Phillips 66 Approves Funding for Two Midstream Projects in Southeast Texas - $3 Billion

February 18, 2014 Kirk Eggleston

Funding for two Southeast Texas midstream projects was approved in early February 2014 by Phillips 66's board of directors. Costs for the construction of a fractionator in Old Ocean, TX, announced in August of 2013, and a liquefied petroleum gas export terminal in Freeport, TX, are an estimated $3 billion combined.

According to Phillip's 66, the projects will create more than 50 full-time jobs and over 1,000 temporary construction jobs.

“It’s an extraordinary time of opportunity for our company and our industry, especially in the rapidly growing midstream space,” said Tim Taylor, executive vice president, Phillips 66 Commercial, Marketing, Transportation and Business Development. “Given the anticipated growth in natural gas liquids production, we see substantial advantages in having fractionation and export facilities on the Gulf Coast outside of Mont Belvieu. These projects allow us to maximize our existing infrastructure and will position us for further growth.”

Fractionator Located Close to Sweeny, TX Refinery

The "Sweeny Fractionator One" will be located close to the company’s Sweeny Refinery, and will supply purity natural gas liquids (NGL) products to the petrochemical industry and heating markets. Y-grade (mixed NGL) supply to the fractionator will come from nearby major pipelines, including the recently completed Sand Hills Pipeline.

The 100,000 bbls per day NGL fractionator is expected to be completed and online in the third quarter of 2015.

Liquefied Petroleum Gas Export Terminal in Freeport, TX

The "Freeport LPG Export Terminal" will be located at the company’s existing marine terminal in Freeport, Texas, and will allow growth for Phillips 66's midstream, transportation and storage infrastructure on a global scale. According to the company estimates, the terminal will have an initial export capacity of 4.4 million bbls per month, with a ship loading rate of 36,000 bbls per hour. The export terminal is expected to come online in mid-2016.

Fractionators are used to separate a raw NGL stream into its various components (ethane, butane, propane, etc.)

Valero Refinery Expansions Pushed Forward by Eagle Ford Production Growth - $730 Million

January 31, 2014 Kirk Eggleston

Valero plans to build crude topping units at its Corpus Christi, TX refinery and its refinery in Houston.

The two expansions come with a price tag of $730 million, but will likely be needed if the growth of light-sweet crude oil from areas like the Bakken, Eagle Ford, and Permian Basin continue.

The company's plans include adding a 70,000 b/d unit at the Corpus Christi refinery at an estimated cost of $340 million and a 90,000 b/d topping unit in Houston at a cost of $390 million.

Valero announced plans to add the 90,000 b/d unit at its Houston facility at an estimated cost between $220 - $280 million early in 2013. According to Valero Spokesman, Bill Day, those costs are now projected at $390 million for the 90,000 b/d unit.

Eagle Ford Crude Oil Production Driving Refinery Expansions

Eagle Ford Crude has an API of 50 degrees, and Valero's refineries are accustomed to processing heavier crude from South America. As Valero's Eagle Ford production rates remain strong, the need for its refineries to process the light sweet domestic crude is the push behind both of these initiatives.

Additional production growth will likely lead to even more favorable pricing for domestic crude oil.

“The new units at these refineries will allow the plants to purchase less intermediate feedstocks from outside suppliers.”

— Valero Spokesman, Bill Day

Both refinery units are in the planning phase, so no construction has taken place, but the company intends for both units to be completed by the end of 2015.

Other Valero Downstream Projects in Texas

[ic-l]At the Valero's Three Rivers refinery, which sits atop the Eagle Ford shale, the company built a new pre-flash tower and added logistics in 2011-12 to process more light Eagle Ford crude.

Valero also plan expansions at the McKee Refinery in the Texas Panhandle. The project calls for spending $60 million to increase the crude unit from 170,000 bpd to 185,000 bpd, in order to process more Permian Basin crude.

Kinder Morgan & Magellan Expanding Eagle Ford System to Move Anadarko Crude & Condensate

January 3, 2014 R.T. Dukes

Double Eagle Pipeline Eagle Ford System Map

Double Eagle Pipeline, a partnership between Kinder Morgan and Magellan Midstream, is expanding to move more crude and condensate to the Houston Ship Channel.

