Phillips 66 Benefits from Tax Reform, Progresses with Growth Projects

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Phillips 66 (NYSE:PSX) (Houston, Texas) reported fourth-quarter 2017 net income of $3.2 billion, compared with $163 million in fourth-quarter 2016. However, the company benefitted from a one-time credit from U.S. tax reform of $2.7 billion. Adjusted fourth-quarter earnings were still $548 million, compared with $83 million in fourth-quarter 2016. In the company's conference call, Chief Executive Officer Greg Garland gave an update on some of the company's key projects, including those belonging to its midstream spinoff, Phillips 66 Partners (NYSE:PSXP) (PSXP) (Houston), its joint venture with Spectra Energy (NYSE:SE) (Houston), DCP Midstream Partners (NYSE:DPM) (Denver, Colorado), and a joint venture pipeline with Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta).

"We announced an open season with Enbridge for the Gray Oak pipeline project to transport crude oil from the Permian Basin to markets along the Texas Gulf Coast," said Garland. "The pipeline is expected to have an initial throughput capacity of 385,000 barrels per day (BBL/d) and be placed in service during the second half of 2019." The 700-mile pipeline has an estimated total investment value of $750 million. Construction is planned to kick off this summer. For more information, see Industrial Info's project reports on the pipeline and pump station.

Garland said, "The Bayou Bridge Pipeline, in which PSXP holds a 40% interest, has received all permits from the extension from Lake Charles [Louisiana] to St. James, Louisiana. Construction is underway. Commercial operations are expected to begin in the second half of 2018." The pipeline is a joint venture with Energy Transfer Partners (NYSE:ETP) (Dallas, Texas) and Sunoco LP (NYSE:SUN) (Dallas). The 160-mile pipeline extension will transport 280,000 BBL/d and will be expandable up to 480,000 BBL/d. For more information, see Industrial Info's project report.

"DCP Sand Hills Pipeline, which transports NGLs (natural gas liquids) from the Permian Basin to the Texas, Gulf Coast has exceeded 300,000 BBL/d of throughput in the fourth quarter and is expected to complete the capacity expansion to 365,000 BBL/d by the end of the quarter," said Garland. "Further capacity expansion of the line to 450,000 BBL/d is anticipated in the second half of 2018. Sand Hills is owned two-thirds by DCP and one-third by Phillips 66 Partners." For more information on the pending capacity expansion, see Industrial Info's project reports on the additional pipeline loops near Midkiff and Odessa in Texas.

Garland said, "DCP continues to progress construction of two gas processing plants in the high-growth DJ Basin. The Mewbourn III plant is expected to start up in the third quarter of 2018, and the O'Conner II plant is scheduled for completion in mid-2019." Construction on the third gas processing train at the Mewbourn plant near Gilcrest, Colorado, began last summer. The project has an estimated total investment value of $200 million and will add 200 million cubic feet per day of processing capacity, bringing the total plant capacity to 435 million cubic feet per day. For more information, see Industrial Info's project report. The Phase II expansion of the O'Conner plant near Kersey, Colorado, also will add 200 million cubic feet per day of processing capacity, bringing the total plant capacity to 360 million cubic feet per day. For more information, see Industrial Info's project report. Saulsbury Industries (Odessa, Texas) is performing engineering, procurement and construction (EPC) on both projects.

Garland said, "DCP also announced the final investment decision to proceed with joint development of the Gulf Coast Express Pipeline project, in which it holds a 25% interest. The pipeline will provide an outlet for natural gas production in the Permian Basin to markets along the Texas Gulf Coast." The pipeline is a joint venture with Kinder Morgan Incorporated (NYSE:KMI) (Houston) and will carry up to 1.92 billion cubic feet per day of natural gas. Construction is expected to begin later this year and be completed in late 2019. Pumpco Incorporated is acting as general contractor on the project, which has a total investment value of $1.7 billion. For more information, see Industrial Info's project report.

"In refining, we continue to focus on high-return, quick-payoff projects," said Garland. "We have multiple yield-enhancing projects that are expected to deliver an additional 25,000 BBL/d of clean products by the end of 2018." Among these projects is the modernization of the fluid catalytic cracker unit at the company's Bayway Refinery in New Jersey. Construction began earlier this year and is anticipated to be completed in the second quarter. Jacobs Engineering Group Incorporated (NYSE:JEC) (Dallas, Texas) is engineer on the project, which has an estimated TIV of $150 million. The project will increase gasoline yields by 4,000 BBL/d and reduce emissions. For more information, see Industrial Info's project report.

Phillips 66's full-year 2017 net income was $5.1 billion, compared with $1.6 billion in 2016. The company has allocated a 2018 capital budget of $2.3 billion, including $1.4 billion in growth capital and $900 million in sustaining capital. For more information, see December 12, 2017, article - Phillips 66 to Spend $2.3 Billion in 2018 Capex.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.