Phillips 66 Alliance Refinery

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Conoco 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, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name for a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Each company is run independently and the two companies have different ticker names in the stock market. Photo: Hugh Pickens all rights reserved.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations


Contents

Master Index of Articles about Phillips 66

The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the Refinery Complex in Ponca City. The supercrane was used to move two new 232 ton coker reactor units within the refinery on September 29, 2013. Phillips was willing to invest $70 million in the two new coker reactor units because the Ponca City Refinery is one of the best run, safest, and most profitable of Phillips' fifteen worldwide refineries and Garland wants the refinery in Ponca City to continue to run smoothly and profitably. This photograph of the supercrane in Ponca City was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.
Hugh Pickens, an analyst who closely follows Phillips 66, speaks with Phillips CEO Greg Garland (right) about the disposition of the North Tower, South Tower, and Research West at Phillips' Ponca City Refinery after Garland's speech to the Bartlesville Chamber of Commerce on August 13, 2014.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations

Conoco and Phillips 66 announced on November 18, 2001 that their boards of directors had unanimously approved a definitive agreement for a "merger of equals". The merged company, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name of a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Photo: Hugh Pickens all rights reserved.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations


Master Index of Articles about Phillips 66

The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the Refinery Complex in Ponca City. The supercrane was used to move two new 232 ton coker reactor units within the refinery on September 29, 2013. Phillips was willing to invest $70 million in the two new coker reactor units because the Ponca City Refinery is one of the best run, safest, and most profitable of Phillips' fifteen worldwide refineries and Garland wants the refinery in Ponca City to continue to run smoothly and profitably. This photograph of the supercrane in Ponca City was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.
Hugh Pickens, an analyst who closely follows Phillips 66, speaks with Phillips CEO Greg Garland (right) about the disposition of the North Tower, South Tower, and Research West at Phillips' Ponca City Refinery after Garland's speech to the Bartlesville Chamber of Commerce on August 13, 2014.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations


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.[1] Photo by eustatic Flicker Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)
Flooding at the Alliance Refinery in Belle Chasse, Louisiana after Hurricane Isaac. 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." Photo: Lower Mississippi Riverkeeper Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

Description of 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.[2]

News and Views on Alliance Refinery

April 4, 2015: Phillips 66 Restarts Alliance Refinery after Shutdown Due to Power Loss

Phillips was in the process of restarting its Alliance, Louisiana refinery on Monday after it was shut on Saturday due to power loss. The refinery also reported a release of materials due to the power loss, according to a filing with the National Response Center.[3]

December 30, 2014: Phillips Donates $100,000 to Belle Chasse YMCA

The Plaquemines Gazette reported on December 30, 2014 that Phillips presented a $100,000 grant to the YMCA of Greater New Orleans on December 22, 2014 that will allow the YMCA in Belle Chasse to build an outdoor walking and jogging track around their facility. “Phillips 66’s Alliance Refinery recently recognized a need for a safe place, free from traffic, for walkers and joggers to exercise outside. Without even being asked to do so, they have now provided a means to our YMCA Belle Chasse facility to meet this community need. Thank you Phillips 66 for your generosity,” said YMCA of Greater New Orleans’ President and Chief Executive Officer Gordon Wadge.[4]

October 29, 2014: Phillips Increased Advantaged Crude to Alliance Refinery in Third Quarter

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that during the third quarter, 95% of Phillips U.S. crude slate was advantaged, and this compares with 93% last quarter and this was tied to increased advantaged crude at the Alliance Refinery. "During the quarter, 95% of our U.S. crude slate was advantaged, and this compares with 93% last quarter. This represents a record quarter for us. The improvement was tied to increased crude runs at our Alliance Refinery after their second-quarter turnaround, and was also due to certain crudes becoming advantaged relative to Brent."

