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Released January 08, 2025 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Less than a month after selling a stake in a pipeline that delivers natural gas from the Permian Basin, Phillips 66 (NYSE:PSX) (Houston, Texas) said it would spend $2.2 billion to build up its midstream position in the shale basin through the acquisition of EPIC NGL (San Antonio, Texas).
"This transaction bolsters Phillips 66's position as a leading integrated downstream energy provider," said Mark Lashier, the chairman and chief executive officer of Phillips 66, on Monday.
EPIC NGL and its various subsidiaries control two fractionators near Corpus Christi and pipelines that are linked to production areas in the Texas shale patch, according to Phillips 66. Industrial Info is tracking two EPIC natural gas liquids (NGL) fractionation facilities and 13 NGL pump stations. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production and Pipelines plant databases can click here for the plant profiles.
"The facilities connect Permian production to Gulf Coast refiners, petrochemical companies, and export markets and will be highly integrated with the Phillips 66 asset base," the company said.
Shale production is evolving. As pressures change over the course of long-term production, more gas is released from the basin. This makes the Permian one of the fastest growing reserves in terms of natural gas production.
Already the top inland crude oil producer in the United States, the Permian is the second-largest gas producer after the Appalachia basin. The U.S. Energy Information Administration (EIA), the data arm of the Department of Energy, expects Permian gas production to increase 5% from 2024 levels to average 26.1 billion cubic feet per day (Bcf/d).
But while EPIC NGL was in the process of expanding its pipeline capacity, Phillips 66 said it has no plans to adjust its own capital spending plans to accommodate that expansion.
Phillips 66 turned in dismal earnings for the third quarter, with the $346 million in earnings representing a 65% decline from the previous quarter. Energy companies were burdened by something of a lower-for-longer market scenario in 2024, with the EIA reporting that crude oil prices were essentially range-bound for much of the year.
Crude oil prices varied by around $24 per barrel last year, the narrowest range since 2019. When adjusted for inflation, however, it was the narrowest since 2003. That, in turn, spilled over to refiners as refining margins hovered below the five-year range for much of last year.
Margins in October were the lowest in a quarter century. Phillips 66, among the largest U.S. refiners, in turn posted a $108 million loss from its refining segment, compared with a profit of $302 million during the second quarter.
In December, the company sold a non-controlling interest in a Permian Basin gas pipeline as part of an effort to streamline its portfolio, offloading DCP GCX Pipeline LLC, a subsidiary that owns a 25% non-operating interest in Gulf Coast Express LLC, to an affiliate of ArcLight Capital Partners (Boston, Massachusetts) for a pre-tax cash value of $865 million. For more information, see December 17, 2024, article - Phillips 66 Sells Stake in Permian Gas Pipeline.
Gulf Coast Express LLC operates a pipeline that moves 2 billion cubic feet per day of natural gas from the Permian Basin to a gas hub in Aqua Dulce, Texas. With the sale, the pipeline, called Gulf Coast Express, and its controlling entity are in the hands of Kinder Morgan Incorporated and ArcLight. Subscribers can click here for a list of Gulf Coast Express LLC natural gas compressor and booster station plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
"This transaction bolsters Phillips 66's position as a leading integrated downstream energy provider," said Mark Lashier, the chairman and chief executive officer of Phillips 66, on Monday.
EPIC NGL and its various subsidiaries control two fractionators near Corpus Christi and pipelines that are linked to production areas in the Texas shale patch, according to Phillips 66. Industrial Info is tracking two EPIC natural gas liquids (NGL) fractionation facilities and 13 NGL pump stations. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production and Pipelines plant databases can click here for the plant profiles.
"The facilities connect Permian production to Gulf Coast refiners, petrochemical companies, and export markets and will be highly integrated with the Phillips 66 asset base," the company said.
Shale production is evolving. As pressures change over the course of long-term production, more gas is released from the basin. This makes the Permian one of the fastest growing reserves in terms of natural gas production.
Already the top inland crude oil producer in the United States, the Permian is the second-largest gas producer after the Appalachia basin. The U.S. Energy Information Administration (EIA), the data arm of the Department of Energy, expects Permian gas production to increase 5% from 2024 levels to average 26.1 billion cubic feet per day (Bcf/d).
But while EPIC NGL was in the process of expanding its pipeline capacity, Phillips 66 said it has no plans to adjust its own capital spending plans to accommodate that expansion.
Phillips 66 turned in dismal earnings for the third quarter, with the $346 million in earnings representing a 65% decline from the previous quarter. Energy companies were burdened by something of a lower-for-longer market scenario in 2024, with the EIA reporting that crude oil prices were essentially range-bound for much of the year.
Crude oil prices varied by around $24 per barrel last year, the narrowest range since 2019. When adjusted for inflation, however, it was the narrowest since 2003. That, in turn, spilled over to refiners as refining margins hovered below the five-year range for much of last year.
Margins in October were the lowest in a quarter century. Phillips 66, among the largest U.S. refiners, in turn posted a $108 million loss from its refining segment, compared with a profit of $302 million during the second quarter.
In December, the company sold a non-controlling interest in a Permian Basin gas pipeline as part of an effort to streamline its portfolio, offloading DCP GCX Pipeline LLC, a subsidiary that owns a 25% non-operating interest in Gulf Coast Express LLC, to an affiliate of ArcLight Capital Partners (Boston, Massachusetts) for a pre-tax cash value of $865 million. For more information, see December 17, 2024, article - Phillips 66 Sells Stake in Permian Gas Pipeline.
Gulf Coast Express LLC operates a pipeline that moves 2 billion cubic feet per day of natural gas from the Permian Basin to a gas hub in Aqua Dulce, Texas. With the sale, the pipeline, called Gulf Coast Express, and its controlling entity are in the hands of Kinder Morgan Incorporated and ArcLight. Subscribers can click here for a list of Gulf Coast Express LLC natural gas compressor and booster station plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
