of ConocoPhillips' current headquarters. The Pinnacle Westchase building fits that general description.[118]
March 20, 2012: Phillips 66 Headquarters to be Located in Houston
Houston Business Journals reported on March 20, 2012 that according to an email sent to employees, the new headquarters of refining and marketing spin-off company Phillips 66 will be near Interstate 10 and Beltway 8, within 10 miles of ConocoPhillips' current headquarters at 600 N. Dairy Ashford Road. The decision to locate in Houston was made because the company’s oil and gas infrastructure is already present. During the two- to three-year construction period on the new facility, Phillips 66 employees will be located in temporary locations in the company’s current space.[119]
The Stock Market and Investor Relations
Stock Price
January 1, 2013: Phillips Stock Appreciates over 50% in 2012
Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.[121]
Dividends
May 8, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
The Wall Street Jurnal reported on May 8, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on June 3, 2013, to shareholders of record at the close of business on May 20, 2013.[122]
February 11, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
Investors Business Daily reported on February 11, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on March 1, 2013, to shareholders of record at the close of business on Feb. 18, 2013.[123]
December 7, 2012: Phillips Increases Quarterly Dividend from 25 cents to 31.25 cents
Bloomberg reported on December 7, 2012 that Phillips has announced that the company is raising its quarterly dividend to 31.25 cents per share from 25 cents. The new dividend will be paid in the first quarter of 2013. Phillips 66 also said it approved the repurchase of another $1 billion in company stock. It approved the repurchase of $1 billion shares during the third quarter as well.[124]
October 3, 2012: Phillips Increases Quarterly Dividend from 20 cents to 25 cents
Businesswire reported on October 3, 2012 that Phillips has declared a quarterly dividend of 25 cents per share on Phillips 66 common stock, representing a 25 percent increase from the prior quarter. “This 25 percent increase reinforces our objective to provide competitive and growing dividends,” said Phillips 66 Chairman and CEO Greg Garland. “Allocating capital to dividends and repurchases while continuing to invest in the growth of our business is fundamental to our philosophy of delivering shareholder value.”[125]
July 12, 2012: Phillips 66 Initiates $0.20 Quarterly Dividend
Michael Aneiro reported on Barrons on July 11, 2012 that Phillips 66 announced a quarterly common stock dividend of 20 cents per share, payable Sept. 4 to stockholders as of July 23. “Phillips 66 has a clear strategy to improve returns and to deliver a strong, competitive dividend program to our investors,” said compay chairman and CEO Greg C. Garland. “We are convinced that returns, growth and distributions create value.”[126]
Stockholder's Meetings
April 17, 2013: Phillips Announces First Annual Stockholder's Meeting
The Herald Online reported on April 17, 2013 that will host its First Annual Meeting of Stockholders on Wednesday, May 8, 2013 at 9:00 a.m. CDT at the Marriott Houston Westchase at 2900 Briarpark Drive, Houston 77042. Stockholders must present an admission ticket or proof of ownership of Phillips 66 stock, as well as valid picture identification, to enter the meeting. Phillips also encourages company employees to attend the meeting.[127]
Earnings Conferences
Bloomberg reported on May 1, 2013 that Phillips net income for the 1st quarter rose to $1.41 billion, or $2.23 a share, from $636 million, or $1, a year earlier as the margin between oil costs and fuel prices widened and its chemical business improved. Greg Garland has said he’s focused on chemicals, pipelines and natural gas processing to reduce the volatility that comes with refining earnings. “This company is a different animal because the growth opportunities are not on the refining side of the business,” said Fadel Gheit, an analyst at Oppenheimer & Co. Refining profits rose as the margin between the cost of West Texas Intermediate oil and the price at which refiners sell fuel rose 20 percent to an average of $32.689 a barrel in the January-to-March period, according to data compiled by Bloomberg.[128]
Phillips 66 has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.[129]
January 31, 2013: Phillips 66 Adjusted Profit Beats 4th Quarter Estimates But Gross Profits Down 65% When Including Impairment Charge
Bloomberg reported on January 31, 2013 that Phillips beat fourth-quarter profit estimates by 37 cents more than the $1.69 average of 16 analysts' estimates compiled by Bloomberg. Adjusted earnings for the quarter were $1.31 billion or $2.06 per share, compared to adjusted earnings of $379 million or $0.60 per share in the same period last year. However these adjusted profit figures exclude a writedown of the value of the company's interest in a plant in Malaysia of $2.06 a share. If the writedown is included, then the company reported a 65 percent decline in profit for the fourth quarter from last year as an impairment charge more than offset higher refining and chemical margins.[130][131]
The company has rallied along with other U.S. refiners by boosting access to a growing supply of domestic crude that has become cheaper than overseas oil. U.S. refiners in some regions paid an average of $17.48 less for every barrel they processed compared to the global benchmark oil price, according to data compiled by Bloomberg. "They're taking advantage of the God-given gift of very wide crude discounts and cheap natural gas," Fadel Gheit, a New York-based analyst with Oppenheimer & Co., said in a telephone interview. "They are putting the money to good use, and it's reflected in the stock price."[132]
Reuters reported on October 31, 2012 that Phillips announced 3rd quarters profits of $1.6 billion or $2.51 per share, compared with $1 billion or $1.65 per share a year earlier. Analysts on average had expected a profit of $2.35 per share, according to Thomson Reuters I/B/E/S.[133]
Increased access to cheaper crude oil from the United States and Canada boosted Phillips 66's quarterly profits above analyst expectations with more than half of the company's refining capacity in the central corridor of the U.S. with access to cheaper crudes in North Dakota, Texas, Kansas and other states, executives told analysts during Phillips 66's third-quarter earnings conference call. "Our U.S. advantaged crudes increased from 52 percent last year to 61 percent to date in 2012," Chief Financial Officer Greg Maxwell said.[134]
October 10, 2012: Phillips 66 to Announce Third-Quarter Financial Results on October 31
Phillips announced on October 10, 2012 that the company will release its third-quarter financial results on October 31, 2012 and host a conference call to discuss the company’s third-quarter performance and provide an update on strategic initiatives.[135]
August 1, 2012: Phillips announces Profits up 14% in Second-Quarter Earnings Call
Reuters reported on August 2, 2012 that Phillips 66 posted a 14 percent jump in second-quarter profit with a net income of $1.18 billion, or $1.86 per share, up from $1.04 billion, or $1.64 per share, a year earlier. Chief Financial Officer Greg Maxwell told analysts the company's capital expenditures for 2012 would range between $1 billion and $1.5 billion. Phillips 66 said it would retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there. Garland said Phillips 66 "really likes" its Midwest and Gulf Coast refineries, which have easier access to cheaper Canadian and inland U.S. crudes. "The East and West Coast refineries are challenged refineries, and we think there are opportunities to improve them," Garland told Reuters in a post-call interview. Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude. Garland said the Bayway Refinery and Ferndale Refinery were "absolutely" more likely to stay in the company's portfolio if Phillips 66 can increase the amount of Bakken crude they run, backing out other more expensive crudes. Bayway can run up to 100,000 bpd of light crude, while Ferndale can run 50,000 and Phillips plans to rail Bakken crude to both plants. Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems. Garland says that the company is not planning potential acquisitions -- refineries or other assets -- at this time. "There's nothing really interesting to us at this time," says Garland.[136]
Plan to Get Advantaged Crudes to Every Refinery
Garland said that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day. "We are trying to get those crudes to every refinery we can. But clearly to Ferndale on the West Coast to Bayway on the East Coast, we think Ferndale can probably run 50,000 barrels a day of Bakken crude. Wood River, we can run up to 90,000 to 120,000 barrels a day of shale type crudes there. Ponca about 60,000 barrels a day. Bayway, 100,000 barrels a day of shale type crudes that we can advantage, that we can move into Bayway. Smaller Rodeo we can get at 30,000 barrels a day and Sweeny about 40,000 barrels a day. And then Alliance, we are running today Eagle Ford crude and some Bakken crude in Alliance, but ultimately 50,000 to 90,000 barrels a day. So we have a plan to get advantaged crude into most of our refineries."[137]
June 28, 2012: Phillips 66 to Hold First Earnings Call on August 1
Phillips 66 issued a press release on June 28, 2012 announcing that Phillips will issue its second-quarter earnings report on August 1 and Greg Garland and Executive Vice President and Chief Financial Officer Greg G. Maxwell will host a webcast to discuss the company’s second-quarter performance and provide an update on how the company is delivering on its strategy.[138]
Investor Conferences
February 28, 2013: Phillips to Present at Bank of America Merrill Lynch 2013 Refining Conference on March 7
The Fort Mills Times reports that Larry Ziemba, executive vice president, Refining, Project Development and Procurement of Phillips 66 will speak at the Bank of America Merrill Lynch 2013 Refining Conference in New York on Thursday, March 7 to discuss the company’s plans to enhance refining returns, as well as its overall strategy for growth and value creation.[139]
February 5, 2013: Taylor Tells Credit Suisse Energy Summit That Canadian Crude is Being Transported to California Refineries
Reuters reported on February 5, 201 that Tim Taylor, Phillips executive vice president for commercial, marketing, transportation and business development, told the Credit Suisse energy conference that Phillips has begun moving cut-price Canadian crude to its California refineries at Los Angeles and San Francisco via rail. "We're beginning to deliver Canadian crude to our California refineries by rail," said Taylor. Garland told Reuters on January 30, 2013 that Phillips was looking at coiled tube cars that are suited to bitumen in Canada's heavy oil deposits that must be heated in order to flow.[140]
January 22, 2013: Phillips 66 to Present at Credit Suisse Energy Summit on February 5, 2013
Daily Finance reported on January 22, 2013 that Tim Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 will speak to investors and securities analysts at the Credit Suisse Energy Summit in Vail, Colo. on February 5, 2013 to discuss the company's strategy to enhance refining returns, grow midstream infrastructure and chemicals capacity, and increase distributions to shareholders.[141]
December 13, 2012: Phillips Announces 2013 Capital Program at Inaugural Analyst Meeting
Phillips reported on Decmeber 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.[142]
December 13, 2012: Phillips to Transfer Transportation Assets To A Master Limited Partnership
Marketwatch reported on Decemeber 13, 2012 that Phillips will transfer transportation assets to a master limited partnership that will debut in the stock market in 2013. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL, analysts at Simmons said in a note.[143] “We expect to use the master limited partnership as an efficient vehicle to fund growth investments in the transportation and midstream sectors,” said Phillips 66 Chairman and CEO Greg Garland. “We believe the proposed MLP will enable us to enhance value for our shareholders and increase the transparency of our business.”[144]
December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Refining and Marketing Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they intend to invest $1.149 Billion in 2013 in their Refining and Marketing Business Segment to improve capital efficiency. The company has identified sources of additional advantaged crudes and is taking steps to move these lower cost feedstocks to its refineries and expects to replace 500,000 BPD of higher cost feedstocks with new or advantaged crudes over the next few years.[145]
Other initiatives to improve margins in the R&M Business Segment include increasing clean product yields in refining and controlling costs, targeting cost reductions and value capture in excess of $200 million before-tax by the end of 2013. “Our ability to capture advantaged feedstocks, coupled with the growing international demand for refined products, enables us to maintain high utilization rates and reduce costs per unit,” said Garland. “We will continue to primarily serve domestic markets and will explore opportunities to meet growing demand overseas. Export markets support a more positive balance of trade and promote economic benefits, and jobs, here in the United States.”[146]
December 13, 2012: Phillips Announces Marine Charter Agreements to Supply Alliance and Bayway Refineries
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they had recently signed time charter agreements for two medium-range Jones Act marine vessels that will supply the Alliance and Bayway refineries, and potentially the company’s other Gulf Coast refineries, with Eagle Ford crude beginning in early 2013.[147]
December 13, 2012: Phillips to Invest $1.461 Billion in 2013 in Midstream Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that DCP Midstream plans to invest $2.2 billion primarily for new logistics infrastructure and NGL production during 2013.[148]
December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Chemical Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.[149]
November 27, 2012: Greg Garland to Host Inaugural Analyst Meeting on December 13
Marketwatch reported on November 27, 2012 that Greg Garland and other executives at Phillip 66 will discuss the company's strategic objectives, including its plans to enhance returns, grow profitably and increase shareholder distributions at an Inaugural Analyst Meeting in New York on December 13, 2012.
November 13, 2012: Tim Taylor Presents at Bank of America Merrill Lynch 2012 Global Energy Conference
4-traders reported on November 5, 2013 that Tim G. Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 spoke to investors and securities analysts at the Bank of America Merrill Lynch 2012 Global Energy Conference in Miami, Fla. on November 13, 2012 with an overview of the company and its strategic initiatives.[150]
September 5, 2012: Garland Speaks at Barclays CEO Energy-Power Conference
Phillips 66 reported that Phillips CEO Greg C. Garland spoke to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[151]
August 22, 2012: Garland to Speak at Barclays CEO Energy-Power Conference on September 5
Marketwatch reported on August 22, 2012 that Phillips CEO Greg C. Garland will speak to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 20120 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[152]
June 5, 2012: Garland Presents Phillips Strategy for Growth to the Citi Global Energy Conference
On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.[153]
Refining and Marketing Strategy
Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."[154]
There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."[155]
Phillips also wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.[156]
When asked a question about rationalizing refining capacity by closing down plants Garland said it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."[157]
Midstream Strategy
Garland said there are s large opportunities in terms of midstream investment in gas gathering and processing, NGL fractionation, and distribution and that Phillips has a a very aggressive investment profile in the midstream space. "We have about $7 billion of projects identified, underway in this space and so you think at the DCP JV level spending kind of $500 million a year, historical capex, we’re moving that up to about $2 billion a year," said Garland. "We also have our own embedded midstream business within Phillips 66. It’s primarily pipelines and ownership in fractionators at Conway, Borger, and Belvieu. Good business generates good returns for us in a growth area for us and we would consider growth in this area around fractionation, around LPG exports."[158]
Chemical Strategy
Garland says the NGLs that are coming on over the next 10 years are going to be feedstocks for the petrochemicals business and that the Joint Venture with Chevron is well positioned for that.[159]
June 5, 2012: Garland Presents to Investors at Citi Global Energy Conference
On May 29, 2012 Phillips 66 announced that CEO Greg Garland will speak to investors and securities analysts on June 5, 2012 at the 2012 Citi Global Energy Conference partipating n a roundtable discussion, providing a brief company overview and engaging in Q&A with investors.[160]
May 24, 2012: Clayton Reasor Presents to UBS Global Oil and Gas Conference
On May 17, 2012 Phillips 66 announced that Clayton Reasor, Phillips 66 senior vice president for Investor Relations, Strategy and Corporate Affairs, will speak to investors and securities analysts on May 24, 2012 at the UBS Global Oil and Gas Conference in Austin, Texas about Phillips 66's strategic priorities, including plans for growth and returns enhancement.[161]
Other Investor News
March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO
Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.[162]
July 3, 2012: Phillips Recommends Stockholders Reject TRC Mini-Tender Offer
CSP Net reported on July 3, 2012 that Phillips 66 Co. has recommended that shareholders not tender their shares in response to an unsolicited mini-tender offer that TRC Capital Corp. TRC is offering to purchase up to three million shares, or less than 0.48% of Phillips 66's outstanding common stock at an offer price of $31.30 per share represents a 4.78% discount to the Phillips 66 closing share price on June 25, 2012, the day prior to the commencement of TRC's mini-tender offer. "Phillips 66 strongly recommends investors obtain current market quotes for their shares of common stock and consult with their financial advisors with respect to TRC's offer," the company said. "The company does not endorse and is not associated with TRC's unsolicited mini-tender offer."[163]
June 7, 2012: Garland says Phillips Deserves a Higher P/E
On June 7, 2012 Barrons reported that Greg Garland said that Phillips is a lot more than just an oil refiner and deserves a higher price/earnings multiple than the paltry P/E ratio that refiners now garner. "We don't want the Street to just give us a refining multiple," Garland said in an interview in New York. Philips shares, at around 32, trade for less than seven times projected-2012 profits of $4.90 a share and yield 2.5% based on the company's targeted quarterly dividend of 20 cents that is set to begin in the third quarter. Garland says that Phillips has gotten about 60% of its profits on average over the past three years from higher-return businesses, principally chemicals and so-called midstream assets, including pipelines and processing facilities that handle natural-gas liquids. The chemical and midstream operations generate 20%-plus returns on capital and offer significant reinvestment opportunities.[164]
May 2, 2012: Phillips Rings Wall Street's Opening Bell
On May 2, 2012, executives and employees from Phillips 66 celebrated the company's first week of regular trading on the New York Stock Exchange by ringing the opening bell. Chairman and Chief Executive Officer Greg C. Garland led the delegation, which included employees from its Houston Headquarters and Bayway Refinery in Linden, N.J.[165]
April 23, 2012: Phillips to Join S&P 500
It was announced on April 23, 2010 that Phillips 66 will join the the S&P 500.[166]
April 17, 2012: Howard Thill says Phillips Will Have Increased Flexibility
On April 17, 2012 Howard Thill, Marathon Oil’s vice president of investor relations and public affairs, spoke about the ConocPhillips split at Oklahoma State University’s energy conference in Oklahoma City. “It’s about enhanced flexibility — the ability to focus on an individual asset or set of assets,” Thill said. “When you have a very large conglomerate, it’s very difficult to be able to generate enough information at a low enough level to give investors that transparency into the business,” Thill said. “Independent refiners and independent exploration and production companies disclose much more information about their companies than a major integrated because from a major integrated standpoint, the scale is so large that it just doesn’t make a difference in that respect.”[167]
April 4, 2012: ConocoPhillips Board of Directors Votes to Create Two New Companies
On April 4, 2012 ConocoPhillips' board of directors announced that two new companies will be separated through the distribution of shares of Phillips 66 to holders of ConocoPhillips common stock. This distribution is expected to occur after market close on April 30, 2012. ConocoPhillips shareholders will receive one share of Phillips 66 common stock for every two shares of ConocoPhillips common stock held at the close of business on the record date of April 16, 2012.[168]
Operational Excellence
Greg Garland told financial analysts on April 9, 2012 that operational excellence would be a focus at Phillips 66 and part of his strategy to grow the company. "We'll always focus on operational excellence. We'll focus on building a great organization to execute our plans."[170][171][172]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips 66 has a long legacy of being good operators and of operational excellence. "I have a real passion for this. It's the foundation that provides the opportunity to create sustainable value growth. I'm proud of our progress here. We have more work to do."[173]
Components of Operational Excellence
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that operational excellence is holistic in our view and includes personal safety, process safety, environmental excellence, reliability, and cost management. "It's all those elements wrapped together."[174]
Safety
Garland says that that the safest facilities tend to have the best cost structures. "We expect employees can work one day, one week, one month, even an entire career, without getting hurt. Over 30 years, I've observed that our safest facilities tend to have the best cost structures. They tend to be the most reliable facilities that we have. There's solid business reasons for focusing on operating excellence. It's clearly a foundation for sustainable value. We've got more work to do here. Zero's the target. That's where we're heading."[175][176][177]
- See a History of Operational Excellence Issues at Each Refinery at: News, Issues, and Status at Refineries
April 26, 2013: Amy Goldsmith and Fletcher Harper write that Phillips 66 has Reduced Staffing in Safety Areas at Bayway Refinery, Creating Concern for Workers and Neighbors
Amy Goldsmith and Fletcher Harper wrote in an op-ed in the New Jersey Star-Ledger on April 26, 2013 that the threat of an industrial fire and explosion that recently hospitalized hundreds in West, Texas has potentially increased for New Jersey residents as a result of a recent change in ownership at the Bayway oil refinery. "Last year, the refinery became part of Phillips 66," write Goldsmith and Harper. "After the ownership change, Phillips 66 eliminated one of just two positions dedicated entirely to firefighting and response to chemical leaks on the night shift and also reduced staffing for a process unit that can generate deadly hydrogen sulfide gas. They also cut back on long-established procedures for testing fire protection."[178]
According to Goldsmith, director of the New Jersey Environmental Federation, the state chapter of Clean Water Action, and Harper, executive director of GreenFaith, Phillips produces millions of pounds of highly toxic and flammable substances at Bayway Refinery and Phillips May 2012 Risk Management Plan submitted to EPA acknowledges that a flammable mixture could cause serious harm in the surrounding area in which 18,000 people live. "The people who work at the Bayway refinery have been objecting to Phillips 66’s cuts through their union, Teamsters Local 877. Unfortunately, Phillips 66 has responded by ordering a two-week suspension from work for the local union officer who has helped lead the workers’ health and safety efforts for many years," write Goldsmith and Harper. "Between Earth Day (Monday) and Workers’ Memorial Day (this Sunday), this week has focused Americans’ attention on the need to put public safety and environmental protection ahead of extra profits and bonuses for corporate CEOs. This would be a good time for corporate executives such as those at Phillips 66 to start listening."[179]
April 5, 2013: Explosion at DCP Midstream Gas Compressor Station in Langston, Oklahoma
Channel 2 News reported on April 5, 2013 that authorities say a worker inside a natural gas compressor station owned by DCP Midstream was able to escape without injury after an explosion near Langston, Oklahoma, about 45 miles north of Oklahoma City. The Guthrie Fire Department, along with Meridian and Coyle fire departments, all responded to the explosion but firefighters let the natural gas in the line burn off before they could safely fight the blaze and the fire was extinguished several hours after the blast. DCP Midstream doesn't know what started the explosion in rural Logan County, but is investigating along with the Department of the Environmental Quality and the Oklahoma Corporation Commission. "It was a tremendous fire ball in the sky and was able to be seen for quite a few miles," said Guthrie Fire Chief Eric Harlow adding that he believes weather may have been a factor in the fire. "We didn't have much wind last night, which would allow the gas to kind of stay in place, instead of dissipating, at that point any spark, whether it be static electricity or even the spark of vehicle ignition could likely set it off." Three homes had to be evacuated and DCP Midstream offered to pay for one other family's hotel if they wanted to evacuate. "We've never had any problems at the compressor station before," said William Savory, who has lived in Wellston for 20 years and decided not to take DCP up on its offer. "And I told my wife, all it's just going to do is burn off, it's going to burn off because it's so wet."[180][181]
June 26, 2012: Santa Maria Refinery Wins a National Safety Award
The Santa Maria Times reported on June 26, 2012 that the Phillips 66 Santa Maria refinery won a national safety award from the American Fuel and Petrochemicals Manufacturers and a delegation of five refinery employees traveled to San Antonio, Texas, to accept the 2011 Distinguished Safety Award presented May 17 at AFPM’s national safety conference. To qualify, a facility must have an exceptional safety record that includes no lost-time injuries for three prior years. The Santa Maria Refinery has about 150 employees and processes about 45,000 barrels per day of crude oil that is shipped via pipeline for further processing at the company’s refinery in Rodeo.[182]
May 1, 2012: Employee Fatality at Borger Refinery
KVII-TV in Amarillo, Texas, reported on May 1, 2012 an employee at the Phillips 66 refinery in Borger, Texas fell from a height of 100 feet at about 3pm and was taken to the Golden Plains Community Hospital in Borger where he died. "ConocoPhillips deeply regrets the loss of our employee and wishes to extend sympathy to the employee's family, friends and co-workers," said spokesman Rich Johnson. "ConocoPhillips is investigating the cause of the accident." Officials with Phillips 66 say the incident remains under investigation. It is reported that this is the first fatality at the refinery in 25 years.[183][184]
Environmental Excellence
January 23, 2013: Phillips 66 pays $50K over Hazardous Waste Allegations at Trainer Refinery
The Philadelphia Inquirer reported on January 23, 2013 that Phillips 66 Co. has agreed to pay a $50,000 penalty to settle alleged violations of hazardous waste regulations at its former refinery in Trainer. The U.S. Environmental Protection Agency cited Phillips 66 for violations involving the storage of hazardous materials including refinery hydrocarbon waste, chromium waste, heavy metal waste from batteries and mercury waste from fluorescent bulbs.[185]
January 23, 2013: Phillips Joins Global Environmental Management Initiative
IB Times reported on January 23, 2013 that Phillips has joined the Global Environmental Management Initiative, an organization of leading companies dedicated to foster global environmental, health and safety (EHS) and sustainability excellence through the sharing of tools and information to help business achieve environmental sustainability excellence. "We are pleased to welcome Phillips 66 to GEMI," said GEMI's Chair, Neville Dias, Director, HESS Management System, Carnival Corporation & plc. "Their knowledge and experience will be valuable additions to GEMI, and we look forward to combining their expertise with that of our other GEMI members."[186][187]
January 2, 2013: California Sues Phillips for Environmental Violations at Gas Stations
Bloomberg reported on January 2, 2013 that California Attorney General Kamala Harris and and seven county district attorneys filed a complaint on January 2, 2013 in state court seeking an order to force ConocoPhillips and Phillips 66 to comply with California’s laws for underground gasoline storage tanks as well as unspecified civil penalties for violating the state’s health and safety code. “The state’s hazardous waste laws help protect our residents from contaminated groundwater,” Harris said in a statement. “This lawsuit safeguards public health by ensuring proper maintenance of the tanks that store fuel beneath many California communities.” The People v. Phillips 66, RG13661894, Superior Court of California, Alameda County (Oakland) accuses the two companies of improperly monitoring, inspecting and maintaining underground storage tanks.[188]
December 19, 2012: Phillips 66 Responds to Ponca City Residents' Concerns Over Groundwater Contamination
Beverly Bryant reported in the Ponca City News on December 19, 2012 that Phillips 66 has responded to health concerns of Ponca City residents of about what they believe to be contamination of the water which comes into their homes, as well as groundwater on their properties. “Phillips 66 conducts its operations and environmental programs in a manner that protects the community, human health and the environment," said a statement by Bob Gingerich, head of Human Resources at the Phillips 66 Refinery. "Since the early 1990s, Phillips 66 (previously Conoco and then ConocoPhillips) has been working cooperatively with state regulators, to continue remediation and monitoring of groundwater and springs beneath and surrounding the refinery. Phillips 66 conducts monitoring of this groundwater and springs multiple times throughout the year in accordance with a plan approved by state regulators. Test results show the impacted area continues to shrink. These results are available to the public through the Oklahoma Department of Environmental Quality and at the Ponca City Public Library. Since 2003, Phillips 66 has purchased and continues to purchase selective property near the refinery to increase the buffer zone between the community and the refinery. Phillips 66 has a long history of working with our neighbors and responding to community questions and concerns. Community members are welcome to call our 24-hour InfoLine (580) 767-7130.” Gingerich declined to answer any questions about the monitoring results, but said “We are happy to talk to any individual homeowners about any concerns and come out to help them understand what’s going on."[189]
December 18, 2012: Ponca City Residents Meet Over Concerns about Possible Groundwater Contamination
Beverly Bryant reported in the Ponca City News on December 18, 2012 that residents of a southeast Ponca City neighborhood adjacent to the Phillips 66 Refinery met at the Poncan Theatre with Attorneys Dave Askman, Jason Aamodt, Kalyn Free and Dallas Strimple to discuss possible groundwater contamination with benzene, a volatile organic compound which can cause cancer. The attorneys, who included the co-counsels that represented the Ponca Tribe in their 2005 lawsuit against Continental Carbon Company, gave a presentation called “Orange Water: Ponca City, Oklahoma.” Water samples were taken from seven sites, said Askman adding that although not all seven sites showed the same results, benzene was found in a concentration of 20 parts per million at one site, along with diesel-range organics. “In those orange springs, we know there is benzene and diesel coming up in the water,” said Askman. “Phillips has information that materials have gotten into the neighborhood.” The Ponca City News reported that efforts to contact spokesmen for Phillips 66 and the Oklahoma Department of Environmental Quality had so far been usuccessful but would continue.[190]
June 24, 2012: Bayway Refinery Earns EPA’s ENERGY STAR® Certification
New Jersey Today reported on June 24, 2012 that Phillips Bayway Refinery has earned the US. Environmental Protection Agency’s ENERGY STAR certification, which signifies that the industrial facility performs in the top 25 percent of similar facilities nationwide for energy efficiency and meets strict energy efficiency performance levels set by the EPA. Bayway Refinery improved its energy efficiency by 11 percent since 2002 by strategically managing energy consumption and making cost-effective improvements to the plant. To earn the ENERGY STAR, Phillips 66 Bayway Refinery replaced a large crude oil unit furnace to newer, more efficient technology in 2010, replaced its sulfur recovery plant in 2007, upgraded various plant energy recovery systems. ENERGY STAR was introduced by EPA in 1992 as a voluntary, market-based partnership to reduce greenhouse gas emissions through energy efficiency.[191]
Reliability
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that reliability has improved over the past couple of years. "We operate above industry average rates."[192]
Cost Management
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that part of Phillips' heritage is stringent, prudent, detailed cost management. "We have all grown up in commodity businesses. We understand the importance of cost, cost structure, and managing those costs every day."[193]
August 1, 2012: Plan to Reduce Controllable Cost by 5% with Optimize 66 Program
Phillips was asked by Paul Sankey of Deutsche Bank during their second-quarters earnings report on August 1, 2012 about the $4 billion of controllable costs and if Phillips had set a target for a 5% reduction in controllable costs for around $200 million of savings. "Yes. Controllable cost, we put a number out there $200 million. We think it is a good number," said Garland. "I frankly think we will do better than that. We tend to always exceed. We have got a program we call Optimize 66 that we are working across this budgeting process, which we are in the middle of now. And people are looking at all avenues to improve efficiency and reduce costs. And, frankly, [the boys] have come up with some great ideas from their early work that I have seen. So I think that the $200 million is a good number for a target."[194]
Refineries and Marketing Business Segment
Garland said during his analyst call on April 9, 2012 that the refining and marketing segment has one of the broadest geographic bases of our peers. Phillips 66 has 15 refineries and 2.2 million barrels a day of capacity and is the sixth largest non-governmental controlled refiner in the world, the second largest US refiner. Phillips 66 is the only independent downstream to have significant ownership and interest in gas gathering and processing in the global petrochemicals business.[196][197][198]
Geographic Diversity of Refineries
September 5, 2012: Philips Geographic Footprint is a Very Competitive Advantage
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips has the broadest geographic segment within our peer group. "We think this geographic footprint gives us a very competitive advantage. It's a great platform for capturing advantaged feedstock and optimizing the product placement that comes out of the refineries. You can see 15 refineries, 11 in the US. We have substantial infrastructure that supports the refineries in terms of 15,000 miles of pipe, 50 some odd terminals, barges, railcars, etc."[199]
High Profitability of Refineries Running Advantaged Crude
According to Christopher Helman writing in Forbes magazine, Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent — from Texas north to Montana including the Sweeny refinery [sic], Ponca City, Wood River and Billings. The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing," writes Helman. "The bottleneck that kept oil from getting out of Cushing also kept its price at a record-wide discount relative to its rival European benchmark Brent crude. At one point last year you could buy a barrel of WTI for $27 less than a barrel of Brent. Historically WTI has been slightly more expensive." In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries. However, this opportunity is not going to last long term because there will soon be plenty of new options for getting crude out of Cushing and Garland agrees that the price differential will collapse. “Over three to five years those wide differentials that we’re seeing in the Midcon will collapse to the transportation differential,” he told me. “So more like $3 to $5 a barrel. It’s not going to be $20 forever.”[200]
Gregory J. Millman wrote in the Wall Street Journal on May 15, 2012 that mid-continent refineries have access to high quality crudes that are cheap because there are no pipelines to carry them to world markets, and therefore they are in superabundant supply. Since the product price is a world market price, and refineries have access to export markets, those that can use cheaper crudes enjoy fatter margins and are more profitable than those who cannot.[201]
Fox News reported on May 1, 2013 that Phillips has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.[202]
January 30, 2013: Garland Says Feedstock Advantage Increased Earnings for $300 Million for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that improvements in feedstock advantage increased earnings in the Gulf Coast by over $200 million and by over $100 million in the Central Corridor. "The positive $3.69 per barrel adjustment per feedstocks stems from running certain crudes and other feedstocks that are priced lower than our benchmark crudes," said Garland. "For example, our feedstock advantage this quarter was primarily related to running for an heavy-sour crudes at our Gulf Coast refineries and Canadian crudes in our refineries in the Central Corridor. In addition, our crude slate is increased to include more shale crudes, primarily Bakken and Eagle. Finally, the other category primarily reflects the impacts of volume gain and product differentials."[203]
September 19, 2012: Greg Garland Says Structural Change in Crude Prices Provide an Opportunity for US Refiners
Fuelfix reported on September 19, 2012 that with new shale crudes coming on there has been a structural change in crude prices that presents a real opportunity for the U.S. refining businesses. "You still have 2 to 3 million barrels a day of new light sweet crude coming on out of these new shale plays," said Garland. "And I think ultimately there’s 2 to 3 million barrels a day of Canadian heavy that comes south. I think the U.S. is going to find itself, particularly the mid-continent areas and the Gulf Coast areas — where 51 percent of our capacity is — with an advantaged crude price versus the rest of the world. That’s a structural change."[204]
August 1, 2012: The Spread between Brent and Bakken Crude is still around $19/barrel
Michael Fitzsimmons wrote on Seeking Alpha on August 1, 2012 that in February2, 102 Fitzsimmons wrote that the price differential between WTI and Brent (then $19/barrel) would tighten up once the Seaway pipeline was reversed. "I was wrong in my prediction. What I missed was the huge increase in oil production coming out of the Bakken (now over 600,000 bpd) and Eagle Ford shales," writes Fitzsimmons. "While I was expecting production to increase, I had no idea it would increase at such a rate as to pretty much fill up Seaway and still be left with the same problem as before it was reversed."[205]
June 5, 2012: Greg Garland Wants a Pipeline on Wheels to Get the Barrels in Front of the Facilities
Streetinsider reported on Jun 5, 2012 that Phillips may purchase a "couple thousand" additional rail cars to provide transportation from US shale formations to refineries.[206] The railroad cars would cost $200 million and enable Phillips to carry 120,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.[207] "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.[208]
Simone Sebastian reported in the Houston Chronicle on July 2, 2012 that the nation's energy transportation network is undergoing a multibillion-dollar overhaul, as oil and natural gas production surges in new regions of the country and energy producers charge into new areas with technology that can reach oil and natural gas trapped in shale and other tight rock formations leaving pools of crude and gas stranded far from the Gulf Coast refineries and petrochemical plants that need them. "Where it used to be isn't where it is now. Where it needs to go isn't where it used to go," says Terrance McGill, president of fuel carrier Enbridge Energy. "You're seeing this fundamental shift of crude oil across the country." Phillips 66 CEO Greg Garland says his company is considering buying 2,000 more rail cars that could carry an additional 150,000 barrels a day from shale regions (PDF) to its refineries across the country because the glut of crude oil pouring out of the newly tapped shale oil plays like North Dakota’s Bakken has kept the price of Mid-Continent crude at a record-wide discount of up to $27 per barrel relative to its rival European benchmark Brent crude because there is not enough pipeline capacity to get Bakken crude to Gulf coast refineries. "That's a pipeline on wheels," says Garland. "You'll see us stepping out and doing some more things around infrastructure. Like everyone else, we're doing everything we can to get more barrels in front of those facilities."[209][210]
May 24, 2012: Clayton Reasor Says Price Spread between West Texas Intermediate Crude and Brent Crude futures Likely to Narrow Sharply in 2013
NASDAQ reported on May 24, 2012 that according to Clayton Reasor, Phillips 66's senior vice president of strategy and corporate affairs, the price spread between West Texas Intermediate crude and Brent crude futures is likely to narrow sharply in 2013 as increased domestic pipeline capacity relieves the glut created by new shale-oil supplies. "The WTI-Brent differential will narrow as the onshore pipeline capacity is built up and removes some of the bottlenecks that exist between Cushing and the Gulf Coast," said Reasor.[211]
May 22, 2012: New Pipelines to Bring Bakken Crude to Ponca City Refinery and Cushing
Janet McGurty wrote in the Calgary Herald on May 22, 2012 that Kinder Morgan’s Pony Express Pipeline and Belle Fourche Pipeline are looking for shippers to use their newly planned pipeline to send their light, sweet crude from outside Baker, Montana, just over the state line from North Dakota’s booming Bakken oil shale play, about 1,000 miles southeast to Ponca City, home of Phillips 66 refinery before continuing on to the oil storage hub of Cushing, Oklahoma. Once the Pony Express reaches Cushing it will be near the Seaway pipeline, now able to carry 150,000 bpd of oil to the Gulf Coast with expansion plans to over 400,000 in the works. Although plans are on the book to move Bakken crude north and east, production in the region topped 510,000 bpd in March and is expected to continue to expand.[212]
May 10, 2012: Simon Moore Says New Pipelines Will Bring Bakken Oil to Mid-Continent Refineries
Simon Moore writes on Seeking Alpha on May 10, 2012 that with all the new piplines getting ready to come online to move Bakken Oil to Cushing, starting material for refineries in the Mid-Continent Segment will soon become relatively cheaper which will benefit Phillips 66 with three Gulf coast refineries with a total capacity of 733 MMbpd for the next several years. Moore notes that the Seaqay Pipline reversal will go online on May 17, 2012 brining 150,000 barrels/day of light sweet crude from Cushing, Oklahoma to the Gulf Coast and there are currently plans to expand the pipeline to approximately 400,000 barrels/day and then to 850,000 barrels/day. In addition the new Flanagan South Pipeline will move another 585,000 barrels/day from Illinois to Cushing. Finally the Bakken Express Pipeline from Oneok (OKE) will move 200,000 barrels/day from the Bakken to Cushing. "PSX stands to benefit from the extra crude that will be piped from Cushing to the Gulf Coast increasingly over time."[213]
May 1, 2012: Phillips 66 Plans to Run More Shale Oil
Kristen Hays wrote on Reuters on May 1, 2012 that Greg Garland says the Phillips 66 aims to process more shale oil "everywhere we can get it." Garland added that several refineries are already well positioned to receive shale oil, such as its 247,000 barrels-per-day (bpd) refinery in Sweeny, Texas, in proximity to the state's prolific Eagle Ford shale play, or Midwest plants. The company last fall also ran unit trains from the Bakken shale oil play in North Dakota to its 238,000 bpd Bayway refinery in Linden, New Jersey, and has taken trains to West Coast refineries. "You'll see us stepping out and doing some more things around infrastructure," he said. "Like everyone else, we're doing everything we can to get more barrels in front of those facilities."[217]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that all three business segments, the R&M business, theMidstream business, and the Chemicals business, are well positioned to take advantage of the prolific shale plays and the Canadian heavy. "A big source of competitive advantage we think we can have in our business is the access to advantaged crudes. It's 75% of our cost structure, a lot of work going across the Company in accessing these advantaged crudes."[218]
Growth Strategy in Refineries and Marketing
"As we look at our refining business, we pulled capital down over the past couple years. Our sustaining level of capital in the R&M segment is about $1 billion a year. We will focus some incremental spend in R&M on margin improvement projects. We think that there's opportunities to capture more feed stock advantaged crudes. We can drive our clean product yields, increase our export capability. 1% improvement in clean product yield gives us about $100 million to $150 million of net income improvement. If we can capture $1 a barrel of WTI/Brent differential, it's worth about $90 million of net income. There is powerful economic incentives to capture these margin improvements."[219][220][221]
Garland told the Houston Chronicle on May 1, 2012 that investments in refining will enhance its export abilities and connections to lower-cost crude. "But you won't see us investing to increase refining capacity," Garland says. Garland says that Phillips 66 will execute a number of strategies to revitalize the refining business. Phillips 66 will target lower-cost oil and focus more of its refining capacity on producing diesel and other high-yield fuels. The company also will ramp up exports to foreign markets that offer higher prices for their fuel.[222]
In 2011 about 84% of Phillips 66 capital was allocated to Refinery and Marketing with 11% allocated to Chemicals and 5% to Midstream. Phillips 66 plans a major change in this allocation. "Long-term we have a vision that about 50% of our capital employed will be directed towards the R&M segment. And the other 50% will be directed towards Midstream and Chemicals."[223][224][225]
News and Views on Advantaged Crude
January 30, 2013: Garland Says Phillips is Runnng More Advantaged Crude
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips is running more advantaged crudes with 67% of Phillips U.S. crude in advantaged crude compared to 57% in the fourth quarter of last year.[226]
June 5, 2012: Garland Wants to Get More Advantaged Crude to the Front End of Refineries
On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.[227]
Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."[228]
There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."[229]
Phillips also wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.[230]
When asked a question about rationalizing refining capacity by closing down plants Garland said it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."[231]
Plan to Increase Exports
September 19, 2012: Phillips Plans to Increase Exports to 220,000 bbl by End of 2013
FuelFix reported on September 19, 2012 that Phillips 66 exported about 100,000 barrels a day and plans to increase daily exports to 220,000 by the end of 2013. "If we can export to make more money, we’ll do that. If we can sell in the U.S. and optimize earnings, we’ll do that too. But to date, exporting has actually gotten us a higher price than selling in the U.S." Garland added that it doesn't take a huge investment to increase exports. "These aren’t huge investments. It’s access to tanks and pipes and dock space. It’s less than $100 million of investment for us to do this." Garland says that demand is down in the United States, so increasing exports is beneficial for the country. "Last year, the U.S. industry’s No. 1 export oil products, gasoline and diesel essentially. When we think about exports, we think it’s great for the country. It makes jobs for us. Ultimately, I think it results in better prices for American consumers. We are running our refineries harder, we are spreading those fixed costs over more barrels. So what you are seeing is relatively high utilization rates in the U.S. refining industry today even though demand has been down."[232]
Refining and Marketing Earnings
January 30, 2013: Garland Says Phillips Expects 15% ROCE in R&M Business Segment Going Forward
In answer to a question from Blake Fernandez of Howard Weil Incorporated, Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that he expects a 15% ROCE in the R&M Business Segment going forward. "My view is that, refining historically has been kind of a 10% to 12% business," said Garland. "We think we have plans in place to advantage crude capture, yields, cost reduction, that we can move it 400 basis points. So it’s a 15% business going forward for us versus a 30% return business in Chemicals. And probably Midstream business 15% to 17% returns is kind of what we’re looking in fact. So, to the extent that we have 30% and 40% return projects in refining, we’re going to do those. I think, I mean we do get challenged by people all the time or we under investing in refining. At this point, we don’t think so. I don’t think there’s any opportunities out there, we feel that we’ve missed in terms of an investment opportunity in the refining space. Our focus is going to be very disciplined. We’re going to restrict capital in this space. We’re going to improve returns in this space. And so we don’t see a change required in our strategy at this point in time."[234]
January 30, 2013: Garland Announces 22% ROCE in R&M Business Segment for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips return on capital employed for the R&M segment, which includes over $3 billion in goodwill improved to 22% for 2012, up from a 12% return for 2011. "The earnings of all four of our refining regions increased primarily due to improved refining margins," said Garland. "The improvements in refining margins, reflects not only higher market crack spreads, but also an improved feedstock advantage especially in the Gulf Coast, in the Central Corridor regions. The improvements in feedstock advantage increased earnings in the Gulf Coast by over $200 million and by over $100 million in the Central Corridor. Finally, other refining was up this quarter compared to last year, primarily due to movements of Canadian crude supply to several of our refineries."[235]
August 1, 2012: Phillips announces Annualized R&M Adjusted Net Profit of 17% for Second-Quarter, 2012
Reuters reported on August 2, 2012 that Phillips 66 posted an annualized 17 percent adjusted profit for the R&M Business Segment for the 2nd quarter of 2012. "The adjusted net profit for 2011 was 12%. Refining and Marketing generated $1.2 billion in adjusted earnings," said Phillips Chief Financial Officer Greg Maxwell. "The $437 million improvement was primarily driven by much stronger refining margins particularly in the US Midcontinent and Europe."[236][237]
May 24, 2012: Phillips 66 Expects Global Refining Margins to Drop in 2012 and 2013
- See also Presentation by Clayton Reasor to UBS Conference May 24, 2012
NASDAQ reported on May 24, 2012 that Clayton Reasor, Phillips 66's senior vice president of strategy and corporate affairs, said that Phillips 66 expects global refining margins to drop in 2012 and 2013 and that US gasoline demand growth in the U.S. and Europe is expected to continue to fall, while demand for distillate fuels, such as heating oil and diesel, is expected to jump, driven by growth in developing countries. "What we need to do as a refining company is ship out our yield away from gasoline to distillate to the extent we can," said Reasor. "As gasoline demand continues to fall in the U.S. we need to find markets for our products." Part of Phillips 66's strategy to become more profitable is boosting its fuels exports to more than 200,000 barrels per day by the middle of the decade, up from 100,000 barrels a day last year.[238]
April 23, 2012: ConocoPhillips Reports 2012 Q1 Earnings
ConocoPhillips announced on April 23, 2012 that for Q1 2012, R&M’s worldwide crude oil capacity utilization rate was 91 percent, reflecting minimal unplanned downtime. The U.S. refining capacity utilization rate was 89 percent and the international rate was 97 percent. In addition, the worldwide clean product yield remained at 84 percent. R&M earnings were $452 million, compared with $482 million a year ago. The slight decrease was primarily due to lower refining margins, partially offset by higher marketing margins. Refining margins decreased as the impact of less favorable crude differentials more than offset improved market crack spreads. Pre-tax turnaround expenses for the quarter were $176 million, in line with expectations.[239]
Plans to Reduce Phillips Portfolio of Refineries and Sell Non-Core Assets
May 11, 2013: Phillips Sells Power Plant at Humber Refinery
The Grimsby Telegraph reported on May 11, 2013 that the 1,220 MWe power plant employing 56 people and providing steam and electricity to Phillips 66's Humber Refinery, steam to the neighboring Lindsey refinery, and electricity to the National Grid is being sold to the Vitol Group, based in Switzerland, for an undisclosed sum. Expanded at a cost of £210 million in 2010, the power plant has at least twice been subject of a review by ConocoPhillips and by Phillips 66. "While a high-quality business and asset, ICHP was determined not be a core asset for Phillips 66's business strategy," said Brian Coffman, general manager of Phillips 66 Humber Refinery, and lead executive in the UK. "ICHP is a good solid business with strong potential in the UK electricity market."[240]