"Alliance came back on after turnarounds, so you had more exposure to light and medium grades with that," added Tim Taylor. "And then there was less availability of Maya, the crude, and that was backfilled with more light medium. So we had a mix - effect that gave more exposure to light medium versus heavy in the third quarter."[5]

October 14, 2014: Bomb Scare at Alliance Refinery Was Only a PVC Pipe

The Times-Picayune reported on October 14, 2014 that a bomb scare at a Alliance Refinery on October 14, 2014 brought an FBI bomb expert to the scene, who quickly determined the suspicious object was simply a PVC pipe with putty and duct tape on the end used as a marker by a sub-contractor. The three-inch long PVC pipe, later found to contain a two-inch in diameter ball bearing, "is commonly used by a refinery subcontractor as a marker while taking X-rays," according to the Plaquemines Sheriff's Office. A sheriff's office spokesman said the refinery did not need to be evacuated and production was not affected.[6]

July 30, 2014: Turnaround Lets Phillips Run More Eagle Ford at Alliance Refinery

Greg Garland told analysts during the 2nd quarter earnings conference on July 30, 2014 that the alliance turnaround allowed Phillips to run more Eagle Ford at Alliance but it really didn’t necessarily increase overall throughput. "I don’t think it’s a function of running more lights sweet crude necessarily. We did do at alliance turnaround some work that allowed us to run more Eagle Ford at Alliance but it really didn’t necessarily increase overall throughput at alliance. It was just avoiding some of the issues we had when we ran the Eagle Ford."[7]

April 30, 2014: Earnings Down In Gulf Coast Largely Due To Plant Turnaround at Alliance Refinery

Greg Maxwell, Chief Financial Officer for Phillips, reported during the first quarter earnings call that in the Gulf Coast, earnings were down largely due to plant turnaround at the Alliance Refinery. [8]

March 26, 2014: Phillips Pays $500,000 Fine for Clean Air Violations at Alliance Refinery and Four Other Refineries

CSP Daily News reported on March 26, 2014 that Phillips will pay a $500,000 penalty for violations of the Clean Air Act at the Alliance Refinery in Belle Chasse, La., the Sweeny Refinery in Old Ocean, Texas, the Wood River Refinery in Roxana, Ill., the Lake Charles Refinery in Westlake, La., the Borger Refinery in Borger, Texas, and several terminals across the country. Phillips also agreed to retire more than 21 billion sulfur credits that could have been used in the production of gasoline, which could potentially lead to significantly less pollution from vehicles. In a administrative settlement agreement, the EPA alleged that the company generated invalid sulfur credits between 2006 and 2012 and that Phillips failed to comply with recordkeeping, reporting, sampling and testing requirements at the five refineries. EPA discovered these violations during facility inspections and through a review of company records, which included the results of third-party company audits required by the Clean Air Act.[9]

May 7, 2014: Phillips Added ‘Pre Flash’ Unit at Alliance Refinery to Improve Eagle Ford Crude Runs

Phillips added a unit during recent planned work at its Alliance refinery in Belle Chasse, Louisiana, to improve runs of Texas Eagle Ford crude, the company’s CEO said on Wednesday. The “pre-flash” unit handles natural gas liquids and condensate that are prevalent in Eagle Ford output. Without it Alliance would have had to slow rates or shut down more often for maintenance, according to the CEO.[10]

February 14, 2014: Garland Says Phillips Has Plans to Process More Eagle Ford Crude Alliance Refinery

Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips has plans to process more Eagle Ford crude at Sweeny and Alliance Refineries. "One of the things we find with the Eagle Ford crude, you hit limits because of bottleneck issues. So even in Alliance, which is 230 a day light sweet refinery, we hit limits of how much Eagle Ford we can process there. So we have projects at Alliance to debottleneck that if you will so we can process more Eagle Ford at Alliance. Similarly, Sweeny, these are projects that are $30 million or $40 million where you can take existing equipment, reconfigure, do a pre-flash tower, and we can get an incremental 5,000, 10,000 barrels a day through. But we're not going to invest $500 million or $600 million or $1 billion in adding capacity to do that. It'll be very incremental around the margin for us. So you should expect we can move to 350 to 360 and 370 maybe, but we're not going to take it to 500."[11]

February 14, 2014: Garland Says the Decision Not the Sell Alliance Refinery Was a Good One

Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that the decision not to sell Alliance Refinery was a good one. "As we look at what's happening and the crudes coming at us, clearly the U.S. Gulf Coast is going to move to we think a very advantaged position. As we came out of Conoco Phillips, we made the decision to take Alliance off the market, because we were in the middle of a process to sell Alliance. I think it turned out to be a good decision for us as we look back."[12]

