Phillips 66 (NYSE: PSX) and Plains All American Pipeline (Plains) (NYSE: PAA) announced that they have formed a 50/50 joint venture, Red Oak Pipeline LLC, and are proceeding with construction of the Red Oak Pipeline system (Red Oak). The pipeline system will provide crude oil transportation service from Cushing, Oklahoma, and the Permian Basin in West Texas to Corpus Christi, Ingleside, Houston and Beaumont, Texas. Red Oak is underpinned with long-term shipper volume commitments. Initial service from Cushing to the Gulf Coast is targeted to commence as early as the first quarter of 2021, subject to receipt of applicable permits and regulatory approvals.
“We are pleased to partner with Plains to build Red Oak,” said Greg Garland, Phillips 66 chairman and CEO. “The pipeline provides a competitive outlet for shippers to access the key market centers along the Texas Gulf Coast from Cushing and the Permian. This investment aligns with our long-term strategy to grow our Midstream business with projects generating stable, fee-based earnings while further enhancing integration across our value chain.”
“Red Oak represents a capital-efficient industry solution that will utilize existing assets and provide pull-through benefits to our systems,” stated Willie Chiang, CEO of Plains All American. “We look forward to working closely with Phillips 66 and our committed shippers to bring Red Oak into service and further optimize our assets upstream and downstream of the new pipeline system. We also look forward to creating jobs and supporting economic growth in Oklahoma and Texas.”
The Red Oak joint venture will lease capacity in Plains’ Sunrise Pipeline system, which extends from Midland to Wichita Falls, Texas. The joint venture plans to construct a new 30-inch pipeline from Cushing to Wichita Falls and Sealy, Texas. From Sealy, the joint venture will construct a 30-inch pipeline segment to Corpus Christi and Ingleside and a 20-inch pipeline segment to Houston and Beaumont. Where feasible, Red Oak will utilize existing pipeline and utility corridors and advanced construction techniques to limit environmental and community impact. Plains will lead project construction on behalf of the joint venture, and Phillips 66 will operate the pipeline. The project is expected to cost approximately $2.5 billion.
The joint venture plans to hold a supplemental binding open season to be announced at a later date that will enable additional shippers to enter into long-term transportation services agreements.
About Phillips 66
Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Phillips 66 Partners, the company’s master limited partnership, is integral to the portfolio. Headquartered in Houston, the company has 14,300 employees committed to safety and operating excellence. Phillips 66 had $58 billion of assets as of March 31, 2019. For more information, visit http://www.phillips66.com or follow us on Twitter @Phillips66Co.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Words and phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “continues,” “intends,” “will,” “would,” “objectives,” “goals,” “projects,” “efforts,” “strategies” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to Phillips 66’s operations (including joint venture operations) are based on management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this news release was prepared. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include fluctuations in NGL, crude oil, and natural gas prices, and petrochemical and refining margins; unexpected changes in costs for constructing, modifying or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; lack of, or disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas, and refined products; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; the impact of adverse market conditions or other similar risks to those identified herein affecting PSXP, as well as the ability of PSXP to successfully execute its growth plans; and other economic, business, competitive and/or regulatory factors affecting Phillips 66’s businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
About Plains All American Pipeline
Plains All American Pipeline (PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, NGLs and natural gas. PAA owns an extensive network of pipeline transportation, terminalling, storage, and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles more than 6 million barrels per day of crude oil and NGL in its Transportation segment. PAA is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
Certain matters discussed in this release are forward-looking statements that involve risks and uncertainties that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. These risks and uncertainties include, among other things, shortages, cost increases or delay in receipt of supplies, materials or labor; failure to implement or capitalize, or delays in implementing or capitalizing, on expansion projects, whether due to permitting delays, permitting withdrawals or other factors; the effects of competition, including the effects of capacity overbuild in areas where we operate; the impact of current and future laws, rulings, orders, governmental regulations, accounting standards and statements and related interpretations; weather interference with business operations or project construction, including the impact of extreme weather events or conditions; environmental liabilities, issues or events that result in construction delays or otherwise impact targeted in-service dates; interruptions in service on third-party pipelines or facilities; general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil as discussed in PAA's filings with the Securities and Exchange Commission.