March 7, 2013: Phillips May Sell Refineries in Europe and Asia if the Price is Right
Alison Sider reported at Hyrdocarbon Processing on March 7, 2013 that Larry Ziemba, executive vice president for refining, project development and procurement, told analysts that, for the right price, the company would consider selling its 71,000 barrel-per-day refinery in Cork, Ireland, its 47 percent interest in the 170,000 barrels per day (bpd) Melaka, Malaysia Refinery and its 18.75 percent stake in the 300,000 bpd Mineraloelrafnerie Oberrhein GmbH refinery in Southwest Germany. "They're really not strategic," said Ziemba. The company's stake in Malaysia's Maleka refinery is a holdover from Phillips 66's days as the refining arm of ConocoPhillips, which had upstream operations in Malaysia. Now, "it might be worth more to Petronas or someone else than it is to us," said Ziemba.[241][242]
Ziemba added that most of Phillips refining capacity is located in the US, where the company is looking to take full advantage of booming production of relatively inexpensive "advantaged" crude-oil and that the share of "advantaged" oil has grown from 52% of the crude Phillips 66 ran in 2011, to 70% by the end of 2012. "Ultimately, our objective is to push all the Brent crudes out of our system," said Ziemba.[243][244]
January 30, 2013: Garland Does Not Rule Out a Sale of Los Angeles Refinery and San Francisco Refinery
Reuters reports that Greg Garland told investors on January 30, 2013 at the 4th quarter earnings conference that Phillips did not rule out a sale of Phillips two California refineries, one at Los Angeles and one at San Francisco, given challenges with state regulatory requirements and high costs. "We're studying any and all options for California in terms of where do we go long-term in the business," said Garland. "We are doing everything we can to improve it. I don't feel it's a distressed asset. We want to take our time and be thoughtful."[245]
Garland told analysts that Phillips 66 was looking at getting railcars capable of hauling even cheaper Canadian heavy crude to the company's refineries in California. However, he said resistance to such a move was likely. A 2006 California law requiring sharp cuts in emissions has a component that would require refineries to run crudes produced in environmentally friendly ways. Canadian crude production comes with high emissions. Plus, California has the huge Monterey shale, estimated by the U.S. government to have more reserves than the prolific Eagle Ford in Texas or Bakken in North Dakota. But output has been spotty with geology that differs from those other plays. Given those uncertainties, Garland told Reuters in an interview that for the time being, Phillips 66 will focus on improving the California refineries' single-digit returns while studying a possible sale, joint venture or spinoff. "The option value to hold California is zero. It really costs us nothing."[246]
December 13, 2012: Phillips Likely to Sell Whitegate Refinery in Ireland and its stake in Melaka Refinery in Malaysia
Reuters reported on December 13, 2012 that Greg Garland told reporters on December 13, 2012 that Phillips will likely look to sell its Whitegate refinery in Cork, Ireland, and its stake in the 2 Melaka refinery in Malaysia. Phillips plans to retain stakes in the refineries it owns in the United Kingdom and Germany. "We don't envision growing in the Asian refining space," said Garland.[247]
December 13, 2012: Phillips to Transfer Transportation Assets to a Master Limited Partnership
Marketwatch reported on Decmeber 13, 2012 that Phillips will transfer transportation assets to a master limited partnership that will debut in the stock market in 2013. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL, analysts at Simmons said in a note.[248] “We expect to use the master limited partnership as an efficient vehicle to fund growth investments in the transportation and midstream sectors,” said Phillips 66 Chairman and CEO Greg Garland. “We believe the proposed MLP will enable us to enhance value for our shareholders and increase the transparency of our business.”[249]
December 3, 2012: Standard and Poor Says Some Phillips Facilities Are Candidates for Divestiture or Closure
Standard and Poor reported on December 3, 2012 that the overall quality of Phillips operations is mixed, with some facilities being candidates for divestiture or closure over the next few years. "Notwithstanding the relatively favorable market conditions at times over the past year, we view long-range industry fundamentals as difficult given persisting excess production capacity globally and a secular decline in demand for some key transportation fuel products in developed markets," the report says. "While we believe that Phillips 66 Co. will be able to further improve the operating performance of its refining assets, we expect opportunities for doing so will be mostly incremental in nature."[250]
October 31, 2012: California Refineries are in Lower Performing Part of Refinery Portfolio and Must Improve
Tim Taylor was asked at the Phillips Third Quarter Earnings Conference on October 31, 2012 if Phillips' position with its two major refineries in California was sufficiently advantaged to warrant continued participation and replied that when Phillips looks at the West Coast, it's been one of the more challenged markets from a recovery standpoint post-recession. "In California, specifically, it's a tough regulatory environment, as well, so costs are higher. And there is a lot of potential additional costs as new regulations come into effect. That said, it's still a very significant market and we think it's really important to look at how can we get some of these crudes out of the middle part of the country into the West Coast, particularly California. So we're working hard on that to try and change that. The comment I'd make in Washington is that that's got a natural access to the Bakken in North Dakota and Canadian crudes. We separate the Washington piece from the California piece that way. But everyone's working hard to look at some crude solutions for the West Coast to improve its competitive position."[251]
"I think we look at the market and say demand continues to struggle out there, as well, post-recession," added Taylor. "And then I think you look more fundamentally at the operating environment and the costs associated with particularly the environmental regulations. And we think that's going to continue to keep pressure on operations and operating costs out there. So, yes, I would say that from a California perspective it is one of the more challenged parts of our portfolio in terms of the basic value equation. So that's why we're still looking at the crude side of it. And continuing to stay abreast and on top of what it's going to take to comply with things like AB32 to really maintain your operations out there."[252]
Asked if California would still remain part of Phillips' core portfolio Taylor replied that right now California is in the lower performing part of Phillips portfolio. "So I think that if our assessment would become that it's going to be challenged for some period of time, we've either got to find a way to improve that operation or find some other way to deal with that."[253]
October 17, 2012: Phillips Decides Not to Build Research and Training Campus in Louisville, Colorado
Timescall reported on October 17, 2012 that Phillips has decided not to build a a global training center and research and development campus, a facility heralded for its potential to bring thousands of jobs and an economic boom, in Louisville, Colorado and plans to sell the 432-acre property off U.S. 36. "The uses that ConocoPhillips originally envisioned for this site don't really fit into Phillips 66's long-term plans at this time," said Louisville Mayor Bob Muckle. After the split from ConocoPhillips, Phillips 66 acquired the research facility in Bartlesville, Okla., and moved forward on plans to establish an international training center at its new corporate headquarters in Houston. "After careful consideration of the needs of the new company and its employees, Phillips 66 has decided to sell its 432-acre property in Louisville, Colo.," said Phillips 66 officials in the statement. "Phillips 66's predecessor company, ConocoPhillips, purchased the Louisville property in 2008. As a result of the repositioning of ConocoPhillips into two independent energy companies, the Louisville site became an asset of Phillips 66." The campus was to be constructed in three phases: the opening of 1.6 million square feet of office, research, training and hotel space by 2013, another 150,000 square feet by 2018 and the final 750,000 square feet by 2032.[254]
October 9. 2012: Phillips Sells Riverhead, NY Marine Petroleum Terminal
The Sacramento Bee reported on October 9, 2012 that Phillips announced the sale of the Riverhead, N.Y., marine petroleum terminal and associated assets to United Refining Co. for an undisclosed sum. The terminal is located on the north shore of Long Island in New York and is used as a storage and shipment hub for crude, heavy fuel, diesel and gasoline. It has the only deep-water loading and unloading platform on the East Coast.[255]
September 19, 2012: Greg Garland Says There's No Need to Expand Refining Capacity
Fuelfix reported on September 19, 2012 that no need to expand the refining capacity at Phillips 66. "This market is well supplied," said Garland. "I think we have the opportunity to improve margins and improve returns because of these structural changes in crude and the opportunity to uplift export. But even for us, while looking at exports, the refineries tend to have very localized markets. So you think globally, but act locally in this business for the most part."[256]
September 19, 2012: Greg Garland Says Underperforming Refineries Could be Sold
Garland added that in the future there could be more sales of refineries. "We have $50 billion in assets and in the last six years we’ve sold $10 billion. You would expect that some assets are really good and some aren’t quite as good. Over time you want to move the under-performing assets and take that money and invest it in higher performing assets. That’s business.," said Garland. "I don’t have any refineries today that have a huge capital requirement. It’s not that we’re in dire straights and we have to do something with any asset we have. It becomes a question of what assets do we think long-term will provide the highest returns in the portfolio. And the ones that don’t meet that criteria, what can we do to fix them? I would prefer to fix them first. And we’re going to give people time to do that. But ultimately, if we can’t get a way to fix them, we’ll see if someone will pay something for them, more than they’re worth."[257]
September 5, 2012: Garland says Phillips Will Always Work the Tail of its Portfolio
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that over the last six years Phillips has sold $10 billion of $50 billion worth of assets and that investors should expect that over time that Phillips will always work the tail in its portfolio. "We're not going to be real specific about which assets that we might sell. But you should expect that we'll always manage that core. We did have Alliance on the market. The offers came -- we had 20 people go through the data room. We probably had four offers, none really serious. We think that with LLS and where it's going, we see more opportunity for Alliance in the future than we saw a year ago when we put it on the market. But yes, you should always expect that we're going to have some rationalization of the portfolio."[258]
August 1, 2012: Phillips Does Not Have Plans to Acquire Additional Refineries
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 is not planning potential acquisitions -- refineries or other assets -- at this time. "We have looked at what is out there on the market right now in acquisitions and there is nothing really interesting to us at this time," said Phillips CEO Greg Garland. "So we have got our plate full in terms of executing the plan around improving our base R&M business, improving margins, [and] returns."[259][260]
August 1, 2012: Phillips Won't Sell Alliance Refinery
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 has decided to retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there.[261]
June 13, 2012: Delta Airlines Set to Close its Landmark Deal on June 22 to buy Phillips Trainer Refinery
June 7, 2012: Greg Garland says Phillips has no plans to Buy or Expand its Portfolio of 11 Domestic Refineries
In an interview with Barrons published June 7, 2012 Phillips CEO Greg Garland said that Phillips has no plans to buy or expand its portfolio of 11 domestic refineries. Philips has an advantage because about 60% of its crude comes at advantageous prices relative to the world market thanks in part to the company's midcontinent presence where crude-production growth has depressed prices.[262]
June 5, 2012: Garland Says It Takes a Lot of Money to Close Down a Refinery
When asked a question about rationalizing refining capacity by closing down plants Garland said at the Investor Conference on June 5, 2012 that it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."[263]
June 5, 2012: Phillips 66 Reconsiders Sale of Alliance Refinery
Nasdaq reported on June 5, 2012 that Phillips 66 CEO Greg Garland told financial analysts during an investors conference that although Phillips 66 has been considering the sale of its Alliance refinery in Belle Chasse, Louisiana since December 2011, the company is now rethinking the prospect amid falling prices for Light Louisiana Sweet (LLS) crude oil and may not put the refinery up for sale after all. "Our view of that refinery has increased," said Garland. "We think LLS will become an advantaged crude." hillips 66 and other refiners have been rearranging their geographic footprint to take advantage of a boom in US oil and natural gas production that has scrambled the refining map. Refineries with access to new, discounted oil in the U.S. midcontinent have prospered, while coastal refineries have seen profit margins decline.[264] LLS sold for about $95 a barrel Tuesday, down nearly 17% since December. The premium of about $12 LLS commands over inland-crude-oil benchmark West Texas Intermediate should fall as more WTI crude comes to the Gulf Coast via pipelines and rail cars.[265]
According to an article in the Wall Street Journal on June 7, 2012, it may be difficult for Phillips to find a buyer for the Alliance Refinery because long term US gasoline consumption is falling. "Other refineries all have assets on the chopping block, but in a world where domestic fuel sales are in long-term decline, potential buyers are in short supply," write Ben Lefebre. However lower crude prices are making the economics of refining attractive again. "There may be a gleam of hope for Gulf Coast refiner profitability," writes Lefebre. "Exports are growing and Gulf Coast crude economics are getting better. The surge in domestic crude production could bring down the cost of regional oil benchmark Light Louisiana Sweet, giving refines in the region a distinct advantage, refiners and analysts have said."[266]
June 5, 2012: Fox News reports Sunoco and BP Have Refineries on the Selling Block
Other refineries are on the selling block include Sunoco's 35,000-barrel-a-day refinery in Philadelphia. Sunuco closed its refinery in Marcus Hook in December, 2011. BP PLC (BP, BP.LN) is also trying to sell its 265,000-barrel-a-day Carson refinery in California.[267]
May 23, 2012: Morningstar Analyst Recommends Sale of Underperforming Refining Assets
According to Allen Good writing in Morningstar on May 23, 2012 Phillips 66 needs to start selling underperforming assets in their Refining and Marketing Business Segment and Phillips 66's refinery assets are definitely a mixed bag. Phillips' four Mid-Continent refineries in Billings, Ponca City, Wood River, and Borger "are some of the company's best positioned, given their access to discount domestic and Canadian crudes." The three Gulf Coast refineries in Alliance, Lake Charles and Sweeny facilities are some of the most attractive in Phillips portfolio, given their size and complexity says Good. Phillips has already let it be known that the Alliance Refinery is up for sale at the right price but "we won't let it go cheap." The two refineries in California at Los Angeles and San Fransisco face higher costs and environmental regulation which weighs on their value. "Efforts to boost cost-advantaged feedstock should help, but a weak economy in the short term and regulatory capital spending in the long term will be headwinds." Finally the sale or closure of the one remaining East Coast refinery at Bayway in Linden, NJ would "further high-grade the portfolio" although Greg Garland has already said that Bayway will be the "last refinery standing" in PADD I.[268]
May 1, 2012: Phillips Sells Trainer Refinery to Delta Airlines
May 1, 2012: Phillips 66 is Trying to Sell Alliance Refinery
Reuters reported on May 1, 2012 that Greg Garland says that Phillips 66 aims to double refined product exports to 200,000 bpd in the next two years, but its 247,000 bpd Alliance refinery in Belle Chasse, Louisiana -- which runs light-sweet crude -- is on the block. Increasing U.S. light-sweet inland shale oil output along with more infrastructure to move it to the refinery-heavy Gulf Coast means more advantaged crude prices could show up in the region in the coming years, increasing Alliance's value, Garland said. If the price isn't right for what he called "a good export platform for us," Phillips 66 will keep it, Garland said. "We wouldn't let the refinery go cheap."[269]
July 14, 2011: Greg Garland says “There’s enough refineries in the world today"
In recent years ConocoPhillips has sold a European refinery and backed out of a big project with Saudi Aramco to build a brand-new refinery in Saudi Arabia. Phillips 66 is looking to sell its Alliance refinery in Louisiana and its Trainer plant in Pennsylvania “We’ve been selling and shutting down unprofitable assets,” says Garland. “There’s enough refineries in the world today." “No one knows these assets better than the guys at ConocoPhillips; if they think it’s a good idea to jettison this baggage, shouldn’t you too?” says Ed Hirs, a professor of energy economics at the University of Houston. “No one is going to want to buy into Phillips 66. They have no growth, no upside and huge environmental liabilities."[270] Jim Mulva reiterated in his conference call to financial analysts on July 14, 2011 in answering a question by Ed Westlake of Credit Suisse that "if we have an alternative to sell one of the less sophisticated refineries in a way, we are not going to delay until this is done accomplishing and doing that."[271][272]
Refinery Labor Issues
September 10, 2012: Union Contract Ratified with 52 percent of Bayway Refinery Workers Voting in Favor
Reuters reported on September 10, 2012 that union members at Phillips 66 Bayway refinery ratified a three-year contract with 52 percent of the 288 members of the Teamsters union at the refinery voting in favor of the contract which takes effect on October 1, 2012. Union leadership recommended the contract be accepted but several members of the union expressed displeasure with some of the work rights and quality of life changes in the new contract.[273]
September 7, 2012: Bayway Refinery Workers Vote on New Union Contract
Reuters reported on September 7, 2012 that members of the Teamsters Union at Bayway refinery vote on September 7, 2012 on whether to ratify their latest labor contract. The existing union contract ends on October 1, 2012 but if the contract is voted down there will not be an immediate strike but rather a return to negotiations. Contract negotiations began in June which provided a longer window for the talks. Although The contract was recommended by the union's executive board, according to a source familiar with the situation, some union members plan to vote against the contract which includes issues concerning work rules, overtime pay, and scheduling changes. Rich Johnson, a spokesman for Phillips 66, said the company would prefer to wait until after the ratification vote before offering any comment.[274]
August 30, 2012: Refinery Operators Expected to Decline by 14% by 2010
Fox News reported on August 30, 2012 that over the next decade, the number of Petroleum Pump System Operators, Refinery Operators and Gaugers is expected to decline by 14% from 44,200 in 2010 to 38,000 by 2020.[275]
May 30, 2012: Phillips Fires 21 Union Workers, 3 Supervisors at Billing Refinery for Stealing Hours
The Billings Gazette reported on May 30, 2012 that according to Wade Johnson, president of the United Steelworkers International union in Billing that twenty-one pipefitters, welders and insulators and three supervisors were fired from the Phillips 66 refinery on May 30, 2012. “They were certainly not given an option of keeping their jobs,” said Johnson. “So, I would call that being fired.” Rich Johnson, a Phillips 66 spokesman based in Houston, said the company took some individual personnel actions. “I can tell you we took personnel actions against employees today,” said Johnson said. “But it is our company policy not to comment on personnel matters.” According to KTVQ TX the workers were fired for for knowingly violating policy in regard to hours worked at the refinery. "There are no mass layoffs taking place at the refinery," said Johnson.[276][277]
KTVQ reported on May 31, 2012 that the United Steelworkers International union says it plans to fight the dismissal of 21 union employees at the Billings Phillips 66 refinery. Union president, Wade Johnson, with the United Steelworkers International in Billings, says the union believes the employees were wrongfully discharged.[278] According to a comment to the story by Kathy Reinhardt the fired workers were called in to work extra hours so that turnaround could be completed at the refinery. According to a comment by Jonathon Sapp the supervisor who called the men in to work should have been held responsible.[279]
Other News and Views on Refining at Phillips 66
March 20, 2013: Phillips Signs Deals to Boost Deliveries of Cheap Crude by Pipeline and Rail
Eliot Caroom reported on Bloomberg on March 20, 2013 that Phillips will increase deliveries of cheaper crudes to its refineries nationwide by as much as 130,000 barrels a day under three transportation deals and a new investment.[280]
First is a three-year deal with Enbridge Energy Partners LP for loading rail cars with up to 35,000 to 45,000 barrels a day of Bakkan crude from Enbridge’s terminal in Berthold, North Dakota. The crude will be delivered to Bayway Refinery on the east coast and Ferndale Refinery on the West Coast. Some crude could also be sent to Gulf Coast refineries at Lake Charles, Alliance, and Sweeney.[281]
Second is a pact with Targa Resources Partners LP (NGLS) for five years to provide rail-unloading and barge-loading services in Tacoma, Washington for about 30,000 barrels a day of U.S. and Canadian crudes that will go to the Ferndale Refinery. Phillips’s Rodeo refinery near San Francisco could also receive crude deliveries, displacing imports from outside North America.[282]
Finally Phillips has signed a pipeline deal with Magellan Midstream Partners LP (MMP) to move 20,000 barrels a day of crude to near the Marland Refinery in Ponca City, replacing West Texas Intermediate from Cushing with oil from the Mississippian Lime play. Magellan service will begin in late 2013, reaching full volume by January 2014. Phillips will also invest in its own Oklahoma assets to transport an additional 40,000 barrels a day of Mississippian Lime to Ponca City. Mississippian Lime crude comes from the Anadarko Basin, which spans Oklahoma and neighboring states. Two new pipelines carrying the grade are planned to start service this year, according to a February EIA report. “We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” Greg Garland, Phillips 66 chairman and chief executive officer, said in the statement. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses.”[283]
January 8, 2013: Global Partners to Deliver 50,000 bpd of Bakken Crude to Bayway Refinery
The Boston Globe reported on January 8, 2013 that Global Partners LP has signed a five-year contract with Phillips 66 to deliver crude oil from North Dakota to Bayway Refinery using its rail transloading, logistics, and transportation system to deliver about 91 million barrels of crude oil to the Phillips refinery over the life of the contract. That equates to approximately 50,000 barrels per day.[284] “Global has established a ‘virtual pipeline’ for the reliable transportation of Bakken crude,” said Tim Taylor, Executive Vice President, Commercial, Marketing, Transportation & Business Development of Phillips 66. “Our five-year agreement with Global assures us long-term access to advantaged crude for our Bayway refinery through what we believe is a cost competitive origin-to-destination supply system to the East Coast.” The Bakken crude oil is expected to be transloaded at Basin Transload LLC’s North Dakota rail facilities.[285]
December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Refining and Marketing Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they intend to invest $1.149 Billion in 2013 in their Refining and Marketing Business Segment to improve capital efficiency. The company has identified sources of additional advantaged crudes and is taking steps to move these lower cost feedstocks to its refineries and expects to replace 500,000 BPD of higher cost feedstocks with new or advantaged crudes over the next few years.[286]
Other initiatives to improve margins in the R&M Business Segment include increasing clean product yields in refining and controlling costs, targeting cost reductions and value capture in excess of $200 million before-tax by the end of 2013. “Our ability to capture advantaged feedstocks, coupled with the growing international demand for refined products, enables us to maintain high utilization rates and reduce costs per unit,” said Garland. “We will continue to primarily serve domestic markets and will explore opportunities to meet growing demand overseas. Export markets support a more positive balance of trade and promote economic benefits, and jobs, here in the United States.”[287]
December 13, 2012: Phillips Announces Marine Charter Agreements to Supply Alliance and Bayway Refineries
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they had recently signed time charter agreements for two medium-range Jones Act marine vessels that will supply the Alliance and Bayway refineries, and potentially the company’s other Gulf Coast refineries, with Eagle Ford crude beginning in early 2013.[288]
September 5, 2012: Annual Sustaining Capital Investment in Refining is about $900M
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the annual investment in the base refining business at DD&A levels is roughly 900 million a year roughly. "As we think about our capital program and really shifting investment to the higher returning segments of our portfolio, R&M is really around investing in marketing, specialties and transportation, reliability improvements. CPChem we have opportunities on the US Gulf Coast, DCP opportunities in infrastructure. So over time, what you would see, and this chart actually shows the very beginning of that, is a ramp up in the spend in Chemicals and in Midstream versus kind of holding our investment in the base refining business," said Garland. "So as you think about the portfolio then over the next say five to ten years, you would expect that the proportion of the R&M would stay flat on an absolute basis but on a proportional basis would actually go down over time and the investment in Chemicals and Midstream would then increase.[289]
August 15, 2012: Crack Spread is $29.05 a barrel for Texas and Midwest Refiners
Paragon reported on August 15, 2012 that new crude production from Texas and the Midwest has resulted in profits reaching their highest levels since 2007 with the difference between the cost of crude and the price companies could sell fuel 9crack spread) in the April-June quarter at $29.05 a barrel according to data collected from Bloomberg. "The prospects for U.S. refiners have turned around dramatically," said John Auers, senior vice president of Turner Mason & Co., a petroleum and refinery consulting company. "Cheap crude has given an advantage to the U.S. refining system, already the most advanced, most complex and most efficient in the world." U.S. refiners have outperformed all other energy sectors in the S&P 500 Index with an average gain of 42 percent. In comparison the S&P 500 Integrated Oil & Gas Index has gained just 2.85 percent year-to-date.[290]
August 1, 2012: Phillips to Buy 2,000 Rail Cars to Move Bakken Crude to Bayway and Ferndale Refineries
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude.[291]
June 5, 2012: Phillips May Add Several Thousand Railroad Cars in an Effort to Expand Capacity
Streetinsider reported on Jun 5, 2012 that Phillips may purchase a "couple thousand" additional rail cars to provide transportation from US shale formations to refineries.[292] The railroad cars would cost $200 million and enable Phillips to carry 120,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.[293] "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.[294]
Marketing and Special Products
Phillips 66 treats marketing and special products as part of the R&M Business Segment but a significant portion of the earnings of R&M are not related directly to refining. Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that marketing and special products is a very stable business that brings in $500 million to $700 million of annnual net income. "When we talk about marketing in the US, we do not own any stations. We market through branded wholesale stations in the US. There's about 8,000 branded stations that are marketed under either the Phillips 66, the Conoco, or the 76 brand. About half of our marketing margin is actually moved through unbranded wholesale. In Europe, we do sell direct. We have about 900 stations in Germany and Austria, another 250 stations in Switzerland in a joint venture with Coop. In Germany and Austria, we -- Switzerland and UK we market under the JET brand. Extremely high market efficiency out of these stations. Strong ROCEs in excess of 30%. We like the European retail presence. We look at the European market. It's a lot like North America. It's really a flat to declining market. So we will grow, but we'll grow marginally in the European business. We're also a large top three supplier of lubricants in the US, the other business we like and we'll continue to grow that business."[295]
Marketing
May 14, 2013: Phillips to Celebrate New Company During Marketing Conference
CSP Daily News reported on May 14, 2013 that Phillips will have booths manned by informed company representatives from the fuels, lubricants and aviation divisions to promote Phillips 66 Lubricants, Phillips 66 Motor Fuels Marketing and Phillips 66 Aviation at the 2013 Marketing Conference & Trade Show from May 21 to May 24 2013 at the Aria Resort in Las Vegas. Phillips chose the theme "New Energy, New Possibilities" to celebrate the establishment and spirit of the new corporation. "The theme expands on our excitement and passion for providing you new opportunities, ideas and ways to help grow your business," the company said. "Expect informative and beneficial breakout sessions, engaging speakers, a comprehensive trade show, exciting entertainment and much more."[296]
January 2, 2013: California Sues Phillips for Environmental Violations at Gas Stations
Bloomberg reported on January 2, 2013 that California Attorney General Kamala Harris and and seven county district attorneys filed a complaint on January 2, 2013 in state court seeking an order to force ConocoPhillips and Phillips 66 to comply with California’s laws for underground gasoline storage tanks as well as unspecified civil penalties for violating the state’s health and safety code. “The state’s hazardous waste laws help protect our residents from contaminated groundwater,” Harris said in a statement. “This lawsuit safeguards public health by ensuring proper maintenance of the tanks that store fuel beneath many California communities.” The People v. Phillips 66, RG13661894, Superior Court of California, Alameda County (Oakland) accuses the two companies of improperly monitoring, inspecting and maintaining underground storage tanks.[297]
Specialty Coke
September 5, 2012: Garland Says Speciality Coke Provides Stable Earnings
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the specialty coke business provides stable earnings and really slightly stronger earnings in the base refining business. "As we think about specialty coke, really two types, anode coke and the needle coke. Anode coke is critical to the production of aluminum. We think the aluminum market grows about 5% to 7% a year. We have about a 7% market share of global demand in this business. So this business provides stable earnings and really slightly stronger earnings in the base refining business. We also make a needle grade coke at two of our refineries. It's the only type of coke that's used to make graphite anodes in the steel recycling industry. This industry is growing about 2% to 4% a year, very high profit for us. This is based upon proprietary PSX technology. So you'll see us grow this business over time.[298]
Technology Development
Proprietary Technology
CPChem's Proprietary Technology
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that CPChem's success is partly based upon their proprietary technology. "We think this ensures low cost. It ensures competitive position via the other peers out there."[299]
Research Center
October 27, 2012: Bartlesville Research Center Dodges a Bullet
Rod Walton reported in the Tulsa World on October 27, 2012 that with Phillips decision not to build a long-planned major research and training center in Colorado, Bartlesville employees are breathing a sigh of relief because many feared that their piece of the company might be headed to the Rocky Mountains. "Any time a major employer in the community makes a sizable investment in another location, it generates concerns," said David Wood, president of Bartlesville Development Corp. "The formal announcement that Phillips 66 will be selling the Louisville property puts this issue to rest." The Bartlesville research center has a long history. Phillips Petroleum Co. had its headquarters in the city from the early 20th century until the merger with Conoco Inc. in 2002. Now it looks like the research center is safe and sound for some years to come. "Without being complacent, indications are that the research center will continue to be a large, high-wage employer in Bartlesville for the foreseeable future," Wood said. "We couldn't be more pleased with that outcome."[300]
October 17, 2012: Phillips Decides Not to Build Research and Training Campus in Louisville, Colorado
Timescall reported on October 17, 2012 that Phillips has decided not to build a a global training center and research and development campus, a facility heralded for its potential to bring thousands of jobs and an economic boom, in Louisville, Colorado and plans to sell the 432-acre property off U.S. 36. "The uses that ConocoPhillips originally envisioned for this site don't really fit into Phillips 66's long-term plans at this time," said Louisville Mayor Bob Muckle. After the split from ConocoPhillips, Phillips 66 acquired the research facility in Bartlesville, Okla., and moved forward on plans to establish an international training center at its new corporate headquarters in Houston. "After careful consideration of the needs of the new company and its employees, Phillips 66 has decided to sell its 432-acre property in Louisville, Colo.," said Phillips 66 officials in the statement. "Phillips 66's predecessor company, ConocoPhillips, purchased the Louisville property in 2008. As a result of the repositioning of ConocoPhillips into two independent energy companies, the Louisville site became an asset of Phillips 66." The campus was to be constructed in three phases: the opening of 1.6 million square feet of office, research, training and hotel space by 2013, another 150,000 square feet by 2018 and the final 750,000 square feet by 2032.[301]
New Technology
August 21, 2012: Team Sets New world Record in Power Conversion Efficiency for Polymer-based Organic Photovoltaic (OPV) Cells
Marketwatch reported on August 21, 2012 that Phillips 66, the South China University of Technology (SCUT), and Solarmer Energy, Inc. successfully set a new world record in power conversion efficiency for polymer-based organic photovoltaic (OPV) cells with a 9.31 percent efficiency certified by the Newport Technology & Application Center's Photovoltaic Lab in Long Beach, CA. "The breakthrough in efficiency offers a good opportunity for the commercialization of the organic photovoltaic technology," said Dr. Byron Johnson, manager of Sustainability Technologies at Phillips 66. "This marks an important milestone for the industry and has the potential to deliver truly low cost energy for the world." OPV is lightweight, has a better performance in low light and is easier to manufacture -- making it a potentially cost-effective renewable energy technology on par with current conventional energy technologies.[302]
Technology Transfer
March 21, 2013: Phillips 66 to License E-Gas™ Technology to CB&I
Hydrocarbon Processing reported on March 21, 2013 that Phillips has entered into an agreement with CB&I to provide Phillips E-Gas solids gasification technology, a process that converts coal or petcoke into syngas, which can be used for power generation or further converted to substitute natural gas, hydrogen and downstream methanol-related chemicals production. Financial details were not disclosed. “We look forward to adding the E-Gas Technology to our portfolio, which will mark our entry into the syngas value chain," said Daniel McCarthy, group president of CB&I’s technology operating group. "It also will bring added synergy to our delayed coking technology offering for integrated power generation, and other options to the refining and power industries."[303]
May 21, 2012: Phillips 66 to License E-Gas™ Technology to India's Planned Gasification Plants at Jamnagar
Phillips 66 announced on May 21, 2012 that it will will license its E-Gas™ Technology to Reliance and provide process engineering design and technical support relating to Reliance's Jamnagar site, the largest refining complex in the world, with an aggregate refining capacity of 1.3 million barrels of oil per day. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas that will be used as feedstock for a new chemical complex and will fuel the refinery's existing gas turbine power generation units. “We look forward to this opportunity to work with Reliance on the largest gasification project in the world,” said Rex Bennett, President, Specialties and Business Development at Phillips 66. “Our E-Gas™ Technology will be used to turn petcoke and coal into clean, reliable energy for Reliance’s refinery and petrochemical plant operations.”[304]
How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?
The Phillips 66 Refinery located in Ponca City, Oklahoma, has a published crude oil processing capacity of 187,000 barrels per day[305] making it by far the largest refinery in Oklahoma.[306] The refinery processes a mixture of light, medium and heavy crude oil. Most of the crude oil processed is received by pipeline from the Gulf of Mexico, Oklahoma, Texas and Canada. Additional foreign crude is purchased into the Gulf Coast and delivered by pipeline. The Ponca City Refinery is a high-conversion facility that produces a full range of products, including gasoline, diesel fuel, jet fuel, LPG and anode-grade petroleum coke. Its facilities include fluid catalytic cracking, delayed coking and hydrodesulfurization units. Finished petroleum products are shipped by truck, railcar, and company-owned and common-carrier pipelines to markets throughout the Mid-Continent Region.[307]
The Phillips 66 Refinery in Ponca City contributed a net profit of over $500 million in 2011 to Phillips bottom line, making it the most profitable of Phillips 66's fifteen worldwide refineries.
Based on Phillips' second quarter earnings report for 2012 and the realized crack spread of $26.34 for mid-continent refineries (Borger Refinery, Billings Refinery, Marland Refinery in Ponca City, and Wood River in Ravena, Illinois), profits are on target for the Marland Refinery in Ponca City to contribute over $600 million of net profits in 2012 to Phillips bottom line.
Based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line.
Related Topics
Background
How Oil Prices are Set
When an oil producer sells to a refiner, they generally agree to a price set on an exchange such as the New York Mercantile Exchange. After the oil is refined into gasoline, it is sold by the refiner to a distributor, again pegged to the price of wholesale gasoline on an exchange. Finally, gas station owners set their own prices based on how much they paid for their last shipment, how much they will have to pay for their next shipment, and, perhaps most importantly, how much their competitor is charging. Oil companies and refiners have to accept whatever price the market settles on -- it has no relation to their cost of doing business. When oil prices are high, oil companies make a lot of money, but they can't force the price of oil up.[311]
Large refiners like Phillips have the capital resources and ability to use their infrastructure to maximize the difference between the spot prices and final product. For decades the mid-continental oil benchmark, West Texas Intermediate (WTI) was priced at a premium above other benchmarks such as North Sea Brent. At the start of 2010 this began to change radically. Brent became more expensive and the last few months Brent has sold around $15-$25 higher than WTI. Even more, interior continental oil plays like Niobrara (Colorado) and the Bakken (North Dakota) have sold for as low as $40 under Brent. Phillips is able to take advantage of the cheap mid-continent oil available to their refineries in Billings, Borger, Ponca City, and Ravena to buy crude oil cheap and sell the refined products high with record realized crack spreads for the mid-continent refineries of $26.34 per barrel reported by Phillips for the 2nd quarter of 2012.[312]
Benchmarks
There are two benchmarks for oil prices that are very important to determining the profitability of the refinery at Ponca City: Brent and West Texas Intermediate (WTI). Brent Crude is a major trading classification of sweet light crude oil comprising Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation). Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.[313] West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of Chicago Mercantile Exchange's oil futures contracts. The price of WTI is often referenced in news reports on oil prices, alongside the price of Brent crude from the North Sea.[314]
Prior to September 2010, there existed a typical price difference per barrel of between +/-3 USD/bbl compared to WTI and OPEC Basket.[315] Since the autumn of 2010 there has been a significant divergence in price compared to WT with a $10-$15 spread between the two developing that has remained ever since.[316]. Many reasons have been given for this widening divergence ranging from a speculative change away from WTI trading (although not supported by trading volumes), Dollar currency movements, regional demand variations, and even politics. The depletion of the North Sea oil fields is one explanation for the divergence in forward prices.[317] According to James Hamilton writing at Econbrowser, the gap is essentially a geographic difference between the price paid for oil in the central United States and that paid on the U.S. coasts and anywhere else in the world.[318] In February 2011 the divergence reached $16 during a supply glut, record stockpiles, at Cushing, Oklahoma and is currently (August 2011) above $23. Historically the different price spreads are based on physical variations in supply and demand (short term).[319]
Barclays Plc (BARC) cut its 2012 forecast for West Texas Intermediate oil on July 5. WTI will average $96 a barrel this year and Brent will average $113, according to a report published today by analysts Paul Horsnell and Amrita Sen in London. That’s down from $105 for WTI and $120 for Brent that the bank had projected in a report on June 25. So right now the differential is $17 per barrel.[320]
Advantaged Oil
Companies that have pipelines in the Mid-Continent region - which is to say, the Texas Panhandle, Oklahoma, Kansas - are inherently in a position to source cheap crude. And companies that have refining assets on the coasts - the West Coast, the East Coast and the Gulf Coast - are in a much tougher position when it comes to sourcing cheap crude because, generally speaking, they have to buy crude that's imported. And import crudes are at a premium to WTI.[321]
The CEO of Phillips 66 says to process more shale oil "everywhere we can get it." "We want to increase our exposure in both the West Coast and East Coast for some of those advantaged barrels."[322] That includes more rail unloading, rail cars and storage to facilitate, in the medium term, movement of cheaper inland crude to coastal markets until more pipelines are built to alleviate bottlenecks, he said. Phillips 66 is the only refiner that has plants in all U.S.markets.[323] Garland noted several refineries are already well positioned to receive shale oil, such as its 247,000 barrels-per-day (bpd)refinery in Sweeny, Texas, in proximity to the state's prolific Eagle Ford shale play, or Midwest plants.[324]
Last fall Phillips 66 also ran unit trains from the Bakken shale oil play in North Dakota to its 238,000 bpd Bayway refinery in Linden, New Jersey, and has taken trains to West Coast refineries.[325] "You'll see us stepping out and doing some more things around infrastructure," he said. "Like everyone else, we're doing everything we can to get more barrels in front of those facilities."[326] Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shale related crudes.[327]
Mid-Continent Oil
Phillips 66 has 15 refineries globally and 2.2 million barrels a day of capacity. "When we think about our refining business we like to think about it in four segments. One is the Mid-Continent, about 21% of our capacity is there. Margins have been very strong in this area, as you know," says Phillips 66 CEO Greg Garland.[328] "Our largest region is the Gulf Coast, about 33% of our capacity is there.We have large economy of scale here. We have very complex refineries on the Gulf Coast. The Western US and Pacific region is about 20%, includes our interests in the Melaka refinery.The West Coast has typically had high margins historically, but the last couple years has been challenged in part due to the economic slowdown in California."[329]
Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent — from Texas north to Montana including the Borger refinery, Ponca City, Wood River and Billings. [330] The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing," writes Helman. "The bottleneck that kept oil from getting out of Cushing also kept its price at a record-wide discount relative to its rival European benchmark Brent crude.[331] At one point last year you could buy a barrel of WTI for $27 less than a barrel of Brent.[332] In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries.[333]
Phillips to Run More Mississippi Lime Shale Crude through the Ponca City Refinery
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems.[334] Rod Walton reported in the Tulsa World on September 24, 2011 that Mississippi Lime - porous limestone formations in northern Oklahoma and southern Kansas has been yielding reservoirs to horizontal operators such as SandRidge, Chesapeake, Devon and Tulsa-based Eagle Energy LLC during the past two years. The "new" reserves actually lie slightly below formations that were big producers 100 years ago. Phillips Petroleum Co., for instance, made its name in the nearby Burbank Field, on the eastern edge of the play that includes Osage, Pawnee, Kay, Garfield, Woods, Alfalfa and other northern Oklahoma counties. "It's sort of amazing that all of this has been sitting there and waiting for horizontal drilling," says Eagle CEO Steve Antry. "The vertical wells hardly drained any of that." The move now is toward the deposits containing mostly oil and natural gas liquids. [335]
The Mississippi Lime's ratio is often 52 to 55 percent oil, according to reports. "We're into the second tier of this renaissance," says Chip Minty, a spokesman for Oklahoma City-based Devon Energy Corp. "Now what we're doing is taking the same technology beyond the shales to the carbonates, such as limestone." One advantage of the Mississippi Lime is that limestone's porosity and natural fractures can mean less expense on the drilling and hydraulic fracturing parts of the project. Expenses can total half and even a fourth of typical unconventional well efforts. Another advantage is that there is already plenty of seismic data available for the area from past exploration and drilling. "It's a reasonably low-cost play where hydrocarbons have been found before, with a lot of wells drilled in the past," says RAM spokesman Robert Phaneuf. And that gives you good data points."[336]
Methodology for Determining the Profitability of the Ponca City Refinery
The methodology for determining the profitability of the refinery at Ponca City is to begin with a very crude estimate of profitability using figures from Phillips 66 presentations to financial analysts, and then to drill down into these figures and add in additional factors, refining the figures through more detailed scenarios to come up with a better estimate.
Phillips 66 does not break out their profitability by refinery. However they do provide the profitability of the Refining and Marketing Business Segment and they break out the profitability of their domestic refineries and their international refineries. Further Phillips 66 CEO Greg Garalnd has provided guidance as to the what portion of the R&M Business Segment is due to advantaged oil that is TI related and refined in Phillips Mid-Continent refineries at Borger, Ponca City, Wood River, and Billings.
In addition, on August 1, 2012 Philips 66 publicly reported the realized crack spreads during their 2nd quarter 2012 presentation to financial analysts for Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific refineries.
Our methodology will look at the following scenarios:
- Scenario 1: Look at the Total R&M Segment Profitability and divide it equally into Phillips 66's fifteen worldwide refineries
- Scenario 2: Look at the Total R&M Segment Profitability for domestic refineries only and divide it into Phillips 66's eleven domestic refineries by throughput capacity
- Scenario 3: Determine what the profit contribution has been for advantaged West Texas Intermediate-related crude (WTI) and allocate the portion attributable to the Ponca City Refinery based on the refinery's throughput capacity
- Scenario 4: Determine the portion of the R&M Profitability which is not attributable to advantaged TI-related oil and allocate it to each refinery based on throughput capacity. Include a correction factor for the portion of the R&M profitability that is attributable to Marketing.
- Scenario 5: Determine the sum of TI-related net income (Scenario 3) and non-TI-related net income (Scenario 4) for each refinery.
- Scenario 6: Determine the projected profitability of each refinery for 2012 based on Phillips 2nd Quarter Earnings and the Realized Crack Spread for the Mid-Continent refineries
- Scenario 7: Determine the projected profitability of each refinery for 2012 based on Phillips 3rd Quarter Earnings and the Realized Crack Spread for the Mid-Continent refineries
Profitability of the Ponca City Refinery
Scenario 1: Total R&M Earnings Divided by Worldwide Refineries
The very simplest formulation for determining the profitability of of the Ponca City Refinery is to simply look at the overall R&M profits for 2011 ($2,664 Million) and divide it by the fourteen Phillips 66 worldwide refineries giving a profit contribution of $178 million for each refinery.
Scenario 2: Total Domestic R&M Earnings Divided by Domestic Refineries
Phillips 66 breaks out the profitability of the Refining and Marketing Business Segment by international refineries and by domestic refineries, so we will look at only the domestic refineries in the second scenario. Dividing the R&M profits for domestic refineries for 2011 ($2,365 Million) by the eleven Phillips 66 domestic refineries gives a profit contribution of $215 million for each domestic refinery.
Scenario 3: Portion of the Net Earnings Attributable to TI-Related Crude
According to Phillips 66 CEO Greg Garland, each dollar of WTI-Brent differential translates to $90 million in additional net income to Phillips 66. West Texas Intermediate is used in Phillips' mid-Continent refineries.[337]
In 2011 the average differential for WTI crude was $15 which contributed $1,350 million in net income to Phillips. Breaking out the TI-related advantaged oil that is refined in Phillips 66 mid-continent refineries.
| Location | Total Capacity (KBD) | Normalized Capacity (KBD) | % of Total Mid-Continent | Net Income from TI-related Crude ( $ millions) |
|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 35.2% | 475 |
| Roxana, IL | 306 | 153 | 28.2% | 389 |
| Billings, MT | 118 | 118 | 22.2% | 300 |
| Borger, TX | 146 | 73 | 13.7% | 186 |
| Total Mid-Continent | 531 | 100.0% | 1,350 |
- Note that the Wood River refinery is owned by WRB Refining, Phillips 50-50 joint venture with Cenovus Energy Inc. The Borger refinery is operated by Phillips in a 50-50 joint venture with Cenovus Energy Inc. Therefor only half of the throughput of each of these two refineries is will be attributed to Phillips 66 for purposes of calculating the use of TI-related advantaged crude.
The total throughput of the four mid-continent refineries is 531,000 barrels per day. The Ponca City Refinery, with a throughput of 187,000 bpd, accounts for 35.2% of the TI-related advantaged crude.
Incidental Use of Non-TI Related Crude
As a footnote, the Ponca City refinery does not refine WTI crude exclusively. One of the reasons that ConocoPhillips resisted reversing its Seaway Pipeline from Cushing to the Gulf for so long was that ConocoPhillips had said it was in the company's best interests to maintain the status quo to help supply its 198,400 bpd refinery in Ponca City to produce "premium coke" at the Ponca City Refinery. However, this has a negligible effect on the Marland Refinery's overall profitability because the proportion of non-TI related crude supplied to Ponca is a small percentage of the total, the profit margin on specialty products is also high, and other Phillips mid-continent refineries are in a similar situation of refining a small proportion of non-advantaged crudes.[338][339][340][341]
Scenario 4: Portion of the Net Earnings Not Attributable to TI-Related Crude
Subtracting out for earnings attributable to TI-related advantaged crude gives $1,015 million in net income attributable to normal earnings for refining during this part of the business cycle and attributed to each domestic refinery on the basis of throughput capacity.
Phillips 66 does not break out the marketing earnings separately for the Refining and Marketing Business Segment in their reports. However slide 16 from the April 9, 2012 presentation to investors shows that for the years 2009 to 2011 marketing contributed 24% to Phillips 66 total earnings while Refining contributed 40% to Phillips 66 total cumulative earnings earnings for those years. The total adjusted earnings for the Refining and Marketing Business Segment for 2009, 2010, and 2011 was $ 4,057 million. Marketings contribution to the R&M bottom line would be 37.5% which translates to $1,521 million and on the assumption the marketing profitability was relatively stable across the three year period would be $507 million for each of the three years.