Double Eagle Pipeline has signed an agreement with Anadarko Petroleum to extend its pipeline system and connect with the KMCC Pipeline to move crude to the Houston Ship Channel.

Also read: Kinder Morgan Expanding Its Eagle Ford Crude & Condensate Pipeline Into Karnes County

Double Eagle is expected to spend approximately $45 million to add 160,000 bbls of storage and add a pump state at Gardendale, as well as build 10 miles of pipeline connecting the system to the KMCC System in Karnes County.

“We are pleased that customer demand on the Double Eagle system is continuing to grow,” said Michael Mears, Magellan’s chief executive officer. “The increased connectivity for the Double Eagle system is in direct response to our customers’ desire to more efficiently supply additional condensate barrels to the Houston Ship Channel.”

Kinder Morgan's KMCC and Double Eagle System Map

To service the Double Eagle addition, Kinder Morgan plans to add 240,000 bbls of storage at the KMCC's Helena Station.

Through Kinder Morgan's KMCC Pipeline oil moves to delivery points in the Houston Ship Channel or the Phillips 66 Sweeney Refinery in Brazoria County, TX.

The KMCC pipeline system has capacity of 300,000 b/d and has been in operation since mid-2012.

About Double Eagle Pipeline

The Double Eagle Pipeline includes 140 miles of 12-inch pipeline connecting to an existing 50-mile, 14- and 16-inch pipeline segment owned by Kinder Morgan extending from Three Rivers, Texas, to Magellan’s marine and storage terminal in Corpus Christi, Texas. The capacity of the pipeline is 100,000 barrels per day, but can be expanded with additional pumps.

Plains All American Expanding Eagle Ford Fractionation & Condensate Stabilization

January 2, 2014 R.T. Dukes

Plains All American plans to spend $120 million to construct a new natural gas liquids (NGL) fractionator and expand its condensate stabilization facility in South Texas.

The new fractionator will be located near the company's Gardendale facilities in La Salle County, TX.

The fractionator is supported by third party commitments and will have capacity of 15,000 b/d of Y-Grade and off-spec Y-Grade products.

Also Read: Plains & Enterprise Announce Eagle For JV Pipeline Expansion

Plain All American's existing Gardendale truck and rail infrastructure will be upgraded to handle unloading and loading of Y-Grade products. Plains will also build 80,000 bbls of storage for the NGL products

The condensate stabilization train will be the third in the area and will provide approximately 40,000 barrels per day of incremental capacity. Total capacity will be 120,000 b/d when it is completed.

TexStar Is Building An Eagle Ford Pipeline From Karnes to San Antonio for Calumet

December 24, 2013 R.T. Dukes

TexStar Midstream has signed an agreement with Calumet Specialty Products Partners to construct, own, and operate a 30,000 b/d pipeline system that will deliver Eagle Ford crude to Calumet's San Antonio Refinery.

The deal includes a 15-year agreement for TexStar to build and operate the Karnes North Pipeline System (KNPS). The system will include 50-miles of 8-inch pipe from Karnes to the southeast side of San Antonio.

Also Read:NuStar Buying Eagle Ford Midstream Assets - Selling San Antonio Refinery to Calumet

Calumet expects its refinery in Elmendor, TX, will receive deliveries of at least 10,000 b/d, with the potential for more. The company's San Antonio Refinery has capacity to process 14,500 b/d. Capacity is expected to grow to 17,500 b/d soon. The company spent $9 million to increase production of jet fuel, diesel, and gasoline.

“We expect this agreement will help to further improve the long-term profitability of our San Antonio refinery,” stated Jennifer Straumins, COO of Calumet. “By year-end 2014, the refinery will begin receiving significant volumes of Eagle Ford crude oil via the TexStar line, thereby enabling us to realize significant transportation cost savings on our delivered feedstock.”

The Calumet refinery produces ultra-low sulfur diesel, jet fuel, and specialty solvents.

Currently, crude oil is delivered by truck and Calumet expects the pipeline to significantly reduce the cost of delivered oil.

Read the full press release at calumetspecialty.com