Phillips 66 defers crude pipeline projects
US independent refiner Phillips 66 is pausing two large crude pipeline projects because of market uncertainty in the aftermath of crashing oil prices and demand destruction related to the global coronavirus pandemic.
Phillips 66 is deferring the Red Oak pipeline and the Liberty pipeline projects and will make a decision on whether to continue them at a later date. Both were previously scheduled to start service in early 2021.
Red Oak, a joint venture (jv) with Plains All American Pipeline, would transport crude from the Permian in west Texas and Cushing, Oklahoma, to Texas ports, including Corpus Christi, Ingleside, Houston and Beaumont. That project included leasing capacity on Plains' existing Sunrise pipeline system from Midland to Wichita Falls. It also included building a 30-inch line from Cushing to Wichita Falls and Sealy and two other connecting lines to the Gulf coast destinations.
The Liberty pipeline, a jv with Bridger, would have moved move 350,000 b/d of Rockies and Bakken production to Corpus Christi.
The two pipelines are "good projects," but the deferments are "the prudent thing to do with the amount of uncertainty going on in the market right now," executive vice president of midstream Tim Roberts said on a conference call today. "We thought it was a good time to go ahead and pull up, pause and then we can reevaluate," he said.
The company also postponed a final investment decision on the Ace pipeline project that would connect supply in St James, Louisiana, to refineries in the region.
More project delays are likely in the US midstream sector as several other companies have already announced cuts to capital expenditure budgets.
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