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Phillips 66's Bluewater Texas Project FID Many Months Away

Zacks Equity Research

Phillips 66’s PSX planned Bluewater Texas oil export terminal project is expected to wait for “many months” before a final investment decision is made due to a delay in federal licensing process, per S&P Global Platts. The company’s joint venture partner in the project is Trafigura Group Pte. Ltd. Trafigura joined the venture this February after dropping its Texas Gulf Terminals deepwater port project. The Bluewater deepwater terminal project is located off the coast of Corpus Christi in Texas.

Coronavirus-induced lockdowns, which caused massive energy demand destruction, are further delaying the licensing process. This will likely push the project’s final investment decision, which was earlier expected by 2020-end, “many months” away. Last November, the Maritime Administration suspended the application timeline for the terminal to allow the owners more time to provide further information on the project. The offshore terminal is expected to export 2 million barrels of oil a day.

The Bluewater project update came just after the report of temporary suspension of Enterprise Products Partners L.P. EPD and Enbridge Inc.’s ENB Sea Port Oil Terminal’s review process. The drafting of an environmental impact statement is halted as of now as the firms are now required to give answers to some specific questions.

Several projects like Bluewater and Sea Port Oil Terminal were racing to build offshore terminals even a few years back. These offshore terminals are designed to have the capability of fully loading Very Large Crude Carriers. The projects came at a time when domestic production was surging, in turn triggering huge export volumes. The backdrop has changed a lot since then, especially in recent times, due to the coronavirus outbreak. Energy demand has decreased around the globe, primarily due to travel restrictions on account of the pandemic. Also, crude oil glut has resulted in historical low prices. Several offshore terminal projects have been abandoned or consolidated.

Price Performance

Phillips 66’s shares have gained 70.3% since the beginning of the second quarter compared with 75.7% rally of the industry it belongs to.

Zacks Rank & Stock to Consider

Currently, Phillips 66 has a Zacks Rank #3 (Hold). A better-ranked player in the energy space is Chaparral Energy, Inc. CHAP, holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chaparral Energy’s bottom line for 2020 is expected to rise 57.8% year over year.

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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Enbridge Inc (ENB) : Free Stock Analysis Report
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