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[[Image:Baywayrefinery.jpg|thumb|right|400px|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.<ref>[http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips. "US Refining as of March 31, 2011"]</ref> [http://secure.flickr.com/photos/whartz/2733894173/ Photo by William Hartz] Flicker Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)]] 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.<ref>[http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips. "US Refining as of March 31, 2011"]</ref> 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.<ref>[http://in.reuters.com/article/2012/09/07/refinery-operations-phillips66-bayway-idINL2E8K7CB620120907 Reuters. "Phillips 66 Bayway refinery workers to vote on contract Friday" September 7, 2012.]</ref> ==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.<ref>[https://en.wikipedia.org/wiki/Bayway_Refinery Wikipedia. "Bayway Refinery" retrieved September 12, 2012.]</ref> 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.<ref>[https://en.wikipedia.org/wiki/Bayway_Refinery Wikipedia. "Bayway Refinery" retrieved September 12, 2012.]</ref> 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.<ref>[https://en.wikipedia.org/wiki/Bayway_Refinery Wikipedia. "Bayway Refinery" retrieved September 12, 2012.]</ref> ==News and Views about Bayway Refinery== =====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.<ref>[http://www.reuters.com/article/2012/05/01/phillips-66-ceo-idUSL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" by Kristen Hays. May 1, 2012.]</ref> =====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.<ref>[https://secure.marketwatch.com/story/phillips-66-rings-opening-bell-at-new-york-stock-exchange-2012-05-02 MarketWatch. "Phillips 66 Rings Opening Bell at New York Stock Exchange" May 2, 2012.]</ref> =====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.<ref>[http://njtoday.net/2012/06/24/bayway-refinery-earns-epas-energy-star-certification/ New Jersey Today. "Bayway Refinery Earns EPA’s ENERGY STAR® Certification" June 24, 2014.]</ref> =====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.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012]</ref> =====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.<ref>[http://in.reuters.com/article/2012/08/01/us-phillips66-results-idINBRE8700OV20120801 Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012]</ref> =====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.<ref>[http://www.nj.com/union/index.ssf/2012/08/hazmat_team_called_to_linden_r.html NewJersey.com "Hazmat team called to Linden refinery for compressor problem" by Ryan Hutchins. August 27, 2012.]</ref> =====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.<ref>[http://in.reuters.com/article/2012/09/07/refinery-operations-phillips66-bayway-idINL2E8K7CB620120907 Reuters. "Phillips 66 Bayway refinery workers to vote on contract Friday" September 7, 2012.]</ref> =====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.<ref>[http://in.reuters.com/article/2012/09/10/refinery-operations-phillips-bayway-idINL1E8KA5PE20120910 Reuters. "Phillips 66 Bayway refinery workers ratify contract" September 10, 2012.]</ref> ==Earnings Estimates for Phillips 66 refineries for 2012 based on Phillips 2nd Quarter Earnings and Realized Crack Spreads== As an independent check on our previous calucations, here is an estimate for the net income from Ponca City's refinery for 2012, based another method using the Phillips' realized crack spreads for each major region on Phillips' profitability for the second quarter of 2012: * On August 1, 2012 Phillips reported adjusted earnings for their refining operations of $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 reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $26.34, $9.36, $7.76, and $ $7.91 respectively. * The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery and allocating the total refinery profit to each refinery. {| border=1 cellspacing=0 !scope="col" width="150" | Location !scope="col" width="75" | Capacity (KBD) !scope="col" width="75" | [A] Normalized Capacity (KBD) !scope="col" width="75" | [B] Crack Spread ($) !scope="col" width="75" | [C] Capacity Utilization (%) !scope="col" width="75" | [A]*[B]*[C] !scope="col" width="75" | Per Cent Contribution to Total Refining Profits !scope="col" width="75" | Extrapolated Yearly Profit |- |Ponca City, OK||198||198||26.34||95||4,995||18||629 |- |Roxana, IL||306||153||26.34||95||3,829||14||486 |- |Billings, MT||118||118||26.34||95||2,953||11||375 |- |Borger, TX||146||73||26.34||95||1,827||7||232 |- |Belle Chasse, LA||247||247||9.36||91||2,104||8||267 |- |Old Ocean, TX||247||247||9.36||91||2,104||8||267 |- |Westlake, LA||239||239||9.36||91||2,036||8||258 |- |Linden, NJ||238||238||7.76||95||1,755||6||223 |- |Whitegate, England||71||71||7.76||95||523||2||66 |- |Humber, Germany||221||221||7.76||95||1,629||6||207 |- |Carson/Wilmington, CA||139||139||7.91||89||979||4||124 |- |Rodeo, CA||120||120||7.91||89||845||3||107 |- |Melaka, Malaysia||76||76||7.91||89||535||2||68 |- |Ferndale, WA||105||105||7.91||89||739||3||94 |- |Total|| ||2,245|| || ||28,730||100||3,404 |} Using this method for 2012, the Bayway Refinery in Linden, NJ will make a contribution to Phillips 66's net profit of $223 million. If Bayway can start running 100,000 bbl of advantaged crude with a crack spread of $26, the composite crack spread going into the refinery would be (138,000 bbl times $7.76 + 100,000 times $26 ) divided by 238,000 or $15.40. This would increase the annual net profit from the Bayway Refinery to $443 million. ==References== {{reflist}} ==External Links== [[Image:Help.jpg|thumb|350px|If you have additional information, insights, or corrections for this report please contact the author at hughpickens AT gmail DOT com.]] ===Corporate Links and