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Phillips 66 Partners to Build ACE Pipeline, Holds Open Season

Zacks Equity Research

Phillips 66 Partners LP PSXP is set to lead a joint venture, which will build the ACE Pipeline System in Louisiana. The Houston, TX-based midstream firm has PBF Logistics LP PBFX and Harvest Midstream Company as partners in the project. An open season for gauging shipper interest in the pipeline started on Jan 14.

The ACE Pipeline System is expected to ship crude oil from the market hub in St. James to nearby refining destinations located in Belle Chasse, Chalmette and Meraux, LA. The pipeline — anticipated to have 400,000 barrels per day of initial throughput capacity — may witness capacity expansion if shipper interest rises. The pipeline is expected to come online in the second half of 2020.

If the need arises, Phillips 66 Partners is ready to add Clovelly, LA as another delivery destination for the pipeline system. The ACE Pipeline System, with the help of a new-build segment, will be connected to the CAM Pipeline of Harvest Midstream, which is a private company headquartered in Houston, TX.

Currently, Phillips 66 Partners is working on another joint venture in the state of Louisiana with Energy Transfer LP ET for the second phase of the Bayou Bridge Pipeline. The first phase came online in 2016 and the second phase was scheduled to come into service in fourth-quarter 2018.

However, the second phase of the pipeline, which is facing fierce opposition, is yet to be completed. Notably, Phillips 66 Partners has 40% non-operating stake in the project.

Price Performance

Phillips 66 Partners has lost 13.6% in the past year compared with 15.1% collective decline of the industry it belongs to.


Zacks Rank & Another Stock to Consider

Currently, Phillips 66 Partners carries a Zacks Rank #2 (Buy). Investors interested in the energy sector can opt for another top-ranked stock as given below.

Houston, TX-based Shell Midstream Partners, L.P. SHLX is a midstream energy company. For 2019, its bottom line, which has witnessed three upside revisions over the past 60 days, is expected to grow 27.7% year over year. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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