Upstream, Downstream, One Voice

Phillips 66 announces two strategic JV’s and pipeline constructions

Phillips 66 and Bridger Pipeline LLC have announced that they have formed a 50/50 joint venture, Liberty Pipeline LLC, and are proceeding with construction of the Liberty Pipeline.

The 24-inch pipeline will provide crude oil transportation service from the Rockies and Bakken production areas to Cushing, Oklahoma. From Cushing, shippers can access multiple Gulf Coast destinations, including Corpus Christi, Ingleside, and Houston, Texas. Liberty is underpinned with long-term shipper volume commitments. Initial service on the pipeline is targeted to commence as early as the first quarter of 2021, subject to receipt of applicable permits and regulatory approvals.

“The Liberty Pipeline presents us with a great opportunity to serve producers in the growing Bakken and Rockies production areas,” said Greg Garland, chairman and CEO of Phillips 66. “The pipeline adds to our integrated infrastructure network that serves the key shale oil producing regions with connectivity to major Gulf Coast market centres. Our pipeline network has strategic alignment with our Central Corridor and Gulf Coast refineries, further enhancing value across our assets.”

“The Liberty Pipeline is an important undertaking on the part of our company to ensure that oil from Wyoming, the Rockies and the Bakken can get to markets in the U.S. and around the world,” said Hank True, president of Bridger Pipeline LLC. “Our commitment to the Liberty Pipeline will give producers the confidence to grow oil production in these important regions.”

Phillips 66 will lead project construction on behalf of the joint venture and will operate the pipeline. Where feasible, Liberty will utilise existing pipeline and utility corridors and advanced construction techniques to limit environmental and community impact. The project is expected to cost approximately $1.6 billion.

The joint venture plans to hold a supplemental binding open season to be announced at a later date that will enable additional shippers to enter into long-term transportation services agreements.

Phillips 66 and Plains All American Pipeline also announced that they have formed a 50/50 joint venture, Red Oak Pipeline LLC, and are proceeding with construction of the Red Oak Pipeline system. The pipeline system will provide crude oil transportation service from Cushing, Oklahoma, and the Permian Basin in West Texas to Corpus Christi, Ingleside, Houston and Beaumont, Texas. Red Oak is underpinned with long-term shipper volume commitments. Initial service from Cushing to the Gulf Coast is targeted to commence as early as the first quarter of 2021, subject to receipt of applicable permits and regulatory approvals.

“We are pleased to partner with Plains to build Red Oak,” said Mr Garland. “The pipeline provides a competitive outlet for shippers to access the key market centres along the Texas Gulf Coast from Cushing and the Permian. This investment aligns with our long-term strategy to grow our Midstream business with projects generating stable, fee-based earnings while further enhancing integration across our value chain.”

“Red Oak represents a capital-efficient industry solution that will utilise existing assets and provide pull-through benefits to our systems,” stated Willie Chiang, CEO of Plains All American. “We look forward to working closely with Phillips 66 and our committed shippers to bring Red Oak into service and further optimise our assets upstream and downstream of the new pipeline system. We also look forward to creating jobs and supporting economic growth in Oklahoma and Texas.”

The Red Oak joint venture will lease capacity in Plains’ Sunrise Pipeline system, which extends from Midland to Wichita Falls, Texas. The joint venture plans to construct a new 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. Where feasible, Red Oak will utilise existing pipeline and utility corridors and advanced construction techniques to limit environmental and community impact. Plains will lead project construction on behalf of the joint venture, and Phillips 66 will operate the pipeline. The project is expected to cost approximately $2.5 billion.

The joint venture plans to hold a supplemental binding open season to be announced at a later date that will enable additional shippers to enter into long-term transportation services agreements.