This leaves $543 million in normal non TI-related profitability for 2011 to be divided among the 15 domestic and international refineries, so based on throughput the net income for normal refinery operations attributable to the Ponca City Refinery is 10% of Phillips 1,866,000 bpd in domestic production which translates to an additional $ 54 million in net income attributable to the Ponca City Refinery after the adjustment for marketing has been made.
Scenario 5: Total Net Income for Domestic Refineries
The total net income for each Phillips domestic refinery is the sum of the TI-related net income and the non-TI related net income as shown in the following table:
| Location | Capacity (KBD) | Normalized Capacity (KBD) | TI-Related Net Income ($ M)) | non TI-Related Net Income ($ M) | Total Net Net Income ($ M) |
|---|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 475 | 54 | 529 |
| Roxana, IL | 306 | 153 | 389 | 44 | 433 |
| Billings, MT | 118 | 118 | 300 | 34 | 334 |
| Borger, TX | 146 | 73 | 186 | 21 | 207 |
| Belle Chasse, LA | 247 | 247 | 71 | 71 | |
| Old Ocean, TX | 247 | 247 | 71 | 71 | |
| Linden, NJ | 238 | 238 | 69 | 69 | |
| Westlake, LA | 239 | 239 | 69 | 69 | |
| Carson, CA/Wilmington, CA | 139 | 139 | 40 | 40 | |
| Rodeo, CA | 120 | 120 | 34 | 34 | |
| Ferndale, WA | 105 | 105 | 30 | 30 | |
| Total | 1,866 | 1,350 | 543 | 1,893 |
With a a contribution to Phillips 66's net profit of over $500 million, the Phillips 66 Refinery in Ponca City contributes more than one-quarter of the net income to Phillips Refining bottom line and contributes more than the the total of the seven least profitable Phillips refineries combined.
Scenario 6: Estimates for 2012 based on Phillips 2nd Quarter Earnings and Realized Crack Spreads
On August 1, 2012 Phillips reported their adjusted earnings for refining operations were $851 million in their 2nd Quarter Earnings Report for 2012. Phillips has taken out R&M earnings attributable to marketing and specialty products($334 million). Phillips also reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $26.34, $9.36, $7.76, and $7.91 respectively. The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery to allocate the total refinery profit to each refinery.
| Location | Capacity (KBD) | [A] Normalized Capacity (KBD) | [B] Crack Spread ($) | [C] Capacity Utilization (%) | [A]*[B]*[C] | Per Cent Contribution to Total Refining Profits | Annualized Yearly Profit |
|---|---|---|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 26.34 | 95 | 4,995 | 18 | 600 |
| Roxana, IL | 306 | 153 | 26.34 | 95 | 3,829 | 14 | 491 |
| Billings, MT | 118 | 118 | 26.34 | 95 | 2,953 | 11 | 379 |
| Borger, TX | 146 | 73 | 26.34 | 95 | 1,827 | 7 | 234 |
| Belle Chasse, LA | 247 | 247 | 9.36 | 91 | 2,104 | 8 | 270 |
| Old Ocean, TX | 247 | 247 | 9.36 | 91 | 2,104 | 8 | 270 |
| Westlake, LA | 239 | 239 | 9.36 | 91 | 2,036 | 8 | 261 |
| Linden, NJ | 238 | 238 | 7.76 | 95 | 1,755 | 6 | 225 |
| Whitegate, England | 71 | 71 | 7.76 | 95 | 523 | 2 | 67 |
| Humber, Germany | 221 | 221 | 7.76 | 95 | 1,629 | 6 | 209 |
| Carson/Wilmington, CA | 139 | 139 | 7.91 | 89 | 979 | 4 | 126 |
| Rodeo, CA | 120 | 120 | 7.91 | 89 | 845 | 3 | 108 |
| Melaka, Malaysia | 76 | 76 | 7.91 | 89 | 535 | 2 | 69 |
| Ferndale, WA | 105 | 105 | 7.91 | 89 | 739 | 3 | 95 |
| Total | 2,245 | 28,730 | 100 | 3,404 |
Using this method for 2012, the Marland Refinery in Ponca City will make a contribution to Phillips 66's net profit of $600 million, by far the largest of any of Phillips' refineries.
Scenario 7: Estimates for 2012 based on Phillips 3rd Quarter Earnings and Realized Crack Spreads
On October 31, 2012 Phillips reported their adjusted earnings for refining operations were $1,580 million in their 3rd Quarter Earnings Report for 2012. Phillips also reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $31.83, $11.42, $13.02, and $13.30 respectively. The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery to allocate the total refinery profit to each refinery.
| Location | Capacity (KBD) | [A] Normalized Capacity (KBD) | [B] Crack Spread ($) | [C] Capacity Utilization (%) | [A]*[B]*[C] | Per Cent Contribution to Total Refining Profits | Extrapolated Yearly Profit |
|---|---|---|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 31.83 | 102 | 6,071 | 16 | 1,032 |
| Roxana, IL | 306 | 153 | 31.83 | 102 | 4,967 | 13 | 844 |
| Billings, MT | 118 | 118 | 31.83 | 102 | 3,831 | 10 | 651 |
| Borger, TX | 146 | 73 | 31.83 | 102 | 2,370 | 6 | 403 |
| Belle Chasse, LA | 247 | 247 | 11.42 | 88 | 2,482 | 7 | 422 |
| Old Ocean, TX | 247 | 247 | 11.42 | 88 | 2,482 | 7 | 422 |
| Westlake, LA | 239 | 239 | 11.42 | 88 | 2,402 | 6 | 408 |
| Linden, NJ | 238 | 238 | 13.02 | 100 | 3,099 | 8 | 527 |
| Whitegate, England | 71 | 71 | 13.02 | 100 | 924 | 2 | 157 |
| Humber, Germany | 221 | 221 | 13.02 | 100 | 2,877 | 8 | 489 |
| Carson/Wilmington, CA | 139 | 139 | 13.30 | 97 | 1,793 | 5 | 305 |
| Rodeo, CA | 120 | 120 | 13.30 | 97 | 1,548 | 4 | 263 |
| Melaka, Malaysia | 76 | 76 | 13.30 | 97 | 980 | 3 | 167 |
| Ferndale, WA | 105 | 105 | 13.30 | 97 | 1,355 | 4 | 230 |
| Total | 2,245 | 28,730 | 100 | 6,320 |
Using this method for 2012, the Marland Refinery in Ponca City will make a contribution to Phillips 66's net profit of $1,032 million, by far the largest of any of Phillips' refineries.
Variations in the Realized Crack Spread Among Phillips' Four Mid-Continent Refineries
One of the factors not accounted for in the methodology used to calculate the earnings attributable to the Marland Refinery in Ponca City is that Phillips 66 does not break out the crack spreads by refinery but only provides the composite realized crack spread for the mid-continent refineries which include the Billings Refinery, Borger Refinery, Marland Refinery in Ponca City, and Wood River Refinery in Roxana, Illinois.
On September 7, 2012 Brent was selling at $112.85 and WTI at $91.40 for a Brent-WTI differential of $21.45. North Dakota Sweet was selling at $74.50 for a Brent-North Dakota Sweet differential of $38.40. The Borger Refinery primarily runs WTI while the Billings and Wood River Refineries run Canadian and Bakken crude respectively. Except for some specialty products, the Marland Refinery in Ponca City runs primarily WTI but has been increasing the amount of Mississipi Lime Shale crude that it has been buying from oil producers in Northern Oklahoma and Southern Kansas like Red Fork Energy who recently signed a contract with Phillips to provide Mississippi crude to Ponca City. Phillips 66 hasnot disclosed the amount of Mississipi Shale crude provided to the Marland Refinery in Ponca City nor the price that Phillips has negotiated for the shale crude. The contribution to the realized crack spread from the Brent differential will be somewhere between the Brent-WTI differential of $21.45 and the Brent-North Dakota Sweet differential of $38.40 depending on the quantity of Mississipian run through the Marland Refinery in Ponca City and the price that has been negotiated for the Mississippi Lime Shale crude.[344]
Phillips to Run 60,000 bbl of Shale Crude Through Ponca City
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "Ponca about 60,000 barrels a day."[345]
The Oil and Gas Journal reported on August 8, 2012 that the Pony Express Pipeline company has received sufficient binding shipper commitments to move forward with its Pony Express Oil Project that will deliver crude oil from receipt points near Guernsey, Wyo., to the Phillips 66 Ponca City Refinery as well as to Cushing, Okla. The 220,000 b/d pipeline will enter service third-quarter 2014. Once the Pony Express Pipeline is in operation, this will make interior continental oil plays like Niobrara in Colorado available to the refinery in Ponca City which have sold for as low as $40 under Brent.[346][347]
Phillips did not disclose how much shale oil is presently being refined at the Marland Refinery in Ponca City at the 2nd Quarter Earnings Report on August 1, 2012 nor what the realized crack spread is for the refinery in Ponca City. But every barrel of shale crude that runs through the Marland Refinery in Ponca City replaces a barrel of TI-related crude and adds an additional $17 of Brent differential so once Phillips gets up to their full 60,000 bbl target this will add another $372 million in profit for Phillips. Until Phillips breaks out the realized crack spread for each refinery, the additional profit will be reflected in an increased crack spread for the mid-continent refineries.
How Much Does Phillips 66 Contribute to Ponca City?
- For more detailed information see Phillips 66's Contributions to Ponca City
Phillips 66's Marland Refinery in Ponca City provides benefits to the local community in wages to local employees, property taxes paid to the community, and direct philanthropic contributions to the community. We will evaluate three categories:
- Wages Paid to Local Employees
- Property Taxes Paid the Community
- Direct Philanthropic Contributions to the Community
Wages Paid to Ponca City Residents
The Ponca City News reported on October 14, 2012 that Refinery Manager Pete Stynes spoke to the Ponca City Lions Club on October 10, 2012 about Phillips 66's Refinery in Ponca City and said that 800 employees work at the refinery with the direct employment of 625 Phillips employees.[348]
FuelFix reported on January 12, 2012 that according to the United Steelworkers International representing 30,000 refinery and chemical workers at 168 production, refining, marketing, transportation, pipeline and petrochemical facilities nationwide the average wage of US refinery and chemical workers is $33.85 an hour.[349] We estimate that of the 800 workers at the Marland Refinery, 100 of them are in engineering or managerial positions earning an average yearly salary of $110,000. We estimate that the cost of additional employee benefits including social security payments, unemployment benefits, pension benefits, vacation days, sick days, holidays, and medical benefits adds an additional 60% to direct wages paid. This cost is known as the burden rate.[350]
| Marland Refinery in Ponca City | Hourly Employees | Salaried Employees |
|---|---|---|
| Hourly Wage | $ 33.85 | |
| Yearly Salary | $ 70,408.00 | $110,000.00 |
| Number of Employees | 700 | 100 |
| Wages | $49,285,600.00 | $11,000,000.00 |
| Payroll Taxes (10%) | $4,928,560.00 | $1,100,000.00 |
| Wages and Payroll Taxes | $54,214,160.00 | $12,100,000.00 |
| Total Wages and Payroll Taxes for Hourly and Salaried Employees | $66,314,160.00 |
Under these assumptions the total wages and payroll taxes paid to the 800 employees at the Marland Refinery in Ponca City including both hourly employees and salaried employees is $66,314,160.00 (54,214,160.00 + 12,100,000.00).
Comparison with Borger Refinery
By way of comparison with the Phillips Refinery in Borger, Texas, the Borger News Herald reported on July 11, 2012 that refinery manager Chris Coon spoke to the Borger Rotary Club on July 10, 2012 about employment and payroll at the Borger Refinery. Coon told members that Phillips pays with an annual payroll of $65 million to 920 full time employees (including 200 routine contractor) at the Borger refinery. Phillips also pays $6 million in payroll taxes and about $12 million in property taxes.[351] The Borger Refinery is comparable in capacity with the Marland Refinery in Ponca City having a throughput capacity of 146,000 barrels per day compared with Marland's throughput capacity of 187,000 bpd.
| Borger Refinery | All Employees |
|---|---|
| Hourly Wage | $ 34.00 |
| Average Yearly Salary | $ 70,652.00 |
| Number of Employees and Routine Subcontractors | 920 |
| Wages | $65,000,000.00 |
| Payroll Taxes (10%) | $6,000,000.00 |
| Wages and Payroll Taxes | $71,000,000.00 |
The figures provided by the refinery manager at Borger are consistent with the calculations made for employees at the Marland Refinery in Ponca City. Using the same average yearly salary of employees at Borger Refinery, the annual wages plus payroll taxes for the Marland Refinery at Ponca City is $61,739,000.00.
Phillips 66 Property Tax Paid to Kay County
According to property tax records of the Kay County Assesor's Office Phillips 66 has two different types of property that pay tax in Kay County: the refinery itself and real estate around Ponca City including office buildings, warehouses, and residential properties.
Tax Assessment of the Refinery
The Phillips Refinery is assessed under According to Tax Record 30,446.
| Amount | |
|---|---|
| Total Market Value | $ 542,889,080 |
| Total Assessed Value (14%) | $ 76,004,471 |
| Total Exemption | $ 4,255,329 |
| Net Assessed | $ 71,749,142 |
| Tax Paid | $ 6,771,684 |
The total annual tax paid by Phillips 66 for the refinery is $ 6,771,684.
Tax Assessment for Real Estate
On May 21, 2012, ConocoPhillips transferred real estate in Kay County to Phillips 66 for a value of $69,223,000.00. Real property in the Ponca City School District is taxed at a rate of .00948 for an annual tax of $656,234 on this real estate.
Phillips 66 Charitable Contributions to Ponca City
The Ponca City News reported on October 21, 2012 that Phillips 66 provides financial and in-kind support to community organizations through corporate and employee based programs. "Our philanthropic contributions in Ponca City and the surrounding area are significant. In 2011, direct contributions to non-profit agencies, matching United Way contributions, and contributions based on employee and retiree hours or monetary contributions were in excess of $1.1 million dollars. When employee and retiree contributions are added to the company contributions, the total is over $1.7 million dollars."[352]
Ponca City and the "Merger of Equals" with Phillips in 2001
2001: The Creation of ConocoPhillips
Conoco Inc. and Phillips Petroleum Co. announced on November 18, 2001 that their boards of directors have unanimously approved a merger of equals and signed a definitive merger agreement. The merged company became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. Worldwide, it became the sixth-largest energy company based on hydrocarbon reserves and the fifth-largest global refiner. Upon completion of the merger, Archie W. Dunham, Conoco chairman and chief executive officer, would serve as chairman of ConocoPhillips and delay his scheduled retirement to 2004. James J. Mulva, Phillips chairman and chief executive officer, would become president and chief executive officer of the combined company, and also become chairman upon Dunham's retirement.[354][355]
The Associated Press reported that analysts described the combination as a deal done to survive. If Phillips and Conoco hadn't decided to join forces, analysts said they risked losing market share to competitors in an unhealthy business climate for all but the largest petroleum companies reported Alan Clenndenning. "This is absolutely a matter of survival - survival nor necessarily to thrive, but to guarantee they will survive, said Fadel Gheit, an analyst at Fahnestock & Co. In a conference callwith analysts, top Phillips and Conoco officials said the merger would allow them to save at least $750 million annually in part through the elimination of an unspecified number of jobs from the company's combined roster of 58,000 employees. "You cannot say you are cutting cots if you cut less than 5 percent, said Gheit. "And if you want to be aggressive with a sharp knife you can cut 15 to 20 percent, which I see as unlikely." Officials took pains to describe the deal as a merger of equals, tough under its terms, Phillips shareholders wil end up with a 56.6 percent stake in the new company.[356]
Businessweek reported in 2005 chief executive officer Mulva had conceived the bold $16 billion deal that created ConocoPhillips in 2002 that vaulted it into the league of energy giants so large they're called supermajors and was an aggressive risk-taker willing to place multibillion-dollar bets in the most volatile places on earth. All of the industry's big players are swimming in cash, reported Businessweek but Mulva is plowing some 70% of the company's expected cash flow back into the business, compared with 60% at Chevron Corp. and 35% at Exxon Mobil Corp.. "We're aggressive about where we want to be five years from now," said Mulva. "Even with the benefit of hindsight, Mulva has done a lot right," wrote Mark Morrison. "His aptly timed Conoco acquisition put the company in a position to benefit from a new global dynamic of rising energy demand that could last into the next decade. And his bold plans may ultimately prove that he adjusted more wisely and quickly to the changing world of energy than the other majors. Right or wrong, no one will accuse Mulva of being shy."[357]
According to Jim Mulva's presentation to financial analysts on July 14, 2011, ConocoPhillips' view was that the company needed to go up in size. That is one of the reasons for the merger -- to compete around the world. "We also felt, looking back 10 years ago, that there is going to be consolidation in the industry. And that made a lot of sense that we were pretty bullish about oil prices and we feltthe supply and demand situation of oil would get tighter with time."[358][359][360]
2001: Impact of Merger of Conoco and Phillips on Oklahoma Communities
KOCO reported on November 19, 2001 that merger of Conoco and Phillips in 2001 stunned residents in both Bartlesville and Ponca City. "This could be a bad deal for Bartlesville," said an unnerved Bartlesville resident Chuck Tate, who realizes how the economic fortunes of his town are tied to the huge oil company based. "I hope not, but I'm expecting the worst." Bartlesville's fortune has long mirrored the ups and downs of the company founded in 1917 by brothers Frank and L.E. Phillips. There was downsizing after the 1980s oil bust. Bartlesville embarked on a sustained effort to diversify its economy, luring new businesses and factories but nothing to compare to Phillips. During the oil boom 20 years ago, Phillips employed 9,000 locally, half the city's workforce. "Phillips has obviously been a huge part of this town, in my lifetime anyway," said local travel agency executive Gary Spears. "It's scary." Spears said all of his business is directly related to arrangements with Phillips or tied indirectly to travel by Phillips' employees or townspeople who benefit from the company. "When they say the Phillips' headquarters is not going to be here, it's a huge announcement," Spears said. "I don't know what that means at this point. Nobody does."[361]
ConocoPhillips will based in Houston, home to Conoco. It will keep a reduced presence in Bartlesville, Okla., where Phillips employs 2,400 at its headquarters and research facility. "This is really a growth story for Conoco and Phillips," said Conoco CEO Archie Dunham who is delaying a planned retirement to serve as chairman of the combined company. Phillips chairman James Mulva will be chief executive of the company, and become chairman when Dunham retires in 2004. Gov. Frank Keating said the merger was "unavoidable to ensure the survival in Oklahoma of both companies." "While some job reductions will result, I have assurances from the leaders of the new company that it will maintain an even stronger Oklahoma presence," he said.[362]
Also affected is Ponca City, 70 miles due west, where Conoco's refinery and offices employ 1,900 of the town's 26,000 people. "One of the great fears we've had in Ponca City was that Conoco might be the victim of a hostile takeover," said Ponca City Mayor Tom Leonard. "Now that they have created the third largest oil and gas company in the United States, that pretty much eliminates that risk."[363]
2005: ConocoPhillips Closes Demonstration Plant in Ponca City
On October 21, 2004 ConocoPhillips announced that it would shut down its demonstration plant eliminating up to 120 jobs. The plant was built to test technology designed to convert natural gas into liquid fuels. "It is never easy tomake this kind of announcement," said George Paczkowski, ConocoPhillips vice-president of downstream technology in Ponca City, "but we've known this demonstration plant was temporary since we built it. The plant was scheduled to close in July, 2005 eliminating 80 full-time positions and 40 contract jobs. Paczkowski said many of the full-time workers would be reassigned to other positions at the company.[364] "We started the plant to prove our technology to turn natural gas into diesel, and then to provide data for the design of a commercial plant," said ConocoPhillips spokeswoman Shanley Wells-Rau. "In 2005, we said that we successfully developed and proved the technologies. But the company never has moved on to build one commercially. It was never meant to be a long-term, commercial plant."[365]
The Daily Oklahoman reported on December 20, 2008 that ConocoPhillips had sold the company’s natural gas-to-liquids demonstration plant along with the technology behind it for an undisclosed amount of money. The plant was a demonstration project that opened in 2003 and closed in 2005 and had the capability of producing 400 barrels a day of liquid fuels from natural gas. The buyer was Industrial Properties, based in Kansas City who plan to dismantle the plant to resell its steel and equipment.[366]
2009: ConocoPhillips Relocates 700 Jobs from Ponca City
On November 7, 2008 ConocoPhillips announced that the company was planning to downsize their operation in Ponca City and that all 700 office worker positions in Ponca City were being for relocated to Bartlesville or Houson. On November 8, 2008 ConocoPhillips first announced that all 700 office worker positions in Ponca City are being considered for consolidation or relocation. "Consolidation and relocation are options we're looking at," said company spokesman Tracy Harlow. "Any and all options are still on the board right now." Most of ConocoPhillips' nonrefinery jobs in Ponca City werefocused in the credit card, information technology, facilities and other support operations, she noted. A steering committee, including ConocoPhillips managers, was looking at options. The review started November 2008 and had not narrowed into specifics so far, Harlow said. The 750 people employed in refinery operations would not be affected by the review.[367]
The Tulsa World reported on February 17, 2009 that ConocoPhillips had decided to relocate all of its 750 non-refinery positions out of Ponca City within two years and that first 250 jobs will be moved in 2009 with 180 jobs going to Houston and 70 jobs to Bartlesville. The positions moving first include jobs in technical services, research and development, engineering and support, human resources and Internet technology, among others. Management met with hundreds of Ponca City employees to tell them the news. "It’s a difficult time in general for all ConocoPhillips employees," said ConocPhillips spokesman Tracy Harlow. ConocoPhillips originally planned the Ponca City relocation study as a standalone effort in 2008 but falling energy and credit markets forced ConocoPhillips to consider layoffs and include Ponca City into its overall business efficiency study. "We made the strategic decision to consolidate locations for the most effective corporate operations,” Harlow said. “Obviously we are conserving cash right now, so cash will limit relocations in 2009.”[368]
Business Week reported that Ponca City took a hit from ConocoPhillips in February 2009, when the company said it planned to move 750 non-refinery jobs out of the city of about 26,000 to Bartlesville and Houston. But the refinery has remained a key part of ConocoPhillips' operations, said ConocoPhillips spokesman John Roper. Rich Cantillon, president and CEO of the Ponca City Chamber of Commerce, said ConocoPhillips upgraded the refinery last year and is performing another upgrade this year. No new oil refineries have been built in the U.S. since 1976, which is another positive sign for the Ponca City facility's future. "It's not going anywhere," Cantillon said. "We are good to go. Ponca City is a happy, good community. ... It's fascinating to see how (the split) will all play out, but we'll always have the refinery. There won't be any more job loss for Ponca City when it comes to (ConocoPhillips). There could be job growth."[369]
City officials were disappointed in ConocoPhillips' announcement that 750 jobs will be relocated from Ponca City, but expect the community to bounce back. "We would have liked to have seen them expand here. We have plenty of office room for them and had hoped they would grow their operation here," said City Manager Craig Stephenson. "We also understand it's a corporate decision." Mayor Homer Nicholson said Conoco has been a good corporate citizen and he is glad ConocoPhillips has decided to leave Oklahoma's largest refinery in Ponca City. "We are thankful," he said. "We were hoping the business optimization study would give them a reason to expand their business in Ponca City. Unfortunately, that did not happen," Nicholson said. "We have weathered larger reductions in force than this one," the mayor said.[370]
2009: Effect of ConocoPhillips Downsizing on Ponca City
The Tulsa World reported in 1009 that Conoco employed more than 5,000 people in Ponca City before the oil bust of 1985, the year Dave Myers, executive director of the Ponca City Development Authority, pinpoints as "the beginning of the end for us being a company town." The end itself came in 2002, when Conoco merged into ConocoPhillips and began transferring departments en masse to the Phillips campus in Bartlesville. In November 2009, the company announced it would probably transfer the final 700 office jobs out of Ponca, leaving only 750 jobs in the refinery.[371]
Until a few months ago, Fred Holmes worked in research and development with more than 100 other technicians. Then he and his wife had to choose between early retirement or transferring to Bartlesville, an hour and 20 minutes east of Ponca. "It was a 12-hour day any way you look at it," Holmes says. "She couldn't put up with it then, and I didn't want to do it now." After a few weeks, his wife quit the company and invested in a downtown bridal shop, Affairs to Remember. Now Holmes works there, too — recently moving the shop to a larger storefront and adding a catering service. But Homes still resents the company for, as he puts it, "abandoning Ponca City." While he had a small business to fall back on, Holmes has watched friends and co-workers move away to look for jobs elsewhere. "You used to be able to wake up in the morning and know you had a job and know that your family would be provided for," he says. "Now, nobody knows what's going to happen next."[372]
Mike Dove took early retirement when the company moved his entire department to Bartlesville. When he grew up during the '60s, a job with the company seemed like "the ultimate prize," Dove says. Like many of his classmates, Dove went off to college not to escape Ponca City, but so he could come back and stay. "You could pretty much count on a job for life, and it gave you a sense of security and stability. "By the '90s, that wasn't the case at all." For his own two children, both now adults, staying in Ponca City was never an option. "Finding a job," Dove says, "pretty much means going somewhere else."[373]
KOCO reported on November 7, 2008 that City development executive director David Myers said the diversity of the economy would lessen the effect of possible job losses. "The impact of this economically is not nearly as severe as the impact emotionally," said Myers adding that city leaders didn't want to depend on a single employer that could make or break the community and that other employers also make up a big portion of the economy. "Sensor testing is a $6 billion worldwide industry, and we're the only place in the world where you come and have your sensor tested by a neutral third party," Myers said. "Our real concern is with the individual families that might be impacted by this, and we want to make sure that there are some viable alternatives for them to stay here in Ponca City because most of them do want to stay here," Myers said. Barber Barney Barnwell said he has been in this situation before and so has the community. "We can survive," he said. "Ponca can survive."[374]
2010: Possible Sale of Ponca City Refinery
In May 2010, there was a lot of discussion in Ponca City about the possibility that ConocoPhillips was interested in selling its Ponca refinery to another oil company and getting out of Ponca City especially after ConocoPhillips Chairman and CEO Jim Mulva met with corporate analysts in October 2009 for the ConocoPhillips Q3 2009 Earnings Call and announced that the company's capital budget would decrease by about 12 percent in 2010 and that ConocoPhillips planned to divest $10 billion in refining, exploration, and production assets in a bid to improve its financial position.[375]
At the earnings call on October 29, 2009 Mulva was asked specifically about the possibility that ConocoPhillips might divest itself of some of its refineries and Mulva said that the company was "going through a more strategic assessment [of its refineries] because there are some that are less sophisticated. We will think long-term when the market gets a little bit better about selling some refineries. We think that is going to be subsequent to the next two years for 2012, 2013 and we have in mind a number of facilities that we think might have some value to someone else."[376]
The Tulsa World and the Bartlesville Examiner-Enterprise report that Mulva appeared before a packed house at the Bartlesville Community Center on May 21, 2010 to present the annual company update, talk about ConocoPhillips' plans for the future, and clarify the company's plans for Bartlesville and for the Ponca City refinery.[377]
Mulva told his audience that employees in Bartlesville and Ponca City have little to fear. Although ConocoPhillips announced last year that it was tranferring or eliminating all 700 non-refinery jobs in Ponca City, ConocoPhillips plans to keep the Ponca City refinery with it's 750 employees. "We will retain only the largest and most sophisticated refineries," Mulva said. "Ponca City is a large and sophisticated refinery that is important to our refinery portfolio."[378]
Mulva added that he didn't forsee any change in the 3,100 ConocoPhillips employees in Bartlesville, and that there was actually room to accommodate an additional 800 to 1,000 more employees in Bartlesville. "There's no change in our long-term plans for Bartlesville," Mulva said. "It's a very important global support center for ConocoPhillips."[379]
"Ponca City Still a Competitive Refinery"
The announcement reinforced a statement made in February 2009 at the time that the announcement was made that ConocoPhillips non-refinery employees in Ponca City would be relocated over the next three years. "The refinery in Ponca City continues to be a competitive refinery," said John A Carrig, President and Chief Operating Officer of ConocoPhillips, when he talked to students as part of the Distinguished Speaker Series at the Michael F. Price College of Business at Oklahoma University. "Like all of our facilities, we are continuing to make investments to enable it to thrive. I don't see any particular change in the outlook for it."[380]
Jim Mulva reiterated in his conference call to financial analysts on July 14, 2011 that in answering a question by Ed Westlake of Credit Suisse that "if we have an alternative to sell one of the less sophisticated refineries in a way, we are not going to delay until this is done accomplishing and doing that."[381][382][383]
Ponca City and the Spinoff of Phillips 66 in 2012
How the Spinoff Affects Ponca City and Bartlesville
Rod Walton writes in the Tulsa World on April 28, 2012 that with the spinoff, Ponca City may not be affected as dramatically by the split as Bartlesville. Going back to the 2002 merger shows that Bartlesville and Ponca City were affected differently leaving the two cities in different situations today."[386]
Conoco employed nearly 1,900 people in Ponca City at the end of 2001, while Phillips had a workforce of 2,500 in Bartlesville. The ConocoPhillips numbers shrunk to only 750 refinery workers in Ponca City but swelled to 3,500 at the shared services center in Bartlesville. Ponca City is now purely a refining town, with Ponca City having lost all 750 non-refinery jobs during the three-year repositioning plan. "Today, we're a refinery town," said David Myers, executive director for the Ponca City Development Authority. "No doubt about it: the merger was not kind to Ponca City." "The dark humorists in that city used to joke that Ponca City got the first name in the merger but little else," writes Walton. "ConocoPhillips opted to shut down a carbon fibers plant early on and eliminated the rest of the 750 non-refinery jobs beginning in 2009.""[387]
The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that Jim Mulva has "proven to be a true friend to the City of Bartlesville."[388] According to Rod Walton, Bartlesville was a big beneficiary of the ConocoPhillips merger and seems to have lived a charmed life economically over the past ten years. Although the home of Frank Phillips doesn't employ 9,000 company workers as it did in the early days, the 1,000 employees added since 2002 have kept downtown buildings such as Plaza and Adams full of mid-level computer, credit and other support personnel. But now Bartlesville operations are in flux and there is much uncertainty about the future. "All employees are being moved to one of the two companies, with co-workers who once sat side to side now literally shifted to separate buildings," writes Walton. ConocoPhillips will employ about 1,700 people in the downtown Plaza and Frank Phillips Tower Center buildings and in the Adams warehouse. Phillips 66's Bartlesville workforce will number 1,900 people, housed in the main Adams and Phillips buildings and the Research and Development Center on the west edge of the city.[389] The Bartlesville Examiner-Enterprise reported on April 29, 2012 that the "split or 'repositioning' as it has been called by company officials, has required many existing local employees to shift jobs and even physically move from one building to another within the extensive downtown Bartlesville office complex" adding that "while no one can predict the future with perfect clarity, Bartlesville appears no worse for the wear during this complex process."[390]
ConocoPhillips CEO Ryan Lance and Phillips 66 CEO Greg Garland reassured its employees in Oklahoma in an op-ed they wrote for the Bartlesville Examiner-Enterprise titled "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" that "ConocoPhillips and Phillips 66 together employ nearly 4,500 people in Oklahoma, an increase in recent years. Going forward, we will both maintain Global Services Centers in Bartlesville providing essential finance, information technology and other vital support to our personnel around the world. Elsewhere, Phillips 66 will continue operating the Ponca City Refinery, by far Oklahoma’s largest, and will remain the leading gasoline marketer. ConocoPhillips will continue producing oil and natural gas from the Anadarko Basin and the Panhandle area." Lance and Garland added that "we continue encouraging both current and incoming employees to maintain our proud tradition of community service. Bartlesville is a special place to work, live and raise a family, and we want to help keep it that way. This is an exciting time for ConocoPhillips and Phillips 66. All of our Oklahoma communities are great homes to our people and businesses, and we both look forward to long and bright futures here."[391]
"The Phillips and Conoco merger has taught everyone, Poncans and Bartians alike, to simply expect the unexpected," writes Walton. "In other words, who knows what ConocoPhillips and Phillips 66 will look like 10 years down the road?" "We do have a strong Conoco retiree group that lives here," says Dave Myers. "There's still talk in the community, still those who'd like to go back to the old days. I think most people have moved on."[392][393]
The Bartlesville Examiner-Enterprise reported on September 12, 2012 that Greg Garland visited Bartlesville on September 11, 2012 to speak to the Chamber of Commerce and told members of the chamber that Bartlesville is of strategic importance to Phillips 66. “As we were approaching the repositioning and spinning Phillips 66 out of ConocoPhillips, there was never any question that Bartlesville would continue to be a strategic and important part of our company, in the support of our company operations, for a very long time,” Garland said. Garland added that Phillips is “pretty much at capacity” in Bartlesville. “I don’t see us moving a lot of people into Bartlesville,” he said, adding that Bartlesville will always be a core asset for the company. “There’s not big plans to move in a big section of the workforce. We just don’t have the capacity or the space here today to do that.”[394]
Visit of Phillips 66 Leaders to Ponca City
On March 27, 2012, the Ponca City News reported that leaders from Phillips 66 visited Ponca City and were met by community leaders.
On the Phillips 66 side were Bob Herman, Future Lead of Health, Safety and Environment; Pete Stynes, Ponca City Refinery Manager; Larry Ziemba, future Lead of Refining, including Projects and Procurement, and President, Global Refining; Chantal Veevaete, future Human Resources; and Tim Taylor, future Commercial, Marketing, Transportation and Business Development.
On the Ponca City side were City Manager Craig Stephenson; Lee Evans, Chair of the Ponca City Area Chamber of Commerce; David Myers, Ponca City Development Authority; Rich Cantillon, Chamber of Commerce/Tourism Bureau; Carl Renfro, community leader; and Larry Murphy, Chair of the Ponca City Development Authority.[395]
Phillips 66 CEO Greg Garland, although originally scheduled to visit Ponca City with his management team, was not able to attend. Ponca City Mayor Homer Nicholson, retired from ConocoPhillips after 38 years service, was also unable to attend.
Proposal to Rename Phillips 66's Refinery to the "Marland Refinery in Ponca City"
On March 12, 2012 a web site was created asking the management of Phillips 66 to consider honoring EW Marland, the oil pioneer who built the refinery in 1919 and developed the oil industry in North Central Oklahoma by restoring the name of the Phillips 66 refinery in Ponca to its original name, "Marland Refinery in Ponca City," as a gesture of goodwill to the community of Ponca City.
"The Ponca City News" recently announced that with the split of ConocoPhillips into two companies, the ConocoPhillips operation in Ponca City, Oklahoma will soon be renamed Phillips 66.Frank Phillips, the founder of the Phillips 66 Oil company, was a man who knew how to use his courage and initiative and great administrative ability to create industry and wealth in Oklahoma leaving a legacy in the oil company that bears his name that will always be a monument to his memory.
But there is another Oklahoma oil pioneer who was equally important in developing the oil industry and bringing prosperity and advancement to Northern Oklahoma and that man was EW Marland.
EW Marland pioneered the use of geological techniques in the oil industry and was years ahead of his time as an employer providing housing, loans, medical care, and other benefits for thousands of employees who worked at his refineries and pipelines but Marland lost everything to the powerful JP Morgan banking interests - even losing his name on the oil company that he founded in Ponca City.
It is altogether fitting and proper that Phillips 66 honor the heritage of oil development in Northern Oklahoma by recognizing Frank Phillips and EW Marland.
The executives of Phillip 66 have honored the memory of Frank Phillips by choosing to name their new company for Phillips. We think Phillips 66 should honor the legacy of oil pioneer EW Marland by naming their refinery in Ponca City for Marland, the man who started the refinery and brought advancement and development to North Central Oklahoma.[396]
It would mean a great deal to the residents of Ponca City for Phillips 66 to acknowledge the history and heritage of the oil industry in Oklahoma by honoring these two great oil pioneers, Frank Phillips and EW Marland.
Renaming the refinery the "Marland Refinery in Ponca City" will serve as a symbol going forward of the partnership between the oil industry and the citizens of North Central Oklahoma that honors the legacy of these two great oil pioneers.[397]
A full page advertisement by Phillips 66 announcing its "intent on continually earning the trust of the communities we serve and operating with the highest levels of integrity" appeared in the Ponca City News on May 1, 2012.[398] A quarter-page advertisement congratulating Phillips 66 on its creation and asking Phillips 66 to honor the legacy of EW Marland appeared in the Ponca City News on May 1, 2012.[399][400]
News from the Ponca City Refinery
April 3, 2013: Several Units Temporarily Shut Down at Ponca City Refinery Due to Storms
Nasdaq reported on April 3, 2013 that several units at the Marland Refinery in Ponca City were temporarily shut down over the weekend due to storms. Phillips was making progress toward restarting some units and some units have been restarted.[401]
March 20, 2013: Phillips Signs Deals to Boost Deliveries of Cheap Crude to Marland Refinery in Ponca City
Eliot Caroom reported on Bloomberg on March 20, 2013 that Phillips has signed a pipeline deal with Magellan Midstream Partners LP (MMP) to move 20,000 barrels a day of crude to the Marland Refinery in Ponca City, replacing West Texas Intermediate from Cushing with oil from the Mississippian Lime play. Magellan service will begin in late 2013, reaching full volume by January 2014.
Phillips will also invest in its own Oklahoma assets to transport an additional 40,000 barrels a day of Mississippian Lime to Ponca City. Mississippian Lime crude comes from the Anadarko Basin, which spans Oklahoma and neighboring states. Two new pipelines carrying the grade are planned to start service this year, according to a February EIA report. “We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” Greg Garland, Phillips 66 chairman and chief executive officer, said in the statement. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses.”[402]
February 20, 2013: Oscar nominated Director David O. Russell attached to Marland Movie
The Tulsa World reported on February 20, 2013 that Oscar-nominated director David O. Russell will reunite with Oscar winner Jennifer Lawrence in the movie "The Ends of the Earth" about Oilman E. W. Marland founder of the Marland Oil Campany and builder of the Marland Refinery in Ponca City, Oklahoma and his wife Lydie Marland. The Weinstein Company (which made "Silver Linings Playbook" with Lawrence and Russell) has described the film as "the epic love story, based on true events (as) powerful oil tycoon Ernest Marland loses everything after engaging in a controversial love affair with his adopted daughter Lydie." The previously announced film - likely a 2014 or 2015 release - will be written by Chris Terrio, the screenwriter of best-picture Oscar film "Argo."[403]
February 7, 2013: Gasoil Hydrotreater Shut Down for Short-Term Repairs at Ponca City Refinery
Lynn Doan at Bloomberg reported on February 7, 2013 that a gasoil hydrotreater was shut down for short-term repairs at the Marland Refinery in Ponca City. Workers began shutting down equipment about two weeks ago for short-term maintenance turnarounds, said the person, who asked not to be identified because the information isn’t public. Phillips recently finished repairs on the amine treater and shut a gas plant associated with the coker and a gasoil hydrotreater for work that may last two more weeks, the person said. In the fall, the coker will be out of service for work the person added. Cokers convert heavy refinery streams, such as vacuum bottoms, into light products such as naphtha and heating oil. Hydrotreaters remove sulfur, metal and other impurities from refined oil products. Rich Johnson, a spokesman at company headquarters in Houston, said by e-mail that planned maintenance is under way in Ponca City. He declined to comment on specific units.[404]
February 1, 2013: Phillips Honors E. W. Marland by Hosting Chamber Members in Marland Boardroom
Rich Cantillon reported in the Ponca City Chamber of Commerce online Newsletter on February 1, 2013 that Phillips honored E. W. Marland by hosting a tour of E. W. Marland's office and the Marland Oil Company Board Room for members of Ponca City Government, the Ponca City Chamber of Commerce, and the Ponca City Development Association (PCDA). "Hand carved designs are everywhere in what was the board room and Marland's Office," wrote Cantillon, Executive Director of the Ponca City Chamber of Commerce. "This is an incredible part of Oklahoma oil history right here in Ponca City! It has been kept just like it was when E.W. Marland worked in this office and ran his oil company." City officials met with Phillips Refinery Manager Pete Stynes, Phillips HR Manager Bob Gingerich, and H.J. Reed, Phillips Manager for State Government Relations who was in Ponca City to give an update on what to expect in the upcoming legislative session.[405]
January 13, 2013: Replacement Coker Unit Arrives in Ponca City
The Ponca City News reported on January 13, 2013 that a 463,000 pound replacement coker unit had arrived in Ponca City for installation at the Phillips 66 Refinery. The unit, manufactured in Japan, will be prepared at a staging area at Standing Bear Park for later installation at the refinery.[406]
December 25, 2012: Greg Garland Visits Ponca City
The Ponca City News reported on December 25, 2012 that Phillips CEO Greg Garland visited Ponca City accompanied by Larry Ziemba, Executive Vice President Refining; Merl Lindstrom, Vice President Technology; and Michael Wirkowski, General Manager, Refinery Business Improvement. Garland his team were welcomed to Ponca City by Mayor Homer Nicholson, a 38-year veteran of Conoco and ConocoPhillips before his retirement; David Myers and Larry Murphy with the Ponca City Development Authority; City Manager Craig Stephenson; civic leader Carl Renfro; Pete Stynes, Phillips 66 Refinery Manager in Ponca City; and Lee Evans and Rich Cantillon with the Ponca City Chamber of Commerce.[407] This was Garland's first public visit to Phillips 66's most profitable refinery since becoming CEO. Garland cancelled a previous visit to Ponca City scheduled for March, 2012.[408]
December 18, 2012: Ponca City Residents Meet Over Concerns about Possible Groundwater Contamination
Beverly Bryant reported in the Ponca City News on December 18, 2012 that residents of a southeast Ponca City neighborhood adjacent to the Phillips 66 Refinery met at the Poncan Theatre with Attorneys Dave Askman, Jason Aamodt, Kalyn Free and Dallas Strimple to discuss possible groundwater contamination with benzene, a volatile organic compound which can cause cancer. The attorneys, who included the co-counsels that represented the Ponca Tribe in their 2005 lawsuit against Continental Carbon Company, gave a presentation called “Orange Water: Ponca City, Oklahoma.” Water samples were taken from seven sites, said Askman adding that although not all seven sites showed the same results, benzene was found in a concentration of 20 parts per million at one site, along with diesel-range organics. “In those orange springs, we know there is benzene and diesel coming up in the water,” said Askman. “Phillips has information that materials have gotten into the neighborhood.” The Ponca City News reported that efforts to contact spokesmen for Phillips 66 and the Oklahoma Department of Environmental Quality had so far been usuccessful but would continue.[409]
Beverly Bryant reported in the Ponca City News on December 19, 2012 that Phillips 66 has responded to health concerns of Ponca City residents of about what they believe to be contamination of the water which comes into their homes, as well as groundwater on their properties. “Phillips 66 conducts its operations and environmental programs in a manner that protects the community, human health and the environment," said a statement by Bob Gingerich, head of Human Resources at the Phillips 66 Refinery. "Since the early 1990s, Phillips 66 (previously Conoco and then ConocoPhillips) has been working cooperatively with state regulators, to continue remediation and monitoring of groundwater and springs beneath and surrounding the refinery. Phillips 66 conducts monitoring of this groundwater and springs multiple times throughout the year in accordance with a plan approved by state regulators. Test results show the impacted area continues to shrink. These results are available to the public through the Oklahoma Department of Environmental Quality and at the Ponca City Public Library. Since 2003, Phillips 66 has purchased and continues to purchase selective property near the refinery to increase the buffer zone between the community and the refinery. Phillips 66 has a long history of working with our neighbors and responding to community questions and concerns. Community members are welcome to call our 24-hour InfoLine (580) 767-7130.” Gingerich declined to answer any questions about the monitoring results, but said “We are happy to talk to any individual homeowners about any concerns and come out to help them understand what’s going on."[410]
October 31, 2012: Phillips Increases Amount of Sour Crude and Mississippian Lime Crude Processed at Ponca City Refinery
Tim Taylor reported at the Phillips Third Quarter Earnings Conference on October 31, 2012 that Phillips had increased the amount of crude processed at the Ponca City Refinery and is also ramping up deliveries of locally produced Mississippian lime crude into the Ponca City refinery via pipeline and truck. "We expect to receive up to an additional 50,000 barrels per day of this high-quality crude into Ponca City by the end of 2013."[411]
October 21, 2012: Phillips 66 Charitable Contributions in Ponca City and the Surrounding Area are Significant
The Ponca City News reported on October 21, 2012 that Phillips 66 provides financial and in-kind support to community organizations through corporate and employee based programs. "Our philanthropic contributions in Ponca City and the surrounding area are significant. In 2011, direct contributions to non-profit agencies, matching United Way contributions, and contributions based on employee and retiree hours or monetary contributions were in excess of $1.1 million dollars. When employee and retiree contributions are added to the company contributions, the total is over $1.7 million dollars."[412]
The Ponca City Refinery earned profits in excess of $500 million in 2011 for Phillips 66 and based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line.
