Phillips 66 Plans Crude Export Terminal, New Pipelines Offshore Texas

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HOUSTON – Phillips 66 on Wednesday confirmed plans for a deepwater crude export terminal off the Texas Gulf Coast to transport production from the Permian and Bakken basins to international markets via its recently announced Red Oak and Liberty pipelines.

The proposed Bluewater Texas Terminal (BWTX) would be a single point mooring (SPM) deepwater port located 21 nautical miles east of the entrance to the Port of Corpus Christi, out of sight from land, company spokesperson Dennis Nuss said.

Phillips 66 would be operator of the project, which calls for construction of two 30-inch crude oil pipelines to buoys off San Jose Island in San Patricio County, according to a May 2019 document outlining the project.

Phillips 66 is working with the Port of Corpus Christi to develop the project, which, if approved “would provide an additional safe and environmentally sustainable solution for the export of abundant domestic crude oil supplies from major shale basins to global markets,” Nuss said.

“Phillips 66 has decades of experience safely and responsibly operating similar SPM systems and other marine loading facilities,” Nuss said. “BWTX would provide U.S. oil producers another outlet for their increasing volumes while also potentially reducing the need for reverse lightering and the environmental impact that those operations have on a regional level.”

U.S. crude exports hit 3.12 MMbpd this month, and shale oil from fields in Texas, Colorado, New Mexico and North Dakota is projected to push U.S. output to 12.32 MMbpd this year. At least eight more potential oil export terminals projects are aiming to send U.S. crude to world markets.

BWTX is one of a series of projects that signal aggressive expansion by Phillips 66 to broaden its transportation and logistics operations. The facility could load up to 1.56 million bpd, nearly the capacity of a supertanker. If approved by the U.S. Maritime Administration, U.S. Coast Guard and Texas regulators, operations could begin in mid-2021, a person familiar with its plans told Reuters.

Phillips 66 already owns a 25% stake in Buckeye Partners’ South Texas Gateway export terminal, which recently completed site preparation and began construction in Corpus Christi.

Last week, the company announced it has formed two joint ventures and sanctioned construction of $4.1 billion of new crude oil pipelines to link shale production from North Dakota and West Texas through Cushing, Okla., to the Texas Gulf Coast.

Phillips 66 said it will build the $2.5 billion Red Oak Pipeline system with Plains All American Pipeline. Their joint venture will construct a 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.

The $1.6 billion Liberty Pipeline, to be constructed through a 50-50 joint venture with Bridger Pipeline, will span 1,350 miles. It is designed for an initial capacity of 350,000 bpd, while the Red Oak will be a 650-mile project with a capacity of 400,000 bpd.

Phillips 66 aims to reinvest 60% of its annual cash flow into its business, Chief Executive Greg Garland said on Tuesday during a presentation at a JPMorgan Chase & Co energy conference in New York, Reuters reported. He did not mention the project at the conference.

“We’ll do $1.5 billion to $2.5 billion of growth investments” and spend a similar amount of cash flow on share buybacks each year, Garland said.

P&GJ Staff and Wire Report

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