Oil refiner Phillips 66 (PSX) plans to develop a natural gas liquids (NGL) fractionator in Old Ocean, Texas. The fractionator will have a capacity of 100,000 barrels per day (:BPD) and will be located close to the company’s Sweeny refinery.
Several pipelines in proximity will supply the NGL feedstock for the new fractionator. Production of purified products from the same will be marketed principally to petrochemical customers in the area with access to Mont Belvieu.
The existing midstream transportation and storage infrastructure of Phillips 66 will be favorable for the upcoming fractionator. The project would also generate more than 25 full-time jobs and hundreds of temporary construction jobs.
The project is presently in the engineering design phase and is subject to various approvals. Upon receiving all the clearances, Phillips 66 expects to start construction in the first half of 2014 with production likely to begin by the second half of 2015.
Phillips 66, an independent publicly traded company, was formed after the spin-off of the refining/sales business of ConocoPhillips (COP) in May 2012. The move resulted in the creation of the largest refining company in the U.S. and the largest exploration and production player based on oil and gas reserves.
Last month, Phillips 66 signed logistics agreements with companies to improve supplies of low cost North American oil to its domestic refineries. As part of the initiative, the company entered into a three-year pact with midstream service provider Enbridge Energy Partners, L.P. (EEP). The deal entails the delivery of the Bakken crude oil to Phillips 66 refineries on the West and East coasts. The crude-by-rail shipments from an Enbridge terminal in Berthold, N.D., will commence in May and will expand to 35,000–45,000 BPD by November.
Also, Phillips 66 inked an agreement with Magellan Midstream Partners L.P. (MMP) to deliver about 20,000 BPD of crude from the Mississippian Lime shale play to Phillips 66’s Ponca City, Okla., facility.
The company currently retains a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.
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