October 10, 2012: Refinery Manager Pete Stynes Speaks to Ponca City Lions Club
The Ponca City News reported on October 14, 2012 that Refinery Manager Pete Stynes spoke to the Ponca City Lions Club on October 10, 2012 about Phillips 66's Refinery in Ponca City. Stynes said that 800 employees work at the refinery with the direct employment of 625 Phillips employees. Stynes said the local oil boom, as well as discoveries of light crude in North Dakota and other parts of the country, have resulted in a profitable time for the refinery. Stynes said that Phillips employees contribute thousands of dollars to local organizations — much of it matched by Phillips 66 - and that Phillips employees put in many volunteer hours with at least 40 employees serving on the boards of directors of local charities.[413]
August 8, 2012: Pony Express Pipeline to Deliver Crude from Wyoming to Ponca City Refinery
The Oil and Gas Journal reported on August 8, 2012 that the Pony Express Pipeline company has received sufficient binding shipper commitments to move forward with its Pony Express Oil Project that will deliver crude oil from receipt points near Guernsey, Wyo., to the Phillips 66 Ponca City Refinery as well as to Cushing, Okla. The 220,000 b/d pipeline will enter service third-quarter 2014. The project involves converting 430 miles of existing pipeline from natural gas to oil service, and constructing a 260-mile pipeline extension from the existing pipeline to Ponca City and Cushing.[414]
August 6, 2012: Weinstein Company to Produce Film about EW Marland, the Marland Refinery, and the Birth of the Oil Industry in North Central Oklahoma
The Tulsa World reported on August 6, 2012 that the Weinstein Company, producer of the last two Academy Award winners for best picture: "The King's Speech" and "The Artist," is attached to topline the romantic drama "Ends of the Earth," written by Chris Terrio and based on the lives of EW and Lydie Marland, in a story that follows the controversial love affair between an oil baron and his adopted daughter, which destroys the empire they built together. "Chris (Terrio) has brought to life with his writing one of the most epic love stories that people have yet to really discover," said Dylan Sellers, Weinstein Company president of production. "We knew right away that this script was something special." Jennifer Lawrence, star of "The Hunger Games," is attached to play Lydie, an educated, headstrong woman who was adopted as a girl by her aunt Virginia and uncle Ernest who later becomes their adopted daughter and eventually becomes EW's wife. According to the screenplay, Lydie urges EW to raise workers' wages at the Marland Refinery and give them unpredecented access to medical care, earning her the nickname the "princess of the prairies." Todd Black, Jason Blumenthal and Steve Tisch will produce the movie for Escape Artists, which is aiming to start production in the summer of 2013.[415][416]
August 6, 2012: Red Fork Energy to Pipeline and Truck Mississippi Lime Crude to Ponca City Refinery
The Oil and Gas Journal reported on August 6, 2012 that Red Fork Energy Ltd. has agreed to sell the Mississippi Lime Crude from its 75,000 net acres east of the Nemaha ridge in five Oklahoma counties to a subsidiary of Phillips 66. The oil will be pipelined or trucked to the Ponca City Refinery. Red Fork Energy just completed the McMurtry 1-21H well in Noble County, OK, in which it has 62.2% working interest, at a peak rate of 494 b/d of 38° gravity oil and 1.3 MMcfd of high-BTU gas. The well’s 23-day average was 470 boe/d.[417] Red Fork has drilled nine horizontal Mississippian wells with four completed for production, three awaiting completion and two currently drilling. The company's McMurtry 1-21H well in Development Area 2, Oklahoma, continues to be a winner for the company with production averaging about 470 barrels of oil equivalent per day. The well has been producing uninterrupted since testing commenced and has been transferred to the company's production monitoring team for permanent production. Further production from the Mississippi Lime play is just waiting on completion works to be carried out on the McMurtry 1-22H, Bunch 1-19H and State 1-13H wells.[418]
August 1, 2012: Phillips to Run 60,000 bpd of Advantaged Crudes to Ponca City Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "Ponca about 60,000 barrels a day."[419]
August 1, 2012: Phillips to Run More Mississippi Lime Shale Crude through the Ponca City Refinery
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems.[420] Rod Walton reported in the Tulsa World on September 24, 2011 that Mississippi Lime - porous limestone formations in northern Oklahoma and southern Kansas has been yielding reservoirs to horizontal operators such as SandRidge, Chesapeake, Devon and Tulsa-based Eagle Energy LLC during the past two years. The "new" reserves actually lie slightly below formations that were big producers 100 years ago. Phillips Petroleum Co., for instance, made its name in the nearby Burbank Field, on the eastern edge of the play that includes Osage, Pawnee, Kay, Garfield, Woods, Alfalfa and other northern Oklahoma counties. "It's sort of amazing that all of this has been sitting there and waiting for horizontal drilling," says Eagle CEO Steve Antry. "The vertical wells hardly drained any of that." The move now is toward the deposits containing mostly oil and natural gas liquids. The Mississippi Lime's ratio is often 52 to 55 percent oil, according to reports. "We're into the second tier of this renaissance," says Chip Minty, a spokesman for Oklahoma City-based Devon Energy Corp. "Now what we're doing is taking the same technology beyond the shales to the carbonates, such as limestone." One advantage of the Mississippi Lime is that limestone's porosity and natural fractures can mean less expense on the drilling and hydraulic fracturing parts of the project. Expenses can total half and even a fourth of typical unconventional well efforts. Another advantage is that there is already plenty of seismic data available for the area from past exploration and drilling. "It's a reasonably low-cost play where hydrocarbons have been found before, with a lot of wells drilled in the past," says RAM spokesman Robert Phaneuf. And that gives you good data points."[421]
July 30, 2012: Major Disaster Averted at Ponca City Refinery
The Ponca City News reported on July 31, 2012 that what might have been a major disaster at the Ponca City Refinery was narrowly averted when a concrete pillar prevented an out-of-control rock-hauling truck from plowing into critical piping at the south refinery along US 60. Oklahoma Highway Patrol Trooper Jason Ross reported in his investigation the truck was traveling eastbound on US 60 approaching the railway overpass when it went into the steel guardrail on the right side and continued for 625 feet before then crashing through cement barriers and fencing around the refinery plant and striking a barrier around exposed pipes, traveling another 295 feet before crashing head-on into the concrete pillar at the base of the refinery operation. Refinery spokeswoman Diane Anderson says the refinery production operation was not affected and that major damage to the plant was narrowly avoided.[422]
July 10, 2012: Planned Maintenance under way at Ponca City refinery
Reuters reported on July 10, 2012 that planned maintenance is taking place at the Ponca City Refinery. Phillips 66 did not say when the maintenance work started or how long it is expected to last.[423] Phillips 66 completed maintenance work on July 19 at Ponca City refinery on July 19, according to traders doing business with the refinery.[424]
News, Issues, and Status at Other Refineries
Phillips 66 has 15 refineries globally and 2.2 million barrels a day of capacity. "When we think about our refining business we like to think about it in four segments. One is the Mid-Continent, about 21% of our capacity is there. Margins have been very strong in this area, as you know. Our largest region is the Gulf Coast, about 33% of our capacity is there.We have large economy of scale here. We have very complex refineries on the Gulf Coast. The Western US and Pacific region is about 20%, includes our interests in the Melaka refinery.The West Coast has typically had high margins historically, but the last couple years has been challenged in part due to the economic slowdown in California."[425][426][427]
Characteristics of Phillips 66 Worldwide Refineries[428]
| Country | Name | Location | Capacity (KBD) | Nelson Complexity Factor | Clean Product Yield |
|---|---|---|---|---|---|
| Central US | Billings Refinery (BI) | Billings, MT | 118 | 14.4 | 89% |
| Central US | Borger Refinery (BG) | Borger, TX | 146 | 12.3 | 89% |
| Central US | Ponca City Refinery (PC) | Ponca City, OK | 187 | 9.8 | 91% |
| Central US | Wood River Refinery (WR) | Roxana, IL | 306 | 12.5 | 85% |
| Eastern US and Europe | Bayway Refinery (BW) | Linden, NJ | 238 | 8.4 | 90% |
| Eastern US and Europe | Humber Refinery (HU) | North Linconshire | 265 | 11.6 | 81% |
| Eastern US and Europe | MIRO Refinery in Germany* (MI) | Karlsruhe | 56 | 7.9 | 85% |
| Eastern US and Europe | Whitegate Refinery in Ireland (WG) | Cork | 71 | 3.8 | 65% |
| Gulf Coast US | Alliance Refinery (AL) | Belle Chasse, LA | 247 | 12.5 | 86% |
| Gulf Coast US | Sweeny Refinery (SW) | Old Ocean, TX | 247 | 13.2 | 87% |
| Gulf Coast US | Lake Charles Refinery (LC) | Westlake, LA | 239 | 11.2 | 69% |
| Western US and Asia | Ferndale Refinery (FN) | Ferndale, WA | 105 | 7.0 | 75% |
| Western US and Asia | Los Angeles Refinery (LA) | Carson, CA/Wilmington, CA | 139 | 14.1 | 87% |
| Western US and Asia | San Francisco Refinery (SF) | Rodeo, CA | 120 | 13.5 | 83% |
| Western US and Asia | Melaka Refinery in Malaysia (ME) | Melaka | 58 | 9.3 | 83% |
- Denotes joint ventures. Crude capacity reflects that proportion.
Nelson Complexity Number
What differentiates one refinery from another are their capacities and the types of processing units used to produce these petroleum products. Refineries have a distillation column and then can have any combination of secondary processing units depending on the type of crude oil they process and the products they want to produce. A distillation column separates crude oil into different petroleum products based on differences in boiling points. Each secondary processing unit after the distillation column has a specific purpose, whether it is increasing separation; upgrading low-value products, like residual fuel oil, to high value products, like distillate; increasing octane; or enhancing environmental compliance by removing sulfur and other pollutants. A refinery's level of complexity is often based on how much secondary conversion capacity it has.[429]
The Nelson Complexity Index is one measure of refinery complexity. Developed in the 1960s by W.L. Nelson, the index measures the complexity and cost of each major type of refinery equipment.[430] The Nelson complexity index assigns a complexity factor to each major piece of refinery equipment based on its complexity and cost in comparison to crude distillation, which is assigned a complexity factor of 1.0. The complexity of each piece of refinery equipment is then calculated by multiplying its complexity factor by its throughput ratio as a percentage of crude distillation capacity. Adding up the complexity values assigned to each piece of equipment, including crude distillation, determines a refinery’s complexity on the Nelson Complexity Index. The Nelson complexity index indicates not only the investment intensity or cost index of the refinery but also its potential value addition. Thus, the higher the index number, the greater the cost of the refinery and the higher the value of its products.[431]
For example, the Phillips 66 refinery at Ferndale refinery in Washington has a Nelson Complexity Number of 7.0 and includes a fluid catalytic cracker, alkylation, and hydrotreating units. The Wilmington Refinery has a Nelson Complexity Number of 14.1 and includes a fluid catalytic cracker, alkylation, hydrocracking, reforming, and coking units.[432]
Alliance Refinery
Description of Alliance Refinery
- See also Phillips 66 Alliance Refinery
The Alliance Refinery, located on the Mississippi River in Belle Chasse, La., 25 miles south of New Orleans, has a crude oil capacity of 247 MBD and processes mainly light, low-sulfur crude oil. Alliance receives domestic crude oil from the Gulf of Mexico via pipeline and foreign crude oil from West Africa via pipeline connected to the Louisiana Offshore Oil Port. The single-train refinery’s facilities include fluid catalytic cracking, hydrodesulfurization units, a reformer and aromatics units that enable it to produce a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel. Other products include petrochemical feedstocks, home heating oil and anode petroleum coke.The majority of the refined products are distributed to customers in the southeastern and eastern United States through major common-carrier pipeline systems and by barge.[434]
News and Views on Alliance Refinery
January 30, 2013: Garland Says Phillips Has Completely Backed Out US Light Sweet Crude from Alliance Refinery
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips has completely backed out imports of U.S. light sweet crude in the Gulf Coast refineries including Alliance Refinery.[435]
December 13, 2012: Phillips Announces Marine Charter Agreements to Supply Alliance Refinery with Eagle Ford Advantaged Crude
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they had recently signed time charter agreements for two medium-range Jones Act marine vessels that will supply the Alliance and Bayway refineries, and potentially the company’s other Gulf Coast refineries, with Eagle Ford crude beginning in early 2013.[436]
October 31, 2012: Phillips Ran Global Refineries at 96% Capacity in 3rd Quarter Despite Downtime at Alliance Refinery
Chief Financial Officer Greg Maxwell reported at the Phillips Third Quarter Earnings Conference on October 31, 2012 that globally Phillips ran at a 96% utilization rate despite the Alliance refinery being down for approximately three weeks related to the impact of Hurricane Isaac.[437]
September 21, 2012: Production Resumes at Alliance Refinery
Nasdaq reported on September 26, 2012 that production had resumed at its Alliance refinery on September 21, 2012 as expected. Operations were idled on August 28 ahead of Hurricane Isaac.[438]
September 19, 2012: Phillips Expects to Have Alliance Back Online by September 22
Phillips 66 reported on September 17, 2012 that several units have been brought back online at the Alliance Refinery and that Phillips expects to have all refinery units back online by the end of the week of September 17.[439]
September 6, 2012: Power Restored at Alliance Refinery
Phillips 66 reported on September 6, 2012 that power was restored to Alliance Refinery on September 5, 2012 and the refinery expected to be operating by mid-September.[440]
September 5, 2012: Alliance Refinery Loses Electricity
Phillips 66 reported on September 5, 2012 that Alliance Refinery has lost electricity supply from its third-party power provider and work is proceeding to resolve the problem, and the utility provider expects to have power back to the refinery by late in the day on September 5, 2012. This outage will slow the restart of the refinery.[441]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Isaac went right over the top of the Alliance refinery. "We got back in the refinery on Wednesday afternoon. Some minor damage in terms of insulation blown off of towers, but really the refinery came through in really good shape. Back side of the storm created flooding in Plaquemines Parish. It overran a levy. We had about a 100 foot breach in our dike. So we got water into the refinery. By Thursday afternoon, we had managed to breach that. But we had about a foot to a foot and a half of water in the refinery. By Saturday, we had pumped all that out. No equipment damage really. We had hardened the refinery after Katrina. We had raised and elevated motor control centers, control rooms, etc. So really no equipment damage. We got a boiler started up Sunday night. We got gas restored on Sunday, power restored on Tuesday. So we're in startup mode and we expect in six to nine days, we'll have Alliance up and running. So really we came out well compared to the Katrina event back in 2005."[442]
September 4, 2012: Electricity Restored to Alliance Refinery
Phillips 66 reported on September 4, 2012 that power was restored to the Alliance Refinery early the morning of September 24, 2012 and refinery personnel are in the process of safely bringing the refinery back online. It is expected to take a couple of weeks before the refinery is running at normal rates.[443]
September 4, 2012: Alliance Refinery Reports Leakage at Oil Storage Facility
Reuters reported on September 4, 2012 that a leaking oil storage facility at the Alliance Refinery released an unknown amount of oil into the facility and surrounding area according to a filing with national pollution regulators. The incident was discovered at 1308 (local time) on September 2, 2012, the filing said.[444]
September 2, 2012: Alliance Refinery Remains Shut Down without Power
Phillips 66 reported on September 2, 2012 that the Alliance Refinery remains shut down and is without power at this time but most of the floodwater has been cleared from the refinery and personnel have returned to work and are preparing the refinery for an eventual restart once power has been restored by the third-party power provider.[445]
August 31, 2012: Alliance Refinery Remains Shut Down Due to Flooding
Phillips 66 reported on August 31, 2012 that the Alliance Refinery remains shut down without power and floodwater remains in parts of the refinery. More than 100 employees should be at the refinery by the end of August 31, 2012 to assist with assessment and recovery of the refinery and additional emergency generators, fuel and other supplies also are expected. A timeline for restart will be developed once the assessment is complete.[446]
Herald Online reported on August 31, 2012 that Phillips will contribute $500,000 to the American Red Cross to assist relief operations following Hurricane Isaac and flooding in the Gulf Coast region and will match employee contributions for disaster relief. "Our thoughts and prayers go out to all those impacted by Hurricane Isaac, including our many employees, friends and neighbors across the Gulf Coast,” said Phillips CEO Greg Garland. “We are extremely thankful that all of the employees at our Alliance Refinery in Belle Chasse, La., and their immediate families are safe, though some have experienced significant damage to their homes and property.[447]
August 30, 2012: Some Flooding from Hurricane Isaac in Alliance Refinery
Phillips 66 reported on their web site on Augsut 30, 2012 that a team is assessing damage from flooding from Hurricane Isaac and that some flooding is evident in the refinery with personnel working to prevent more flooding and to pump water out of the flooded areas. The refinery remains shut down and is without power and a timeline for restarting the refinery will be made once the assessment is complete.[448]
August 28, 2012: Alliance Refinery Loses Power During Hurricane Isaac
The Times-Picayune reported on August 28, 2012 that according Plaquemines Parish Sheriff's Office deputies, Hurricane Isaac knocked out power at the Phillips 66 Alliance Refinery in Belle Chase's Jesuit Bend area. Belle Chase has about 5,100 outages as hurricane-force winds in lower Plaquemines likely would last between 6 to 10 hours.[449] “We are not yet able to confirm whether or not flooding in the region has impacted the refinery,” the company said in a statement on its website.[450] The Phillips 66 web site reported that refinery personnel are making plans to re-enter the refinery once the hurricane has passed and it is safe to do so in order to assess the condition of the refinery. A decision on a timeline for restart will be made once the assessment can be completed.[451]
August 27, 2012: Alliance Refinery Will be Shut Down for Hurricane Isaac
Fox News reported on August 27, 2012 that the Alliance refinery in Belle Chasse was in the process of suspending operations and would be completely shut down by the evening of August 27, 2012 ahead of Tropical Storm Isaac.[452] Refinery owners often shut down operations in advance of a storm because refineries consume enormous amounts of electric power and generate steam to cook crude oil into gasoline, diesel, jet fuel and heating oil and if a refinery loses power suddenly, operators can't properly clear the partially cooked oil out of pipes, and re-starting the refinery can take several days or even weeks. However if refineries instead conduct what is known as an orderly shutdown, they can re-start as soon as the power supply is assured again.[453]
August 26, 2012: Alliance Refinery Likely to Shut Down for Hurricane Isaac
Reuters reported on August 26, 2012 that Hurricane Isaac looks set to disrupt U.S. offshore oil and gas supplies and analysts say it could wreak havoc on "refinery row" along the Gulf Coast, a low-lying area between Texas and Mississippi that is home to about 44 percent of U.S. refining capacity and could be the biggest test for U.S. energy infrastructure since 2008, when Hurricanes Gustav and Ike disrupted offshore oil output for months and damaged onshore natural gas processing plants, pipelines and some refineries. According to Lousiana Governor Bobby Jindal, Phillips 66 was "likely" to shut its 247,000 bpd Alliance refinery in Belle Chasse, Louisiana.[454]
August 9, 2012: Phillips 66 Puts Project On Hold to Boost ultra-low-sulfur diesel fuel output at Alliance Refinery
Bloomberg reported on August 9, 2012 that Phillips is holding off on starting a project that would boost ultra-low-sulfur diesel fuel output at its Alliance refinery in Louisiana. Phillips 66 is “re-evaluating the timing of the project based on market economics,” Rich Johnson, a Houston-based company spokesman, said in an e-mailed statement. “Reviewing economics such as supply and demand forecasts for our product will be taken into consideration as part of the long-range planning cycle we use to determine what capital projects we want to invest in.” The company received a permit on July 25, 2012 to expand a diesel hydrotreater and gulfining unit, according to a filing with the state’s Department of Environmental Quality allowing the units to remove more sulfur to meet emissions regulations. The permit will expire on Jan. 25, 2014.[455]
August 1, 2012: Phillips to Run 50,000 to 90,000 bpd of Advantaged Crudes to Alliance Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most Phillips refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "And then Alliance, we are running today Eagle Ford crude and some Bakken crude in Alliance, but ultimately [we want to run] 50,000 to 90,000 barrels a day."."[456]
August 1, 2012: Phillips Won't Sell Alliance Refinery
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 said it would retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there.[457] "We had a lot of people go through the data room. We had a handful of offers and nothing we really regarded as approaching our whole value for the asset," said Garland. "I think in the interim year that's passed since we made that first decision that our view has changed in terms of Gulf Coast crudes particularly LLS as becoming advantaged. So we just think Alliance really has more future value than certainly -- value today than what people are willing to pay."[458]
June 5, 2012: Phillips 66 Reconsiders Sale of Alliance Refinery
Nasdaq reported on June 5, 2012 that Phillips 66 CEO Greg Garland told financial analysts during an investors conference that although Phillips 66 has been considering the sale of its Alliance refinery in Belle Chasse, Louisiana since December 2011, the company is now rethinking the prospect amid falling prices for Light Louisiana Sweet (LLS) crude oil and may not put the refinery up for sale after all. "Our view of that refinery has increased," said Garland. "We think LLS will become an advantaged crude." hillips 66 and other refiners have been rearranging their geographic footprint to take advantage of a boom in US oil and natural gas production that has scrambled the refining map. Refineries with access to new, discounted oil in the U.S. midcontinent have prospered, while coastal refineries have seen profit margins decline.[459] LLS sold for about $95 a barrel Tuesday, down nearly 17% since December. The premium of about $12 LLS commands over inland-crude-oil benchmark West Texas Intermediate should fall as more WTI crude comes to the Gulf Coast via pipelines and rail cars.[460]
According to an article in the Wall Street Journal on June 7, 2012, it may be difficult for Phillips to find a buyer for the Alliance Refinery because long term US gasoline consumption is falling. "Other refineries all have assets on the chopping block, but in a world where domestic fuel sales are in long-term decline, potential buyers are in short supply," write Ben Lefebre. However lower crude prices are making the economics of refining attractive again. "There may be a gleam of hope for Gulf Coast refiner profitability," writes Lefebre. "Exports are growing and Gulf Coast crude economics are getting better. The surge in domestic crude production could bring down the cost of regional oil benchmark Light Louisiana Sweet, giving refines in the region a distinct advantage, refiners and analysts have said."[461]
May 1, 2012: Phillips 66 is Trying to Sell Alliance Refinery
Garland told Reuters on May 1, 2012 that Phillips 66 aims to double refined product exports to 200,000 bpd in the next two years, but its 247,000 bpd Alliance refinery in Belle Chasse, Louisiana -- which runs light-sweet crude -- is on the block. Increasing U.S. light-sweet inland shale oil output along with more infrastructure to move it to the refinery-heavy Gulf Coast means more advantaged crude prices could show up in the region in the coming years, increasing Alliance's value, Garland said. If the price isn't right for what he called "a good export platform for us," Phillips 66 will keep it, Garland said. "We wouldn't let the refinery go cheap."[462]
Bayway Refinery
Description of Bayway Refinery
The Bayway Refinery, located on New York Harbor in Linden, N.J., has a crude oil processing capacity of 238 MBD and processes mainly light, low-sulfur crude oil. Crude oil is supplied to the refinery by tanker, primarily from the North Sea, Canada and West Africa. Bayway refining units include one of the world’s largest fluid catalytic cracking units, two hydrodesulfurization units, a reformer, alkylation unit and other processing equipment. The refinery produces a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel, as well as petrochemical feedstocks, residual fuel oil and home heating oil. The facility distributes refined products to East Coast customers via barges, trucks, pipelines and railcars. Bayway also operates a 775 MMLB/Y polypropylene plant.[464] Bayway is the northernmost refinery along the U.S. Atlantic Basin. Bayway Refinery's nickname, "The Gasoline Machine," is derived from its gasoline-making fluid catalytic cracking unit, which at 145,000 bpd is the largest in the nation. It has the capacity to supply half the gasoline used in New Jersey, the nation's 11th most populous state.[465]
Bayway is the second largest of 12 refineries on the East Coast, and the 25th largest in the United States, according to the U.S. Energy Information Administration. It employs about 800 people at the Linden facility.[466]
History of Bayway Refinery
In 1907 Standard Oil founder John D. Rockefeller acquired several hundred acres of the former Morse family estate between Linden and Elizabeth, New Jersey as the site for the Bayway refinery. Construction of temporary office buildings began on October 15, 1907 and work clearing the heavily wooded land began immediately. The cornerstone of the machine shop, the first permanent structure at the site, was laid on January 18, 1908, and construction continued throughout the year. The first crude stills at Bayway were completed in late 1908 and on January 2, 1909, they were symbolically fired up by William C. Koehler. The facility began processing an initial 10,000 barrels of crude oil per day. Capacity was expanded to an estimated 7,176 barrels per day by 1911. Over the next several years the plant continued expanding and increasing capacity and workforce.[467]
In 1911, Standard Oil was broken up into smaller units in accordance the Sherman Antitrust Act. One of these successor companies was Standard Oil Company of New Jersey, the precursor to Esso and later Exxon, which retained the ownership of the Bayway facilities.[468]
In 1993, the Tosco Corporation finalized proceedings to purchase the refinery from Exxon for a sum of $175 million, although the Exxon Chemical Company continued to run the Chemical Plant. During this time Bayway was operated by Bayway Refining Company, a wholly owned subsidiary of the Tosco Corporation. Under the direction of Tosco, Bayway was able to reorganize and upgrade the facility, and years of operating at a loss for Exxon in the later 1980s were turned around swiftly. Tosco was bought in 2001 by Phillips Petroleum, which merged with Conoco to form ConocoPhillips in 2002 and later spun-off downstream, midstream and chemical assets into a new Phillips 66 company in 2012.[469]
News and Views about Bayway Refinery
April 26, 2013: Amy Goldsmith and Fletcher Harper write that Phillips 66 has Reduced Staffing in Safety Areas at Bayway Refinery, Creating Concern for Workers and Neighbors
Amy Goldsmith and Fletcher Harper wrote in an op-ed in the New Jersey Star-Ledger on April 26, 2013 that the threat of an industrial fire and explosion that recently hospitalized hundreds in West, Texas has potentially increased for New Jersey residents as a result of a recent change in ownership at the Bayway oil refinery. "Last year, the refinery became part of Phillips 66," write Goldsmith and Harper. "After the ownership change, Phillips 66 eliminated one of just two positions dedicated entirely to firefighting and response to chemical leaks on the night shift and also reduced staffing for a process unit that can generate deadly hydrogen sulfide gas. They also cut back on long-established procedures for testing fire protection."[470]
According to Goldsmith, director of the New Jersey Environmental Federation, the state chapter of Clean Water Action, and Harper, executive director of GreenFaith, Phillips produces millions of pounds of highly toxic and flammable substances at Bayway Refinery and Phillips May 2012 Risk Management Plan submitted to EPA acknowledges that a flammable mixture could cause serious harm in the surrounding area in which 18,000 people live. "The people who work at the Bayway refinery have been objecting to Phillips 66’s cuts through their union, Teamsters Local 877. Unfortunately, Phillips 66 has responded by ordering a two-week suspension from work for the local union officer who has helped lead the workers’ health and safety efforts for many years," write Goldsmith and Harper. "Between Earth Day (Monday) and Workers’ Memorial Day (this Sunday), this week has focused Americans’ attention on the need to put public safety and environmental protection ahead of extra profits and bonuses for corporate CEOs. This would be a good time for corporate executives such as those at Phillips 66 to start listening."[471]
March 20, 2013: Phillips Signs Deals to Boost Deliveries of Cheap Crude to Bayway Refinery
Eliot Caroom reported on Bloomberg on March 20, 2013 that Phillips has signed a three-year deal with Enbridge Energy Partners LP for loading rail cars with up to 35,000 to 45,000 barrels a day of Bakkan crude from Enbridge’s terminal in Berthold, North Dakota. The crude will be delivered to Bayway Refinery on the east coast and Ferndale Refinery on the West Coast. Some crude could also be sent to Gulf Coast refineries at Lake Charles, Alliance, and Sweeney.“We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” Greg Garland, Phillips 66 chairman and chief executive officer, said in the statement. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses.”[472]
February 19, 2013: Bayway Refinery Manager Presents Check for $500,000 to American Red Cross
The Star Ledger reported on February 19, 2013 that David Erfert, Phillips 66 Bayway Refinery Manager, presented a check on behalf of Phillips 66 to Suzanne Lutz of the North Jersey Region of the American Red Cross to assist with hurricane relief efforts following Superstorm Sandy. "The American Red Cross is extremely grateful for Phillips 66’s generosity to support our work helping those impacted by Superstorm Sandy," said Lutz.[473]
January 30, 2013: Garland Says Phillips Utilization Rate Was Negatively Impacted by Hurricane Sandy Related Unplanned Downtime at the Bayway Refinery
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips utilization rate was negatively impacted by Hurricane Sandy related unplanned downtime at the Bayway refinery as well as the turnarounds at the Wood River Refinery, Los Angeles Refinery and Borger Refinery. "In refining and marketing, our refining realized margin was $13.67 per barrel with a global crude utilization rate of 91% and a clean product yield of 83%," said Garland. "Lower volumes negatively impacted earnings by $42 million, mainly in the Atlantic basin and the Central Corridor regions, reflecting unplanned downtime due to Hurricane Sandy and plant turnarounds."[474]
January 8, 2013: Global Partners to Deliver 50,000 bpd of Bakken Crude to Bayway Refinery
The Boston Globe reported on January 8, 2013 that Global Partners LP has signed a five-year contract with Phillips 66 to deliver crude oil from North Dakota to Bayway Refinery using its rail transloading, logistics, and transportation system to deliver about 91 million barrels of crude oil to the Phillips refinery over the life of the contract. That equates to approximately 50,000 barrels per day.[475] “Global has established a ‘virtual pipeline’ for the reliable transportation of Bakken crude,” said Tim Taylor, Executive Vice President, Commercial, Marketing, Transportation & Business Development of Phillips 66. “Our five-year agreement with Global assures us long-term access to advantaged crude for our Bayway refinery through what we believe is a cost competitive origin-to-destination supply system to the East Coast.” The Bakken crude oil is expected to be transloaded at Basin Transload LLC’s North Dakota rail facilities.[476]
December 13, 2012: Phillips Announces Marine Charter Agreements to Supply Bayway Refinery with Eagle Ford Advantaged Crude
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they had recently signed time charter agreements for two medium-range Jones Act marine vessels that will supply the Alliance and Bayway refineries, and potentially the company’s other Gulf Coast refineries, with Eagle Ford crude beginning in early 2013.[477]
November 27, 2012: Bayway Refinery Resumes Normal Operations
Fox Business reported on November 27, 2012 that Bayway Refinery has resumed normal operations following extensive repair and replacement of equipment impacted by salt water during Hurricane Sandy.[478]
November 26, 2012: Phillips Reports Emissions During Equipment Startup at Bayway Refinery
Businessweek reported on November 26, 2012 that Phillips reported emissions associated with an equipment startup when more than 500 pounds of sulfur dioxide flared at the Bayway refinery on November 25, 2012. The unit was undergoing repairs and maintenance following Hurricane Sandy.[479]
November 17, 2012: Bayway Refinery to Reopen by End of November
Phillips 66 reported on November 19, 2012 that the Bayway Refinery is expected to resume normal operations by the end of November. Work to repair or replace damaged equipment, primarily electrical equipment impacted by saltwater during the storm surge from Hurricane Sandy, is progressing. The refinery’s processing units are in good condition. The Bayway polypropylene plant will follow the same restart schedule as the refinery.[480]
November 5, 2012: Bayway Refinery Leaked 7,700 Gallons of Oil after Hurricane Sandy
Reuters reported on November 5, 2012 that according to the US Coast Guard about 7,700 gallons of fuel spilled from the Bayway Refinery after Hurricane Sandy.[481]
November 2, 2012: Bayway Refinery Could be Weeks Away from Restart
Reuters reported on November 2, 2012 that a source familiar with refinery operations Bayway refinery is weeks away from restarting due to heavy damage caused by salt water flooding into the facility from the neighboring Arthur Kill during Hurricane Sandy. Work is underway on one of the two docks where the pumps were ruined by salt water. Estimates for one dock to return to service and receive product are for next week, the source said.[482]
The Phillips 66 website reported on November 2, 2012 that the refinery remains temporarily shut down at this time while we continue to clean up, assess equipment and begin to make necessary repairs. A decision regarding when the refinery will be able to resume crude oil processing operations will be made once all assessments are complete.[483]
October 31, 2012: Greg Maxwell Updates Analysts on Bayway Refinery Shutdown
Chief Financial Officer Greg Maxwell reported at the Phillips Third Quarter Earnings Conference on October 31, 2012 that before Hurricane Sandy made landfall in the Northeast Phillips safely idled the Bayway refinery and shut down the terminals as a precautionary measure. "There was some flooding in low-lying areas of the refinery but flood waters have since receded. And as of this morning power has been restored at Bayway. We are currently assessing the condition of the assets. And a decision on resuming operations will be made once this assessment is complete."[484]
October 31, 2012: Phillips to Send More Advantaged Crude to Bayway Refinery by Rail
Chief Financial Officer Greg Maxwell reported at the Phillips Third Quarter Earnings Conference on October 31, 2012 that Phillips is delivering 30,000 to 40,000 barrels per day of advantaged crude to the Bayway refinery by rail.Time Taylor, Phillips head of EVP Commercial Transportation, Business Development and Marketing, added during the question period that on average it costs Phillips $2 to $3 a barrel to move crude to Bayway by rail. Asked if there was a significant increase in moving crude to Bayway by rail from the 2nd to the 3rd Quarter, Taylor said there had been an increase. ". I can't remember the exact increase but we're increasing that. As you can guess we're continuing to, so to speak, test the limits. And we can go substantially higher. I think the challenge for us is to continue to work logistics and get more and more of that into the Bayway refinery."[485]
October 30, 2012: Sandy Knocks Out Power at Bayway Refinery
Houston Business Journal reported on October 30, 2012 that Phillips 66 has reported a power outage at its Bayway refinery. The plant had been shut down as a precaution, but the outage could slow the recovery at the plant. Phillips 66 said there was "some flooding in low-lying areas" of the refinery. Utility PSE&G said power was likely to be restored no sooner than in 24 to 48 hours. The flooding at Bayway, which had been seen by experts as the refinery most vulnerable to Sandy's record 13-foot (4-meter) storm surge and subsequent power outages, is a potential second nightmare for Phillips 66, which had struggled to restore its Alliance, Louisiana, refinery after Hurricane Isaac in August. That storm pushed more than 2 feet of floodwater into the plant.[486][487]
October 28, 2012: Phillips Begins Shutdown of Bayway Refinery
Reuters reported on October 28, 2012 that Phillips had begun shutting its Bayway Refinery in Linden, New Jersey in preparation for Hurricane Sandy. "A significant storm surge is predicted for coastal areas in New Jersey and New York, and as a precaution, we are in the process of temporarily shutting down the 238,000 barrel-per-day Bayway Refinery in Linden, N.J. We expect the refinery to be completely shut down by early Monday morning. Our Riverhead, N.Y., and Tremley Point, N.J., terminals also have been temporarily shut down. Our Linden terminal remains open at this time but will be shut down by Monday morning. Decisions regarding restarting these operations will be made once the storm has passed and post-storm assessments have been completed."[488][489]
October 26, 2012: Bayway Refinery Prepares for Hurricane Sandy
Reuters reported on October 26, 2012 that Oil refineries along the U.S. Atlantic Seaboard on Friday braced for Hurricane Sandy, putting in place emergency plans ahead of the storm's expected landfall in the Northeast early next week. Phillips 66, owner of the 238,000 bpd Bayway refinery in Linden, New Jersey, said it is monitoring the storm. "All of our East Coast operations continue to operate normally while we prepare our facilities for the storm," said Rich Johnson, a spokesman for the company.[490]
September 10, 2012: Union Contract Ratified with 52 percent of Bayway Refinery Workers Voting in Favor
Reuters reported on September 10, 2012 that union members at Phillips 66 Bayway refinery ratified a three-year contract with 52 percent of the 288 members of the Teamsters union at the refinery voting in favor of the contract which takes effect on October 1, 2012. Union leadership recommended the contract be accepted but several members of the union expressed displeasure with some of the work rights and quality of life changes in the new contract.[491]
September 7, 2012: Bayway Refinery Workers Vote on New Union Contract
Reuters reported on September 7, 2012 that members of the Teamsters Union at Bayway refinery vote on September 7, 2012 on whether to ratify their latest labor contract. The existing union contract ends on October 1, 2012 but if the contract is voted down there will not be an immediate strike but rather a return to negotiations. Contract negotiations began in June which provided a longer window for the talks. Although The contract was recommended by the union's executive board, according to a source familiar with the situation, some union members plan to vote against the contract which includes issues concerning work rules, overtime pay, and scheduling changes. Rich Johnson, a spokesman for Phillips 66, said the company would prefer to wait until after the ratification vote before offering any comment.[492]
August 27, 2012: County Hazardous Materials Team Called to Bayway Refinery After Compressor Problems
NewJersey.com reported on August 27, 2012 that a hazmat team from Union County was called to the Phillips 66 Bayway Refinery after a routine flaring operation led to problems with a compressor. New Jersey's Department of Environmental Protection contacted the county, asking that the hazmat team collect air samples. They found "no unusual activity," said Tina Casey, a county spokeswoman. The flaring process is a common stopgap measure in which raw materials are burned off in the open air. The resulting flames can be seen atop the plant's towering exhaust pipes, visible in nearby communities and from nearby highways.[493]
August 1, 2012: Phillips to Run 100.000 bpd of Advantaged Crudes to Bayway Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland adding that Phillips can probably move 100,000 barrels a day of shale type crudes into Bayway.[494]
August 1, 2012: Bayway Refinery to Remain in Phillips Portfolio if Phillips Can Run More Bakken Crude
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that the Bayway Refinery is "absolutely" more likely to stay in the company's portfolio if Phillips 66 can increase the amount of Bakken crude the refinery runs, backing out other more expensive crudes. Bayway can run run up to 100,000 bpd of light crude and Phillips plans to rail Bakken crude to Bayway and to its Ferndale Refinery. Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to it Bayway Refinery and to its Ferndale Refinery.[495]
June 24, 2012: Bayway Refinery Earns EPA’s ENERGY STAR® Certification
New Jersey Today reported on June 24, 2012 that Phillips Bayway Refinery has earned the US. Environmental Protection Agency’s ENERGY STAR certification, which signifies that the industrial facility performs in the top 25 percent of similar facilities nationwide for energy efficiency and meets strict energy efficiency performance levels set by the EPA. Bayway Refinery improved its energy efficiency by 11 percent since 2002 by strategically managing energy consumption and making cost-effective improvements to the plant. To earn the ENERGY STAR, Phillips 66 Bayway Refinery replaced a large crude oil unit furnace to newer, more efficient technology in 2010, replaced its sulfur recovery plant in 2007, upgraded various plant energy recovery systems. ENERGY STAR was introduced by EPA in 1992 as a voluntary, market-based partnership to reduce greenhouse gas emissions through energy efficiency.[496]
May 2, 2012: Bayway Employees Join Garland to Ring Wall Street Opening Bell
On May 2, 2012, executives and employees from Phillips 66 celebrated the company's first week of regular trading on the New York Stock Exchange by ringing the opening bell at the New York Stock Exchange (NYSE) with Phillip 66 Chairman and Chief Executive Officer Greg C. Garland leading the delegation, which included employees from Phillips 66' Houston Headquarters and employees from Phillips 66 Bayway Refinery in Linden, NJ.[497]
May 1, 2012: Phillips 66 Plans to Keep the Bayway Refinery
Garland told Reuters on May 1, 2012 that Phillips 66 plans to keep the Bayway plant and its foothold in the East Coast refining market. "It's a good machine. It should be the last refinery standing in PADD I," Garland said.[498]
November 17, 2011: Bayway Refinery Faces a Challenge to Stay Open
NJ.com reported on November 17, 2011 that Bayway Refinery faces a challenge: The crude oil it refines is more expensive than crude oil in other parts of the country, a dynamic that already led to the sale or closure of several East Coast refineries this year. Nearby plants owned by other companies also have been on the chopping block, including two Sunoco plants — in Philadelphia and Marcus Hook, Pa. — that will be sold or closed. "What you’re seeing is a lot of refineries shutting down in this region," said Hamza Khan, an analyst at the Schork Report, which covers energy markets. "Sunoco is pulling out. A number of refineries are shutting down on the East Coast. The onus is either shut down or sell." However Bayway Refinery may have an advantage due to upgrades over the years. "They’re continuing to operate Bayway, and I think Bayway is a little more sophisticated," said Tom Kloza, the Wall Township-based chief oil analyst for the Oil Price Information Service. "A complex refinery can use cheaper, heavier sour crude." Because Bayway can handle a variety of types of crude, Kloza said, it probably could survive. "It’s in a strategic location, and for most of the years I’ve seen it make money," Kloza said. "I think most people take them at their word that they’re not making any money at their Pennsylvania refinery." Kloza said ConocoPhillips has a list of five or six refineries that are candidates for sale or closure. "I’ve heard varying reports of whether Bayway is on the list or not," Kloza said. "That is one that’s on the bubble."[499]
