Phoenix to Receive Half of Proposed Product Pipeline’s Volumes: Phillips 66

Phillips 66 expects about half of the refined product volumes shipped on its proposed Western Gateway pipeline from the U.S. Midcontinent to Arizona and California would be shared equally by both states, Brian Mandell, the company’s executive vice president for marketing and commercial said on Wednesday.

The proposed line also would allow Phillips to deliver fuel to markets with higher margins than those in Midcontinent, where the company operates three refineries, Mandell told analysts in a call to discuss the company’s third-quarter financial results.

Chief Executive Mark Lashier said the project was proposed because of declining refining capacity in California and growing demand for fuel in Arizona and
Nevada.

Phillips and Kinder Morgan last week launched an open season to solicit shipping interest in the proposed 1,300-mile joint venture pipeline that would run from Borger in West Texas to Phoenix and into Southern California.

Don Balbridge, the company’s executive vice president of midstream and chemicals, said Phillips has had “constructive and active” discussions with potential shippers in the early days of the open season.

The line would supply fuel produced from Phillips’s 159,688 b/d Borger, Texas, 236,927 b/d Ponca City, Okla., and 384,220 b/d Wood River, Ill., refineries along the existing Gold Line.

In addition, Kinder Morgan’s SFPP line from Colton, Calif., to Phoenix would reverse flow to allow products to move east to west, allowing for deliveries into California and Las Vegas.

Phillips executives on the call also said the company completed its acquisition of the 50% ownership stakes in Wood River and Borger from Cenovus Energy at the start of October.

Mandell said the company intends to continue to move barrels by water into California, adding that the state will largely remain a waterborne market to meet its fuel demand.

The Houston-based company also said it ceased crude processing at its 156,000 b/d Los Angeles refinery on Oct. 16 and plans to idle the plant’s remaining operations by year’s end.

–Reporting by Frank Tang, ftang@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com

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