Presentations=== * [http://www.phillips66.com/EN/investor/presentations_ccalls/Pages/index.aspx Phillips 66 Presentations & Conference Calls] * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/PSX%20Earnings%20Release%202q2012_color.pdf Slide Presentation for Phillips 66 second-quarter earnings call] August 1, 2012 * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Transcript for Phillips 66 second-quarter earnings call] August 1, 2012 * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/UBS_PSX_Reasor.pdf Presentation by Clayton Reasor to UBS Conference] May 24, 2012 * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/April%202012%20PSX%20Investor%20Update.pdf Slide Presentation for Phillips 66 Investor Update] April 9, 2012 * [http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf Transcript of Phillips 66 Analyst Update] April 9, 2012 * [http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call"] April 9, 2012 * [http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/Restructuring%20Analyst%20presentation%207-14-11.pdf ConocoPhillips. "Creating Two Leading Energy Companies"] July 14, 2011 * [http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/downstream_spinoff-2011-07-14.pdf 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. * [http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips Worldwide Refining] ===Third Party Links and Presentations=== * [http://honorewmarland.com Honor the Legacy of EW Marland] * [http://www.usw.org/our_union/oil/news?id=0032 Weekly Lists of Refinery Events compiled by the United Steelworkers] ==About the Author== [[Image:Reservoir Hill.jpg|thumb|right|450px|Hugh Pickens]] [http://hughpickens.com Hugh Pickens] (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, crossed the [https://en.wikipedia.org/wiki/Rub'_al_Khali empty quarter of Saudi Arabia], and [http://project-tools.com/projects.htm built satellite control stations for NASA] all over the world. Retired in 1999, Pickens and his wife moved back to his hometown of Ponca City, Oklahoma in 2005 where he cultivates his square foot garden, mows nine acres of lawn, and [http://flickr.com/photos/20881138@N00/sets/ photographs local events] at the Poncan Theatre and Ponca Playhouse. Since 2001 Pickens has edited and published [http://peacecorpsonline.org/frontpage/index.html “Peace Corps Online,”] serving over one million pageviews monthly. His other writing includes contributing over 1,200 stories to [http://hughpickens.com/slashdot/ “Slashdot: News for Nerds,”] and articles for [http://en.wikipedia.org/wiki/User:Reservoirhill Wikipedia], [http://poncacityweloveyou.com “Ponca City, We Love You”], and [http://peacecorpsworldwide.org/pickens-writes-writes/ Peace Corps Worldwide]. ===Other Articles by Hugh Pickens about Ponca City=== * [http://www.pioneerwomanmodels.com/ The Pioneer Woman Models Should Return to Ponca City]] July 13, 2007 * [http://researchandideas.com/index.php?title=The_Pioneer_Woman_Models_Come_Home The Pioneer Woman Models Come Home to Ponca City] February 26, 2010 * [http://researchandideas.com/index.php?title=Stanley_Ann_Dunham President Barack Obama's Mother Grew Up in Ponca City] February 6, 2009 * [http://peacecorpsonline.org/standingbear/ Standing Bear Looks to the Future] * [http://poncacityweloveyou.com/attractions/ What to See in Ponca City] * [http://thebrokenstatue.com/ Ponca Playhouse to Present "The Broken Statue"] January 17, 2012 * [[What Ponca City Owes EW Marland]] June 20, 2012 * [[How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?]] July 23, 2012 ===Full Disclosure=== I am an independent investor who is a stockholder in Phillips 66. 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 Marland Refinery in Ponca City, Oklahoma. I began building my position in PSX when Phillips 66 went public on May 1, 2012 and am long PSX. I will disclose publicly if I close my position on PSX or go short. Unless stated otherwise, there is a citation for every statement in this article. The only exception is the "Conclusions Section"<ref>[http://researchandideas.com/index.php?title=Phillips_66_and_Ponca_City%2C_Oklahoma#Conclusions Research and Ideas. "Phillips 66 and Ponca City Oklahoma: Conclusions" by Hugh Pickens retreived May 8, 2012.]</ref> in this report which includes my own judgments and findings. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Phillips 66 (PSX). I am an advocate that that it would be beneficial for both Phillips 66 and the community of Ponca City for Phillips 66 [http://researchandideas.com/index.php?title=An_Independent_Evaluation_of_Phillips_66%2C_its_Business_Strategy%2C_and_Execution#Renaming_of_Refinery_in_Ponca_City restore the original name to its refinery in Ponca City renaming the refinery the "Marland Refinery in Ponca City"] to honor an oil pioneer who together with Frank Phillips brought prosperity and advancement to Northern Oklahoma. ===Updates to the Web Site=== This web page is frequently updated so check back periodically to see the latest information on "Phillips 66 and Ponca City." If you have any additional information or insights that you would like to see added to this report on Phillips 66 and Ponca City please contact Hugh Pickens by email at hughpickens AT gmail DOT com. ===Copyright=== The material in this article is licensed under under the Creative Commons under an [http://creativecommons.org/licenses/by-nc-sa/2.0/deed.en| Attribution-Noncommercial-Share Alike 2.0 Generic] license. Except for short, fair use excerpts, the material on this article cannot be used for commercial purposes without permission of Hugh Pickens. Attribution for use of any material from this article must be provided to Hugh Pickens and if used on the web a link must be provided to http://hughpickens.com. ===Monthly Reports=== * [[Phillips 66 News and Views - August, 2012]]

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