Billings Refinery
The Billings Refinery is located in Billings, Mont. It has a crude oil processing capacity of 58 MBD and processes a mixture of Canadian heavy, high-sulfur crude oil plus domestic high-sulfur and low-sulfur crude oil, all delivered by pipeline. Its facilities include fluid catalytic cracking and hydrodesulfurization units. A delayed coker converts heavy, high-sulfur residue into higher-value light oils. The refinery produces a high percentage of transportation fuels, such as gasoline, aviation and diesel fuels, as well as fuel-grade petroleum coke. Finished petroleum products from the refinery are delivered via pipeline, railcar and truck. Pipelines transport most of the refined products to markets in Montana, Wyoming, Idaho, Utah and Washington.[501]
The Billings Refinery's market value in 2010 according to Montana property records is $508,333,155.[502]
December 28, 2012: Billings Refinery Back to Normal After Flaring
The Billings Gazette reported on December 29, 2012 that the Billings Refinery is back to normal operations after a compressor that pumps gases from the cracker unit twice tripped offline and a pressure relief valve did not close properly triggering flaring of excess gases. The plant’s main processing unit, the fluid catalytic cracker (FCCU), is back online and operating normally said Phillips spokesman Travis Sloan. "“The refinery is back to normal operations as of 7:20 p.m. last night." The refinery used its flare-gas recovery system to remove sulfides from the gas to cut the amount of sulfur dioxide pollution from the flare and a refinery official reported that flaring at the plant only emitted between eight and 30 pounds a day of sulfur dioxide during the event. The refinery’s air quality permit limits the amount of pollution that can be released by flaring to 150 pounds over a three-hour period, or 1,200 pounds a day. Neither of those limits was exceeded said Jim Hughes, an environmental specialist with the Montana Department of Environmental Quality.[503]
December 27, 2012: Compressor Failure Leads to Large Flames Shooting from Billings Refinery's Main Flare Stack
The Billings Gazette reported on December 27, 2012 that the failure of a wet-gas compressor on the fluid catalytic cracking unit (FCCU) is to blame for large flames shooting from the refinery's main flare stack that can be seen from the eastern half of Billings. "There is a back pressure release valve that is stuck," says Jim Hughes, an environmental specialist in Billings with the Montana Department of Environmental Quality, adding that there isn't any known public danger. "They haven’t been able to completely close it, so there are gases that are still escaping." Phillips 66 officials also offered reassurance. "We are currently in the process of restoring normal operations," says Travis Sloan, a Phillips 66 spokesman. "Refinery personnel have been monitoring air quality, and there remains no concern for the public at this time. Phillips 66 is committed to protecting the safety and environment in the communities we operate."[504]
December 22, 2012: Phillips to Remove Oil Pipeline beneath Bighorn River
The Missoulian reported on December 22, 2012 that Phillips 66 is removing an oil pipeline from beneath Bighorn River after determining the line had to be abandoned because it was increasingly exposed by erosion. The planned removal comes in the wake of a break in an Exxon Mobil Corp. pipeline last year beneath the Yellowstone River that spilled an estimated 63,000 barrels of crude into the flooding river and contaminated 70 miles of riverbank. "Like a lot of the older pipelines around here, it wasn't buried real deep," said Fish, Wildlife and Parks spokesman Bob Gibson. "This was one that was considered at risk, and there were times it was exposed. This is good — getting it proactively and replacing it before it pops."[505]
September 19, 2012: Phillips Sues Yellowstone County over Property Taxes on Billing Refinery
Equities.com reported on September 19 that Phillips 66 has taken its property tax protest involving its Billings refinery to court in Yellowstone County filing a complaint that the Montana Department of Revenue illegally or improperly raised the refinery's market value for 2010, resulting in a tax bill that was $623,715 higher. Phillips asked Yellowstone District Judge Ingrid Gustafson to block its revised tax assessment, saying it will "suffer irreparable injury absent the issuance of a preliminary injunction." The complaint also said Montana is improperly trying to retroactively raise the refinery's tax assessment from 2003 through 2010 in order to collect more taxes. The refinery's market value in 2010 should be $379,718,534, said Phillips, not the department's retroactive change to $508,333,155. Revenue Department officials in Helena says they conducted a routine audit in July and found that Phillips 66 refinery property that had “either escaped assessment, been erroneously assessed or omitted from taxation” from 2003 to 2010, said department spokeswoman Mary Ann Dunwell. Revenue Department officials in Helena said that they are reviewing the complaint and plan to file a response by the end of next week.[506]
September 19, 2012: Billing Refinery Plans Disaster Simulation
The Billings Gazette reported on September 19, 2012 that the Billings refinery will simulate a disaster on September 26, 2012 affecting about 60 volunteers who will have fake but real-looking wounds to test the community’s response to a full-scale disaster. The code name for the operation is COYOTE 2012, which is short for “County of Yellowstone Operating Together in an Emergency.” Held every few years, the drill allows emergency responders and agencies to test their plans in an effort to improve services and to ensure the public receives the highest level of service possible, said Duane Winslow, Yellowstone County’s director of Disaster and Emergency Services.[507]
July 14, 2012: Phillips Protests Property Tax for Billings Refinery
The Missoulian reported on July 14 that Phillips is one of seven refinery, utility and communications companies in Yellowstone County that is protesting their property tax bill for the 2011 tax year. When a company protests its tax bill, the money is placed in an escrow account, earning interest, until the argument is settled. Schools and other taxing entities who were counting on the funds can tap into these “frozen” taxes, but must repay some or all of the money with interest if the taxpayer wins the protest.[508]
May 30, 2012: Phillips Fires 21 Union Workers, 3 Supervisors at Billing Refinery for Stealing Hours
The Billings Gazette reported on May 30, 2012 that according to Wade Johnson, president of the United Steelworkers International union in Billing that twenty-one pipefitters, welders and insulators and three supervisors were fired from the Phillips 66 refinery on May 30, 2012. “They were certainly not given an option of keeping their jobs,” said Johnson. “So, I would call that being fired.” Rich Johnson, a Phillips 66 spokesman based in Houston, said the company took some individual personnel actions. “I can tell you we took personnel actions against employees today,” said Johnson said. “But it is our company policy not to comment on personnel matters.” According to KTVQ TX the workers were fired for for knowingly violating policy in regard to hours worked at the refinery. "There are no mass layoffs taking place at the refinery," said Johnson.[509][510]
KTVQ reported on May 31, 2012 that the United Steelworkers International union says it plans to fight the dismissal of 21 union employees at the Billings Phillips 66 refinery. Union president, Wade Johnson, with the United Steelworkers International in Billings, says the union believes the employees were wrongfully discharged.[511] According to a comment to the story by Kathy Reinhardt the fired workers were called in to work extra hours so that turnaround could be completed at the refinery. According to a comment by Jonathon Sapp the supervisor who called the men in to work should have been held responsible.[512]
May 15, 2012: Smell at Billings Refinery Alarms Downtown Businesses
The Billings Gazette reported on May 15, 2012 that a foul odor from the Billings Refinery prompted some downtown Billings businesses to evacuate. The smell originated from Phillips 66 refinery and was harmless. "We try to to minimize any odors coming from our facility, but during start-up it happens," said Travis Sloan of Phillips 66. The refinery didn't evacuate, Sloan said, but did send observers into surrounding neighborhoods to monitor the smell, which was harmless and dissipated after 20 minutes. Sloan added that the Billings facility has been out of service for its on-going turn around, that started the last week in March. "We did not evacuate anybody, but certainly there were businesses downtown that evacuated their own buildings," said Frank Odermann, Billings Fire Department assistant chief. Odermann added that since the chemical release quickly dissipated, there are no on-going health concerns.[513][514]
May 1, 2012: Billings Refinery Anticipates No Major Changes
KTVQ reported on May 1, 2012 that there will be no major changes with the Billings Refinery in Billing, Montana. "We don't expect any significant changes to our local operations. We are excited about being part of a new, independent downstream energy company. Phillips 66 has a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce, and a continued commitment to safety and operating excellence."[515]
Borger Refinery
The Borger Refinery is located in Borger, Texas, in the Texas Panhandle about 50 miles north of Amarillo and includes an NGL fractionation facility. The refinery’s gross crude oil processing capacity is 146 MBD, and the NGL fractionation capacity is 45 MBD. The refinery facilities include coking, fluid catalytic cracking, hydrodesulfurization and naphtha reforming that enable it to produce a high percentage of transportation fuels. As a result of the business venture with Cenovus Energy, ConocoPhillips has a 50 percent interest in the refinery. The refinery processes primarily medium sour crude oil and natural gas liquids delivered through pipelines from West Texas, the Texas Panhandle, Wyoming and Canada. The Borger Refinery also can receive foreign crude oil via company-owned and common-carrier pipeline systems. It produces a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel, as well as coke, NGL and solvents. Pipelines move refined products to West Texas, New Mexico, Colorado and the Mid-Continent Region. The Borger refinery is operated by Phillips in a 50-50 joint venture with Cenovus Energy Inc.[518][519]
May 6, 2013: Phillips Completes Scheduled Work at Borger Refinery
Businessweek reported on May 6, 2013 that Phillips completed scheduled work at Borger Refinery that may have included a fluid catalytic cracker and alkylation unit, according to people familiar with plant operations.[520]
April 29, 2013: Process Upset at Borger Refinery
Fox Business reported on April 30, 2013 that a process upset occurred on April 29, 2013 that resulted in sulfur dioxide and hydrogen sulfide being emitted at Phillips' Borger Refinery. Phillips declined to say if operations were affected.[521]
March 13, 2013: Phillips Completes Maintenance on Wet Compressor at Borger Refinery
Fox Business reported on March 13, 2013 that Phillips 66 completedd maintenance at a key gasoline-making unit's wet gas compressor at its Borger Refinery on March 13, 2013. The planned work got under way on February 27, 2013.[522]
January 30, 2013: Garland Says Phillips Utilization Rate Was Negatively Impacted by Turnaround at Borger Refinery
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips utilization rate was negatively impacted by the turnaround at the Borger Refinery as well as turnarounds at Wood River and Los Angeles refineries, and Hurricane Sandy related unplanned downtime at the Bayway refinery. "In refining and marketing, our refining realized margin was $13.67 per barrel with a global crude utilization rate of 91% and a clean product yield of 83%," said Garland. "Lower volumes negatively impacted earnings by $42 million, mainly in the Atlantic basin and the Central Corridor regions, reflecting unplanned downtime due to Hurricane Sandy and plant turnarounds."[523]
December 10, 2012: Maintenance Finally Completed at Borger Refinery
Nasdaq reported on December 11, 2012 that a Phillips 66 spokesman said December 10, 2012 that recent planned maintenance at the Borger Refinery had been completed. The company said December 7, 2012 that it was shutting down its Unit 29 fluid catalytic cracking unit and that it would conduct work on Unit 29 after finishing working on FCCU No. 40, which is now believed to be back online.[524] Phillips had originally said FCCU, No. 40 would begin the process of restarting on November 26, 2012.[525]
February 27, 2013: Maintenance Begins on Wet Gas Compressor of Unit 40 Fluid Catalytic Cracker at Borger Refinery
Nasdaq reported on February 27, 2013 that maintenance began on the wet gas compressor of the unit 40 fluid catalytic cracker, a component in the gasoline-making process at the Borger Refinery that is scheduled to last through March 8 according to a filing with state regulators.[526]
December 5, 2012: Maintenance Still Ongoing at Borger Refinery
Fox News reported on December 5, 2012 that maintenance was still ongoing at its Borger Refinery despite the company having said on November 26 that a key gasoline-making fluid catalytic cracking unit, or FCCU, No. 40 at the refinery would begin the process of restarting.[527] Businessweek reported on December 5, 2012 that acccording to a person familiar with the operations the refinery is operating one of three crude units and a fluid catalytic cracker. The Borger outage has contributed to a growing glut of supply in West Texas with pipelines taking oil out of the region running at capacity. West Texas Intermediate crude delivered in Midland, Texas, rose $3.50 to an $11.50-a-barrel discount to the same grade delivered in Cushing, Oklahoma.[528]
November 30, 2012: Maintenance Still Underway at Borger Refinery
Businessweek reported on November 30, 2012 that according to Rich Johnson, a Phiilips spokesman maintenance is still under way at the Borger Refinery. The plant was scheduled to restart a fluid catalytic cracker Nov. 26, according to a filing with state regulators.[529]
November 30, 2012: Maintenance Delays at Borger Refinery Fuel Decline in WTI
“The outage is a major contributor to the blowout in WTI- Midland discounts,” Jeff Dietert, an analyst with Simmons & Co. in Houston, said in a note to clients. “Eliminating the demand from the Borger refinery creates over a 100,000- barrel-a-day shortage of demand/pipeline takeaway capacity in the Basin.” West Texas Intermediate crude delivered in Midland, Texas, declined $1.25 a barrel to a discount of $8.50 to the same grade of oil delivered in Cushing, Oklahoma according to data compiled by Bloomberg. West Texas Sour, another crude grade produced in West Texas, dropped $2 to a discount of $9.50 a barrel.[530]
November 26, 2012: Borger Refinery Down for Planned Maintenance Longer Than Expected
Businessweek reported on November 26, 2012 that the Borger Refinery has been down for planned maintenance longer than expected. Phillips took down production units for maintenance on September 22, 2012 and was scheduled to restart them last week, a person familiar with the situation said. Planned maintenance at the refinery is ongoing, the company said in an e-mail.[531]
November 20, 2012: Two Fluid Catalytic Cracking Units Shut Down For Maintenance At Borger Refinery
Bloomberg reported on November 20, 2012 that Phillips plans to shut down two fluid catalytic cracking units for maintenance has been delayed at least a week because repairs were more difficult than anticipated, according to a person with knowledge of the situation. The plant may start up this weekend, the company said.[532]
November 5, 2012: Process Upset at Borger Refinery
Fox Business reported on November 6, 2012 that a sulfur recovery unit process upset caused emissions to be routed to the plant's safety flare system at the Borger Refinery. The upset occurred at around 4:30 p.m. CST on Monday and ended at approximately 12:30 p.m. CST on Tuesday, the company said in a filing to Texas state environmental regulators.[533]
October 31, 2012: Major Turnaround in Progress at Borger Refinery
Tim Taylor reported at the Phillips Third Quarter Earnings Conference on October 31, 2012 that Borger Refinery is in a major turnaround. "Wood River and Borger are both in turnarounds today. We expect those back in operation here in November. Those are major turnarounds. Borger is a very significant one."[534]
September 24, 2012: Coker Taken Out of Service at Borger Refinery
Nasdaq reported on September 26, 2012 that FCCU 40, a key gasoline-making fluid catalytic cracking unit, will be taken out of service for just over one month starting September 24, 2012. FCCU 29 will shut down on October 21 for one month.[535]
August 8, 2012: Phillips 66 reports process upset at Borger refinery
Fox Business reported on August 8, 2012 that Phillips reported a process upset at its Borger Refinery. The filing didn't specify the unit involved in the upset, but listed Area C and D as sources of the emissions that lasted just over three hours. The status of operations at the plant is unclear. A Phillips 66 representative wasn't immediately available to comment, and typically doesn't speak about day-to-day refining operations or regulatory filings.[536]
July 11, 2012: Refinery Manager Chris Coon Says Borger Refinery has about 720 Full-Time Employees and 200 Routine Contractors
The Borger News Herald reported on July 11, 2012 that refinery manager Chris Coon speaking to the Borger Rotary Club told members that he Borger refinery has about 720 full-time employees and 200 routine contractors. Coon added that the refinery has a $65 million payroll annually, and is on the rolls for almost $6 million in payroll taxes and about $12 million in property taxes.[537]
July 11, 2012: Refinery Manager Chris Coon Says Borger Refinery Will be on Turnaround from Early August to October 1, 2012
The Borger News Herald reported on July 11, 2012 that refinery manager Chris Coons speaking to the Borger Rotary Club told members that at the beginning of August, a turnaround is beginning at the plant that will go through the first of October. The peak loading is going to be around 3,000 people, which amounts to about 1,500 per shift. Coon said this should benefit those involved in restaurants, hotels, and leasing.[538]
June 12, 2012: Phillips 66 reports process upset at Borger refinery
Phillips 66 reported a process upset on June 12, 2012 at its ) Borger, Texas, refinery according to a filing with the Texas Commission on Environmental Quality.[539]
June 3, 2012: Process Upset in Area A
On June 3, 2012 Philips 66 reported a process upset in Area A on Friday, according to a notice filed with the Texas Commission on Environmental Quality.[540]
May 25, 2012: Equipment Malfunction at Borger Refinery
Reuters reported on May 25, 2012 that an incident occurred around 3 p.m, local time, on May 25, 2012 at Phillips 66 Borger Refinery and the unspecified equipment was shut as a result according to a filing with the Texas Commission on Environmental Quality.[541][542] According to a government filing a hole in the furnace caused at release of 100 pounds of hydrogen sulfide.[543]
May 13, 2012: Process Upset at Borger Refinery
Reuters reported on May 14, 2012 that a process upset had occurred at Phillips 66 Borger refinery. The incident occurred at about 8.30 am, local time, on May 13, 2012 and a gasoline making fluid catalytic cracking unit was identified as a source of emissions. A report was filed with the Texas Commission on Environmental Quality.[544] A third party steam provider (Cogen Unit #1) tripped at 7:40 a.m. due to mechanical failure of a motor. Unit 40 FCCU was shut down and Unit 82 South Scrubber was upset due to steam issues. Unit 40 was restarted.[545][546]
May 10, 2012: Process Upset Leads to Emissions at Borger Refinery
Phillips 66 reported an unspecified process upset at its Borger refinery led to emissions at 1:42 pm on May 10, 2012 according to a filing with the Texas Commission on Environmental Quality. During a third party natural gas supplier upset (Rock Creek startup & line up) the South Scrubber overpressured and relieved to the flare. The emissions were routed to a control device and the operator hard blocked the West Rock Creek valve and moved gas from U82 to U35. The HDS platformer board man vented fuel gas to flare to help lower system pressure.[547][548]
May 1, 2012: Employee Fatality at Borger Refinery
KVII-TV in Amarillo, Texas, reported on May 1, 2012 an employee at the Phillips 66 refinery in Borger, Texas fell from a height of 100 feet at about 3pm and was taken to the Golden Plains Community Hospital in Borger where he died. "ConocoPhillips deeply regrets the loss of our employee and wishes to extend sympathy to the employee's family, friends and co-workers," said spokesman Rich Johnson. "ConocoPhillips is investigating the cause of the accident." Officials with Phillips 66 say the incident remains under investigation. It is reported that this is the first fatality at the refinery in 25 years.[549][550]
Ferndale Refinery
The Ferndale Refinery is located on Puget Sound in Ferndale, Wash., about 20 miles south of the U.S.-Canada border, and has a crude oil capacity of 100 MBD. The refinery processes primarily light, Alaska North Slope crude oil. Ferndale operates a deepwater dock capable of accommodating tankers transporting Alaskan North Slope crude oil from Valdez, Alaska. It also receives Canadian crude oil via pipeline. Ferndale Refinery facilities include a fluid catalytic cracker, an alkylation unit, a diesel hydrotreater and an S-ZorbTM unit. The refinery produces transportation fuels, such as gasoline and diesel fuel. Other products include fuel oil supplying the northwest marine transportation market. Most refined products are distributed by pipeline and barge to major markets in the northwest United States.[552]
May 13, 2013: Phillips to Restart Crude Distillation Unit at Ferndale Refinery
Fox Business reported on May 13, 2013 that according to a person familiar with the refinery's operations, Phillips expects to restart the crude distillation at Ferndale Refinery by May 16, 2013. Phillips 66 had taken the unit down earlier this month at the 100,000 barrel-a-day refinery, sources said. A Phillips spokesman was not immediately available.[553]
April 3, 2013: Phillips Plans Rail-Unloading Facility for Fernadale Refinery
Fox Business reported on April 3, 2013 that Phillips plans to build a crude-oil unloading facility that would allow a train with 100 or more railcars to pull up at the refinery and have its cargo pumped to existing storage tanks, according to an application filed with the Northwest Clean Air Agency. The unloading facility would be able to transfer about 12,800 barrels of oil per hour, allowing a new train to be unloaded about every other day. Work on Phillips 66's proposed unloading facility is scheduled to begin this summer and be completed by December 2014, according to the filing. Larry Ziemba, Phillips 66's executive vice president for refining, project development and procurement, said last month that Phillips was considering a rail rack at the Ferndale refinery that would allow the company to take in Canadian crude that could then be sent by ship to refineries in California.[554]
March 20, 2013: Phillips Signs Deal to Boost Deliveries of Cheap Crude to Ferndale Refinery
Eliot Caroom reported on Bloomberg on March 20, 2013 that Phillips has signed a three-year deal with Enbridge Energy Partners LP for loading rail cars with up to 35,000 to 45,000 barrels a day of Bakkan crude from Enbridge’s terminal in Berthold, North Dakota. The crude will be delivered to Bayway Refinery on the east coast and Ferndale Refinery on the West Coast. Some crude could also be sent to Gulf Coast refineries at Lake Charles, Alliance, and Sweeney.[555]
Phillips also signed a pact with Targa Resources Partners LP (NGLS) for five years to provide rail-unloading and barge-loading services in Tacoma, Washington for about 30,000 barrels a day of U.S. and Canadian crudes that will go to the Ferndale Refinery. Phillips’s Rodeo refinery near San Francisco could also receive crude deliveries, displacing imports from outside North America. “We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” Greg Garland, Phillips 66 chairman and chief executive officer, said in the statement. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses.”[556]
August 1, 2012: Phillips to Run 50,000 bpd of Advantaged Crudes to Ferndale Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "We think Ferndale can probably run 50,000 barrels a day of Bakken crude.".[557]
August 1, 2012: Ferndale Refinery to Remain in Phillips Portfolio if Phillips Can Run More Bakken Crude
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that the Ferndale Refinery is "absolutely" more likely to stay in the company's portfolio if Phillips 66 can increase the amount of Bakken crude the refinery run, backing out other more expensive crudes. Ferndale can run 50,000 bpd and Phillips plans to rail Bakken crude to both plants. Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to it Ferndale Refinery and to its Bayway Refinery in Linden, New Jersey.[558]
June 17, 2012: Ferndale Refinery Reports Flaring after Sulphur Dioxide Release
Reuters reported on June 17, 2012 that Phillips 66's Ferndale Refinery reported flaring on June 15, 2012, according to a notice filed with the U.S. National Response Center. A refinery's safety flare system is used when refinery production units cannot process hydrocarbons normally. The cause of the flaring, which released sulfur dioxide was unknown.[559]
May 10, 2012: Carbon Monoxide Emissions at Ferndale Refinery
Phillips 66 reported carbon monoxide emissions during the restart of the fluid catalytic cracking unit (FCCU) at its Ferndale refinery, according to a filing with the Northwest Clean Air Agency.[560]
Lake Charles Refinery
The Lake Charles Refinery, located in Westlake, La., has a crude oil processing capacity of 239 MBD and processes mainly heavy, high-sulfur crude oil, as well as low-sulfur and acidic crude oil. The refinery receives domestic Gulf Coast and foreign crude oil. The Lake Charles Refinery produces a high percentage of transportation fuels, such as gasoline and jet fuel, along with home heating oil. The majority of its refined products are distributed by truck, railcar, barge or major common-carrier pipelines in the southeastern and eastern United States. In addition, refined products can be sold into export markets through the refinery’s marine terminal. The facilities include crude distillation, fluid catalytic cracker, hydrocracker, delayed coker and hydrodesulfurization units that enable it to produce low-sulfur gasoline and heating oil. The refinery facilities also include a specialty coker and calciner, which produce graphite petroleum coke for the steel industry. Through the Excel Paralubes joint venture, the refinery produces base oils for lubricants.[562]
April 4, 2013: Planned Maintenance Completed at Lake Charles Refinery
Fox Business reported on April 4, 2013 that planned maintenance was recently concluded, on schedule, at its Lake Charles refinery. Phillips did not specify what unit, or units, were involved in this round of maintenance.[563]
February 27, 2013: Phillips 66 Process Technology Building Opens at SOWELA Technical Community College
KPLC reported on February 27, 2013 that SOWELA Technical Community College held a ribbon cutting ceremony on February 27, 2013 for the new Phillips 66 Process Technology Center. Phillips - then ConocoPhillips - donated $2 million to the school to construct a new industrial technology building after the campus sustained extensive damage from Hurricane Rita. "This program is important to industry in the area because SOWELA provides us with well trained operators," said Phillips 66 refinery manager Willie Tempton Jr.[564]
January 30, 2013: Garland Says Phillips Has Completely Backed Out US Light Sweet Crude from Lake Charles Refinery
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips has completely backed out imports of U.S. light sweet crude in the Gulf Coast refineries including Lake Charles .[565]
October 24, 2012: Louisiana Supreme Court Asked to Review Phillips 66 I-10 Bridge Case
KPLC reported on October 24, 2012 that the Louisiana Department of Transportation and Development (DOTD ) hopes the Louisiana Supreme Court will reverse the decision by Judge Clayton Davis to postpone the trial against Phillips 66 on a lawsuit for spilling an estimated 1.7 million pounds of ethylene dichloride (EDC). Judge Clayton Davis continued the lawsuit until a three-year environmental impact study is done. DOTD officials have said when a new bridge is built, they must avoid hitting the underground plume of chemical contamination to avoid spreading it and estimates the state's damages from the spill are $235-million, including the increased cost of a bridge with spans long enough to bypass the spill. "DOTD would like to move forward with the case and get a trial date," said DOTD Attorney Patrick McIntire. "Phillips 66 believes the trial court's [original] ruling was well-reasoned and fair," said a spokesman for Phillips 66.[566]
August 27, 2012: Phillips Keeping a Close Eye on Hurricane Isaac but Lake Charles Refinery Still Operating
Fox News reported on August 27, 2012 that Phillips 66's Lake Charles refinery in Westlake, La. was still running but that the company was keeping a close eye on the progress of Tropical Storm Isaac. Tropical Storm Isaac blew into the eastern Gulf of Mexico August 27, 2012 and is expected to strengthen into a hurricane before hitting parts of the Louisiana coastline by August 29, 2012. Phillips' Alliance refinery in Belle Chasse was in the process of suspending operations and would be completely shut down by the evening of August 27, 2012 ahead of Tropical Storm Isaac.[567]
July 14, 2012: Naphtha Spill at Lake Charles Refinery
The National Response Center reported that there was a spill of Naphtha from Phillips 66’s Westlake, Louisiana refinery due to a flange leak.[568]
June 26, 2012: Court Hearing held on I-10 Bridge contamination from Chemical Spill that Caused $235 million Damage twenty years ago
KPIC.TV reported on June 272, 2012 that there's been almost no progress on a new I-10 calcasieu river bridge because state highway officials say they need to avoid hitting the underground plume of chemical contamination from a chemical spill nearly twenty years ago for which Conoco Phillips and Sasol are responsible and the State Department of Transportation and Development estimates the state's damages from the spill are $235 million including the increased cost of a bridge with spans long enough to bypass the spill. They don't want to drive pilings through the plume for fear of spreading the contamination. The state has filed suit to get that added cost and the jury trial is set for October. "There's contamination in the ground and the groundwater where we need to build the bridge. It's going to cost extra to stay out of the contamination when the bridge is built and that's the damages that the state is requesting that be awarded in the lawsuit. The state would like to stay out of the contamination and span the contamination and that's what drives up the extra cost," says Attorney Patrick McIntire representing the state of Lousiana.[569]
Conoco Phillips and Sasol say it's uncertain what kind of bridge should be built--and that the trial on that part of damages should be delayed until an environmental impact study which will take at least three years. "We are a valued member of this community, and are committed to being a part of the solution for this project in a manner that is consistent with the on-going federal environmental review process. The resolution of the motion presented today will not delay this project in any way," says Phillips 66 in an official statement.[570]
June 17, 2012: Units at Lake Charles Refinery Restarted after Partial Power Outage
Reuters reported on June 17, 2012 that Phillips 66's Lake Charles Refinery was restarting units on June 17, 2012 after a partial power outage and the refinery released particulate matter while flaring following the power outage according to a notice filed with the U.S. National Response Center.[571] BusinessWeek reported on June 18, 2012 that Gulf Coast gasoline strengthened against New York futures as Phillips 66 resumed routine operations at the Lake Charles refinery after the power loss.[572]
Los Angeles Refinery
The Los Angeles Refinery is composed of two linked facilities located roughly five miles apart in Carson and Wilmington, Calif., about 15 miles southeast of Los Angeles International Airport. Carson serves as the front end of the refinery by processing crude oil, and Wilmington serves as the back end by upgrading the intermediate products to finished products. The refinery has a crude oil processing capacity of 139 MBD and processes mainly heavy, high-sulfur crude oil. It receives domestic crude oil via pipeline from California and both foreign and domestic crude oil by tanker through a third-party terminal in the Port of Long Beach. The refinery produces a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel. Other products include fuel-grade petroleum coke. The refinery produces California Air Resources Board (CARB)-grade gasoline using ethanol to meet government-mandated oxygenate requirements. Refined products are distributed to customers in California, Nevada and Arizona by pipeline and truck.[574]
May 10, 2013: Phillips Plans to Flare Sulfur Oxide at Wilmington Refinery from May 12 to May 26
Fox Business reported on May 10, 2013 that Phillips plans to flare sulfur oxide and other gases from May 12 until May 26, 2013 according to a filing with the South Coast Air Quality Management District. A Phillips 66 spokesman declined to comment on the refinery's activities.[575]
April 4, 2013: Fire Extinguished at Wilmington Refinery
Fox Business reported on April 4, 2013 that a small fire in a coking unit at the Wilmington Refinery was put out quickly and caused no injuries.[576]
March 28, 2013: Phillips Shuts Down Leaky Isomerization Unit at Los Angeles Refinery
Bloomberg reported on March 18, 2013 that Phillips shut an isomerization unit on March 18, 2013 at their Los Angeles Refinery after discovering a leak, a person with direct knowledge of the work said. The unit, which makes unleaded gasoline components, may remain down until tomorrow for line repairs, the person said.[577]
February 5, 2013: Canadian Crude is Being Transported to Los Angeles Refinery
Reuters reported on February 5, 201 that Tim Taylor, Phillips executive vice president for commercial, marketing, transportation and business development, told the Credit Suisse energy conference that Phillips has begun moving cut-price Canadian crude to its California refineries at Los Angeles and San Francisco via rail. "We're beginning to deliver Canadian crude to our California refineries by rail," said Taylor. Garland told Reuters on January 30, 2013 that Phillips was looking at coiled tube cars that are suited to bitumen in Canada's heavy oil deposits that must be heated in order to flow.[578]
January 30, 2013: Garland Does Not Rule Out a Sale of Los Angeles Refinery
Reuters reports that Greg Garland told investors on January 30, 2013 at the 4th quarter earnings conference that Phillips did not rule out a sale of Phillips two California refineries, one at Los Angeles and one at San Francisco, given challenges with state regulatory requirements and high costs. "We're studying any and all options for California in terms of where do we go long-term in the business," said Garland. "We are doing everything we can to improve it. I don't feel it's a distressed asset. We want to take our time and be thoughtful."[579]
Garland told analysts that Phillips 66 was looking at getting railcars capable of hauling even cheaper Canadian heavy crude to the company's refineries in California. However, he said resistance to such a move was likely. A 2006 California law requiring sharp cuts in emissions has a component that would require refineries to run crudes produced in environmentally friendly ways. Canadian crude production comes with high emissions. Plus, California has the huge Monterey shale, estimated by the U.S. government to have more reserves than the prolific Eagle Ford in Texas or Bakken in North Dakota. But output has been spotty with geology that differs from those other plays. Given those uncertainties, Garland told Reuters in an interview that for the time being, Phillips 66 will focus on improving the California refineries' single-digit returns while studying a possible sale, joint venture or spinoff. "The option value to hold California is zero. It really costs us nothing."[580]
January 30, 2013: Garland Says Phillips Utilization Rate Was Negatively Impacted by Turnaround at Los Angeles Refinery
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips utilization rate was negatively impacted by the turnaround at the Los Angeles Refinery as well as turnarounds at Wood River and Borger refineries, and Hurricane Sandy related unplanned downtime at the Bayway refinery. "In refining and marketing, our refining realized margin was $13.67 per barrel with a global crude utilization rate of 91% and a clean product yield of 83%," said Garland. "Lower volumes negatively impacted earnings by $42 million, mainly in the Atlantic basin and the Central Corridor regions, reflecting unplanned downtime due to Hurricane Sandy and plant turnarounds."[581]
November 16, 2012: Planned Flaring to Occur at Wilmington Refinery from November 22 to December 6
Bloomberg reported on November 16, 2012 that planned flaring will take place at its Wilmington Refinery from November 22 to December 4, 2012. “Planned maintenance is under way” at the refinery, Dennis Nuss, a spokesman at Phillips 66’s headquarters in Houston, said by e-mail.[582]
November 8, 2012: Planned Flaring to Occur at Carson Refinery from November 10 to November 23
Nasdaq reported on November 13, 2012 that planned flaring will take place at its Carson Refinery between November 10 and 23, 2012. The flaring isn't associated with equipment breakdown, the filing to government regulators said.[583]
October 31, 2012: California Refineries are in Lower Performing Part of Refinery Portfolio and Must Improve
Tim Taylor was asked at the Phillips Third Quarter Earnings Conference on October 31, 2012 if Phillips' position with its two major refineries in California was sufficiently advantaged to warrant continued participation and replied that when Phillips looks at the West Coast, it's been one of the more challenged markets from a recovery standpoint post-recession. "In California, specifically, it's a tough regulatory environment, as well, so costs are higher. And there is a lot of potential additional costs as new regulations come into effect. That said, it's still a very significant market and we think it's really important to look at how can we get some of these crudes out of the middle part of the country into the West Coast, particularly California. So we're working hard on that to try and change that. The comment I'd make in Washington is that that's got a natural access to the Bakken in North Dakota and Canadian crudes. We separate the Washington piece from the California piece that way. But everyone's working hard to look at some crude solutions for the West Coast to improve its competitive position."[584]
"I think we look at the market and say demand continues to struggle out there, as well, post-recession," added Taylor. "And then I think you look more fundamentally at the operating environment and the costs associated with particularly the environmental regulations. And we think that's going to continue to keep pressure on operations and operating costs out there. So, yes, I would say that from a California perspective it is one of the more challenged parts of our portfolio in terms of the basic value equation. So that's why we're still looking at the crude side of it. And continuing to stay abreast and on top of what it's going to take to comply with things like AB32 to really maintain your operations out there."[585]
Asked if California would still remain part of Phillips' core portfolio Taylor replied that right now California is in the lower performing part of Phillips portfolio. "So I think that if our assessment would become that it's going to be challenged for some period of time, we've either got to find a way to improve that operation or find some other way to deal with that."[586]
October 24, 2012: Phillips Restarts Units at Wilmington Refinery after Power Dip
Fox Business reported on October 24, 2012 that a few units at Phillips' Wilmington Refinery were restarted on October 23, 2012 after experiencing an external power dip from the Los Angeles Department of Water and Power. The Refinery also reported an unplanned flaring event to the South Coast Air Quality Management District.[587]
October 5, 2012: Sources Allege Phillips Delays Work at Los Angeles Refinery to Cash In on Record Profit Margins
The Tulsa World reported on October 6, 2012 that according to two people with knowledge of Phillips Los Angles Refinery maintenance schedule, Phillips 66 has delayed work at its Los Angeles refinery to cash in on record profit margins in California. A six-week maintenance turnaround on the hydrocracker, which makes high-octane gasoline and other lighter oil products, has been put off until at least Oct. 16 from a previous Oct. 9 start date, said the people, who asked not to be identified because the information wasn't public. "With crack spreads this high, it's kind of expected that all will make as much fuel as possible to cash in on the spreads," Tim Hamilton, executive director of the Automotive United Trades Organization. A Phillips 66 spokesman at the company's headquarters in Houston, declined to comment on maintenance plans at the 139,000-barrel-a-day Los Angeles plant. "I can tell you there is no planned maintenance work currently at our Los Angeles refinery," said Rick Johnson.[588]
September 24, 2012: Air Pollution Regulators Probe Day Long Burnoff at Wilmington Refinery
The Contra Costa Times reported on September 24, 2012 that air quality regulators are investigating whether a burnoff of petroleum products at the Phillips 66 oil refinery in Wilmington that lasted for about six hours after a power outage caused a sudden shutdown of all refinery operations could have been avoided. Black smoke billowing out of the refinery's flare could be seen for miles. The South Coast Air Quality Management District received 125 complaints about the smoke that day. Two days later, more complaints streamed in over a chemical odor surrounding the refinery. AQMD spokesman Sam Atwood said investigators believe the smell came from vapors that had leaked from a petroleum storage tank. The refinery was issued a violation last week due to the odors, and will have to either pay a fine or invest in something that benefits the local environment, Atwood said.[589]
September 20, 2012: Facility-wide Shutdown at Los Angeles Refinery
Nasdaq reported on September 21, 2012 that record heat and a power outage on September 15, 2012 forced a facility-wide shutdown at Phillips 66's Los Angeles refinery but that several units have been brought back online and all units are seen back by the end of the week.[590] Nasdaq reported on September 26, 2012 that production resumed on September 21, 2012 after record heat and a power outage on September 15 forced a facility-wide shutdown.[591]
July 22, 2012: Planned Flaring at Wilmington Refinery
Nasdaq reported on July 27, 2012 that maintenace work was completed on July 19, 2012 and that planned flaring took place at the Wilmington Refinery from July 22 to July 25, 2012 according to the South Coast Air Quality Management District.[592]
July 20, 2012: Planned Flaring at Wilmington Refinery
Reuters reported a planned flaring at the Wilmington Refinery on July 12, 2012.[593]
July 12, 2012: Planned Flaring at Wilmington Refinery
Reuters reported a planned flaring at the Wilmington Refinery on July 12, 2012.[594]
July 8, 2012: Wilmington Refinery in Planned Overhaul
Reuters reported on July 8, 2012 that the Wilmington Refinery was in a planned overhaul which shut the hydrogen plant, according to a notice the refinery filed with California pollution regulators. The work triggered flaring at the refinery and the release of sulfur dioxide, according to the notice filed with the California Emergency Management Agency.[595]
July 3, 2012: Flaring Reported at Wilmington Refinery
Reuters reported a flaring at the Wilmington Refinery on July 3, 2012.[596]
June 29, 2012: Upset in Alky Unit at Wilmington Refinery
Reuters reported an upset in the AlkyUnit at the Wilmington Refinery on June 29, 2012.[597] Phillips 66 reported flaring due to an alkylation unit upset at its Wilmington refinery, according to a filing with the California Emergency Management Agency. Operators had secured the release and flaring had stopped at the time of the filing.[598]
June 26, 2012: Sulfur Recovery Plant Down at Wilmington Refinery
Nasdaq reported on June 26, 2012 that a sulfur recovery plant at Phillips 66's Wilmington refinery shut down unexpectedly on June 26, causing a flaring event, according to a California Emergency Management Agency hazardous materials spill report.[599]
May 8, 2012: Work Completed as Los Angeles Refinery
Reuters reported on May 8, 2012 that Phillips 66 finished unspecified planned work at its Los Angeles-area refinery that had begun in April, 2012. The refinery has two linked facilities in the Los Angeles-area: one in Carson that processes crude oil and another five miles away in Wilmington that upgrades the products.[600] Bloomberg Businessweek reported on May 3, 2012 that the Los Angeles refinery was scheduled to flare gases through May 3 as part of planned maintenance.[601]
Ponca City Refinery
The Ponca City Refinery, located in Ponca City, Oklahoma, has a crude oil processing capacity of 187 MBD making it by far the largest refinery in Oklahoma.[604] The refinery processes a mixture of light, medium and heavy crude oil. Most of the crude oil processed is received by pipeline from the Gulf of Mexico, Oklahoma, Texas and Canada. Additional foreign crude is purchased into the Gulf Coast and delivered by pipeline. The Ponca City Refinery is a high-conversion facility that produces a full range of products, including gasoline, diesel fuel, jet fuel, LPG and anode-grade petroleum coke. Its facilities include fluid catalytic cracking, delayed coking and hydrodesulfurization units. Finished petroleum products are shipped by truck, railcar, and company-owned and common-carrier pipelines to markets throughout the Mid-Continent Region.[605]
- See also History of the Oil Industry in Ponca City
- See also News and Views on Phillips 66 and Ponca City
- See also How Phillips 66 Business Strategy will Affect the Ponca City Refinery
- See also How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?