February 11, 2014: Alliance Refinery to Begin 47 Day Turnaround

Businessweek reported on February 11, 2014 that Alliance refinery will begin shutting down 10 units on March 5 including the only crude unit, whose atmospheric tower is plugged, and a delayed coker, which requires decoking for a turnaround that will last 47 days, according to two people who asked not to be identified because the information isn’t public. Other units to be shut for the turnaround include a catalytic reformer, a diesel hydrotreater, an aromatic extraction unit, a saturate gas unit and a low-sulfur gasoline unit, according to a regulatory filing with the state last month. The refinery’s catalytic cracker will remain in operation during the work.[13]

Dennis Nuss, a company spokesman in Houston, said in an e-mail that details regarding specific units and duration of work involved in a turnaround are considered proprietary.[14]

July 31, 2013: Phillips to Process More Light Oil at Alliance Refinery

Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that Phillips has opportunities at the Sweeny Refinery, Alliance Refinery, and Lake Charles Refinery to make some modifications and process more light oil through these facilities and with minimal capital investment. "We are looking for 40% return type projects on the refining side. And so we’re looking for quick hit, fast payout projects. We have some underutilized equipment that we can kind of tie together and use that all and so we've got some projects around that that we are executing." Garland added that the projects are already underway. "We actually do things like tie-ins and turnarounds and some other things. So, it kind of depends on the schedule and things that are available, but those are our plans that we have in place to make those margin in some of our refining system already."[15]

February 14, 2013: Equipment Malfunction Shuts Compressor at Alliance Refinery

Phillips 66 reported flaring at its Alliance refinery in Belle Chasse on February 14 was due to an equipment malfunction that shut a compressor, according to a filing with the U.S. National Response Center. Operators were attempting to stabilize the units and get the compressor back online.[16]

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.[17]

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.[18]

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.[19]

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.[20]

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.[21]

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.[22]

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.[23]

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."[24]

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.[25]

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.[26]

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.[27]

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.[28]

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.[29]

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.[30]

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.[31] “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.[32] 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.[33]

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.[34] 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.[35]

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.[36]

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.[37]

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."."[38]

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.[39] "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."[40]

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." Phillips 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.[41] 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.[42]

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."[43]

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."[44]

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  22. Phillip 66. "Storm Center Update #11 for Tropical Storm Isaac" September 6, 2012
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  30. Phillips 66. "Storm Center Website Update #6 for Tropical Storm Isaac" 11 am, August 30, 2012
  31. Times-Picayune. "As Hurricane Isaac winds knock down power lines, Phillips 66 Alliance Refinery loses power along with thousands of others in Plaquemines Parish" August 28, 2012.
  32. FuelFix. "Louisiana refinery without power after shutdown" August 29, 2012.
  33. Phillips 66. "Storm Center Website Update #5 Hurricane Isaac. 9 a.m., Wednesday, August 29, 2012"
  34. Fox News. "Phillips 66: Belle Chasse, La., Refinery Closing Ahead of Isaac" August 27, 2012.
  35. WPXI. "Gas prices rise as refineries shut down for Isaac" August 27, 2012.
  36. Reuters. "UPDATE 2-Storm Isaac bearing down on U.S. refining hub" August 26, 2012.
  37. Bloomberg. "Phillips 66 Puts Alliance Refinery Diesel Fuel Project On Hold" by Christine Harvey. August 9, 2012.
  38. Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
  39. Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
  40. Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
  41. Nasdaq. "Phillips 66 CEO: Louisiana Refinery Sale Decision to Come in Summer" by Ben Lefebre. June 5, 2012.
  42. Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.
  43. Wall Street Journal. "Phillips 66 Rethinks Plan to Sell Louisiana Refinery" by Ben Lefebvre. June 7, 2012.
  44. Reuters. "Phillips 66 aims to run more shale oil" by Kristen Hays. May 1, 2012.



Master Index of Articles about Phillips 66

The North Tower and the South Tower, part of Phillips 66's Refinery Complex in Ponca City, contain over 250,000 square feet of Class A office space that is essentially unused. Research West contains another 230,000 square feet of unused Class A office space. Photo: Hugh Pickens
Ponca: A Core Asset. Phillips CEO Greg Garland told members of the Bartlesville Chamber of Commerce on August 27, 2013 that the refinery at Ponca is a 'core asset' of Phillips 66. The refinery in Ponca City "is making very good money for us," Garland told his Bartlesville audience. Garland added that he expects gas demands in the U.S. to decline by 20 percent in the next 10 years, but that demand for refined products in South America and Africa will more than offset that decline.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


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