Engineering News

Phillips 66 signs deals to use more U.S. shale crude
March 20, 2013 at 9:31 am

Kicking its strategy of using cheaper crude oil from U.S. shale plays into high gear, Phillips 66 said Wednesday it has signed deals with three midstream companies to bring as much as 130,000 barrels a day of North American crude oil to its refineries.

“Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses,” Greg Garland, Phillips 66 chairman and CEO, said in a statement.

Use of lower-cost domestic crude from the nation’s shale plays has helped to boost the bottom lines of U.S. refiners, including Phillips 66, as they are able to replace higher-cost imported oil.

Oil sands: Canadian crude rolling into Gulf Coast refineries

The deals include rail loading and terminal services and a pipeline project and would displace a mix of imported crude oil and West Texas Intermediate with less expensive crude oil from the Bakken, Mississippi Lime and other plays in the United States and Canada.

They include:

• A three-year deal with Enbridge Energy Partners subsidiary Enbridge Rail for railcar loading of Bakken shale crude at Enbridge’s Berthold, N.D., terminal beginning in May, with volumes reaching between 35,000 and 40,000 barrels per day by November. The crude oil will be delivered to Phillips 66 refineries on the west and east coasts; the company said it may ultimately expand the project to its Gulf Coast refineries.

• A five-year deal with Targa Resources Partners to provide rail unloading and barge loading services in Tacoma, Wash. The agreement allows advantaged U.S. or Canadian crude oil to be unloaded from railcars at Targa’s Tacoma terminal and taken by barge to Phillips’ refinery in Ferndale, Wash. The facility also allows for delivery into the company’s refinery in San Francisco, where crude imported from outside North America could be replaced.

At full volume, that deal could reach 30,000 barrels per day, the company said.

• An agreement with Magellan Midstream Partners to transport advantaged crude on Magellan’s pipelines near the Phillips 66 refinery in Ponca City, Okla. The project will replace West Texas Intermediate crude from Cushing, Okla., with crude from the nearby Mississippian Lime play. Small volumes are expected to be delivered to the refinery by late this year, reaching about 20,000 barrels per day by January.

Phillips 66 said it also will invest in additional transportation assets in Oklahoma to move an additional 40,000 barrels per day of Mississippian Lime crude to the Ponca City Refinery, and at the refinery to accept crude from the Magellan project.

Phillips 66 spokesman Dennis Nuss said the company would not release financial details of the deals.

Source: fuelfix

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