Ponca City Community Advisory Council (CAC)
The Ponca City Community Advisory Council (CAC) was established in 1991 between ConocoPhillips and the citizens of Ponca City. The CAC holds monthly meetings that start with updates on safety and environmental performance followed by information on refinery operations. Many meetings have an educational topic and often focus on environmental topics, such as air quality and groundwater remediation. Other topics of interest include sustainable development and the company’s other operations. The Ponca City CAC’s mission statement is to establish and maintain a dialogue between the community and ConocoPhillips in order to understand community issues and ConocoPhillips issues in an atmosphere of trust and mutual respect, using open, honest communication. With that in mind, members of the CAC conducted a survey in which they asked 10 community members about what issues, questions or suggestions they have for ConocoPhillips. The group used the results in planning the monthly meetings and other events in the community.[606]
San Francisco Refinery
The San Francisco Refinery is comprised of two facilities linked by a 200-mile pipeline. The Santa Maria facility is located in Arroyo Grande, Calif., while the Rodeo facility is in the San Francisco Bay Area. The combined facilities have a total crude oil processing capacity of 120 MBD. The refinery processes mainly heavy, high-sulfur crude oil. It receives California crude oil via pipeline and both domestic and foreign crude oil by tanker. Semi-refined products from the Santa Maria facility are sent by pipeline to the Rodeo facility for upgrading into finished petroleum products. A high proportion of the refinery’s production is transportation fuel, such as gasoline, diesel fuel and jet fuel. The refinery produces CARB-grade gasoline using ethanol to meet government-mandated oxygenate requirements. The majority of refined products are distributed by pipeline, railcar and barge to customers in California.[608]
April 12, 2013: Phillips Cuts Production at Rodeo Refinery to Repair Pump
Bloomberg reported on April 12, 2013 that Phillips cut production at Rodeo Refinery to repair a pump at the No. 246 hydrocracker that was damaged after overheating on April 10, 2013. The work is expected to last about three days, said a person familiar with operations at Rodeo, who asked not to be identified because the information isn’t public.[609]
April 10, 2013: Rodeo Refinery Flared Gases for Six Hours after a Unit Shut
Bloomberg reported on April 11, 2013 that Rodeo refinery flared gases for six hours after a unit shut, the company said in a notice to Contra Costa County regulators on April 10, 2013.[610]
March 20, 2013: Phillips Signs Deal that Could Boost Deliveries of Cheap Crude to Rodeo Refinery
Eliot Caroom reported on Bloomberg on March 20, 2013 that Phillipshas signed a pact with Targa Resources Partners LP (NGLS) for five years to provide rail-unloading and barge-loading services in Tacoma, Washington for about 30,000 barrels a day of U.S. and Canadian crudes that will go to the Ferndale Refinery. Phillips’s Rodeo refinery near San Francisco could also receive crude deliveries, displacing imports from outside North America. “We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” Greg Garland, Phillips 66 chairman and chief executive officer, said in the statement. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses.”[611]
February 5, 2013: Canadian Crude is Being Transported to San Francisco Refinery
Reuters reported on February 5, 201 that Tim Taylor, Phillips executive vice president for commercial, marketing, transportation and business development, told the Credit Suisse energy conference that Phillips has begun moving cut-price Canadian crude to its California refineries at Los Angeles and San Francisco via rail. "We're beginning to deliver Canadian crude to our California refineries by rail," said Taylor. Garland told Reuters on January 30, 2013 that Phillips was looking at coiled tube cars that are suited to bitumen in Canada's heavy oil deposits that must be heated in order to flow.[612]
January 30, 2013: Garland Does Not Rule Out a Sale of San Francisco Refinery
Reuters reports that Greg Garland told investors on January 30, 2013 at the 4th quarter earnings conference that Phillips did not rule out a sale of Phillips two California refineries, one at Los Angeles and one at San Francisco, given challenges with state regulatory requirements and high costs. "We're studying any and all options for California in terms of where do we go long-term in the business," said Garland. "We are doing everything we can to improve it. I don't feel it's a distressed asset. We want to take our time and be thoughtful."[613]
Garland told analysts that Phillips 66 was looking at getting railcars capable of hauling even cheaper Canadian heavy crude to the company's refineries in California. However, he said resistance to such a move was likely. A 2006 California law requiring sharp cuts in emissions has a component that would require refineries to run crudes produced in environmentally friendly ways. Canadian crude production comes with high emissions. Plus, California has the huge Monterey shale, estimated by the U.S. government to have more reserves than the prolific Eagle Ford in Texas or Bakken in North Dakota. But output has been spotty with geology that differs from those other plays. Given those uncertainties, Garland told Reuters in an interview that for the time being, Phillips 66 will focus on improving the California refineries' single-digit returns while studying a possible sale, joint venture or spinoff. "The option value to hold California is zero. It really costs us nothing."[614]
February 1, 2013: Unspecified Unit Outage at Rodeo Refinery
Fox Business reported on February 6, 2013 that an unspecified unit outage occurred at Philips Rodeo refinery on February 1, 2013.[615]
January 22, 2013: Unspecified Shutdown at Rodeo Refinery
Fox Business reported on February 6, 2013 that an unspecified shutdown occurred at Philips Rodeo refinery on January 22, 2013.[616]
December 12, 2012: Phillips Wants to Increase Production at Santa Maria Refinery
KCOY reported on December 12, 2012 that Phillips 66 is asking San Luis Obispo County for permission to expand its refinery in Arroyo Grande to increase its oil production by 4,500 barrels a day. "There is no new construction of the refinery," says Phillips 66 Spokesperson Rich Johnson. "The existing equipment is capable of processing more crude oil." The San Luis Obispo County planning commission will consider the company's proposal in a hearing on December 13, 2012. Following that hearing, the company will still have to go before the Air Pollution Quality Control District in January. "We looked at public safety, noise, land use, public services, water resources and air quality and found that there were no significant and unavoidable impacts," says Arlin Genet of the San Luis Obispo County Air Pollution Quality Control District.[617]
October 31, 2012: California Refineries are in Lower Performing Part of Refinery Portfolio and Must Improve
Tim Taylor was asked at the Phillips Third Quarter Earnings Conference on October 31, 2012 if Phillips' position with its two major refineries in California was sufficiently advantaged to warrant continued participation and replied that when Phillips looks at the West Coast, it's been one of the more challenged markets from a recovery standpoint post-recession. "In California, specifically, it's a tough regulatory environment, as well, so costs are higher. And there is a lot of potential additional costs as new regulations come into effect. That said, it's still a very significant market and we think it's really important to look at how can we get some of these crudes out of the middle part of the country into the West Coast, particularly California. So we're working hard on that to try and change that. The comment I'd make in Washington is that that's got a natural access to the Bakken in North Dakota and Canadian crudes. We separate the Washington piece from the California piece that way. But everyone's working hard to look at some crude solutions for the West Coast to improve its competitive position."[618]
"I think we look at the market and say demand continues to struggle out there, as well, post-recession," added Taylor. "And then I think you look more fundamentally at the operating environment and the costs associated with particularly the environmental regulations. And we think that's going to continue to keep pressure on operations and operating costs out there. So, yes, I would say that from a California perspective it is one of the more challenged parts of our portfolio in terms of the basic value equation. So that's why we're still looking at the crude side of it. And continuing to stay abreast and on top of what it's going to take to comply with things like AB32 to really maintain your operations out there."[619]
Asked if California would still remain part of Phillips' core portfolio Taylor replied that right now California is in the lower performing part of Phillips portfolio. "So I think that if our assessment would become that it's going to be challenged for some period of time, we've either got to find a way to improve that operation or find some other way to deal with that."[620]
September 10, 2012: Unplanned Flaring Event at Rodeo Refinery
Nasdaq reported on September 20, 2012 that unplanned flaring event took place on September 10, 2012 at the Rodeo Refinery, according to the California Emergency Management Agency. It wasn't known which units were affected.[621]
August 29, 2012: Fire at Rodeo Refinery Said to Have Shut Down Coker Plant
Bloomberg reported on August 30, 2012 that according to Rick Johnson, a Phillips 66 spokesman, a “small fire” was extinguished in a unit at the Rodeo Refinery on August 29, 2012. According to a person with knowledge of the incident who asked not to be identified because the information isn’t public, the fire was said to have shut down the coker plant and the unit, which converts heavy oil feedstocks into lighter products such as naphtha and heating oil, was not expected to run at 50 percent of capacity until after 4 pm on August 30, 2012 and not at full rates until the end of the week. Phillips 66 declined to comment on the unit’s status.[622]
August 24, 2012: Rodeo Refinery Shuts Down Hydrocracking unit due to Equipment Failure
Reuters reported that the Rodeo Refinery shut the hydrocracking unit August 24, 2012 due to an equipment failure, according to a notice filed with California pollution regulators. "Equipment failure at the unicracker required shutdown and flaring," according to the notice filed with the Contra Costa County Health Department Hazardous Materials Program.[623]
August 10, 2012: Sources Allege Phillips Delaying Work on a Hydrocracker at Rodeo Refinery to Take Advantage of Record Profits
Businessweek reported on August 10, 2012 that Phillips is said to made the decision to delay work on a hydrocracker at the Rodeo refinery in Northern California to take advantage of a fuel-price surge after a fire that cut production at Chevron Corp's Richmond plant. The Rodeo refinery put off maintenance for at least a month at a hydrocracking unit, which makes gasoline and jet fuel, said a person with knowledge of the schedule. The work on the hydrocracker was to have taken six weeks.[624] Phillips 66 delayed a hydrocracker turnaround at the Rodeo refinery in Northern California by a month to profit from a price surge following an Aug. 6 fire at Chevron's Richmond refinery, a person with direct knowledge of the work said.[625]
August 1, 2012: Phillips to Run 30,000 bpd of Advantaged Crudes to Rodeo Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "Smaller Rodeo we can get at 30,000 barrels a day."[626]
July 25, 2012: Valve Leak Causes Flaring at Rodeo Refinery
The Wall Street Journal reported on July 25, 2012 that a leaking valve caused flaring and the release of excessive amounts of sulfur dioxide on July 24, the Rodeo, Refinery according to a California Emergency Management Agency Hazardous Materials Spill Report.[627]
July 19, 2012: Pump Fire at Rodeo Refinery
Bloomberg reported on July 19, 2012 that Phillips 66 extinguished a fire on a pump at the 76,000-barrel-a-day Rodeo plant, according to Rich Johnson, a company spokesman in Houston.[628]
June 27, 2012: Contra Costa Health Department to Address Concerns About Rodeo Refinery Chemical Release
The San Fransisco Chronicle reported on June 27, 2012 that the Contra Costa Health Department will hold a meeting on July 2nd to address concerns and answer questions about the Phillips 66 refinery chemcial release, which occurred on June 15th and affected residents in Pleasant Hill & Martinez. On June 15, the seam of a tank storing processed water at the Phillips 66 refinery separated and allowed hydrogen sulfide vapors into the air, causing a rotten egg odor. The release persisted throughout the area and people may have felt nausea, had headaches or people with respiratory sensitivities may have affected their breathing. Hazardous Materials Ombudsman Michael Kent said it is important to be transparent when such incidents occur so the public is aware of what happened, what is being done and what follow-up actions are taking place. Speakers at the meeting will include representatives from Phillips 66 and County Supervisor Federal Glover’s office, Public Health Director Dr. Wendel Brunner and Chief Environmental Health and Hazardous Materials Officer Randy Sawyer.[629]
June 26, 2012: Santa Maria Refinery Wins a National Safety Award
The Santa Maria Times reported on June 26, 2012 that the Phillips 66 Santa Maria refinery won a national safety award from the American Fuel and Petrochemicals Manufacturers and a delegation of five refinery employees traveled to San Antonio, Texas, to accept the 2011 Distinguished Safety Award presented May 17 at AFPM’s national safety conference. To qualify, a facility must have an exceptional safety record that includes no lost-time injuries for three prior years. The Santa Maria Refinery has about 150 employees and processes about 45,000 barrels per day of crude oil that is shipped via pipeline for further processing at the company’s refinery in Rodeo.[630]
June 16, 2012: Crews Pumped Hundreds of Thousands Of Gallons Of "Sour Water" from a Ruptured Tank at Rodeo Refinery
Rick Hurd reported in the Contra Costa Times on June 16, 2012 that hazardous materials crews pumped hundreds of thousands of gallons of "sour water" from a ruptured tank at a Phillips 66 petroleum refinery in Rodeo as they continued to clean up from a leak the day before. Hydrogen sulfide is not dangerous in low concentrations, but its offensive rotten-egg smell is strong and easily noticed, and can cause dizziness and nausea, said Randy Sawyer, the county's chief environmental health and hazardous materials officer. The threshold for the gas becoming a health hazard is 30 parts per million, and the highest measurement in the area surrounding the refinery was 1 part per million. Crews laid down a blanket of firefighting foam in the tank, and a contractor will rivet and tape down a heavy chemical resistant tarp. The cause of the rupture remains unknown, and the investigation likely won't be finished for weeks.[631][632]
June 15, 2012: Gas Release from Rodeo Refinery Causes Concern in Benicia
JB Davis reported in the Benicia Patch that a leak at the Phillips 66 oil refinery in Rodeo caused a gaseous smell that greeted morning walkers in Benicia as ground level monitors in Benicia that track air quality did showed an uptick in hydrogen sulfide, a colorless, flammable gas that has a rotten egg smell. The Contra Costa County Hazardous Materials team and the county’s health department determined that the leak created a “non-harmful nuisance odor,” according to Division Chief Nick Thomas of the Benicia Fire Department. “Just prior to 8 a.m. was the height of the readings but they are back to normal now,” said Benicia Fire Chief Steve Vucurevich who also reported that the City has received nearly 400 phone calls about the odor.[633] Phillips 66 reported that a leak from a storage tank caused a release of water used in the refining process. The water has a foul smell like rotten eggs. Refinery production was unaffected.[634]
June 4, 2012: Planned Overhaul Completed at Rodeo Refinery
Reuters reported on June 4, 2012 that Phillips 66 has completed a planned overhaul at Rodeo Refinery that began on April 24.[635]
June 1, 2012: Sulfur Dioxide Emissions due to a Flaring Event
Reuters reported that Phillips 66 reported sulfur dioxide emissions due to a flaring event at its refinery in Rodeo, California, according to a filing with state pollution regulators. The filing with California Emergency Management Agency said the release would not pose threat to local residents. Flaring usually indicates refinery operations are interrupted by planned maintenance or an unplanned breakdown.[636]
Sweeny Refinery
The Sweeny Refinery, located in Old Ocean, Texas, 65 miles southwest of Houston, has a crude oil processing capacity of 247 MBD. It processes mainly heavy, high-sulfur crude oil, but also processes light, low-sulfur crude oil. The refinery facilities include fluid catalytic cracking, delayed coking, alkylation, a continuous regeneration reformer and hydrodesulfurization units. The refinery receives domestic and foreign crude oil, primarily through wholly and jointly owned terminals on the Gulf Coast, including a deepwater terminal at Freeport, Texas. It produces a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel. Other products include petrochemical feedstocks, home heating oil and coke. The refinery operates nearby terminals and storage facilities in Freeport, Jones Creek and on the San Bernard River, along with pipelines that connect these facilities to the refinery. Refined products are distributed throughout the Midwest and southeastern United States by pipeline, barge and railcar. Merey Sweeny, L.P. (MSLP) is a limited partnership that owns a 70 MBD delayed coker and related facilities at the Sweeny Refinery that produce fuel-grade petroleum coke. Prior to August 2009, MSLP was owned 50/50 by ConocoPhillips and Petróleos de Venezuela, S.A. (PDVSA), Venezuela’s national oil company. Under agreements that govern relationships between the partners, certain defaults by PDVSA with respect to supply of crude oil to the Sweeny Refinery gave ConocoPhillips the right to acquire PDVSA’s 50 percent ownership interest in MSLP. In August 2009, ConocoPhillips exercised that right. PDVSA has initiated arbitration in the International Chamber of Commerce challenging ConocoPhillips’ actions, and the arbitration process is under way.[637]
May 20, 2013: Sweeny Refinery is Operational Again
Christine Harvey reported on Bloomberg on May 20, 2013 that Sweeny Refinery is operational again as Phillips completed a restart of the refinery after a power failure on May 11, 2013 caused the plant to temporarily shut down and flare gases, according to Rich Johnson, a company spokesman based in Houston.[638]
May 11, 2013: Power Outage Causes Shutdown at Sweeeny Refinery That Will Take Several Days to Restart
Fox Business reported on May 11, 2013 that according to a government filing Phillips shut down some units and decreased production on others on May 11, 2013 after a power outage at its Sweeny refinery. Units affected included the 25.2 crude distillation unit--one of the first steps in the oil refining process--and the 27.1 fluid catalytic cracking unit, a key gasoline production unit. The power outage started at 9 a.m. local time and was triggered by a larger outage in Texas and New Mexico. "This is an ongoing event," Phillips 66 said in the filing.[639]
Fox Business reported on May 12, 2013 that Phillips announced on May 12, 2013 that it would take "several days" to fully restart its Sweeny refinery in Old Ocean, Texas, after a power outage on May 11, 2013. "Power has been restored and the refinery is in the process of restarting, which is expected to take several days to complete," said Phillips 66 spokesman Rich Johnson.[640]
April 9, 2013: Unit Trips at Sweeny Refinery
Nasdaq reported on April 12, 2013 that Unit 38 tripped on April 9, 2013 while a depressure valve was being serviced at Sweeny Refinery according to a filing with the Texas Commission on Environmental Quality.[641]
March 26. 2013: Compressor Failure at Sweeny Refinery
Nasdaq reported on March 26, 2013 that Phillips in a filing with the National Response Center reported a compressor problem on March 25, 2013 at its Sweeny Refinery resulting in lower production rates.[642]
March 11, 2013: Power Outage at Sweeney Refinery Causes Chemical Release
Bloomberg reported on March 11, 2013 that Phillips released an unknown amount of hydrogen sulfide, sulfur dioxide and benzene at its Sweeny, Texas, oil refinery because of flaring after a power outage.[643] Fox News reported on March 14, 2013 that power at Sweeny Refinery has been fully restored and the plant is in the process of restarting after a third-party provided power failure on March 10. It will take several days for the refinery to reach normal operations, a Phillips 66 spokesman said.[644]
February 7, 2013: Production Units Restart at Sweeney Refinery After Planned Maintenance
Bloomberg reported on February 25, 2013 that production units including a pipestill and sulfur recovery unit wee restarting after planned maintenance that began on January 7, 2013 according to two people familiar with the operations who asked not to be identified because the information isn’t public. [645]
January 30, 2013: Garland Says Phillips Has Completely Backed Out US Light Sweet Crude from Sweeney Refinery
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips has completely backed out imports of U.S. light sweet crude in the Gulf Coast refineries including Sweeney.[646]
October 31, 2012: Sweeny Refinery to Receive 30,000 barrels per day of Eagle Ford Crude by Early 2014
Tim Taylorl reported at the Phillips Third Quarter Earnings Conference on October 31, 2012 that Phillips had reached agreement with Kinder Morgan to deliver up to 30,000 barrels per day of Eagle Ford crude via a new pipeline connection to our Sweeny refinery in early 2014. "That's actually a project or a connector pipeline that's relatively short that will be built by Kinder Morgan. And so that's a throughput pipeline connection agreement that we have specifically for that."[647]
September 30, 2012: Process Units Restarted at Sweeny Refinery after Power Outage
Nasdaq reported on October 1, 2012 that Philips restarted process units at its Sweeny Refinery on September 30, 2012 following an early morning power outage. The outage caused flaring and opacity as some units shut down; some went into circulation mode, and some reduced charge rates, a government filing said.[648]
September 11, 2012: Sweeny Refinery Reports Release from Thermal Oxidizer
Reuters reported on September 11, 2012 that there was a benzene release from a thermal oxidizer Sweeny Refinery, according to a filing with national pollution regulators.[649]
August 23, 2012: New Pipeline to Transport up to 30,000 bpd of Advantaged Eagle Ford Shale Crude to Sweeney Refinery
PR Newswire reported on August 23, 2012 that Kinder Morgan plans invest $90 million to build a 27-mile, 12-inch diameter lateral pipeline to extend its Kinder Morgan Crude Condensate (KMCC) pipeline to transport Eagle Ford crude and condensate to Phillips 66’s Sweeny Refinery. The pipeline will have an initial capacity of 30,000 barrels per day (bpd) of capacity, expandable to 100,000 bpd. “This pipeline lateral will provide yet another attractive delivery point for customers of our KMCC pipeline while providing Phillips 66 with enhanced access to price-advantaged Eagle Ford crude and condensate,” said KMP Products Pipelines President Tom Bannigan. Kinder Morgan’s crude/condensate pipeline, which was ready for service in June 2012, already transports crude/condensate from the Eagle Ford shale to the Houston Ship Channel through 65 miles of new-build construction and 113 miles of converted natural gas pipeline. “This agreement aligns with a fundamental part of the Phillips 66 business strategy to get advantaged crude to our refineries,” said Glenn Simpson, general manager, Phillips 66 Crude & International Supply.[650] The Eagle Ford formation is located close to the U.S. Gulf Coast and the largest concentration of U.S. refineries. Eagle Ford crude was priced at $93.75 a barrel on Agust 22, 2012, about a $3 discount to U.S. crude benchmark West Texas Intermediate and a $19 discount to Louisiana Light Sweet.[651]
August 2, 2012: FCCU Emissions During Rapper System Repairs at Sweeney Refinery
Phillips 66 reported it would begin repairs on August 2, 2012 to fix a short circuit detected this week at its Sweeney refinery, according to a filing with the Texas Commission on Environmental Quality. The short circuit was causing a portion of the rapper system to operate abnormally and had ultimately led to emissions, the filing said. After locating the problem and making the necessary repairs, operators will return the system to service. The filing lists a fluid catalytic cracking unit (FCCU) as a source of emissions, which were expected to continue until August 9.[652]
August 1, 2012: Phillips to Run 40,000 bpd of Advantaged Crudes to Sweeney Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "Sweeny about 40,000 barrels a day."[653]
CNBC reported on August 23, 2012 that Phillips 66's Sweeny, Texas, refinery will take 30,000 bpd of Eagle Ford oil beginning in 2014 when Kinder Morgan Energy Partners completes a $90-million extension of a pipeline to the plant, which is 66 miles south of Houston. Light, sweet Eagle Ford crude is lower-priced than other global crudes, which increases profitability for refiners by cutting their crude costs. Eagle Ford crude was recently priced at $93.75 a barrel, about a $3 discount to U.S. crude benchmark West Texas Intermediate and a $19 discount to Louisiana Light Sweet.[654]
July 16, 2012: Fluid Catalytic Cracking Unit Restarted at Sweeney Refinery
On July 25, 2012 Reuters reported that the Fluid Catalytic Cracking Unit (FCCU) restarted at the Sweeney Refinery on July 16, 2012.[655]
July 12, 2012: Coker Flare at Sweeney Refinery
Reuters reported on June 13, 2012 there was a Coker Flare at the Sweeney Refinery on July 12, 2012.[656] Businessweek reported on July 12, 2012 that the refinery reported emissions from coker and fluid catalytic cracker No. 3, according to a filing with the Texas Commission on Environmental Quality. The maintenance event began yesterday at 6:22 a.m. local time and lasted until 11:22 a.m. today, the company said.[657]
July 5, 2012: Unplanned Work at Sweeney Refinery
Reuters reported on June 13, 2012 there was unplanned work at the Sweeney Refinery on July 5, 2012.[658]
July 1, 2012: Leaks Repaired on a portion of Fluidic Catalytic Cracking Unit at Sweeney Refinery
Reuters reported on July 1, 2012 that Phillips repaired leaks on a portion of the gasoline-producing fluidic catalytic cracking unit on June 30 and July 1 after the refinery found oil oozing from welds on a box attached to the unit's riser to repair a hot spot found between a month and two months ago, according to a notice the refinery filed with state pollution regulators. Additional welding was done on the box to repair the leaks, but the work resulted in increased release of particulate matter and carbon monoxide.[659]
May 12, 2012: Power Outage at Sweeny Refinery
Reuters reported on May 13, 2012 that the Sweeny refinery restarted on May 12, 2012 after a power outage hit the refinery affecting the sulfur recovery unit according to a notice the refinery filed with Texas pollution regulators.[660]
Trainer Refinery
The Trainer Refinery, sold by Phillips 66 to Delta Airlines in June, 2012, is located on the Delaware River in Trainer, Pa., about 10 miles southwest of downtown Philadelphia. The refinery has a crude oil processing capacity of 185 MBD and processes mainly light, low-sulfur crude oil. Trainer receives crude oil by tanker from West and North Africa and Canada. The refinery facilities include fluid catalytic cracking, hydrodesulfurization units, a reformer and a hydrocracker that enable it to produce a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel. Other products include home heating oil and low-sulfur fuel oil. Refined products are primarily distributed to customers in Pennsylvania, New York and New Jersey via pipeline, barge and railcar.[662]
January 23, 2013: Phillips 66 pays $50K over Hazardous Waste Allegations at Trainer Refinery
The Philadelphia Inquirer reported on January 23, 2013 that Phillips 66 Co. has agreed to pay a $50,000 penalty to settle alleged violations of hazardous waste regulations at its former refinery in Trainer. The U.S. Environmental Protection Agency cited Phillips 66 for violations involving the storage of hazardous materials including refinery hydrocarbon waste, chromium waste, heavy metal waste from batteries and mercury waste from fluorescent bulbs.[663]
June 22, 2012: Delta Completes Purchase of Trainer Refinery
CBS Moneywatch reported on June 22, 2012 that Delta Airlines had completed its $180 million purchase of Phillips' Trainer Refinery and the refinery is expected to restart in September, according to filings made with Pennsylvania utility regulators by the Delta subsidiary that will run it, Monroe Energy LLC. Delta said the refinery will hire back about 400 people.[664]
June 13, 2012: Delta Airlines Set to Close its Landmark Deal on June 22 to buy the Trainer Refinery
Reuters reported on June 13, 2012 that Delta Airlines is set to close its deal to buy Phillips 66's Trainer Refinery on June 22, allowing Delta to begin a long-delayed maintenance overhaul in early July. A plant-wide turnaround lasting 40 to 50 days is expected to begin after July 4, allowing the idled plant to resume producing fuel. The major maintenance, which is required every five years, was originally due in the spring of 2011, but had been deferred until the plant was shut later that year. Delta expects to reconfigure parts of the refinery to maximizes jet fuel production. About 175 out of the 220 hourly workers are expected to return to the plant, with the remainder either retiring, transferring or getting other employment.[665]
May 1, 2012: Phillips 66 Sells Trainer Refinery
Phillips 66 issued a press release on May 1, 2012 announcing that Phillips 66 and Monroe Energy LLC have signed a purchase and sales agreement for Monroe Energy LLC, a subsidiary of Delta Air Lines, to purchase the Trainer Refinery and associated terminal and pipeline assets for $180 million. The purchase price does not include the value of existing inventories. The transaction is expected to close in the first half of 2012. Phillips 66 also has entered into multi-year agreements with Monroe to supply jet fuel to Monroe in other regions of the country while Phillips 66 will purchase gasoline and other refined products from Monroe at the Trainer Refinery and local terminals.[666]
Critics of Delta's purchase of the refinery have questioned the wisdom of Delta trying to run a refinery in the Northeast. Ed Hirs, a professor of energy economics at the University of Houston, said hedging fuel costs through options can accomplish very much the same agenda without being exposed to the risks of owning a refinery.[667]
Reuters reported on April 9, 2012 that Phillips 66 continue to shore up its refining portfolio and has two refineries up for sale - Trainer and Alliance in Louisiana. Sources familiar with the sales process said Delta Airlines is considering a bid for the Trainer refinery, idled at the end of September 2011, and is in "very critical" negotiations with ConocoPhillips. Reuters also reports that there may be other actions affecting its portfolio.[668]
Andrew Maykuth wrote in the Philadelphia Inquirer that a bid by Delta Airlines to buy the idled Phillips 66 refinery in Trainer to satisfy its enormous thirst for jet fuel appears to be gaining momentum. "Sources close to negotiations believe that Delta Air Lines has emerged as the clear favorite for the idle plant," says Tom Kloza, publisher of Oil Price Information Service. "The action certainly implies that the Trainer refinery will be restarted in the second half of 2012, and perhaps as early as July or August." Delta's interest in buying a business that an experienced oil company wants to jettison has raised eyebrows among some analysts, who believe that the airline has other means available to protect itself from fuel-price fluctuations without investing in manufacturing. "At one level it makes sense to better manage supply," said James Balaschak, a principal with Deloitte Consulting L.L.P. in Philadelphia. "On the other hand it is outside their core business. There are alternative strategies such a hedging which can be as effective."[669]
The Phiadelphia Inquirer reported on April 17, 2012 that US Senator Bob Casey Jr. (D., Pa.) and the Delaware County Council had urged ConocoPhillips to sell its refinery in Trainer to a buyer that would keep the refinery operating as a manufacturing facility rather than turn it into a fuel storage terminal and wrote to ConocoPhillips chief executive James Mulva to urge him to sell the plant to buyer that would operate it as a refinery, which would employ more people and require more investment than a fuel-storage facility.[670]
Did Delta Make a Mistake Buying the Trainer Refinery from Phillips 66?
Greory J. Millman wrote in the Wall Street Journal on May 15, 2012 that Delta's out-of-pocket investment to acquire the Trainer Refinery is $150 million, and it plans to spend another $ 100 million to maximize jet fuel production there. "There are three problems here. First, Delta will not manage the capital invested in the refinery for optimal return. Second, even if Delta were to do so, the refinery is one of the least economical in the U.S. so its potential returns are low at best. Third, the refinery will probably require much more capital than Delta's public presentations suggest." It's easy to see why ConocoPhillips (COP) shut Trainer down adds Millman. "The Trainer Refinery was not producing net income," said ConocoPhillips Chief Financial Officer Jeff Sheets during the company's third-quarter earnings call in 2011. "The cash generation was also not very strong. We were at a point where we were having to decide about timing on turnaround costs and future capital expenditures, which had a lot to do with the timing of the decision to shut it down in October." Once shareholders see the consequences of this deal unfold, they'll demand that Delta divest the refinery operations and redeploy the capital in more productive investments concludes Millman.[671]
Wood River Refinery
The Wood River Refinery is located about 15 miles northeast of St. Louis, Mo., at the convergence of the Mississippi and Missouri rivers in Roxana, Ill. Jointly owned by ConocoPhillips and Cenovus Energy, the Wood River Refinery is operated by ConocoPhillips. Gross crude oil processing capacity of the refinery is approximately 306 MBD. The complex includes a docking area on the Mississippi River. The refinery processes a mix of light, low-sulfur and heavy, high-sulfur crude oil. Wood River receives domestic, Canadian and other foreign crude oil by various pipelines and produces a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel. Other products include petrochemical feedstocks, asphalt and coke. The Wood River Refinery’s operations include three distilling units, two fluid catalytic cracking units, hydrocracking, coking, reforming, hydrotreating and sulfur recovery. Wood River is a major supplier to Lambert International Airport in St. Louis and is also a supplier to Chicago’s O’Hare Airport. Finished product leaves Wood River through pipeline, rail, barge and by truck. The company continues to progress the CORE Project at the Wood River Refinery. Upon completion, the project is expected to increase crude oil gross capacity from 95 MBD to 225 MBD and increase clean product yield by 5 percent.[673]
May 17, 2013: Phillips Reports Coke Compressor Loss at Wood River Refinery
Fox Business reported on May 17, 2013 that Phillips filed a report with the Illinois Emergency Management Agency on the loss of compressor on a coke unit at Wood River Refinery.[674]
April 24, 2013: Sulphur Dioxide Flared at Wood River Refinery
Proactive Investors reported on April 24, 2013 that Phillips flared sulphur dioxide at its Wood River Refinery on April 23, 2013.[675]
March 1, 2013: Rates Said to be Cut on Two Crude Distillation Units at Wood River Refinery
Bloomberg reported on March 1, 2013 that according to a person familiar with the turnaround at the Wood River Refinery who asked not to be identified because the information isn’t public, the plant’s 120,000-barrel-a-day distillation unit is shut, while production from a 150,000-barrel-a-day unit will be cut by half for the next seven to 10 days, while a third unit, which can process about 60,000 barrels of crude a day, is operating at full rates. Work will be performed on that equipment for six days in late March. Planned work was also expected on a hydrocracker from late February to late March, a diesel hydrotreater and delayed coker for six days each in March and two desulfurization units for a combined 24 days. Rich Johnson, a Phillips spokesman, declined to comment on operations in an e-mail. Johnson said Feb. 26 that planned maintenance at the refinery was under way.[676]
Bloomberg reported on March 18, 2013 that the 120,000-barrel-a-day crude distillation unit at the Wood River Refinery, which had been shut, is now running at capacity, said the person, who asked not to be identified because the information isn’t public. The 150,000-barrel-a-day unit is operating at 50 percent of capacity and will return to full rates in the next seven days, the person said. A third unit, which can process about 60,000 barrels of crude a day, is at capacity. Work is planned on that unit for six days in late March.[677]
February 27, 2013: Unplanned Unit Shutdown at Wood River Refinery
Nasdaq reported on February 28, 2013 that an ""unplanned unit shutdown" ocurred at the Wood River Refinery according to a filing with Illinois regulators.[678]
February 26, 2013: Flaring Occurs During Scheduled Maintenance at Wood River Refinery
Nasdaq reported on February 27, 2013 that flaring occurred during scheduled maintenance at the Wood River Refinery on February 26, 2013.[679]
February 25, 2013: Process Upset at Wood River Refinery
Nasdaq reported on February 27, 2013 that a process upset occurred at the Wood River Refinery on February 25, 2013.[680]
January 30, 2013: Garland Says Phillips Utilization Rate Was Negatively Impacted by Turnaround at Wood River Refinery
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips utilization rate was negatively impacted by the turnaround at the Wood River Refinery as well as turnarounds at Los Angeles and Borger refineries, and Hurricane Sandy related unplanned downtime at the Bayway refinery. "In refining and marketing, our refining realized margin was $13.67 per barrel with a global crude utilization rate of 91% and a clean product yield of 83%," said Garland. "Lower volumes negatively impacted earnings by $42 million, mainly in the Atlantic basin and the Central Corridor regions, reflecting unplanned downtime due to Hurricane Sandy and plant turnarounds."[681]
January 25, 2013: Phillips Restarts Alkylation unit at Wood River Refinery
Bloomberg reported on January 25, 2013 that Phillips will restart the alkylation unit at the Wood River Refinery that was shut down on January 22, 2013. The benzene extractor, a part of the unit, will close for work for 22 days beginning February 28, 2013 according to a person who asked not to be identified because the information isn’t public.[682]
January 23, 2013: Phillips to Shut Down two Crude Distillation Units for 33 Days at Wood River Refinery
Bloomberg reported on January 23, 2013 that Phillips plans to shut two crude distillation units, a hydrocracker, a diesel hydrotreater and a coker for 33 days beginning in late February The refinery will begin shutting a hydrocracker on February 26 for work lasting until late March, a diesel hydrotreater on March 9 for six days and a delayed coker on March 25 for six days, according to a person familiar with the turnaround schedule. Other units will be taken down for work during the turnaround, including two desulfurization units for a combined 24 days.[683]
December 12, 2012: Flaring at Wood River Refinery
Fox Business reported that flaring at the Wood River refinery caused by the loss of a wet-gas compressor in a filing with the Illinois Emergency Management Agency.[684]
December 8, 2012: Hydrogen sulfide Release at Wood River Refinery
Fox Business reported that a compressor seal failed on a cracker unit at its Wood River refinery on December 8, 2012 leading to the release of hydrogen sulfide. A company spokesman declined to comment.[685]
November 16, 2012: Refining Units Being Brought Back Online at Wood River Refinery
Nasdaq reported on November 16, 2012 that refining units are being brought back on line at the Wood River Refinery according to traders doing business with the company. An unspecified number of units were taken off line late September and more recent issues have affected the restart of units.[686]
November 13, 2012: Excessive Emissions Released at Wood River Refinery
Nasdaq reported on November 16, 2012 that a gas compressor tripped off line at the Wood River Refinery on November 13, 2012 according to a state government filing. The even caused an excessive release of emissions, but it wasn't know which unit was affected. A refining unit was also upset at the same facility on November 9, 2012.[687]
November 8, 2012: Process Upset at Wood River Refinery
Nasdaq reported on November 13, 2012 that there had been a process upset at the Wood River Refinery on November 8, 2012. . It wasn't known which unit was affected.[688]
October 31, 2012: Scheduled Maintenance Turnaround in Progress at Wood River Refinery
Tim Taylor reported at the Phillips Third Quarter Earnings Conference on October 31, 2012 that the scheduled maintenance turnaround at the Wood River Refinery is currently underway and is proceeding as planned. "Wood River and Borger are both in turnarounds today. We expect those back in operation here in November. Those are major turnarounds. Borger is a very significant one. We do have some operations continuing at Wood River today. Those are planned turnarounds that we've had. We've got smaller turnarounds going on at LA that has some minor impacts in terms of its throughput."[689]
October 26, 2012: Contaminated Houses near Phillips' Wood River Refinery to Be Torn Down
The Telegraph reported on October 26, 2012 that three houses in a polluted area of Roxana near the west fence line of what is now the Wood River Refinery, operated by Phillips 66, are scheduled for demolition November 5 to allow the expansion of a pollution remediation project after tests showed benzene contamination in the area. Phillips 66 acquired the facility from Shell Oil Company after a series of other owners operated it and Phillips has defended the way it has operated the plant. The three houses near Chaffer and Fourth streets now are vacant after they were acquired by Shell, and neighbors are speculating that more homes may be purchased. The Illinois Environmental Protection Agency has been testing homes in the area for several months and found benzene in occupied rooms in the basements in the homes. One family was put up in a motel for several months before Shell bought their property, said Dale Carroll of the 100 block of Fourth Street near the three homes that are slated for demolition.[690]
October 6, 2012: Roxana School District Receives $10 million More in Property Tax Revenue from Reassessment of the Wood River Refinery
The Telegraph reported on October 6, 2012 that for the 2012 fiscal year, the Roxana School District received $10 million more in property tax revenue from the reassessment of the Wood River Refinery, operated by Phillips 66, with about $9.5 million of the increase attributable to the district's operating funds. The district still is working toward securing a long-term agreement with the refinery, said Superintendent Deb Kreutztrager.[691]
On March 31, 2012 the St. Louis Post-Dispatch reported that at issue is the completion of a $3.8 billion expansion at the Wood River Refinery in 2011. Phillips 66 sought to blunt an expected increase in its assessed valuation — on which property taxes are based — by claiming that the vast majority of its operation is dedicated to pollution control. A pollution control facility designation means significantly smaller assessment increases, which mean that school districts and other taxing bodies get smaller increases in revenue. Plaintiffs in the lawsuit include the village of Roxana and the school districts in Roxana, Wood River and East Alton. They say they were not initially aware of the move because the Pollution Control Board and Illinois EPA did not provide proper information and public access to meetings, in violation of the Open Meetings Act and Freedom of Information Act. As a result, the suit claims, the local governments have not been able to formally dispute what they say is an obviously suspect claim: that $3 billion of the project's $3.8 billion expansion was dedicated to pollution control rather than the business of refining fuel.[692]
The refinery and a larger group of affected taxing bodies negotiated an agreement in 2005 that established tax valuation through 2010. That agreement set the value at about $265 million — an increase of about $85 million — and provided for annual increases at a rate 1 percentage point below any increase of the Consumer Price Index. The refinery also agreed to supplemental payments of more than $3 million for previous tax years. In March 2012, the Madison County Board of Review set the 2011 assessed value at $402.2 million, reflecting a market value of $1.2 billion. It would affect taxes payable this year. That is up sharply from the 2010 valuation of $93.4 million, based on a market value of $280 million.[693][694]
The huge expansion increased the refinery's oil-processing capacity by about a third, to 356,000 barrels per day, and enabled it to process heavy crude from the oil sands of Alberta, Canada. The oil arrives via the 2,100-mile-long Keystone Pipeline, which opened last year. Melissa Erker, a spokeswoman for the refinery, would not comment on litigation specifics but said the pollution control exceptions are part of the state's tax code and "allow us to remain competitive relative to property taxes as compared to other refineries in the Midwest."[695]
September 25, 2012: Process Unit Shut Down for Planned Maintenance at Wood River Refinery
Nasdq reported on October 1, 2012 that an unspecified process unit was shut down on September 25, 2012 for planned maintenance at its Wood River Refinery in Roxana, Illinois, according to a filing made available on Sept 26.[696]
September 5, 2012: Garland says CORE was a Good Investment at Wood River Refinery
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the $3.8 billion investment in CORE at the Wood River facility was a good investment. "The other way that we're looking at increasing our return on capital in the base R&M business is increasing clean product yield. You see a nice track record here. As we start up Wood River CORE, we premise about a 5% increase at Wood River CORE. We've seen that with the project in about the 1% increase you see between '11 and '12 year to date is primarily associated with Wood River starting up. We think we can drive this another 1% to 2% without significant capital investment. Want to give you a quick update on the CORE project, $3.8 billion at the Wood River facility. I think it was a good investment. You can see on the slide that the first half benefit to Phillips 66 was $200 million pretax. That's slightly better than expectations. When we approved the project a couple years ago, we're seeing the increase in clean products that we premised. We're running about 166,000 barrels a day of Canadian heavy now at the facility. So it's been a good solid project for us."[697]
August 23, 2012: Hydrogen Sulfide Released at Wood River Refinery
Nasdaq reported on August 30, 2012 that an equipment failure on August 23, 2012 caused a release of hydrogen sulfide at the Wood River Refinery.[698]
August 1, 2012: Phillips is Getting 15 to 20% Return on Investment on the CORE Project at Wood River Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips is pleased with their investment the Coker and Refinery Expansion (CORE) project where up to 200,000 barrels a day of Canadian or heavy crude are coming intot he Wood Rive Refinery. "We are seeing the clean product yield improvement that we envisioned, we are net 65,000 barrels a day of clean products to us. So 120 across the refinery. So as we step back and look at that project you know $3.8 billion investment, solid returns in our view. This is a 15% to 20% type return project for us."[699]
According to a report by Downstream Today on December 4, 2008 the CORE Project was a $4 billion expansion to increase the facility's heavy oil processing capacity as well as its overall throughput by adding a coker unit and increase Wood River's bitumen handling capacity nearly 700% to 200,000 b/d and increase the facility's clean product yield to 87%. "The refinery's total capacity will increase by 94,000 b/d to 400,000 b/d. The facility's owners began the expansion in September 2008 following an unexpectedly lengthy process of obtaining the necessary air permits."[700]
When asked at the Q2 Earnings Conference Call by Morgan Bartosh of Citigroup about the CORE Project and what level of heavy light differential is required to make investment in a new coker economically feasible, Garland replied that he wasn't sure that anyone would start a new coker today in today's market environment. "There's more coking capacity than there is heavy capacity to get into the cokers today. And I think we view that through at least 2017," said Garland. " So, but on the other hand I would say that we are pleased with our investment that we made in the CORE project. It is delivering the results that we anticipated. We are up to 200,000 barrels a day of Canadian or heavy crude into Wood River. We are seeing the clean product yield improvement that we envisioned, we are net 65,000 barrels a day of clean products to us. So 120 across the refinery. So as we step back and look at that project you know $3.8 billion investment, solid returns in our view. This is a 15% to 20% type return project for us."[701]
August 1, 2012: Phillips to Run 90,000 to 120,000 bpd of Advantaged Crudes to Wood River Refinery
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "Wood River, we can run up to 90,000 to 120,000 barrels a day of shale type crudes there."[702]
July 1, 2012: Compressor failure Triggers Flaring at Wood River Refinery
Reuters reported on July 1, 2012 that according to a notice the refinery filed with Illinois regulators Phillips 66's joint-venture refinery in Wood River, Illinois, reported a compressor malfunction that triggered flaring on June 29, 2012. The refinery was working to repair the compressor and restart the unit affected by the malfunction.[703]
May 29, 2012: Illinois’ Attorney General Sues Owners of Wood River Refinery for Ground Water Pollution
Saint Louis Today reported on May 29, 2012 that Illinois’ Attorney General Lisa Madigan is suing the current and past owners of the Wood River Refinery in Roxana, Illinois claiming they're responsible for polluted groundwater around the refinery. The suit comes just months after the Village of Roxana filed a similar lawsuit alleging contamination from the plant. The lawsuit claims the companies have allowed oil, gasoline and other toxins to permeate the groundwater and spread beyond the plant’s property line. "These companies must be held accountable for the environmental and public health damage caused by this contamination,” said the attorney general in a statement. The refinery is jointly owned by Cenovus Energy and Phillips 66, which operates the plant. Melissa Erker, a Phillips 66 spokeswoman, said the company has been working with Shell and state environmental regulators to allow access for remediation of historical contamination. "It is our belief that we are named because of our direct relationship with the former owner," Erker said.[704][705][706]
May 8, 2012: Fault in a Flare Gas Recovery Compressor at the Wood River Refinery
Bloomberg reported on May 4, 2012 that Phillips 66 reported a fault in a flare gas recovery compressor that resulted in a release at its Wood River refinery in Illinois on May 3, 2012. Phillips sent a notice to the Illinois Emergency Management Agency about the incident but Rich Johnson, a spokesman at the company’s headquarters in Houston, declined to comment on the incident.[707]
May 4, 2012: Flare Gas Recovery Compressor Trips at Wood River Refinery
Phillips 66 reported that a flare gas recovery compressor tripped at its joint-venture Wood River refinery in Roxana, Illinois, according to a filing with state regulators. Operators put the compressor back online, which was expected to resolve the issue.[708]
Chemical Business Segment within Phillips 66
There are two other operating segments in the new company: Chemicals and Midstream. “You never really heard us talk about chemicals; you never heard us talk about midstream, and both of those businesses trade at higher multiples than the refining business," says Garland. Phillips 66 will own half of the ChevronPhillips Chemical Company, a JV with Chevron. “Midstream and chemicals is what differentiates us."[709]
Garland said during his analyst call on April 9, 2012 that the Chemicals segment is primarily conducted through our 50/50 JV with Chevron. CPChem is one of the largest producers of olefins and poly olefins and has spent the last 10 years building one of the best positions in the Middle East, and CPChem has significant assets in the US which are advantaged given the NGLs from the North American shale plays.[710][711][712]
"As we've said, our Chemicals operations are conducted through our CPChem joint venture with Chevron. Our Chemicals businesses delivered superior returns. We think it's an exceptional growth platform. CPChem produces petrochemicals in over 70,000 different commercial and industrial products, holds global market positions in several key products, such as olefins, poly olefins, aromatics and other specialties. It has a large global footprint and we're rapidly expanding outside of the US. We think part of CPChem's success and its foundation is based upon -- is proprietary technology.We believe this ensures lower cost for us, it enhances our competitiveness.These are markets, these are technologies that we understand thoroughly. As you know, advantage feed stocks is critical to profitability and sustained returns in this business. CPChem has a substantial footprint in the Middle East. CPChem also has a large asset base in the US. It's primarily based upon ethane. It's allowing CPChem to recover attractive margins today.We believe after the Middle East, the US-based ethane based ethylene margins are going to be significantly advantaged versus margins in Asia and Europe, which are primarily based on naphtha. CPChem's done a good job over the last few years in terms of their portfolio management. They've been very disciplined on their costs.They have been shifting investments into higher returning opportunities, and the have moved from really last in their peer group to number one in their peer group on economic return."[713][714][715]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is the only downstream independent company to have a significant ownership in a petrochemicals business. "We conduct our chemicals operation primarily through Chevron Phillips Chemical Company, 50/50 JV with Chevron. This joint venture is 12 years old. It stood the test of time. We have a great relationship with Chevron. We like the management team. We think they're a very talented group of individuals. We think there's good value between Phillips and Chevron as we manage the joint venture. We're completely aligned in terms of the growth profile, significant organic investment opportunity and growth in CPChem over the last ten years and certainly in the next ten years that we see."[716]
Chevron Phillips Chemical
Chevron Phillips Chemical, a joint venture with Chevron that will be part of Phillips 66, is benefiting from low prices for the natural gas it uses as feedstock to make products such as ethylene and polyethylene plastic. The company has made it clear that Chevron Phillips Chemical is a top priority. It has announced plans to invest in a new $5 billion ethylene cracker at Cedar Bayou.[717]
Phillips 66's Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Now in its 12th year of operations, CPChem is one of the world's top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. The rapid development of natural gas and NGL from shale formations in the United States is driving major growth opportunities for CPChem. At its Cedar Bayou Chemical Complex in Baytown, Texas, CPChem is building the world's largest on-purpose 1-hexene plant capable of producing up to 250,000 metric tons (551,000,000 lbs.) per year. Construction of the 1-hexene plant is expected to begin in the first half of 2012, and the project is anticipated to start up during 2014. CPChem also aims to construct a world-scale ethane cracker at its Cedar Bayou facility in Baytown, Texas, and two polyethylene facilities near its Sweeny facility in Old Ocean, Texas, with anticipated startup in 2017, pending final investment decisions. "Phillips 66 starts out with a clear advantage over many other downstream companies," said Garland. "We have a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce, and a continued commitment to safety and operating excellence. We have an unparalleled foundation for success."[718]
Latest News and Views on the Chemical Business Segment
January 30, 2013: Garland Says Phillips ROCE on Chemical Business Segment Was 31% for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that 2012 return on capital employed from Phillips Chemicals segment increased to 31%, up form 28% last year and Phillips ended the quarter with $3.6 billion in capital employed. "Overall, CPChem achieved a 90% capacity utilization rate and its O&P segment in the fourth quarter," said Garland. "This was down somewhat from the third quarter due to unplanned downtime at the Saudi Polymers petrochemical facility. If we exclude this downtime in SPCo, CPChem’s utilization rate was near capacity for the quarter."[719]
December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Chemical Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.[720]
November 11, 2012: Chevron Phillips Chemical Says the Company is Expanding
Fuel Fix reported on November 11, 2012 that Chevron Phllips Chemical, with about 4,700 employees worldwide, is adding new facilities and employees and expects the number of employees to continue growing over time through projects in North America.. “I am confident we can stack up with just about anybody by delivering new products, our marketing capabilities, and our strategy,” said Dan Coombs, the company’s senior vice president of specialties, aromatics and styrenics.[721]
September 5, 2012: The Chemicals Business is Pursuing Advantaged Feedstock
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the chemicals business is pursuing advantaged feedstock. "We think the shale plays in the US present a new opportunity for advantaged feedstocks here in the US. Most of our US capacity is ethane based. That's a big advantage that we see going forward."[722]
September 5, 2012: Chemicals is Increasing Capacity
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."[723]
September 2, 2012: Low Natural Gas Prices Are a Plus for Phillips' Chemical Business Segment
Emily Pickrell wrote in Fuel Fix on September 2, 2012 that Phillips 66's Midstream Business Segment took a hit in the second quarter along with many companies in the natural gas sector as natural gas prices are at decade lows, reducing the company's second-quarter net profit from $55 million in 2011 to $35 million in 2012 but Phillips 66 uses some of DCP’s natural gas liquids as feedstock for its chemical plants. “For Phillips 66, the low prices are a plus, not a negative. It almost mitigates the negative impacts of NGL prices,” says Fadel Gheit, an analyst with Oppenheimer & Co. “They are one of the largest chemical producers in the country.”[724]
August 10, 2012: Chevron Phillips CEO Pete Cella Says Company Gets More Attention from Phillips 66
