Western Gateway Pipeline Set for Final Investment Decision Next Month or So: Phillips 66

The Western Gateway is a proposed refined products pipeline that is slated to connect Midwest and Gulf Coast refinery supply to the Arizona and California markets. The in-service date for the project is mid-2029.

Don Baldridge, senior vice president of midstream and chemicals at Phillips 66 said in the company’s Q2 earnings call that the proposed project “would be able to have a Final Investment Decision in one month or so.” He added that the company is finalizing “definitive documents” and completing details around the scope of the project, ensuring it represents a solid project execution plan.

“With a summer FID, what we would expect is to be able to deliver reliable, secure fuel from the mid-continent to the Western U.S. by the latter part of 2029,” Baldridge continued in the call. “We think that’s a tremendous benefit to the market in the Western U.S., where the need for a reliable, secure supply coming from the mid-continent of the U.S. will be a benefit.”

Western Gateway aims to supply 200,000 b/d of Midwest-sourced refined products into Arizona. This would replace the 125,000 b/d Phoenix currently receives via the Kinder Morgan SFPP line from California, OPIS previously reported.

The project will connect Las Vegas through the existing Kinder Morgan CalNev Pipeline, according to company statements. The Phillips 66 Gold Pipeline that flows from Borger to St. Louis will be reversed. The Kinder Morgan SFPP pipeline from Colton, Calif., to Phoenix will be reversed, providing flow from east to west. Refineries in the Midwest and Gulf Coast will feed into a new-build pipeline from Borger, Texas, to Phoenix.

“It’s a great addition to the market. It will help the mid-continent set up as well,” Baldridge said. “It will generate the right returns for Phillips 66. We’re very excited to advance the project and looking forward to its completion.”

The confirmation comes two weeks after Kinder Morgan president Dax Sanders announced advancing partnership agreements in his company’s Q2 earnings call, stating that documentation for the project took longer than expected due to complex arrangements. Sanders added that documents could be completed within the next month or two, as the pipeline progresses to a final investment decision.

The project could be a much-needed reprieve for Arizona and Nevada markets, which have historically relied on California. Arizona relies on the Golden State for as much as 50% of its fuel supply, according to analyst firm Stillwater Associates, while Nevada depends on California for close to 90% of its fuel, Nevada’s Fuel Resiliency Committee has said.

“I think as we’ve talked about, it’s the right project at the right time,” Baldrige said.

Reporting by Shaheer Naveed, snaveed@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com