Phillips 66 Breaks Ground on $1 Billion LPG Export Facility on Texas Gulf Coast

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Researched by Industrial Info Resources (Sugar Land, Texas)--Phillips 66 (NYSE:PSX) (Houston, Texas) on Wednesday held the groundbreaking ceremony for construction of its new liquefied petroleum gas (LPG) production and export terminal in Freeport, Texas. When completed, the facility will have the capacity to produce and export up to 4.4 million barrels per month of LPGs, such as propane and butane. The $1 billion facility is expected to begin operating in mid-2016.

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LPG is derived from natural gas liquids (NGL), which are fractionated from raw gas streams prior to further refinement into LPG. U.S. production of NGL has increased substantially since the shale gas boom, and there has been a substantial rise in LPG exports, primarily propane, over the past few years, with a very sharp uptick since early 2013. The U.S .exported 17.17 million barrels of LPG in May 2014 (the most recent date that the data is currently available), compared to 10.47 million in May 2013, which was the first month that U.S. LPG exports broke the 10 million barrel mark.

Click on image at right for a graph provided by the U.S. Energy Information Administration showing LPG exports from 1981 through May 2014.

Phillips 66 will source the NGL for the Freeport facility from its fractionator in Mont Belvieu, Texas, as well as the company's nearby Sweeny Refinery. The 247,000-barrel-per-day (BBL/d) refinery, located in Old Ocean, Texas, about 30 miles inland from Freeport, is in the process of constructing a 100,000-BBL/d NGL fractionation unit, which should be completed in mid-2015.

The Mont Belvieu facility has a current fractionation capacity of 145,000 BBL/d, and there are plans to install a fourth train at the facility, which would increase the plant's overall NGL production capacity by approximately 45,000 BBL/d, helping to provide the necessary fuel for the Freeport facility to reach its targeted 4.4 million-barrel-per-month LPG export capacity.

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