The Houston Business Journal reported on August 10, 2012 in a profile of Chevron Phillips CEO Pete Cella that with the ConocoPhillips split of its upstream and downstream business in May, Chevron Phillips makes up a more prominent part of the Phillips 66 business, which is good because the company gets more attention, said Cella. Cella also said that Chevron Phillips is more than a chemical company, it is a manufacturing company. “There is a newfound optimism in manufacturing that goes beyond chemicals,” said Cella, adding that with the recent chemical industry resurgence, there are more opportunities for U.S. companies to manufacture plastic products and chemical-related products that can boost the overall economy.[725]
June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest
Emily Pickrell wrote in San Antonio Express on June 13, 2012 that Phillips 66 executives gathered for a ceremonial groundbreaking on June 12, 2012 at Chevron Phillips Chemical's Cedar Bayou complex that will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. “The facility that we are groundbreaking is an outcome of this new natural gas resource base,” said Pete Cella, CEO of Chevron Phillips Chemical. “Five years ago, the expectation was that the U.S. would become a net importer of ethylene. Now we are expecting that we will not only meet U.S. demand domestically, but will become a major exporter.” The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.[726]
Chevron Phillips Chemical also plans to build a new ethane cracker at Cedar Bayou; two new polyethylene units at a site near its Sweeny plant in Old Ocean; and an expansion of its fractionator that separates the individual components out of natural gas liquids at the Sweeny facility.[727]
June 12, 2012: In Three Years, Phillips 66 may invest in a Second New Chemical Plant in the U.S. Gulf Region
Fox Business reported on June 12, 2012 that reg Garland told the Financial Times that Phillips 66 may invest in a second new chemical plant in the U.S. Gulf region to take advantage of the cheap feedstock in North America that was released by the shale revolution, a decision that could be made in three years' time. "After the Middle East, the U.S. is the next best place to make petrochemicals, because of the advanced feedstock, and we see that continuing for some time," said Garland.[728] Garland said US chemicals manufacturers could buy ethane at about $5 per million British thermal units of energy content, compared to about $18 per mBTU for crude oil and that the US petrochemicals industry, stands at the dawn of a long-term upturn, and Phillips 66 stands to benefit through Chevron Phillips Chemical, its 50/50 joint venture with Chevron. The cheap feedstock persuaded CP Chem to announce last year that it would build a new “cracker” in Baytown, Texas, to convert ethane into ethylene. The Baytown cracker, expected to come into operation in 2017, will employ 10,000 people while under construction, and about 400 when it is running. [729]
June 4, 2012: Chevron Phillips Chemical Looking into Developing Iraq Plant
Olivia Pulsinelli reported in the Houston Business Journal on June 4, 2012 that Chevron Phillips signed a letter of intent with Iraq to examine the feasibility of building a new plant and upgrading an existing petrochemicals facility owned by Iraq. "Data from BP Plc (NYSE: BP) shows Iraq has the fifth-largest crude reserves in the world and the fifth-largest natural gas deposits in the Middle East, Bloomberg reports. While the Iraq wants to diversify into chemicals productions and other industries, the country currently lacks infrastructure to use natural gas as a fuel for electricity plants or feedstock for petrochemicals."[730]
May 17, 2012: Phillips 66 Exec says Glut of Natural Gas will last 4 to 5 Years
Peter Cella, Chief Executive of Chevron Phillips Chemical, a joint venture between Phillips 66 and Chevron, said on May 17, 2012 that the oversupply of natural gas liquids (NGLs)that feed its US plants is likely to last for another four or five years. "The supply source has gotten ahead of the demand need. I think we're doing our share to elevate the capacity to consume," Cella told the Reuters Global Energy & Environment Summit in Houston. "You can drill a well in a month or two, and it takes us five years to build a new cracker, so you've got this mismatch in timelines." Chevron Phillips Chemical, which was formed in 2000 and employs about 4,700 people, is the world's fourth-largest producer of high density polyethylene, used to make everything from food containers to plastic furniture. Cella expects that three or four new crackers will be needed over the next ten years to meet US plastic demand, especially packaging but also a variety of products like lipstick and trash bags, since demand grows with the economy. Chevron Phillips Chemical is spending $5 billion on new ethylene facilities in Texas.[731]
May 10, 2012: Simon Moore says Chemical is doing well Because it has Access to Cheap US Natural Gas
Simon Moore wrote at Seeking Alpha on May 10, 2012 that the Chemical Business Segment is doing well because it has access to extremely cheap US natural gas, which it uses in the manufacturing process and because the margins on certain chemicals, such as ethylene, are much higher when they are manufactured from NGLs versus naphtha (oil derived). "Ethane derived ethylene has a cash margin of more than $600/ton currently. Naptha derived (oil derived) ethylene has a cash margin of only $100-$200 per ton," writes Moore. "PSX has a great supply of cheap NGLs (ethane among them) in the US."[732]
Andrew Bary wrote in the WSJ on May 12, 2012 that the Chemical Business Segment is so profitable, earning $1.4 billion in 2011, because 80% of its capacity is in the US, where low gas prices hold down input costs. "Phillips' petrochemical business will benefit in a disproportionate way from the growth in the production of natural-gas and natural-gas liquids," says ISI Group analyst Doug Terreson.[733]
April 9, 2012: According to ConocoPhillips CPChem has a strong history of Successfully Executing Growth Projects
According to the ConocoPhillips Investors Presentation on April 9, 2012 "CPChem has a strong history of successfully executing growth projects. They've executed five mega projects in the Middle East over the past 10 years.They continue to work new opportunities in the Middle East region. They're currently building the world's largest 1-hexene plant at Cedar Bayou.They're actively pursuing a new Gulf Coast cracker.We think it will start up in 2017.This will be the first new cracker to start up on the Gulf Coast."[734][735][736]
Midstream Business Segment within Phillips 66
Garland said during his analyst call on April 9, 2012 that Phillips 66's Midstream businesses are primarily conducted through our 50/50 JV with Spectra and DCP is one of the largest gatherers and processors of natural gas and NGLs.[737][738][739]
"DCP is one of the largest gatherers and processors of natural gas and natural gas liquids. We do hold assets outside of DCP. We have interest in three fractionators with a net capacity of 112,000 barrels a day.We also have a 25% interest in the Rex pipeline. When you look at our Midstream operations and particularly the DCP, they overlay some of the best shale plays in North America and so just superbly positioned to capture significant growth opportunities. DCP, like CPChem, leads its peers in terms of economic return on assets."[740][741][742]
DCP Midstream
DCP Midstream, is a 50-50 joint venture with Spectra that helped counteract poor refining performance last quarter for ConocoPhillips. "The fundamentals of the business could not look better," said Spectra CEO Greg Ebel. "DCP operates in liquids-rich areas. In those areas, we are seeing dramatic volume growth, which is helping overcome low natural gas prices for our consumers."[743]
Phillips 66 primarily conducts its Midstream operations through DCP Midstream, LLC, a 50 percent joint venture with Spectra Energy and one of the largest natural gas gatherers and processors in the United States, as well as the largest producer of NGL in North America. Now in its 13th year of operations, DCP Midstream is a full-service provider of gathering, processing and NGL logistics services with strategically located assets in liquids-rich developments. The gas collected by DCP Midstream is processed at 61 owned or operated plants and treaters. Growth in liquids-rich developments in the United States is driving infrastructure demand and expansion opportunities for our Midstream segment. DCP Midstream has $4 billion in major projects currently in execution, including two major pipeline projects. The Southern Hills Pipeline will run more than 900 miles to Mont Belvieu, Texas, with a target capacity of more than 150,000 barrels per day of NGL. The project is expected to start up in mid-2013. The Sand Hills Pipeline is a 720-mile NGL line that will run through the Permian and Eagle Ford basins to market centers along the U.S. Gulf Coast. Initial capacity will be 200,000 barrels per day, and service may be expanded to 350,000 barrels per day. The Sand Hills Pipeline will be phased into service, with the first phase completed by the third quarter of 2012 and the second phase expected as soon as the third quarter of 2013.[744]
Growth Strategy in Midstream Segment
"We're investing significantly in both NGL pipelines and gathering, processing capability.When we look at the increased shale production, we believe there's about $70 billion to $80 billion worth of industry investment needed in infrastructure. Of that, about $21 billion has already been announced. And roughly $6 billion of the $21 billion is DCP's announced investments. When you look at DCP's assets, they overlay some of the best shale opportunities in the world today, places like the Eagle Ford, the Permian, the Anadarko, the Niobrara and others. DCP is just superbly positioned to capture and create value in this area and there remains considerable, additional opportunity in this space."[745][746][747]
Latest News and Views of the Midstream Business Segment
April 19, 2013: DCP Plans Gas Plant Near Carlsbad, New Mexico
Gary Gerew reported in the Albuquerque Business Journal on April 19, 2013 that DPC Midstream plans to build a gas plant on 164 acres in Lea County and a 50-mile pipeline that will run through Eddy County for the collection of natural gas from operators in Eddy and Lea counties. “Right now, we are following regulatory requirements, evaluating the feasibility of the project and understanding our customer’s needs,” said DCP spokewoman Lisa Newkirk. Robert Gomez, BLM realty specialist, said DCP Midstream has requested access to public lands to construct the gas plant and pipeline.[748]
April 19, 2013: DCP Pipeline Awaits Approval in Colorado
Steve Block reported in the Trinidad Times on April 19, 2013 that a proposed 13.75-mile pipeline section planned to go through northeast Las Animas County, Colorado is awaiting approval from the county planning commission and then the county board. As designed, the pipeline has a capacity of 150,000 barrels per day, which could be readily expanded to approximately 230,000 barrels per day and could begin service in the fourth quarter of 2013. Permit land agent Mike Rutherford said the company thought it only needed a special-use permit from the county for the project, which it had in hand before the state gave its final approval. It later turned out that it also needed a 1041 permit under county regulations. “We thought it was just going to be an SUP only and we already had that,” Rutherford said. “I guess if we’d known it was going to be a full-blown 1041, we could have gotten that four or five months ago, and been through this temporary approval process months ago.” The permitting process requires public notice of the application, followed by a 30-day period for comment from interested parties to the county board. Meanwhile, the application must work its way through the planning department approval process. Fourteen days after that, the planning commission and county board can approve the application at the same time, thus speeding up the process. Dixie Newnam, county attorney, said the entire process could take 45 – 60 days from the time the application was submitted.[749]
April 5, 2013: Explosion at DCP Midstream Gas Compressor Station in Langston, Oklahoma
Channel 2 News reported on April 5, 2013 that authorities say a worker inside a natural gas compressor station owned by DCP Midstream was able to escape without injury after an explosion near Langston, Oklahoma, about 45 miles north of Oklahoma City. The Guthrie Fire Department, along with Meridian and Coyle fire departments, all responded to the explosion but firefighters let the natural gas in the line burn off before they could safely fight the blaze and the fire was extinguished several hours after the blast. DCP Midstream doesn't know what started the explosion in rural Logan County, but is investigating along with the Department of the Environmental Quality and the Oklahoma Corporation Commission. "It was a tremendous fire ball in the sky and was able to be seen for quite a few miles," said Guthrie Fire Chief Eric Harlow adding that he believes weather may have been a factor in the fire. "We didn't have much wind last night, which would allow the gas to kind of stay in place, instead of dissipating, at that point any spark, whether it be static electricity or even the spark of vehicle ignition could likely set it off." Three homes had to be evacuated and DCP Midstream offered to pay for one other family's hotel if they wanted to evacuate. "We've never had any problems at the compressor station before," said William Savory, who has lived in Wellston for 20 years and decided not to take DCP up on its offer. "And I told my wife, all it's just going to do is burn off, it's going to burn off because it's so wet."[750][751]
April 2, 2013: DCP Midstream Withdraws Plan to Build Megatank in Searsport
Abigal Curtis reported in the Bangor Daily News on April 2, 2013 that DCP Midstream is withdrawing thire application to build a controversial liquid propane gas terminal and storage tank project at Mack Point in Searsport. “We really, really wanted to do business in Maine,” said Roz Elliott, spokesperson for Denver-based DCP Midstream, citing the Searsport Planning Board’s initial meetings last week to review the $40 million project before issuing a final decision later this spring. “It’s unfortunate, but with these local circumstances, we don’t forsee doing future capital development in Maine.” The board members found that certain elements of the project did not meet the town’s ordinances. “Very extensive time, resources, passion — we really believed in this,” Elliott said, adding that the company decided to withdraw the application “as a courtesy” to the Searsport Planning Board.[752]
April 2, 2013: DCP Midstream Increases Ownership in Eagle Ford Ventre to 80%
Mike Thomas reported in the San Antonio Business Journal that DCP Midstream Partners LP has completed its acquisition of an additional 47 percent interest in an Eagle Ford joint venture for $626 million bringing its stake inthe partnership up to 80 percent. The partnership also increased its ownership in a cryogenic processing plant at Goliad with a capacity of 200 million cubic feet per day that is under construction. The new plant is expected to be complete by the first quarter of 2014 and would be one of the largest gathering and processing plants in the Eagle Ford Shale play.[753]
April 2, 2013: Phillips to Build 100,000 bpd Fractionator in Old Ocean, Texas to Process Natural Gas
4-traders reported on April 2, 2013 that Phillips is pursuing development of a 100,000 barrel-per-day natural gas liquids (NGL) fractionator to be located in Old Ocean, Texas, close to the company's Sweeny Refinery. NGL feedstock for the Old Ocean fractionator project would be supplied by several nearby pipelines avoiding 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. "This project would enable us to take advantage of strong existing midstream transportation and storage infrastructure along with demonstrated operations excellence," said Phillips 66 Chairman and CEO Greg Garland. "We see excellent market-facing opportunities to grow the natural gas liquids business, and the chance to supply purity NGLs and liquefied petroleum gas to the petrochemical industry and heating markets." The project is currently in the engineering design phase, and the company is in the process of filing for all applicable permits.[754]
March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO
Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.[755]
March 13, 2013: DCP Midstream Pipeline to Serve Permian Basin
Mella McEwen reported in the Midland Reporter-Telegram on March 13, 2013 that DCP Midstream LLC is spending $1 billion on projects, including the new Sand Hills Pipeline, a natural gas liquids pipeline that will carry natural gas liquids from the Permian Basin and Eagle Ford Shale to the Gulf Coast, including the fractionation complex at Mont Belvieu. The Eagle Ford leg of the pipeline came online late last year and the Permian Basin portion will begin coming online this summer, reports Greg Smith, newly named president of the midcontinent and Permian business units. DCP's new Rawhide Plant, a 75 million cubic feet per day natural gas processing plant is also under construction in Glasscock County. DCP currently operates 17 gas processing plants in the Permian Basin with processing capacity of 1.3 billion cubic feet per day, recently adding 150 million cubic feet per day of processing capacity through the expansion and restart of existing facilities.[756]
January 30, 2013: Garland Says Phillips ROCE for Midstream Business Segment was 22% for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that although NGL prices were down 36% compared to 2011, return on capital employed for the year was still strong at 22%. Midstream's adjusted earnings for 2012 were $62 million, includes $38 million in earnings associated with Phillipsinterest in DCP Midstream and $24 million for other Midstream businesses. "We ended the quarter with $1.3 billion in capital employed in our Midstream segment," said Garland. "And as I said earlier, during the fourth quarter we closed our investments in the Sand Hills and the Southern Hills pipelines that are being constructed by DCP Midstream, and these pipes are scheduled for startup this year."[757]
January 5, 2013: Two Hundred Turn Out in Searsport to Protest DCP Midstream's LPG Storage Tank
The Republican Journal reported on January 8, 2013 that about 200 people turned up at Mosman Park on January 5, 2013 and formed a circle to show the footprint of a 137-foot-tall liquefied petroleum gas storage tank proposed for Mack Point.[758]
December 13, 2012: Phillips to Invest $1.461 Billion in 2013 in Midstream Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that DCP Midstream plans to invest $2.2 billion primarily for new logistics infrastructure and NGL production during 2013.[759]
December 5, 2012: No Injuries After Gas Line Explosion And Fire Near DCP Midstream Plant at Goldsmith
Permian Basin reported on December 5, 2012 that two gas lines exploded outside of the DCP Midstream plant near Goldsmith around 6 PM and a large fire also broke out in the area of the explosion. The owner of the ruptured lines -- West Texas Gas -- shut off 4 miles of the line and let the fire burn out while DCP Midstream evacuated all employees from their plant safely after the explosion happened.[760]
November 15, 2012: Spectra Acquires one-third Interest in Sand Hills and Southern Hills Pipelines Owned by DCP Midstream
The Sacramento Bee reported on November 15, 2012 that Spectra Energy Corp announced it has closed its previously announced acquisition of a one-third interest in the Sand Hills and Southern Hills pipelines, both of which currently are under construction by DCP Midstream, a 50/50 joint venture between Spectra Energy and Phillips 66. Spectra Energy, Phillips 66, and DCP Midstream each own a one-third interest in the two pipelines – and will equally fund the remaining capital expenditures through completion. The aggregate investment by Spectra Energy in the two pipeline projects is expected to be approximately $700-800 million.[761]
November 12, 2012: Proposed Consent Decree Reached over Contamination at Cahokia Site
The Madison Record reported on November 12, 2012 that the federal government last week sued and reached a proposed settlement with thePhillips 66 Pipeline LLC in St. Clair County seeking to recover some of the money it spent on cleaning up the Rogers Cartage Site in Cahokia after the Environmental Protection Agency (EPA) issued an enforcement action memorandum in 2011 noting the presence of polychlorinated biphenyls (PCBs) at the site and directing Phillips 66 to excavate and remove about 16,575 tons of soil. Rogers Cartage Co. and its corporate parent, Tankstar Inc., were listed as potentially responsible parties to the contamination in a 2009 EPA liability notice. Phillips 66 received the notice as the current owner of the site. In 2011, Phillips 66 sued Rogers Cartage for cost recovery and injunctive relief. Phillips 66 will amend its complaint to pursue a claim for contribution if the proposed decree is approved.[762]
October 24, 2012: DCP Midstream Announces Opening of First Segment Sand Hills Pipeline
DCP Midstream issued a press release on October 24, 2012 announcing that Sand Hills Pipeline has initiated service on the first segment in South Texas online to provide service from the Eagle Ford Shale to Eagle Ford NGLs. Sand Hills will consist of approximately 720 miles of 20-inch pipeline with an initial capacity of more than 200,000 barrels per day, which can grow to 350,000 bbl/d with the installation of additional pump stations. "When finished, Sand Hills Pipeline will be a major link between the liquids-rich Eagle Ford and Permian producing regions and growing Gulf Coast markets," said Tom O'Connor, chairman and chief executive officer of DCP Midstream.[763]
September 7, 2012: Maine Fuel Board Approves Permit for DCP Midstream's Searsport Megatank
The Free Press reported on September 7, 2012 that the Maine Fuel Board has issued a permit to DCP Midstream to build a 22.7 million gallon propane storage tank in Searsport, the final permitting hurdle at the state and federal levels. The next step is for the company to submit the complete site application, including all state and federal permits, to the Searsport planning board for review.[764]
September 2, 2012: Low Natural Gas Prices for DCP Midstream Are a Plus for Phillips' Chemical Business Segment
Emily Pickrell wrote in Fuel Fix on September 2, 2012 that DCP Midstream took a hit in the second quarter along with many companies in the natural gas sector as natural gas prices are at decade lows, reducing the company's second-quarter net profit fell from $55 million in 2011 to $35 million in 2012 but Phillips 66 uses some of DCP’s natural gas liquids as feedstock for its chemical plants. “For Phillips 66, the low prices are a plus, not a negative. It almost mitigates the negative impacts of NGL prices,” says Fadel Gheit, an analyst with Oppenheimer & Co. “They are one of the largest chemical producers in the country.” Analysts predict that Phillips will continue to benefit as new chemical and processing plants come online in the next two to five years. “I think it’s a great place to be,” says John Stekla, an analyst with IHS. “The petrochemical industry is betting tremendous sums of money that NGLs will stay advantaged as a feedstock for the rest of the world. I have no doubt there will be huge growth in NGLs.” DCP has also set about building infrastructure to pick up gas at the wellhead and transport natural gas liquids to market centers on the Gulf Coast converting two pipelines to transport natural gas liquids to Mont Belvieu, a gas storage and processing center east of Houston. “We decided we probably should be looking harder at owning more natural gas liquids infrastructure and more natural gas liquids pipelines,” says Tom O’Connor, CEO of DCP Midstream, the entity that owns the general partner of DCP Midstream Partners, describing DCP’s strategy to position itself as the premier one-stop services company to get natural gas liquids from the well to customers. “We are on the front end of this energy revolution."[765]
August 24, 2012: DCP Midstream GP appoints Bill Waldheim as New President
Equities.com reported on August 24, 2012 that Bill Waldheim has been appointed to the position of president of DCP Midstream General Partner effective September 1, 2012. Bill Waldheim is currently the president of the natural gas liquids, gas, and crude oil logistics business unit for DCP Midstream, LLC, a position he has held since 2011. Prior to that time, Waldheim was president of DCP Midstream, LLC's northern business unit since 2009 and was responsible for executive management of commercial and operations of assets in the Midcontinent, Rocky Mountain, Michigan and Gulf Coast regions as well as being responsible for downstream marketing of gas, NGLs and condensate. "The Board believes that Bill Waldheim has the demonstrated leadership skills and capabilities to ensure the long term growth and stability of DCP Midstream Partners, LP, or the 'Partnership' as we continue to execute on our multi-faceted growth strategy with increased emphasis on co-investment with DCP Midstream, LLC," said Tom O'Connor, the chairman of the board of the General Partner. "Through Bill's leadership DCP has been able to advance numerous high value projects including Sand Hills and Southern Hills pipelines."[766]
August 21, 2012: CEO Mark Borer of DCP Midstream General Partner Resigns
FuelFix reported on August 21, 2012 that DCP Midstream Partner’s Chief Executive Officer Mark Borer will resign at the end of the 2012. “I have been with the DCP enterprise since 1999 and am honored to have been a key executive during its growth into the largest NGL producer in the United States,” said Borer in a written statement. “With an effectively planned succession and transition, now is the time for me to retire from the Partnership and experience other avenues of personal and professional growth.”[767]
August 8, 2012: DCP Midstream Year-to-Year Adjusted Net Income Down in 2nd Quarter
Nasdaq reported on August 8, 2012 that DCP Midstream reported adjusted net income attributable to the company for the quarter was $13.9 million or $0.08 per limited partner unit, compared to the net income of $20.5 million or 0.33 per limited partner unit a year ago.[768][769]
August 6, 2012: DCP Midstream set to Double Processing Capacity in Colorado
The Denver Post reported on August 6, 2012 that DCP Midstream plans to double its capacity in the Denver-Julesberg Basin increasing processing capacity to 800 million cubic feet per day for natural gas and 70,000 barrels a day for liquids by 2014. "The Denver-Julesberg Basin continues to reinvent itself, and the introduction of horizontal drilling is uncovering associated natural gas discoveries in the Niobrara Shale and Codell formations," says Wouter van Kempen, president of the company's gathering and processing business unit. DCP Midstream recently broke ground on a plant, west of LaSalle in Weld County, with a capacity of 110 million cubic feet per day, due to be completed in the second half of 2013 and is also constructing two compressor stations near the LaSalle Plant, and an associated gathering system due to be in service by the second half of 2013.[770]
July 26, 2012: DCP Midstream Increases Quarterly Distribution to Partners
Marketwatch reported on July 26, 2012 that the board of directors of DCP Midstream declared a quarterly cash distribution of $0.67 per unit for the quarter ended June 30, 2012, an increase of 1.5 percent over the last quarterly distribution of $0.66 per unit paid May 15, 2012.[771]
July 25, 2012: DCP Midstream Fined $631,000 For 11 Air Quality Violations
Permian Basin 360 reported on July 25, 2012 that the Texas Commission on Environmental Quality fined DCP Midstream $631,628 for 11 different air quality violations found during an inspection at a DCP Midstream, LP site in Panola County on August 9, 2011.[772]
July 13, 2012: DCP Midstream Breaks Ground on $270 Million Facility in Colorado
Denver Business Journal reported on July 13 that DCP Midstream LLC of Colorado broke ground in June on its $270 million processing plant in Weld County. DCP also recently grew its Mewbourn Plant just south of Greeley, to keep up with demand from clients working in theDenver-Julesburg Basin in northeastern Colorado.[773]
July 5, 2012: DCP Midstream Completes Acquisition of Crossroads Processing Plant
DCP Partners Midstream issued a press release on July 5, 2012 that the company had completed the acquisition of the Crossroads Processing Plant for $63 million.[774]
June 18, 2012: DCP Midstream Partners to Acquire Crossroads Processing Plant
DCP Midstream Partners, a joint venture between Spectra Energy and Phillips 66, issued a press release on June 18, 2012 announcing that has entered into an agreement with Penn Virginia Resource Partners, L.P. ("PVR") to acquire the Crossroads processing plant and associated gathering system, for approximately $63 million. The Crossroads system, located in the southeastern portion of Harrison county in East Texas, includes approximately 8 miles of gas gathering pipe, an 80 million cubic feet per day cryogenic processing plant, approximately 20 miles of NGL pipeline and a 50% ownership in an approximately 11-mile residue gas pipeline. This system will allow the Partnership to increase critical midstream services to producers that are expanding their liquids rich Haynesville shale and Cotton Valley drilling programs in East Texas. "This immediately accretive acquisition provides us with an opportunity to increase our market position in East Texas and demonstrates our commitment to provide integrated midstream services to our customers," said Mark Borer, president and CEO of the Partnership. "The addition of the Crossroads system is a synergistic bolt-on acquisition to our existing East Texas system and will expand our processing capabilities to support our customers' growth."[775]
June 6, 2012: DCP Midstream's Plans Move Forward on Building Large Propane Tank in Maine as Opposition Grows
The Free Press reported on June 6, 2012 that Searsport officials met with representatives of DCP Midstream on June 4, 2012 to review the company's application to build a 23-million-gallon propane storage facility at Mack Point and found the application was missing a gas storage tank permit from the Maine Fuel Board and was also missing some minor but important documentation, including the square footage of each individual building and structure proposed for the development and written documents to town officials and abutting property owners informing them of the development. When the application is deemed complete, the planning board begins reviewing the contents of the application and must schedule a public hearing within 30 days.[776]
June 1, 2012: Plan for DCP Midstream's Giant Propane Gas Tank in Maine Generates Opposition
The Maine Public Broadcasting Company reported on June 1, 2012 that DCP Midstream's plan to build a 137-foot high, 23-million gallon liquid propane gas tank next to the Mack Point industrial area has generated heated opposition in communities along the midcoast as selectmen on the island community of Islesboro added their names to the list of people raising concerns about the tank. "Concerns about the project on the mainland have fallen into several categories," writes Jay Field. "There are those who say the tank is simply an eyesore that dwarfs all other industrial facilities in the area and threatens the sense of place on the midcoast. Others dread the large increase in truck traffic on Route 1 that will come if the project moves forward. Still others worry about the safety hazards of storing so much highly-flammable, liquid petroleum gas in one place." Even if it's approved, the project is all but certain to be challenged in court by opponents for years to come.[777]
May 26, 2012: Oklahoma Property Owners Fight DCP's Gas Pipeline
The Daily Oklahoman reported on June 18, 2012 that DCP Midstream has filed lawsuits in district court that seek eminent domain judgments against 14 property owners in Oklahoma County as landowners have rejected DCP offers to pay for a portion of their land and say they will fight to keep the company off their land. “It’s not a matter of money for most of us, it’s a matter of principle,” says Joe Freund, a retired physician who lives on 40 acres of forestland about a mile east of Arcadia who is concerned that clearing a 75-foot wide strip of forest that runs the length of his property would tarnish the aesthetics that attracted him to this plot in the first place. “They claim that it’s for the public good and perhaps it is, but they won’t even move their pipeline one inch to avoid taking down trees a hundred years old.” DCP Midstream says the pipeline would tie gathering and processing systems across central and western Oklahoma to their existing line and is part of $2 billion in capital investments currently under development by DCP. “It’s about de-bottlenecking for the producers and finally giving them an opportunity to get their product to market," says Roz Elliott, vice president at DCP Midstream, adding that DCP hopes to run 250 million cubic feet of liquid natural gas to coastal markets every day by the middle of 2013.[778]
Conclusions
Note: This section of the report contains our conclusions based on the documented facts that are presented in the rest of the report. All responsibility for the conclusions are ours. If you have any additional information or insights that you would like to see added to this report please contact Hugh Pickens by email at hughpickens AT gmail DOT com.
Our analysis of the information publicly available on Phillips 66 leads us to the following conclusions:
Positives
- The Refining and Marketing Business Segment will be more important to Phillips 66 than it was to ConocoPhillips.
- The Refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips.
Negatives
- The Refining and Marketing Business Segment is the least profitable Business Segment and will be de-emphasized with unprofitable refineries closed or sold off.
- There will be a reduction in Capital Allocation to the Refining and Marketing Business Segment.
- The Refinery in Ponca City is unlikely to be closed or sold In the medium term as margins have been strong in the Mid-Continent Segment and are expected to remain high for the next three to five years.
Refinery and Marketing Segment will be More Important to Phillips 66 than it was to ConocoPhillips
Based on the earnings contribution of the Refining and Marketing business segment, it is possible to estimate the relative importance of the segment to the overall business of both ConocoPhillips and Phillips 66. For Q1 2012 Exploration and Production (E&P) had $2,548M in earnings, Midstream was $93M, Chemicals was $218M, and finally Refining and Marketing was $452M. The total earnings for ConocoPhillips is $3,310M of which R&M's contribution was 13.7%. Considering only the three business segments that will be moving over to Phillips 66, the total earnings were $763M of which the same R&M's contribution was 59.2%. In other words, relatively speaking the R&M business segment is moving over from a small fish in a big pond (ConocoPhillips) to a big fish in a small pond (Phillips 66). The same earnings contribution from the Refining and Marketing Business Segment is 4.3 times as important to Phillips 66 as it was to ConocoPhillips.[779]
The Refinery in Ponca City will be More Important to Phillips 66 than it was to ConocoPhillips
ConocoPhillips does not break out earnings numbers to each refinery. However it is possible to make an estimate of the contribution of Ponca City's refinery to the overall Refinery and Marketing segment by looking at the production of the refineries. According to Garland's presention to financial analysts on April 9, 2012, although ConocoPhillips has reduced throughput refining capacity about 450,000 barrels a day over the past three years, in 2011 it stood at about 2.2 Million barrels per day. According to ConocoPhillips figures, the Ponca City refinery has a crude oil processing capacity of 187,000 barrels per day.[780] In terms of throughput capacity, Ponca City provides 8.5 per cent of Phillips 66 production. From a business standpoint, what is important is the earnings contribution. The Ponca City refinery is part of the Mid-Continent segment with about 21% of Phillips 66 capacity and margins have been very strong in this area so the contribution to earnings would exceed the contribution to throughput. We estimate that the Ponca City refinery contributes about 10% of the earnings to the Refining portion of the Refining and Marketing business segment.
A detailed financial analysis found that the Ponca City Refinery earned a net profit of over $500 million in 2011 and is on track to earn in exess of $600 million in 2012, contributing more than one-quarter of the net income to Phillips Refining bottom line and contributing more than the the total of the seven least profitable Phillips refineries combined.[781]
R&M Segment is the Least Profitable Business Segment and Will be De-Emphasized
The three operating segments of Phillips 66 have very different ROCE's. In 2011 the ROCE of the Refining and Marketing segment was 12%, the ROCE of the Midstream segment was 30%, and the ROCE of the Chemical segment was 28%. Because the ROCE of the Chemical segments and the Midstream segments is so much higher than the ROCE in the R&M segment, Garland plans to plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company.
According to information available on April 17, 2012, Phillips 66 plans to aggressively grow the Chemicals and Midstream segments of the new company and de-emphasize the Refining and Marketing segment of the company. The Refinery and Marketing segment of the company is the lowest profit margin segment of the company and Phillips 66 plans on selling and shutting down unprofitable assets in this segment.
There will be a Reduction in Capital Allocation to R&M Segment
Phillips 66 plans a major change in this allocation. "Long-term we have a vision that about 50% of our capital employed will be directed towards the R&M segment (down from 84% in 2011). And the other 50% will be directed towards Midstream and Chemicals." This is a 40% reduction in capital allocation from from 84% of capital allocated to the R&M segment in 2011. The conclusion we draw is that there will be less capital investment and improvements in the existing Phillips 66 refineries in general and in the refinery in Ponca City in particular.
Refinery in Ponca City Unlikely to be Closed or Sold in the Near Term as Margins Have Been Strong in the Mid-Continent Segment
The Ponca City refinery is part of the Mid-Continent segment with about 21% of Phillips 66 capacity and margins have been very strong in this area. The conclusion we draw is that although Phillips 66 plans to sell or close down some of their less profitable refineries, it is unlikely that any of those in the mid-continent region would be closed.
Phillips 66′s most profitable refineries of the past couple years are in the Mid-Continent including the Sweeny refinery, Ponca City, Wood River and Billings. The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries. However, this opportunity is not going to last long term because there will soon be plenty of new options for getting crude out of Cushing and Garland agrees that the price differential will collapse. “Over three to five years those wide differentials that we’re seeing in the Midcon will collapse to the transportation differential,” he told me. “So more like $3 to $5 a barrel. It’s not going to be $20 forever.”[782]
What Does the Creation of Phillips 66 Mean to Ponca City?
The refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips - 4.3 times as important - because the Refining and Marketing business segment will be a larger part of Phillips 66, a smaller company, focused on downstream operations, than it ever was to ConocoPhillips, where the Refining and Marketing business segment was only a small part of the company, dwarfed by the exploration side of the house. Since the refinery in Ponca City is part of the more profitable mid-continent segment (ConocoPhillips does not break out earnings by refinery.) the refinery is more important to the profitability of Phillips 66 than than it was to ConocoPhillips. Because of these two factors the refinery in Ponca City can expect more attention at the corporate level. The refinery can expect more visits from Phillips 66 upper management. The refinery can expect that technical and community concerns will be listened to with more attention.
Although Phillips 66 is already moving to sell two of its least profitable refineries, it is unlikely that Phillips 66 will move quickly to sell the refinery in Ponca City because of its complexity and the high profitability of the mid-continent segment which is expected to last another three to five years. On the downside, although the Refining and Marketing Business segment of Philips 66 makes the largest overall contribution to the company's earnings, in terms of percentage profitability it is the least profitable business segment with only a 10% COBE so Phillips 66 has made a decision to de-emphasize Refining and Marketing and increase the investment in the Chemical and Midstream business segments with higher COBE's which is also where the new CEO, Greg Garland has his background. Because of this factor, the refinery in Ponca City can expect that there will be relatively little interest at the corporate level at expanding the refinery or making new investments in the refinery.
What Independent Financial Analysts Say About Phillips 66
May 2013
May 2, 2013: Bullish at 59.67: UBS AG Raises Phillips Price Target from $70.00 to $71.00
Mideast Times reported on May 6, 2013 that UBS AG raised its price target for Phillips from $70.00 to $71.00 in a report released on May 2, 2013. UBS AG currently has a buy rating on the stock.[783]
April 2013
For the month of April, 2013 overall analyst consensus is bearish with one analyst bearish and none bullish.
April 17, 2013: Bearish at 57.99: Deutsche Lowers Phillips Price Target to $64
Barrons reported on April 17, 2013 that Deutsche had lowered its price target for Phillips to $64 and given the stock a hold rating. Deutsche said that producing gasoline is getting less profitable because of cost increases, or the threat of them caused by the higher cost of Renewable Identification Numbers (RINs), and stricter vehicle-emission and gasoline standards. "The narrowing spread between domestic and global oil prices is another problem for profits," writes Dimitra DeFotis. "Oil prices have dropped significantly in recent weeks: West Texas Intermediate crude is down to about $87 per barrel, and the global benchmark, Brent, has fallen even more, to near $100. The spread between the two, once $20, was $13 at the end of the first quarter, and could be $8 to $9 by the end of the third quarter, Deutsche says. This matters most for U.S. refiners that use domestic oil sources, but export gasoline with Brent prices."[784]
March 2013
For the month of March, 2013 no financial analysts issued new ratings for Phillips.
February 2013
For the month of February, 2013 overall analyst consensus is bearish with four analysts bullish and none bearish.
February 11, 2013: Bullish at 64.02: Oppenheimer Raises Phillips Price Target from $60.00 to $80.00
Marketwatch reported on February 11, 2013 that Oppenheimer raised their price target for Phillips from $60.00 to $80.00 saying it expects strong performance "to continue longer than many expected." Oppenheimer kept an overweight rating on the stock.[785]
February 11, 2013: Bullish at 64.02: Deutsche Bank Raises Phillips Price Target from $60.00 to $69.00
Jags Report reported on February 11, 2013 that Deutsche Bank raised their price target for Phillips from $60.00 to $69.00. They currently have a hold rating on the stock.[786]
February 4, 2013: Bullish at 62.75: UBS AG Raises Price Target from $64.00 to $68.00
Zomax News reported on February 4, 2013 that UBS AG has raised their price target for Phillips from $64.00 to $68.00.[787]
February 1, 2013: Bullish at 60.57: Argus Raises Phillips Price Target from $67.00 to $75.00
Jags Report reported on February 11, 2013 that Argus raised their price target for Phillips from $67.00 to $75.00. They now have a buy rating on the stock.[788]
January 2013
For the month of January, 2013 overall analyst consensus is bearish with one analyst bullish and two analysts bearish.
January 12, 2013: Bullish at 50.58: Barclays Capital Raises Phillips Price Target from $70.00 to $80.00
Zolmax News reported on January 12, 2013 that Phillips 66 had its price target lifted by Barclays Capital from $70.00 to $80.00 in a research note released on January 9, 2013. Barclays currently has an overweight rating on Phillips.[789]
January 10, 2013: Bearish at 51.32: Zacks Downgrades Phillips Rating
Jags Report reported on February 11, 2013 that Zacks downgraded shares of Phillips 66 from an outperform rating to a neutral rating in a research note to investors on Thursday, January 10th. They now have a $58.00 price target on the stock.[790]
January 7, 2013: Bearish at 51.36: Howard Weil Downgrades Phillips to Market Perform
The Jags Report reported on January 7, 2013 that Howard Weil had downgraded shares of Phillips 66 from an outperform rating to a market perform rating. They currently have $61.00 target price on Phillips.[791]
December 2012
For the month of December, 2012 overall analyst consensus is bullish with two analysts bullish.
December 14, 2012: Bullish at 52.17: Oppenheimer Raises Phillips Price Target to $60
Dividend.com reported on December 14, 2012 that analysts at Oppenheimer raised their price target to $60 for Phillips 66 and gave Phillips an “Outperform” rating after a positive investors meeting on December 13, 2014.[792]
December 10, 2012: Bullish at 52.31: Credit Suisse Says Phillips Theoretical Target Price is $77
Nasdaq reported on December 10, 2012 that Credit Suisee says that although investors are nervous about a transition from "supernormal" WTI-Brent spreads to a new normal as pipeline infrastructure is added through 2013-14, Credit Suisse thinks Phillips has substantial non-refining value and can "force valuation" during the adjustment period. "PSX's refining business has a good share of higher multiple Mid-Con EBITDA (65%) and we expect PSX to provide an update on capturing higher volumes of cheap domestic crude across its system which could lead to EBITDA upgrades," write Credit Suisse analysts. "Free cash generation is strong, supportive of a higher dividend payout and continued share repurchases. Our theoretical value is $77/share."[793]
November 2012
For the month of November, 2012 overall analyst consensus is bullish with two analysts bullish.
November 9, 2012: Bullish at 49.00: Deutsche Bank Lowers Phillips from a “Buy” Rating to a “Hold” Rating
The Daily Political reported on November 9, 2012 that analysts at Deutsche Bank have downgraded Phillips from a “buy” rating to a “hold” rating in a research report issued to clients and investors.[794]
November 6, 2012: Bullish at 47.76: Tudor Pickering Initiates Coverage with a "Buy" Rating
The Daily Political reported on November 9, 2012 that analysts at Tudor Pickering have initiated coverage of Phillips on November 6, 2012 with a “buy” rating[795] and a price target of $79. "We all dream of finding a dusty muscle car with an engine in perfect running shape. For us finance types, [Phillips 66] is close," the analysts said. "The engine keeps humming."[796]
October 2012
For the month of October, 2012 overall analyst consensus is bullish with four analysts bullish.
October 26, 2012: Bullish at 47.50: Credit Suisse Upgrades Phillips to Outperform
The Jags Report reported on October 26, 2012 that Credit Suisse has upgraded shares of Phillips 66 from a neutral rating to an outperform rating in a report released on Friday. Credit Suisse currently has $60.00 target price on the stock.[797]
October 17, 2012: Bullish at 46.49: Zacks Says Phillips 66 is a True Value Pick with an Impressive Valuation
Zacks reported on Seeking Alpha on October 17, 2012 that Phillips 66 is a true value pick with price-to-book (P/B) and price-to-sales (P/S) ratios of just 1.46 and 0.14, respectively. Over the past 30 days, the Zacks Consensus Estimate for 2012 is up nearly 9% to $6.91, as 7 of 13 estimates were revised upward. Given the $6.37 per share earned in 2011, the projected growth rate stands at 8.5% for 2012. The company has a price-to-book (P/B) ratio of 1.46 and a price-to-sales (P/S) ratio of just 0.14, well under the cut off of 3.0 and 1.0, respectively, for a value stock. The PEG ratio comes in at 0.71, a 29% discount to the benchmark of 1 for a fairly priced stock. Going forward, there is an untapped potential locked in the stock.[798]
October 8, 2012: Bullish at 46.02: Argus Sets $54 Price Target for Phillips 66
Jags Report reported on October 8, 2012 that Argus has raised their price target for Phillips 66 from $43.00 to $54.00.[799]
October 4, 2012: Bullish at 45.39: Zacks gives Phillips a Short-term Strong Buy Rating
Zacks Equity Service reported on October 4, 2012 that Phillips 66's latest payout hike reflects reflects the company's commitment towards returning value to shareholders with its strong cash generation capabilities. "Phillips 66 has a good capital deployment policy through share repurchase and payment of dividends," writes Zacks. "We believe that the increase in dividend and share repurchase programs will boost investor confidence in the stock, thereby driving share value." Phillips 66 currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.[800]
September 2012: Analyst Consensus is Neutral
For the month of September, 2012 overall analyst consensus is neutral. Two analysts are bullish and two bearish.
September 20, 2012: Bullish at 45.57: Oppenheimer Raises Price Target on Phillips
The Daily Political reported on September 20, 2012 that analysts at Oppenheimer have raised their price target on shares of Phillips 66 from $48.00 to $55.00 in a research note issued to investors. The firm currently has an “outperform” rating on the stock.[801]
September 17, 2012: Bearish at 46.14: Credit Suisse Downgrades Phillips 66
The Daily Political reported on September 20, 2012 that analysts at Credit Suisse have downgraded shares of Phillips 66 from an “outperform” rating to a “neutral” rating in a research note to investors on Tuesday. They now have a $53.00 price target on the stock, up previously from $46.00.[802]
September 17, 2012: Bearish at 46.73: Citigroup Downgrades Philips 66 from Buy to Neutral
Jags Report reported on September 17, 2012 that analysts at itgroup downgraded Philips 66 from a buy rating to a neutral rating. They currently have $49.00 target price on the stock, up from their previous target price of $40.00.[803]
The Daily Political reported on September 20, 2012 that analysts at Morgan Stanley have upgraded shares of Phillips 66 from an “equalweight” rating to an “overweight” rating in a research note to investors on Wednesday, September 12th. They now have a $67.00 price target on the stock.[804]
August 2012: Analyst Consensus is 60% Bullish
For the month of August, 2012 overall analyst consensus is bullish. Three analysts are bullish, one neutral, and one bearish.
Sean Williams wrote at Motley Fool on August 8. 2012 that Phillips 66 reported a 53% jump in refining and marketing earnings in the second quarter but what's really important to understand about refiners is that their businesses are highly cyclical and subject to margin contraction if oil prices rise so keep in mind that these results can turn on a dime. "Now for the $64,000 question: What's next for Phillips 66? That question really depends on what happens with oil prices, the crack spreads that regulate Phillips 66's margins, and if oil demand remains strong," writes Williams. "The recent run-up in its share price, coupled with the cyclicality of its business, doesn't often make refiners a favorable long-term hold. Usually, you can pilfer double the yield from the upstream side of the oil business, so it really requires you to be picky with regard to when to buy into the refiners' story. Don't get me wrong, I really like Phillips 66 and think Conoco's decision to spin off its refining operations is one of the smartest moves it could have made, but I'm not convinced it can head much higher from its current levels."[805]
August 6, 2012: Bullish at 40.07: Robert Broens at Seeking Alpha Says Phillips 66 is an excellent addition to any long-term portfolio
Robert Broens at Seeking Alpha wrote on August 6, 2012 that Phillips 66 reported a decent set of second quarter results and as a vote of confidence, the board of Phillips 66 approved the repurchase of $1 billion of the company's outstanding shares. "CEO Garland already indicated that future growth will be geared toward pipeline and chemical investments. He hopes to diversify away from the refining activities, which typically report low and volatile earnings," writes Broens. "Phillips 66 operates in an extremely beneficial environment for refiners, with lower spot prices and price differentials between crude. Short-term profits will enjoy a boost from these market conditions, allowing the company to boost the payout to shareholders and finance its growth plans."[806]
August 3, 2012: Bullish at 39.67: Rich Duprey at Motley Fool says Phillips Couldn't have Found a Better Time to go Public
Rich Duprey wrote on Motley Fool on August 3, 2012 that a year ago oil companies were looking to divest themselves of their refining businesses but now 12 months later, the refineries are showing profits and doing better than the oil companies in some cases. "A large part of the explanation is that natural gas remains cheap and the fuel source is a key component of the refining process," writes Duprey. "Because there's something of a glut in crude oil but prices for gasoline remain relatively high, refineries are paying less for their input costs but receiving premiums on their output. They're even able to export their gasoline and still make a profit." On the back of the strong showing, Phillips 66 says it will be buying back $1 billion worth of stock and stock buybacks are generally considered a bullish signal on Wall Street. "They return capital to shareholders, while declaring management's belief that its own cheap shares are its best return on investment," adds Duprey. "Not only should Phillips 66 be buying its stock, but perhaps investors ought to as well."[807]
August 2, 2012: Neutral at 40.32: Stone Fox Capital Says Phillips is a Compelling Value, but Not the Cheapest in the Sector
Stone Fox Capital wrote on August 2, 2012 that Phillips reported earnings that smashed estimates reporting a fantastic $1.4 billion in adjusted earnings, or $2.23 per share. But the majority of the earnings came from the Refining sector leaving limited earnings provided by the midstream and chemicals businesses, where investors hope for growth. "The stock remains cheap, especially considering the cash flow and the ability to fund a much more aggressive shareholder payout plan," wrote Stone Fox Capital. "The stock is a compelling value, but it is not the cheapest in the sector. Until the pipeline and chemicals businesses show stronger growth potential, it will be difficult to get beyond that investment thesis as refining profits swings will dominate this stock for now."[808]
August 1, 2012: Bullish at 37.60: Michael Fitzsimmons at Seeking Alpha Says Phillips Hit a Home Run on its First Quarter
Michael Fitzsimmons wrote on Seeking Alpha on August 1, 2012 that Phillips is currently enjoying a very profitable refining business due to its ability to capitalize on using WTI (currently $87.95/barrel) for its feedstock and selling refined product in a market more tied to Brent (currently $104.92/barrel). "The results were a home run. In fact, the ball was knocked out of the park." In February, 2012 Fitzsimmons wrote that the price differential between WTI and Brent (then $19/barrel) would tighten up once the Seaway pipeline was reversed. "I was wrong in my prediction. What I missed was the huge increase in oil production coming out of the Bakken (now over 600,000 bpd) and Eagle Ford shales," writes Fitzsimmons. "While I was expecting production to increase, I had no idea it would increase at such a rate as to pretty much fill up Seaway and still be left with the same problem as before it was reversed."[809]
July 2012: Analyst Consensus is 66% Bullish
For the month of July, 2012 overall analyst consensus is bullish. Four analysts are bullish, one neutral, and none bearish.
July 30, 2012: Bullish at 37.60: Barlcays Increases Rating to Overweight
Daily Political reported on July 30, 2012 that Barclays Capital increased Phillips 66's rating from “equalweight” rating to“overweight."[810] Barclays raised their price target for Phillips 66 from $37 to $60. Barclays analyst Paul Cheng thinks that U.S. refiners are entering a new “golden age,” where cash flow will be boosted by the regional crude price discount and low natural gas prices that could lead to higher dividends. "Regional crude differential sustainability and the emerging structural U.S. crude cost advantage will not only support increased cash return to shareholders in our opinion, but could also trigger expansion of the current shareholder base and a related upward revaluation of the shares," writes Cheng.[811]
July 16, 2012: Bullish at 34.94: Oppenheimer Gives Phillips 66 an 'Outperform' Rating
Dividend.com reported on July 16, 2012 that analysts at Oppenheimer gave Phillips66 an 'outperform' rating and set a $42 price target for the stock. "PSX’s business strategy is to de-emphasize refining, while aggressively expanding its two other businesses, maximizing return on capital by investing in profitable growth and controlling costs," said the report. "The company intends to grow its cash dividend and repurchase its shares, while maintaining strong financial flexibility. We believe this unique asset mix, large scale and balanced operations give PSX a competitive advantage throughout the business cycle.”[812]
July 13, 2012: Bullish at 33.01: Berkshire Hathaway Makes Investment in Phillips 66
Bloomberg reported on July 13, 2012 that Berkshire Hathaway’s Warren Buffett announced an investment in Phillips 66. Phillips 66, based in Houston, climbed 5.9 percent to $34.94 at the close in New York. The stock, which began trading on May 1, had its biggest gain since May 9. Berkshire reduced its holding in ConocoPhillips and bought into “some of the refining operation,” Chairman and Chief Executive Officer Buffett said in an interview today on Bloomberg Television’s “In the Loop With Betty Liu” from the Allen & Co. media conference in Sun Valley, Idaho. Phillips 66 has touted future growth from pipelines and chemicals as it seeks to reduce refining holdings.[813]
Buffett, 81, apologized to Berkshire shareholders in February 2009 for his bet on ConocoPhillips the prior year, before gas prices plummeted. Omaha, Nebraska-based Berkshire took about $3 billion in impairments on the investment in 2009. The billionaire’s firm cut its stake in ConocoPhillips to 29.1 million shares on March 31 from 84 million shares at the end of the third quarter of 2008, with most of the reduction in 2009, according to data compiled by Bloomberg.[814]
Phillips Investment Not Made by Warren Buffet Himself
Tim McAleenan wrote in Seeking Alpha on July 16, 2012 that contrary to some business reporting the investment in Phillips 66 by Berkshire Hathaway doesn't actually represent an investment made by Buffett himself but was made by Berkshire investment managers Todd Combs or Ted Weschler. "It's a shame that some media outlets will report any Berkshire (BRK.B) move as an action by Warren Buffett. In this case, it's wrong to assume that Buffett has been gobbling up shares of Phillips 66. To the extent that Buffett's moves affect your own investment calculus, extra diligence may be required in determining whether Buffett or his assistants are making a particular stock purchase. It's just a shame that sorting through prominent media misreporting is part of the process."[815]
July 11, 2012: Neutral at 32.69: Wells Fargo sets "Market Perform" rating on Phillips 66
Daily Political reported on July 11, 2012 that equities research analysts at Wells Fargo & Co. initiated coverage on shares of Phillips 66 and set a “market perform” rating on the stock.[816]
July 2, 2012: Bullish at 33.24: Deutsche Bank Raises Phillips 66 to Buy
Latisha Jones wrote on the Daily Political on July 2, 2012 that Deutsche Bank has upgrade Phillips 66 from a “hold” rating to a “buy” with a $42.00 target price on the stock on expectations export-oriented processing manufacturers will benefit from increased oil and gas production. The top beneficiary of the "secular long-term boom" in U.S. oil and gas production will be export-oriented processing manufacturers, with refining the "biggest, most undervalued sector," the firm says.[817][818]
June 2012: Analyst Consensus is 100% Bullish
For the month of June, 2012 overall analyst consensus is bullish. Four analysts are bullish, none neutral, and none bearish.
