West Texas Crude Pipeline System to Be Constructed

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Phillips 66 Partners has received sufficient binding commitments on an initial open season to move forward with construction of the Gray Oak Pipeline system, which will be owned by Gray Oak Pipeline, LLC, a joint venture owned 75 percent by Phillips 66 Partners and 25 percent by Andeavor. In addition, because of the volume commitments from the first open season, a second open season will commence tomorrow, April 26, 2018. Subject to the results of the second open season, the Gray Oak Pipeline could transport up to 700,000 bpd or more of crude oil from the Permian Basin to downstream markets. If fully subscribed, the pipeline’s capacity could ultimately be expanded to approximately 1 million bpd of long-haul takeaway.

As part of the project, a new deep-water, open access marine terminal in Ingleside, Texas will also be constructed.  The South Texas Gateway Terminal will offer 3.4 million barrels of crude oil storage capacity, connectivity to the Gray Oak pipeline and two deep-water vessel docks capable of berthing very large crude carrier petroleum tankers. The terminal can ultimately be expanded to include over 10 million barrels of storage capacity as well as multiple additional docks and other inbound pipeline connections.  The construction of the terminal is supported by long-term minimum volume throughput commitments and is scheduled to commence initial operations by the end of 2019.  Buckeye will own a 50 percent interest in the joint venture and Phillips 66 Partners and Andeavor will each own a 25 percent interest.

Once completed, the Gray Oak Pipeline will provide crude oil transportation from West Texas to destinations in the Corpus Christi and Sweeny/Freeport markets. Origination stations will be constructed in Reeves, Loving, Winkler, and Crane counties in West Texas, as well as from locations in the Eagle Ford production area. The pipeline is expected to be placed in service by the end of 2019, and is backed by long-term, third-party, take-or-pay commitments with primarily investment-grade customers.

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