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Phillips 66 expands area facilities with gaze focused abroad
Fuel Fix ^ | March 23, 2014 | Ryan Holeywell

Posted on 03/23/2014 6:27:19 PM PDT by thackney

The Phillips 66 refinery can seem a maze of tanks, pipes and valves for the uninitiated, even with descriptively named paths like “Diesel Drive” and “Coker Road” showing the way.

Originally built by the U.S. government to process fuel for Allied aircraft during World War II, the plant now is the largest refinery by capacity in the portfolio of Phillips 66, Houston’s biggest Fortune 500 company.

As Phillips 66 officials led a media tour tour this week, crews were preparing the site for the latest addition — a fractionator to separate natural gas liquids into components including ethane, propane and butane.

Those products, in turn, can be used for manufacturing petrochemicals, heating homes and fueling vehicles.

The new fractionator is part of a $3 billion undertaking the company is pursuing at the Brazoria County facility to take advantage of two trends: growing international demand for propane and butane, and a supply of U.S. natural gas liquids that could double by 2020, said, Jim Webster, Phillips 66’s general manager of midstream.

Besides the fractionator, on which construction will begin in a few months, Phillips 66 is reconfiguring its marine terminal 30 miles away in Freeport so it can export the propane and butane the company processes.

The facility now is used to import crude oil and export refined products.

But company officials say they’re tweaking their operations and expanding the facility so it can export 150,000 barrels a day of propane and butane. “We will be able to load a ship in 24 hours and turn it around,” Webster said.

He said the domestic shale boom has produced more natural gas liquids than U.S. demand can absorb. That’s why Phillips 66 is hoping to export butane and propane, known broadly as liquefied petroleum gas.

“The thing that’s happening in the U.S. with the shale development is we’re creating this huge surplus of LPG, particularly propane,” said Tom Manning, senior director at the research firm IHS, which is hosting an international LPG conference in Houston next week. “We don’t have a big enough, growing market to accommodate the LPG.”

But, he added, the demand for liquefied petroleum gas around the world keeps going up.

Customers in China and India are looking to continue using it as a source for heating and transportation fuel, as well as a less expensive ingredient for petrochemical manufacturing.

Earlier this month, the Chinese energy company Sinopec announced it had entered into a long-term contract to buy liquefied petroleum gas from Phillips 66. The companies didn’t disclose the value of the deal or volume of products involved.

Chris Chandler, Phillips 66’s general manager of natural gas liquids, was coy about other potential liquefied petroleum gas customers. “We’re looking at a variety of options,” he said. “We’re considering all markets, both domestic and international.”

Phillips is by no means new to the business of natural gas liquids, and it has a stake in several fractionators already. But the expansions in Old Ocean and Freeport are significant for the company. The new fractionator will be the first one Phillips 66 wholly owns and operates; the propane and butane it ships will be its first exports of those products.

The fractionator is scheduled to come online in the second half of 2015, and the export terminal should be ready a year later, though company officials noted they still need several permits before either of the big projects can get under way.

Phillips 66 isn’t alone. Several other players want to profit from the shale boom’s growing volume of natural gas liquids.

Marissa Anderson, a natural gas liquids analyst with Bentek Energy, said the U.S. has the capacity to export about 400,000 barrels of liquefied natural gas per day. Based on companies’ announcements so far, that could rise to 1.5 million barrels per day by 2016, she said. The new capacity from Phillips 66 would represent about 10 percent of that total.

Enterprise Products Partners last month announced plans for expanded liquefied petroleum gas export capacity at the Houston Ship Channel. Kinder Morgan Energy Partners and Targa Resources announced plans in December to build new natural gas liquid fractionation facilities in Mont Belvieu, about 30 miles east of Houston.

“It’s a very exciting time,” said Webster, the Phillips 66 midstream executive. “This whole shale renaissance is just impacting the entire hydrocarbon chain.”

TOPICS: News/Current Events; US: Texas
KEYWORDS: energy; ngl; refinery

1 posted on 03/23/2014 6:27:19 PM PDT by thackney
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To: thackney

I’m still not all that keen on exporting the gas. But I do like the boom in the petrochemical industry.

2 posted on 03/23/2014 6:38:41 PM PDT by henkster (I don't like bossy women telling me what words I can't use.)
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