June 13, 2012: Bullish at 32.77: Tony Daltorio at Motley Fool says Phillips 66 Will Ride the US Shale Boom
Tony Daltorio at Motley Fool wrote on June 13, 2012 that the shale boom and the resulting cheap, abundant natural gas and natural gas liquids has set off a renaissance in American industry and Phillips 66 will be one of the winners. "The shale boom has led to a surge in production of natural gas liquids (NGLs) such as ethane and propane. That has sent the price of NGLs tumbling. That has created a large cost advantage for US chemicals manufacturers that use these liquids as a feedstock when compared to rivals in Europe and Asia that use naphtha and other products derived from crude oil." Phillips will participate in this petrochemicals upturn through its 50/50 joint venture with Chevron, Chevron Phillips Chemical and is considering investing in a second large new petrochemical plant in the Gulf of Mexico region to benefit from the cheap feedstock unlocked by the shale revolution. "A good way for investors to play this macro theme is through newly spun-off Phillips 66."[819]
June 8, 2012: Bullish at 31.83: Credit Suisse Believes Phillips 66 could announce a Buyback
Credit Suisse wrote on June 8, 2012 that they believe Phillips 66 could announce a buyback at the July board meeting given increased near-term free cash flow and relative valuation. Shares are Outperform rated with a $42 price target.[820]
June 7, 2012: Bullish at 31.83: Quinn Bredl at Seeking Alpha says Phillips Should Have More Upside
Quinn Bredl wrote in Seeking Alpha on June 7, 2012 that many investors see Phillips as a refiner, a reason for its deeply discounted share price; but the midstream and chemical businesses can be quite profitable and are much less volatile than refining, which should offset volatility to some extent. "While both companies are undervalued, I feel that Phillips is cheaper based on growth potential, while also paying a modest dividend," writes Bredl. "In regards to growth, Phillips should have more upside due to its interest in non refining businesses."[821]
June 3, 2012: Bullish at: 29.92: Simon Moore Proposes that Phillips Increase their Participation in Midstream and Chemical Joint Ventures
Simon Moore wrote in Seeking Alpha on June 3, 2012 that Phillips could increase its investment in the Midstream Business Segment by buying out Spectra's portion of DCP Midstream, LLC, a 50 percent joint venture with Spectra Energy and one of the largest natural gas gatherers and processors in the United States. Moore estimates that the midstream business may be worth about $8B meaning the cost to buyout Spectra's portion would be approximately $4B. Any purchase of Spectra's portion for less than $4B would be a positive for shareholder value in Moore's opinion. However "it is unlikely Phillips 66 [will] have the liquidity for this in the near term, but increasing their stake over time is a clear possibility," writes Moore.[822]
To increase Phillips' capital investment in the Chemical Business Segment, Phillips could buy out Chevron's 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Moore estimates the value of the chemicals business at about $10B, so a buyout price under $5B would be a positive for Phillips' stockholder value in Moore's view. "On a longer term view, Phillips 66 may look to buy out joint venture partners, but it doesn't appear to have the liquidity to do that for at least the next few years, these may be a positive for the share price by removing a lack of control premium on those assets, given that control is shared with a partner," writes Moore. "It will be interesting to watch Phillips 66's moves over the coming months to determine whether their actions match their stated shareholder friendly goals, and enable the value in the stock to be realized."[823]
Moore also proposes increased pipeline investment and formation of an MLP for transportation and logistics assets as short term strategies to increase shareholder value.[824]
Phillips 66 CEO Greg Garland told financial analysts at an investors conference on June 5, 2012 that Phillips 66 may also consider spinning off its logistics business into a master-limited partnership, or MLP.[825]
For May 2012: Analyst Consensus is 70% Bullish
For the month of May, 2012 overall analyst consensus is bullish. Twelve analysts are bullish, three neutral, and two bearish.
May 24, 2012: Bullish at 31.63: Allen Good at Morningstar says Return Improvement Initiatives Should Eventually Improve Phillips Competitive Position
Allen Good wrote at Morningstar on May 24, 2012 that he presently views Phillips' assets as a mixed bag but that return improvement initiatives like selling underperforming assets, increasing cost-advantaged feedstock processing, and increasing exports should eventually improve Phillips 66's competitive position. In the R&M Business Segment Allen views that Mid-Continent refineries as some of the company's best positioned, given their access to discount domestic and Canadian crudes while the three Gulf Coast facilities have suffered with the relatively high waterborne crude prices and narrow heavy differentials and will become a smaller portion with the divestment of Alliance and the two refineries in California face higher costs and environmental regulation, which weighs on their value. For the midstream segment, "higher oil prices and growth projects should support earnings, though lower oil prices could pose a threat to our estimates" and Allen "expects volume growth, thanks to DCP expansion projects like Sand Hills and Southern Hills." For the Chemical Business Segment, Allen forecasts continued earnings growth as the global economy recovers and as volumes rise with the startup of additional capacity at the Cedar Bayou chemical complex but forecasts a return to lower earnings levels in the mid-term. Allen sets a valuation of $34 per share for Phillips assuming a continuation of the West Texas Intermediate discount, an improving economy, and a robust export market.[826]
May 21, 2012: Bullish at 31.38: Poonkulali Thangavelu at Seeking Alpha sees Growth Potential at Phillips 66
Poonkulali Thangavelu wrote at Seeking Alpha on May 21, 2012 that Phillips 66 is also likely to benefit from management's plans to grow the Midstream and Chemical Business Segments divisions while reducing the current refining and marketing focus of the company. "The company's midstream unit produced a 30% ROCE in 2011," writes Thangavelu. "The chemicals segment, which turned in a 28% ROCE for 2011, ... uses natural gas liquids and other inputs to produce petrochemicals that it sells for use as input in the production of plastics and chemicals." However Philips faces various risks because of the nature of the industry it operates in. "For instance, there are various federal and state environmental reporting laws that PSX has to operate under, such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) at the federal level, and greenhouse gas legislation."[827]
May 18, 2012: Bearish at 31.38: Tim Plaehn at Seeking Alpha says Phillips 66 appears to be about 25% over-valued
Tim Plaehn wrote at Seeking Alpha on May 18, 2012 that Phillips 66 has a much higher market valuation than its primary competitor, Valero, without producing any additional levels of profit and that according to his analysis, Phillips 66 is 25% overvalued. Phaehn recommends a pair trade shorting Phillips 66 against Valero as a low-risk way to profit if the market brings the value the two companies together in the future. Phaehn recognizes that the refining part of Phillips business is very cyclical and discounts the profit contribution of Phillips Chemical and Midstream Business Segments. "Profits from the crude oil refining business are very volatile," writes Plaehm. "Investors may place a higher valuation on the Phillips 66 chemical and midstream business, although those two segments also reported significantly lower earnings in 2010 compared to 2011."[828]
May 18, 2012: Bullish at 31.38: Bret Jensen at Seeking Alpha says Phillips 66 Looks Undervalued for Patient Investors
Bret Jensen wrote at Seeking Alpha on May 18, 2012 that there are three reasons Phillips 66 is undervalued at $31.00: the company has a forward PE of under 7 while Valero, a comparable company has a forward PE of 8; Phillips 66 management is more focused after the spinoff; and "in addition to refining, it has assets in the midstream business and has joint ventures in chemicals. This should diversify its earnings streams and cause it to be slightly less volatile than pure refiners. Non-refining earnings represent 40% of total earnings."[829]
May 17, 2012: Bullish at 31.38: Howard Weil began coverage on Phillips 66 with "Outperform" Rating
Financial analysts at Howard Weil began coverage on Phillips 66 on May 17, 2012 with a “outperform” rating and a price target of $38.00.[830]
May 17, 2012: Bullish at 31.38: UBS AG began coverage on Phillips 66 with "Buy" Rating
Financial analysts at UBS AG began coverage on Phillips 66 on May 17, 2012 with a “buy” rating and a price target of $37.00.[831]
May 15, 2012: Bullish at 31.67: Citigroup says PSX will deploy its Capital into Chemical and Midstream Generating Higher Returns than Refining
Financial analysts at Citigroup began coverage on shares of Phillips 66 on May 15, 2012 setting a “buy” rating and a $40.00 price target. "Its chemical assets are taking advantage of cheap US feedstocks. Its midstream and pipeline assets are taking advantage of the growing volume of hydrocarbons in the US. PSX’s key strategy is to deploy 50% of its capital into the chemical and midstream business where we estimate it will generate higher risk adjusted returns than on refining.”[832]
May 12, 2012: Bullish at 31.83: Andrew Bary at the Wall Street Journal says if management executes well, Phillips 66 Could Appreciate Nicely
Andrew Bary at the Wall Street Journal wrote on May 12, 2012 that as the Phillips story becomes better understood on Wall Street, and if management executes well, the shares could rise nicely. US Refiners usually trade for low P/E ratios "because of the volatility of their profit margins and because Phillips and other domestic refiners have been reaping a windfall from relatively low-priced oil produced in the middle of the country. Investors worry that this bonanza won't last." However, investors don't fully appreciate Phillips' non-refining assets in the Chemical Business Segment and the Midstream Business Segment, which produce about 40% of its earnings. "If Mr. Garland meets his objectives, Phillips could be another spinoff winner."[833]
May 11, 2012: Bearish at 31.83: Jim Cramer says the Bottom Line is Phillips 66 is a Refiner and not a Great One at That
Drew Sandholm writes on May 11, 2012 on CNBC that Jim Cramer says that although CEO Greg Garland has gone out of his way to highlight the “non-refinery side of things,” such as its pipeline and chemicals divisions, but the bottom line is that the company gets roughly half of its value from refining so it is a refiner and not a great one at that. "The refining business is currently plagued by low growth and high margins, so Cramer recommends staying away. Additionally, PSX isn’t necessarily a cheap stock, considering it currently sells for nearly 7 times earnings."[834]
May 10, 2012: Bullish at 32.48: Simon Moore at Seeking Alpha Says Phillips 66 Refining Margins Remain the Biggest Uncertainty for the Stock
Simon Moore wrote at Seeking Alpha on May 10, 2012 that price to pro forma book, price to pro forma earnings, price to 5 year average earnings, sum of the parts and dividend yield all indicate there is upside to Phillips 66 stock price, "suggesting the potential for 25% price appreciation from current levels on a fundamental basis." Moore noted that risk factors include that Phillips 66 is a new, untested company, that "uch of the valuation hinges on refining margins, which are volatile and the stock would likely trade down in a weak refining environment," and that Phillips 66 costs may rise due to its inability to leverage the shared infrastructure with ConocoPhillips. Moore is long PSX.[835]
May 10, 2012: Bullish at 32.51: David White at Seeking Alpha says Phillips 66 Has a Lot Of Upside Potential
David White wrote on Seeking Alpha on May 10, 2012 that Phillips 66 has received a number of analyst upgrades since it went public and the reason is that Phillips 66 is not just a refiner but has a chemicals arm and a midstream arm and now that Phillips 66 is no longer part of COP, management is planning a clear cut move to greater emphasis on these latter two businesses which have much higher ROCE's. In the Chemical Business Segment, the margins on certain chemicals, such as ethylene, are much higher when they are manufactured from NGLs versus naphtha (oil derived). " Ethane derived ethylene has a cash margin of more than $600/ton currently," writes White. "Naptha derived (oil derived) ethylene has a cash margin of only $100-$200 per ton." In the R&M Business Segment, Phillips 66 stands to benefit from the extra crude that will be piped from Cushing to the Gulf Coast that will soon become relatively cheaper. In the Midstream Business Segment, Phillips 66 has approximately $4B of growth projects in the execution phase and an additional $2B in opportunities. "The bottom line is that this is a newly smaller company with great assets. It was a slower, more lumbering entity when it was a part of the bigger company . With its newly reduced size, its growth should accelerate."[836]
May 10, 2012: Neutral at 32.51: Goldman Sachs Prefers Mid-Continent-focused Peers that show Greater Upside
Benzinga reported on May 10, 2012 that Goldman Sachs has initiated coverage of Phillips 66 (NYSE: PSX) with a Neutral rating and a price target of $39. "Within our refining coverage, we continue to prefer Mid-Continent-focused peers that show even greater upside such as Buy-rated HollyFrontier (CL) and Western Refining, with MidCon comprising only a portion of PSX's asset base. We view PSX's exposure to midstream and chemicals assets, each of which is housed in a 50/50 JV, as favorably differentiating it from other diversified refiners, though the lack of a controlling interest could keep PSX from getting full credit."[837]
May 9, 2012: Neutral at 32.51: Morgan Stanley says the rise in crude oil production provides cost advantages for Mid-Con and Gulf Coast refining, US Chemicals
Zolmax News reported on May 9, 1012 that Morgan Stanley had started coverage of Phillips 66 with an “equal weight” rating and a $40.00 price target. “We estimate 73% of PSX earnings are exposed to secular growth businesses. We believe that the secular rise in North American crude oil production provides cost advantages for Mid-Con and Gulf Coast refining, US Chemicals, and need for further build out of US midstream infrastructure. Current strategy includes plan to increase advantaged feedstock at US refineries, and grow US chemicals and midstream asset base.”[838]
May 9, 2012: Bullish at 32.51: Edward Westlake at Credit Suisse Says Phillips 66 Chemical Business is one of the Most Profitable among its Peers
Businessweek reported May 9, 2012 that Credit Suisse analyst Edward Westlake has rated Phillips 66 with an "Outperform" rating and set a $42 price target as Phillips 66 is expected to benefit in a variety of ways from America's natural gas boom. The chemical business already is one of the most profitable in the industry as natural gas has dropped in price during the past yea, cutting production costs even further for Phillips 66 chemical plants. Lower crude costs should continue to benefit the company's refining business. Phillips 66 "can win in more ways than the average independent" says Westlake.[839]
May 9, 2012: Bullish at 32.51: Deutsche Bank Has a Cautious 12-Month View of Phillips 66 Refining
Zolmax News reported on May 9, 2012 that equities researchers at Deutsche Bank have began coverage on shares of Phillips 66 with a a “hold” rating and a $37.00 price target on the stock. "Although we see this as a premium refiner to direct comp Valero, with NGL gathering & chemicals growth and an MLP kicker, we have a cautious 12 month view on refining," write the analysts. "We struggle to find 20%+ upside, and initiate with HOLD and a $37 PT.”[840]
May 6, 2012: Bullish at 30.16: Barron's says Phillips 66 is Undervalued as a Refiner
Barrons' writes on May 6, 2012 that has been undervalued by investors, and could see its shares climb 30 percent or more because investors have overlooked the potential of its chemical and transportation businesses. Phillips is being valued like a refiner when it gets 40 percent of its earnings from high-return chemical and midstream businesses," Doug Terreson, the ISI Group's energy analyst, told Barron's. Terreson has a "buy" rating and a $44 price target on Phillips.[841]
May 3, 2012: Neutral at 30.39: Simon Moore at Seeking Alpha Thinks Phillips may Offer a Buying Opportunity but Could Suffer Stock Price Declines with Declining Refining Margins
Simon Moore writes on Seeking Alpha on May 3, 2012 that looking back historically, spin-offs offer opportunity for investors because post spin offs, investors have a tendency to sell the asset they are less familiar with and the spin off tends to decline presenting a buying opportunity. "Earnings are volatile given the commodity nature of refining, and the intent is to invest disproportionately in midstream and chemicals which offer higher and less volatile returns than refining," writes Moore. "Phillips 66 appear shareholder friendly in terms of their commitment to the idea of dividend growth and buybacks, and indeed sold a refinery for cash of April 30." Moore adds that as a predominantly refining business, Phillips 66 will be cyclical and could suffer stock price declines with declining refining margins.[842]
April 2012
April 30, 2012: Christopher Helman at Forbes Magazine is Skeptical that Phillips 66 will trade at a higher multiple than ConocoPhillips
Christopher Helman wrote in Forbes magazine on April 30, 2012 that the chasm between how investors value oil finders versus oil refiners is ultimately what the split of ConocoPhillips is all about. Helman notes that the return on capital employed on the Phillips 66 side has improved dramatically, from 1% in 2009 to 5% in 2010 to 13% in 2011. But they are continually outstripped by the upstream, which managed 8%, 12% and 16% in those years. Greg Garland hopes that the downstream will trade at a higher multiple than 8 times earnings which is what ConocoPhillips traded at before the split. “You never really heard us talk about chemicals," says Garland. "You never heard us talk about midstream, and both of those businesses trade at higher multiples than the refining business.”
"The trouble is, if I want to own chemicals I could buy Dow or Celanese. If I want to own pipelines I could go for Kinder Morgan or Enbridge," writes Helman. "As for refineries — I really don’t want to own them at all. I hope Garland has some cool tricks up his sleeve, but otherwise investors have to ask themselves this: ConocoPhillips didn’t want to own this stuff, why should I?"[843]
April 25, 2012: Jason Simpkins at Wall Street Daily says Phillips 66 is a Better Investment than ConocoPhillips
On April 25, 2012 Jason Simpkins reported in the Wall Street Daily that if you’re wondering which will be the better investment when ConocoPhillips splits into two companies, the answer is Phillips 66. "As the proprietor of ConocoPhillips’ pipeline and chemicals business, Phillips 66 controls two of the current company’s most dynamic assets. In the first quarter, Conoco’s midstream business, which includes pipelines, saw a 27.4% jump in profit. Its chemical business raised profits by 13%." Simpkins sees the R&M segment as a drag on the company. "Phillips 66 is looking to shirk its burdensome refining segment in favor of more profitable businesses. The company has plans to shut down its Trainer refinery in Pennsylvania, as well as its Alliance plant in Louisiana. Together, those facilities account for about one-sixth of the company’s refinery capacity." Simplins sees Phillips 66 expanding in Chemicals and Midstream which are more profitable businesses. "Conoco’s earnings from chemicals surged from $498 million in 2010 to $745 million last year. Midstream profits rose from $306 million to $458 million." Finally Simpkins is very impressed with Phillips 66' CEO Greg Garland who formerly headed Chevron Phillips Chemicals Co. – Conoco’s joint venture with Chevron Corp whose stewardship there resulted in a 42% jump in profit last year.[844]
April 5, 2012: Isac Simon at The Motley Fool sees Phillips 66 becoming a Master Limited Partnership
On April 5, 2012 Isac Simon wrote on "The Motley Fool" that management of Phillips 66 plans to run the integrated downstream company as a tax-free distribution. "This means, in all likelihood, that Phillips 66 will become a master limited partnership -- an MLP, in short," writes Simon. "Since MLPs are required to distribute a major percentage of their profits to shareholders as dividends, this kind of a corporate structure might not attract strong investor interest for the downstream company -- at least till the refining industry recovers."
"But that doesn't necessarily mean failure. There's still a lot to look forward to. Post spin-off, Phillips 66 will become the country's second largest independent refiner, with a working interest in 12 refineries. Out of these, six are located in the Mid-Continental region and the Gulf coast. Refineries in these regions have the advantage of being located close to the delivery point of WTI crude oil in Cushing, Okla. These refineries could obtain the cheaper WTI blend as compared with the more expensive Brent crude, the international benchmark."[845]
External Links
Corporate Links and Presentations
- Phillips 66 Presentations & Conference Calls
- "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland September 5, 2012
- Slide Presentation for Phillips 66 second-quarter earnings call August 1, 2012
- Transcript for Phillips 66 second-quarter earnings call August 1, 2012
- Presentation by Clayton Reasor to UBS Conference May 24, 2012
- Slide Presentation for Phillips 66 Investor Update April 9, 2012
- Transcript of Phillips 66 Analyst Update April 9, 2012
- Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011
- ConocoPhillips Analyst Meeting - Color Slides "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ConocoPhillips Worldwide Refining
- We Are Phillips 66 (YouTube Video)
Third Party Links and Presentations
Monthly Reports
References
- ↑ The Center for Association Leadership. "Getting It Done: Larry Bossidy on Execution" retrieved May 18, 2012.
- ↑ Strategy + Business. "Larry Bossidy: The Thought Leader Interview" by Randall Rothenberg. 2002.
- ↑ Conoco Inc. Company History at Conoco Phillips company website (retrieved March 2, 2010).
- ↑ Oklahoma Historical Society. :Marland, Ernest Whitworth"
- ↑ Wikipedia. "Marland Oil Company"
- ↑ Inside Conoco. "The 101 Ranch Oil Company" page 4. published in 1967.
- ↑ Oklahoma Historical Society. "Marland Oil Company"
- ↑ Petroleum Age. "Marland Plans Plant Additions to Cost about $1,600,000" 1922.
- ↑ Wikipedia. "Marland Oil Company"
- ↑ Conoco Inc. Company History at Conoco Phillips company website (retrieved March 2, 2010).
- ↑ Wikipedia. "Ponca City,Oklahoma"
- ↑ Inside Conoco. "Introduction" page 1. published in 1967.
- ↑ Inside Conoco. "Introduction" page 8. published in 1967.
- ↑ Inside Conoco. "Introduction" page 10. published in 1967.
- ↑ The Durant Daily Democrat. "An Oil Company Town, Ponca City Eyeing Tourism Industry" by Robert V. Peterson. November 14, 2982.
- ↑ NY Times. "Refinery's Neighbors Count Sorrows, and Riches" by Roberto Suro. April 4, 1990.
- ↑ NY Times. "Ponca City Journal; Oil Town Is Consumed by Sludge" by Lisa Belkin. May 13, 2988
- ↑ International Economic Development Council. "Case: Diversifying into Knowledge-based Industries in Ponca City, Oklahoma after the Departure of Conoco Phillips" March, 2010
- ↑ NY Times. "DuPont to Spin Off 20% of Conoco, the Rest to Be Sold Later" by Claudia H. Deutsch. May 12, 1998.
- ↑ ConocoPhillips. "Company Independence: 1997-2002 "
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ Petroleum Economist. "ConocoPhillips splits and the experiment begin" by Shaun Polczer. May 25, 2012.
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Tulsa World. "ConocoPhillips streamlines with Phillips 66 refining side spinoff" by Rob Walton. "April 28, 2012.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ ConocoPhillips. "ConocoPhillips’ Board of Directors Approves Spin-off of Phillips 66" April 4, 2012
- ↑ Convenience Store News. "ConocoPhillips CFO: Phillips 66 Spinoff Will Definitely Be on May 1" by Brian Berk. April 23, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ CSPNet. "Phillips 66 Rises Again" November 11, 2012.
- ↑ ConocoPhillips "FAQs:Why was the name Phillips 66 chosen?" retrieved April 26, 2012.
- ↑ Houston Chronicle. "Spun-off refiner gets Phillips 66 name" by Simone Sebastian. November 10, 2011.
- ↑ Phillips 66 Web Site. "Our History" retrieved April 26, 2012.
- ↑ Houston Chronicle. "Spun-off refiner gets Phillips 66 name" by Simone Sebastian. November 10, 2011.
- ↑ Bartlesville Examiner-Enterprise. "ConocoPhillips, Phillips 66 embark on a new future" April 29, 2012.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.
- ↑ Houston Business Journal. "Day in the Life with Pete Cella of Chevron Phillips Chemical Company" August 10, 2012.
- ↑ Tulsa World. "Tulsa Index stocks surge in third quarter" by Laurie Winslow. October 3, 2012.
- ↑ Wikipedia. "Return on capital employed" retrieved Arpil 23, 2012.
- ↑ Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.
- ↑ Houston Chronicle. "Oil giant's profit falls before spinoff" by Simone Sebastian and Emily Pickrell. April 23, 2012.
- ↑ Tul;sa World. "10 years after merger, ConocoPhillips to split" by Rod Walton. April 28, 2012.
- ↑ ConocoPhillips. "James J. Mulva" retrieved April 23, 2012.
- ↑ Houston Chronicle. "Oil giant's profit falls before spinoff" by Simone Sebastian and Emily Pickrell. April 23, 2012.
- ↑ Tulsa World. "10 years after merger, ConocoPhillips to split" by Rod Walton. April 28, 2012.
- ↑ Bartlesville Examiner-Enterprise. "ConocoPhillips, Phillips 66 embark on a new future" April 29, 2012.
- ↑ Detroit News. "GM CEO Akerson paid $7.7M in 2011" by Melissa Burden. April 26, 2012.
- ↑ Your Houston News. "James Mulva leads off ALPS fall lectures" September 4, 2012.
- ↑ ConocoPhillips "Greg C. Garland" retrieved April 23, 2012.
- ↑ Barrons. "Wall Street Should Pump Up Phillips 66's P/E" by Andrew Bary. June 9, 2012.
- ↑ ConocoPhillips "Greg C. Garland" retrieved April 23, 2012.
- ↑ ConocoPhillips "Greg C. Garland" retrieved April 23, 2012.
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Oxy. "Occidental Petroleum Corporation Names WCW Chiang Executive Vice President, Operations" May 23, 2012.
- ↑ Tulsa World. "Spinoff of Phillips 66 positive, profitable, CEO Greg Garland tells Bartlesville chamber" by Rod Walton. September 12, 2012.
- ↑ Bartlesville Examiner-Enterprise. "CEO: City strategic to Phillips 66" by Jessica Miller. September 13, 2012.
- ↑ ConocoPhillips. "John E. Lowe, Executive VP, Planning, Strategy & Corporate Affairs" retrieved April 28, 2012.
- ↑ The Street. "Phillips 66 Board Elects A New Director" from Business Wire. May 10, 2012.
- ↑ CBS News "Phillips 66 Names Board of Directors" April 16, 2012.
- ↑ Marketwatch. "ConocoPhillips Announces Future Board of Directors for Phillips 66" April 16, 2012.
- ↑ Reuters. "S&P rates Phillips 66 Co. 'BBB' with stable outlook" by Standard and Poor. December 3, 2012.
- ↑ Reuters. "S&P rates Phillips 66 Co. 'BBB' with stable outlook" by Standard and Poor. December 3, 2012.
- ↑ Businesswire. "Phillips 66 Appoints Government Affairs Executive" July 30, 2012.
- ↑ Legal Times. "Phillips 66 Retains Van Ness Feldman as New D.C. Lobbyists" by Andrew Ramonas. February 20, 2013.
- ↑ Legal Times. "Phillips 66 Retains Van Ness Feldman as New D.C. Lobbyists" by Andrew Ramonas. February 20, 2013.
- ↑ Fuel Fix. "Refining chiefs expect more regulations under Obama" by Simone Sebastian. November 14, 2012.
- ↑ Detroit News. "NADA president to join Phillips 66 as top lobbyist" by David Shepardson. July 30, 2012.
- ↑ Businesswire. "Phillips 66 Appoints Government Affairs Executive" July 30, 2012.
- ↑ US News and World Report. "U.S. Deserves Candor, Transparency From Refineries" by Gregg Laskoski. January 2, 2013.
- ↑ Jalopnik. "Motor Trend Journalist Also Taking Money To Be A Spokesperson For An Oil Company" by Matt Hardigree. November 5, 2012.
- ↑ PR Newswire. "Phillips 66®, 76® and Conoco® Branded Fuels Announce New Findings on Millennials' Gasoline Buying Habits" September 6, 2012.
- ↑ The Trinidad Times. "Pipeline permit delays project; Company would like to start June 1" by Steve Block. April 19, 2013.
- ↑ Bangor Daily News. "Developer withdraws proposed Searsport tank application" by Abigail Curtis. April 2, 2013.
- ↑ Bloomberg. "Phillips 66 and ConocoPhillips Sued by California Over Tanks" by Edvard Pettersson. January 2, 2013.
- ↑ Madison Record. "Proposed consent decree reached over contamination at Cahokia site" by Bethany Krajelis. November 12, 2012.
- ↑ KPLC. "La. Supreme Court asked to review I-10 Bridge case" by Theresa Schmidt. October 24, 2012.
- ↑ The Telegraph. "Contract talks snarled in Roxana district" by Kathie Bassett. October 6, 2012.
- ↑ The St. Louis Post-Dispatch. "Tax break frozen as judge hears dispute on assessment of Wood River Refinery" by Kevin McDermott. March 31, 2012.
- ↑ The St. Louis Post-Dispatch. "Tax break frozen as judge hears dispute on assessment of Wood River Refinery" by Kevin McDermott. March 31, 2012.
- ↑ The Telegraph. "Roxana teachers send message" by Kathie Bassett. October 11, 2012.
- ↑ The St. Louis Post-Dispatch. "Tax break frozen as judge hears dispute on assessment of Wood River Refinery" by Kevin McDermott. March 31, 2012.
- ↑ Equities.com "Phillips 66 Billings refinery sues over property taxes" September 19, 2012.
- ↑ The Free Press. "Maine Fuel Board Approves Permit for Searsport Megatank" by Christine Parrish. September 7, 2012.
- ↑ The Missoulian. "Corporate tax protests a concern in Yellowstone County" July 14, 2012.
- ↑ KIPT TV. "Court hearing held on I-10 Bridge contamination" by Theresa Schmidt. June 26, 2012.
- ↑ KIPT TV. "Court hearing held on I-10 Bridge contamination" by Theresa Schmidt. June 26, 2012.
- ↑ Maine Public Broadcasting Company. "Plan for Giant Propane Gas Tank in Searsport Generates Opposition" by Jay Field. June 1, 2012.
- ↑ St. Louis Today. "Illinois AG sues refinery over groundwater pollution" by Jeffrey Tomich. May 29, 2012.
- ↑ Reuters. "Illinois sues Wood River, alleging water pollution" May 29, 2012.
- ↑ Illinois Attorney General. "MADIGAN FILES LAWSUIT ALLEGING POLLUTED GROUNDWATER AT WOOD RIVER REFINERY IN ROXANA" May 29, 2012.
- ↑ NewOK.com "Oklahoma County property owners fight against gas pipeline" by Zeke Campfield. May 26, 2012.
- ↑ Phillips 66. "Phillips 66 chooses site of new global headquarters" September 9. 2012.
- ↑ CSP Net. "Phillips 66 Setting Up Shop in Interim HQ" July 9, 2012.
- ↑ Houston Business Journal. "Phillips 66 to build new Houston headquarters" March 20, 2012.
- ↑ Google Finance. "PSX" January 1, 2013.
- ↑ Google Finance. "PSX" January 1, 2013.
- ↑ Wall Street Journal. "Phillips 66 Announces Quarterly Dividend" May 8, 2013.
- ↑ Investors Business Daily. "Phillips 66 Announces Quarterly Dividend" February 11, 2013.
- ↑ Bloomberg. "Phillips 66 raises dividend, plans new $1B buyback" December 7, 2012.
- ↑ Businesswire. "Phillips 66 Announces a 25 Percent Increase in Quarterly Dividend" October 3, 2012.
- ↑ Barrons. "Phillips 66 Initiates $0.20 Quarterly Dividend" by Michael Aneiro. July 11. 2012.
- ↑ Herald Online. "Phillips 66 to Host Inaugural Meeting of Stockholders" April 17, 2013.
- ↑ Bloomberg. "Phillips 66 Quarter Profit Doubles on Refining, Chemicals" by Bradley Olsen. May 1, 2013.
- ↑ Fox Business. "Phillips 66 Profit Surges; Aims to Use All Cheap, Domestic Crude" May 1, 2013.
- ↑ Tulsa World. "Phillips 66 profit beats estimates" by Bradley Olsen. January 31, 2013.
- ↑ Nasdaq. "Phillips 66 Q4 Profit Down 65% On Impairment Charge" January 30, 2013.
- ↑ Tulsa World. "Phillips 66 profit beats estimates" by Bradley Olsen. January 31, 2013.
- ↑ Reuters. "UPDATE 3-Phillips 66 quarterly profit up on good margins" October 31, 2012.
- ↑ Reuters. "UPDATE 3-Phillips 66 quarterly profit up on good margins" October 31, 2012.
- ↑ Phillips 66. "Phillips 66 to Announce Third-Quarter Financial Results" October 10, 2012.
- ↑ Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
- ↑ Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
- ↑ BusinessWire. "Phillips 66 to Hold First Earnings Call" June 28, 2012.
- ↑ Fort Mills Times. "Phillips 66 to Present at Bank of America Merrill Lynch 2013 Refining Conference" February 28, 2013.
- ↑ Reuters. "UPDATE 1-Phillips 66 moving some Canadian crude to Calif. refineries" by Kristen Hays. February 5, 2013.
- ↑ Daily Finance. "Phillips 66 to Present at Credit Suisse Energy Summit" January 22, 2013.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13. 2012.
- ↑ Marketwatch. "Phillips 66 down 3.3%; announces new entity" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ 4-traders. "Phillips 66: to Present at Bank of America Merrill Lynch 2012 Global Energy Conference" November 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Marketwatch. "Phillips 66 to Present at Barclays CEO Energy-Power Conference" August 22, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ TheStreet.com "Phillips 66 To Participate In Citi Global Energy Conference" May 29, 2012.
- ↑ Marketwatch. "Phillips 66 to Present at UBS Global Oil and Gas Conference" May 17, 2012.
- ↑ Reuters. "Phillips 66 midstream vehicle registers for $300 million IPO" March 27, 2013.
- ↑ CSP Net. "Phillips 66 Stands Tall: Recommends shareholders reject mini-tender offer by TRC" July 3, 2012.
- ↑ Barrons. "Wall Street Should Pump Up Phillips 66's P/E" by Andrew Bary. June 9, 2012.
- ↑ MarketWatch. "Phillips 66 Rings Opening Bell at New York Stock Exchange" May 2, 2012.
- ↑ R&D Magazine. "Phillips 66 to replace Supervalu in S&P 500" April 23, 2010
- ↑ The Daily Oklahoma. "Phillips 66 stations return to Oklahoma" by Adam Wilmoth. May 31, 2012.
- ↑ ConocoPhillips. "ConocoPhillips’ Board of Directors Approves Spin-off of Phillips 66" April 4, 2012
- ↑ Koch Industries. "koch Companies Striving to Achieve Operational Escellence." March 25, 2003.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ New Jersey Star-Ledger. "Danger lurks at industrial workplaces, just ask Texas: Opinion" by Amy Goldsmith and Fletcher Harper. April 26, 2013.
- ↑ New Jersey Star-Ledger. "Danger lurks at industrial workplaces, just ask Texas: Opinion" by Amy Goldsmith and Fletcher Harper. April 26, 2013.
- ↑ Channel 2 News "No one injured in Langston, Oklahoma DCP Midstream natural gas plant explosion" April 5, 2013.
- ↑ Channel 6 News. "Witnesses Describe Logan County Gas Explosion" by Heather Hope. April 5, 2013.
- ↑ Santa Maria Times. "Phillips 66 refinery wins safety award" June 26, 2012.
- ↑ Reuters. "Employee dies after fall at Phillips refinery" May 1, 2012.
- ↑ ConnectAmarillo.com "Borger ConocoPhillips employee dies after falling" by Travis Ruiz. May 1, 2012.
- ↑ Philadelphia Inquirer. "Phillips 66 pays $50K over hazardous waste allegations at Trainer refinery" January 23, 2013.
- ↑ IB Times. "Phillips 66 Joins GEMI" January 23, 2013.
- ↑ GEMI Web Site. "About GEMMI" retrieved March 1, 2013.
- ↑ Bloomberg. "Phillips 66 and ConocoPhillips Sued by California Over Tanks" by Edvard Pettersson. January 2, 2013.
- ↑ The Ponca City News. "Residents Voice Areas of Concern" by Beverly Bryant. December 19, 2012.
- ↑ The Ponca City News. "Local Residents Voice Complaints" by Beverly Bryant. December 18, 2012.
- ↑ New Jersey Today. "Bayway Refinery Earns EPA’s ENERGY STAR® Certification" June 24, 2014.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ Wall Street Journal. "Delta Refines A Fallacy" by Gregory J. Millman. May 15, 2012.
- ↑ Fox Business. "Phillips 66 Profit Surges; Aims to Use All Cheap, Domestic Crude" May 1, 2013.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.
- ↑ Seeking Alpha. "Phillips 66 Hits A Home Run" by Michael Fitzsimmons. August 1. 2012.
- ↑ Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.
- ↑ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.
- ↑ Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.
- ↑ Houston Chronicle. "Nation's energy transportation getting a revamp" by Simone Sebastian. July 3, 2012.
- ↑ Slashdot. "US Energy Transportation Gets Multibillion-Dollar Revamp" by Hugh Pickens. July 2, 2012.
- ↑ NASDAQ. "Phillips 66 Executive: WTI-Brent Spread To Narrow Sharply By 2013" May 24, 2013.
- ↑ Calgary Herald. "Kinder Morgan to begin Pony Express crude pipeline" by Janet McGurty. May 22, 2012.
- ↑ Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.
- ↑ Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.
- ↑ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.
- ↑ Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" by Kristen Hays. May 1, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Houston Chronicle. "Phillips 66's route to focus on refining, pipelines" by Simone Sebastian. May 1, 2012.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
- ↑ Phillips 66. "Transcript of Q2 2012 Phillips 66 Earnings Conference Call" August 1,2012.
- ↑ NASDAQ. "Phillips 66 Executive: WTI-Brent Spread To Narrow Sharply By 2013" May 24, 2013.
- ↑ Businesswire. "ConocoPhillips Reports First-Quarter Earnings of $2.9 Billion or $2.27 Per Share" April 23, 2012
- ↑ Grimsby Telegraph. "Swiss firm to buy out plant" May 11, 2013.
- ↑ Hydrocarbon Processing. "Phillips 66 mulls sale of European, Asian refineries" by Alison Sider.
- ↑ Reuters. "UPDATE 1-Phillips 66 may shed some non-US refineries -executive" March 7, 2013.
- ↑ Hydrocarbon Processing. "Phillips 66 mulls sale of European, Asian refineries" by Alison Sider.
- ↑ Reuters. "UPDATE 1-Phillips 66 may shed some non-US refineries -executive" March 7, 2013.
- ↑ Reuters. "Phillips 66 mulling options for California refineries" by Kristen Hays.
- ↑ Reuters. "Phillips 66 mulling options for California refineries" by Kristen Hays.
- ↑ Reuters. "Phillips considers sale of Irish, Malaysian refining stakes" December 13, 2012.
- ↑ Marketwatch. "Phillips 66 down 3.3%; announces new entity" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Reuters. "S&P rates Phillips 66 Co. 'BBB' with stable outlook" by Standard and Poor. December 3, 2012.
- ↑ Philips 66. "Phillips Third Quarter Earnings Conference" October 31, 2012
- ↑ Philips 66. "Phillips Third Quarter Earnings Conference" October 31, 2012
- ↑ Philips 66. "Phillips Third Quarter Earnings Conference" October 31, 2012
- ↑ TimesCall. "Phillips 66 to sell 432-acre campus in Louisville" by Alice Wallace. October 17, 2012.
- ↑ Sacramento Bee. "United Refining to buy Phillips 66 terminal" October 9, 2012.
- ↑ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.
- ↑ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
- ↑ Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
- ↑ Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
- ↑ Barrons. "Wall Street Should Pump Up Phillips 66's P/E" by Andrew Bary. June 9, 2012.
- ↑ Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
- ↑ Nasdaq. "Phillips 66 CEO: Louisiana Refinery Sale Decision to Come in Summer" by Ben Lefebre. June 5, 2012.
- ↑ Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.
- ↑ Wall Street Journal. "Phillips 66 Rethinks Plan to Sell Louisiana Refinery" by Ben Lefebvre. June 7, 2012.
- ↑ Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.
- ↑ Seeking Alpha. "ConocoPhillips And Phillips 66 Stand Apart From Peers" by Alen Good. Mary 23, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" by Kristen Hays. May 1, 2012.
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ Reuters. "Phillips 66 Bayway refinery workers ratify contract" September 10, 2012.
- ↑ Reuters. "Phillips 66 Bayway refinery workers to vote on contract Friday" September 7, 2012.
- ↑ Fox News. "America’s 10 Disappearing Jobs" August 30, 2012.
- ↑ Billings Gazette. "Phillips 66 refinery in Billings fires 21 union workers, 3 supervisors" May 30, 2012.
- ↑ KTVQ TX. "Local refinery fires two dozen employees, for stealing time" May 30, 2012.
- ↑ KTVQ. "Union representative says employees wrongfully discharged from Phillips 66" by Q2 News. May 31, 2012.
- ↑ KTVQ. "Union representative says employees wrongfully discharged from Phillips 66" by Q2 News. May 31, 2012.
- ↑ Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Eliot Caroom. March 20, 2013.
- ↑ Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Eliot Caroom. March 20, 2013.
- ↑ Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Elliot Caroom. March 20, 2013.
- ↑ Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Eliot Caroom. March 20, 2013.
- ↑ Boston Globe. "Global Partners and Phillips 66 sign long-term crude oil contract" by Chris Ready. January 8, 2013.
- ↑ Businesswire "Global Partners and Phillips 66 Sign Long-Term Crude Transportation and Logistics Contract" January 8, 2013.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Paragon. "U.S. Refiners Soaring in 2012" August 15, 2012.
- ↑ Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
- ↑ Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.
- ↑ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.
- ↑ Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ CSP Daily News. "Phillips 66 to Celebrate New Company During Marketing Conference" May 14. 2013.
- ↑ Bloomberg. "Phillips 66 and ConocoPhillips Sued by California Over Tanks" by Edvard Pettersson. January 2, 2013.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Tulsa World. "Phillips 66 cancels Colorado research center, putting to rest any worry for Bartlesville" by Rod Walton. October 27, 2012.
- ↑ TimesCall. "Phillips 66 to sell 432-acre campus in Louisville" by Alice Wallace. October 17, 2012.
- ↑ Marketwatch. "Team Sets New world Record in Power Conversion Efficiency for Polymer-based Organic Photovoltaic (OPV) Cells" August 21, 2012.
- ↑ Hydrocarbon Processing. "CB&I to acquire Phillips 66 syngas technology" March 21, 2013.
- ↑ Businesswire. "Phillips 66's E-Gas(TM) Technology Selected for Reliance Industries' Gasification Project" May 21, 2012.
- ↑ Ponca City News. "Stynes Shares Refinery Update With Noon Lions" October 14, 2012.
- ↑ Bartlesvile Examiner-Enterprise. "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" by Ryan Lance and Greg Garland. May 1,2012.
- ↑ ConocoPhillips. "Worldwide Refining"
- ↑ Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.
- ↑ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.
- ↑ Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.
- ↑ USA Today. "What — and who — makes gasoline prices rise" by Jonathon Fahey. March 23, 2012.
- ↑ Seeking Alpha. "Phillips 66: This Refining Stock Is Pumping Out Cash" by Richard Evans. September 10, 2012.
- ↑ Wikipedia. "Brent Crude"
- ↑ Wikipedia. "West Texas Intermediate"
- ↑ Wikipedia. "Brent Crude"
- ↑ Econbrowser. "Brent-WTI spread" by James Hamilton. April 17, 2011.
- ↑ Wikipedia. "Brent Crude"
- ↑ Econbrowser. "Brent-WTI spread" by James Hamilton. April 17, 2011.
- ↑ Wikipedia. "Brent Crude"
- ↑ Businessweek. "Barclays Cuts 2012 Oil Price Forecasts for WTI, Brent" July 5, 2012
- ↑ Wall Street Journal. "WTI And Import Crude Price Differentials Create Profit Margin Advantages For Mid Continent Refiners Over Coastal Peers; Imports Currently Trade At $10 Premium Over West Texas Intermediate" an interview with Pavel Molchanov. January 9, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.
- ↑ Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
- ↑ Tulsa World. "Horizontal drilling breathes new life into Mississippi Lime oil region" by Rod Walton. September 9, 2011.
- ↑ Tulsa World. "Horizontal drilling breathes new life into Mississippi Lime oil region" by Rod Walton. September 9, 2011.
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call (Transcript)" April 9, 2012.
- ↑ Oil Price. "Differences in the Price of Oil: Brent-WTI Spread" by James Hamilton. April19, 2011.
- ↑ Reuters. "Conoco marketing its Seaway pipeline stake" October 25, 2011.
- ↑ Bloomberg. "Seaway Pipeline Reversal May Face Delay, ConocoPhillips Says" by Robert Tuttle and Bradley Olson. December 6, 2011.
- ↑ 4-Traders.com "Enbridge, Enterprise Finish Seaway Pipeline Reversal" May 17, 2012.
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call (Transcript)" April 9, 2012.
- ↑ Businessweek. "Barclays Cuts 2012 Oil Price Forecasts for WTI, Brent" July 5, 2012
- ↑ Seeking Alpha. "Phillips 66: This Refining Stock Is Pumping Out Cash" by Richard Davis. September 10, 2012.
- ↑ Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
- ↑ Oil and Gas Journal. "Pony Express Wyoming-to-Oklahoma crude line to proceed" by Christopher Smith. August 8, 2012.
- ↑ Seeking Alpha. "Phillips 66: This Refining Stock Is Pumping Out Cash" by Richard Davis. September 10, 2012.
- ↑ Ponca City News. "Stynes Shares Refinery Update With Noon Lions" October 14, 2012.
- ↑ FuelFix. "Refiners, unions prepare for strike as contract deadline looms" January 30, 2012.
- ↑ Investopedia. "Burden Rate" retrieved on November 11, 2012.
- ↑ Borger News Herald. "Phillips 66 seeing success in Borger" by Michelle Berry. July 11, 2012.
- ↑ Ponca City News. "Phillips 66 Continues to Invest in Community" October 21, 2012.
- ↑
