Phillips 66 Expansion, Construction, Acquisitions and Purchases

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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


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


Phillips Expansion, Construction, Acquisitions and Purchases

April 30, 2015: Phillips Puts Off Plans for New Condensate Splitter and Second Fractionater at Sweeny Refinery

FuelFix reported on April 30, 2015 that Phillips 66 has shelved plans to build a new condensate splitter at Sweeny Reinery with the project placed on the back burner for at least a year until prices recover, company officials during an earnings call with investors. Phillips 66 also said it will similarly push back plans for a second fractionator, which separates natural gas liquids into its component parts. The first fractionator, under construction at the company’s Sweeny refinery, is slated to start operations later this year.[1]

April 7, 2015: Three Hundred Construction Jobs Coming to Wood River Refinery with $200 Million Investment in Refinery

KMOV reported on April 7, 2015 that Phillips is investing $200 million in two projects that are slated to begin at Wood Reiver Refinery that will create hundreds of jobs for electricians, pipe fitters, and carpenters. When the first Keystone was built, Wood River underwent a massive $3 billion expansion that allowed it to process the new supply of heavy crude oil, and one project will continue that effort to update refining equipment. The other project is to comply with federal environmental rules limiting fuel sulfur content. In total, the projects will take two years. Wood River Refinery currently employs about 850 Phillips 66 workers and 400 contract workers. The new project will not create a lot of permanent jobs but someone with Phillips 66 said it hires 50 workers or more through attrition.[2][3]

November 6, 2014: Phillips May Be Interested in Purchasing Citgo's Lemont Refinery

Reuters reported on November 6, 2014 that potential buyers from at least six leading oil companies including Phillips 66 have visited Citgo Petroleum Corp’s 172,045 bpd refinery in Lemont, Illinois. The Lemont Refinery is considered attractive because it enjoys consistent profits because it runs cheap oil from Canada's tar sands fields in Alberta, and not heavy Venezuelan crude as do the Citgo's other two refineries for sale at Lake Charles, Louisiana and Corpus Christi, Texas. Sources told Reuters that teams from the following companies have carried out detailed inspections of the Illinois refinery: India's Reliance Industries, independent refiner PBF Energy, U.S. West Coast refiner Tesoro Corp, Marathon Petroleum Corp, Valero Energy Corp and Phillips 66. Representatives from Phillips 66 visited the Lemont refinery this week, sources said. Marathon, Phillips 66, Tesoro and Valero representatives declined to discuss their companies' possible interest in Citgo's assets. PBF and Reliance did not reply to requests for comment. Some refiners take the opportunity of a site visit while a refinery is being offered for sale to gain intelligence on how a competitor operates.[4]

October 29, 2014: Chevron Phillips Considers New Ethylene Cracker

Argus reported on October 29, 2014 that Chevron Phillips continues to consider new US construction projects, including whether to build a new ethylene cracker, but those discussions are still early in the process and no decisions have been made. "We still think the US Gulf coast is still the best place to invest, and we wouldn't hesitate to go forward with a second cracker. But the challenge is where do you put it and what are you going to feed it," said chief executive Greg Garland.[5]

October 28, 2014: Phillips Partners with Energy Transfer to Build Bakken Crude Oil Pipelines

Businesswire reported on October 28, 2014 that Phillips and Energy Transfer have formed two joint ventures to develop the previously announced Dakota Access Pipeline (DAPL) and Energy Transfer Crude Oil Pipeline (ETCOP) projects. Energy Transfer holds a 75 percent interest in each joint venture and will operate both pipeline systems. Phillips 66 owns the remaining 25 percent interests and will fund its proportionate share of the construction costs. The DAPL and ETCOP projects are expected to begin commercial operations in the fourth quarter of 2016. “Energy Transfer is a valued partner with a proven track record of developing major interstate pipelines,” said Greg Garland, chairman and CEO of Phillips 66. “These joint-venture projects will allow Phillips 66 to increase its access to advantaged North American crude oil and add to the momentum we are building in our Midstream business.”[6]

DAPL is expected to deliver in excess of 450,000 barrels per day of crude oil from the Bakken/Three Forks production area in North Dakota to market centers in the Midwest. DAPL will provide shippers with access to Midwestern refineries, unit-train rail loading facilities to facilitate deliveries to East Coast refineries, and the Gulf Coast market through an interconnection in Patoka, Illinois, with ETCOP.[7]

ETCOP will provide crude oil transportation service from the Midwest to the Sunoco Logistics Partners and Phillips 66 storage terminals located in Nederland, Texas.[8]

September 3, 2014: Truck Loading Facility at Ponca City Refinery to Have 100,000 b/d Capability by mid-2015

Greg Garland told analysts at Barclays CEO Energy-Power Conference on September 3, 2014 that Phillips has invested in a truck loading facility at the Ponca City Refinery for indigenous Oklahoma crudes with a capability of 70,000 barrels a day, that by mid-2015 the facility will have a capability of 100,000 barrels a day, and that the Magellan pipe will bring another 20,000 barrels a day to Ponca City. "So, we're buying indigenous Oklahoma crudes at the wellhead, very consistent product, we know what we're getting and that's translating into better yields at the refinery, good throughputs," said Garland. "And so, as we go to wellhead and buy, we know the crude, the quality of the crude that's coming in, and another opportunity to leverage our expertise in our commercial business into our refining business."[9]

September 3, 2014: Phillips Acquires 100% of Cogen Facility at Sweeny to Prevent a Recurrence of 2013 Outages

Greg Garland told analysts at Barclays CEO energy-Power Conference on September 3, 2014 that Phillips wants to prevent a reccurence of the electrical problems that plagued Sweeny in the first and second quarters of 2013. "We took out our other equity owner, 50% owner of the 440 megawatt Cogen facility at Sweeny. when you think about the existing investment we have, the new investment going in at Sweeny, both from PSX and also CPChem, we want to make sure we harden that electrical infrastructure. You remember in the first quarter and second quarter of last year, we had some issues, mostly related to our third-party providers. We want to ensure that we've got that well in hand and we don't have that ever happen to us again and so that was part of the reason for that.[10]

FuelFix reported on July 31, 2013 that Phillips 66 underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. The refinery at Sweeny had two power outages that were a major problem. “We had a second power outage in the second quarter and in my view that’s unacceptable,” Garland said. The refinery is powered both by an on-site generation facility and by a power company. The power company was the cause of the two outages. “To me, personally, the biggest disappointment in the quarter was having a second power outage at Sweeny,” Garland added.[11]

September 3, 2014: Phillips to Build North Dakota Origination Rail Terminal for Bakken Crude

Argus reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips will build a rail-loading facility permitted to handle up to 200,000 b/d of Bakken crude, the first time a US refiner has directly owned a North Dakota origination terminal. We have permits in hand in engineering to construct a new rail-loading facility. This is permitted up to 200,000 b/d. We'll probably do about 160,000 b/d" and build about 300,000 bl in storage said Garland.[12]

August 13, 2014: Phillips Breaks Ground on LPG Export Terminal at Freeport

Jordan Blum reported in the Houston Business Journal on August 13, 2014 that Phillips broke ground on its $1 billion liquefied petroleum gas export terminal — its first ever — in Freeport to sell propane, butane and more to international markets. The project, which is expected to be completed in mid-2016, will export 4.4 million barrels of fuel a month to countries in Europe and Asia. The terminal will get the fuel from its Sweeny complex in Old Ocean and its Gulf Coast Fractionators facility in Mont Belvieu. "We are investing, we are building and we are growing," Phillips 66 Chairman and CEO Greg Garland said at the groundbreaking. "The projects we're breaking ground on … total more than $3 billion of investment for our company, … and it's happening right here in our own backyard in the communities of Sweeny and Freeport." Freeport has advantages over operating out of the Houston Ship Channel because Freeport is 3 miles from deep water, compared to 50 miles for the channel says Jim Webster, Phillips 66’s general manager of midstream.[13]

August 7, 2014: Phillips Not Interested in Purchasing Citgo Refineries

CSPNet reported on August 7, 2014 that Venezuela, strapped for cash at home and staring down costly litigation overseas, is considering a deal for CITGO Petroleum which has three U.S. refineries with combined capacity of approximately 750,000 barrels per day but the offer does not appear to be drawing much interest from other refiners. "I think we've consistently said we have better opportunities to invest in our midstream and chemicals business," says Garland.[14]

June 23, 2014: Phillips to Acquire Lubricant Manufacturer Spectrum Corp

Olivia Pulsinelli reported in the Houston Business Journal on June 23, 2014 that Phillips is acquiring Memphis-based Spectrum Corp. a specialty lubricants company from Dominus Capital LP as it plans to grow its lubricants business. There are approximately 225 employees working at Spectrum today who will become Phillips 66 employees upon closing of the transaction,” a Phillips 66 spokesman told the Houston Business Journal. “The acquisition of Spectrum complements our strong-performing lubricants business by increasing our access to specialized global lubricants markets and is in line with our strategy to selectively grow our marketing and specialties segment,” Tim Taylor, president of Phillips 66, said in a statement. “It also creates new opportunities to expand our worldwide lubricants customer base.”[15]

June 5, 2014: Phillips Buys Big Oil Storage Terminal On Gulf Coast

Fuelfix reported on June 5, 2014 that Phillips plans to purchase the Beaumont Terminal, capable of carrying 7.1 million barrels of oil equivalent, from Chevron subsidiary UNOCAL. “This acquisition supports our midstream growth strategy,” said Tim Taylor. “Given our expectations for increasing volumes of North American crude oil movements into the Gulf Coast region and growth in refined product exports, the Beaumont Terminal is well positioned to serve this growing market while providing significant expansion potential.”[16]

September 29, 2013: Coker Reactors Moved into Place at Ponca City Refinery

The Ponca City News reported on September 30, 2013 that two $70 million, 232 ton coker reactors manufactured in Japan were moved into place into two slots on the working platform at the Ponca City Refinery on September 29, 2013 and carefully lowered into position by the Mammoet PTC-140 heavy lift crane.[17]

References

  1. FuelFix. "Phillips 66 shelves plans for oil processing projects" by Rhiannon Meyers. April 30, 2015.
  2. KMOV. "More jobs coming to refinery in Wood River" by Dan Greenwald. April 7, 2015.
  3. St. Louis Tribune. "Bost says Keystone XL would help Wood River Refinery" by Jacob Barker. April 7, 2015.
  4. Reuters. "Exclusive: Potential buyers checking out two Citgo refineries -sources" November 6, 2014.
  5. Argus Media. "CP Chem Port Arthur unit to restart in 4Q" October 29, 2014.
  6. Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.
  7. Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.
  8. Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.
  9. Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.
  10. Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.
  11. FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.
  12. Argus Media. "Phillips 66 to build Bakken rail facility" September 3, 2014.
  13. Houston Business Journal. "Phillips 66 breaks ground in Freeport" by Jordan Blum. August 13, 2014.
  14. CSP Net. "Who Might Buy CITGO Petroleum?" August 7, 2014.
  15. Houston Business Journal. "Phillips 66 to acquire lubricant manufacturer, grow segment" by Olivia Pulsinelli. June 23, 104.
  16. FuelFix. "Phillips 66 buys big oil storage terminal on Gulf Coast" June 5, 2014.
  17. Ponca City News. "A Tight Fit" September 30, 2013.



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


Other Locations

Personal tools