Phillips 66 seals logistics deals for cheaper crude to US refineries

20 March 2013 13:39  [Source: ICIS news]

HOUSTON (ICIS)--Phillips 66 has sealed three agreements with energy logistics firms to increase supplies of lower-cost US and Canadian crudes to its US refineries, the Houston-based refining major said on Wednesday.

Phillips 66 said that Enbridge agreed to a three-year deal for railcar loadings of US Bakken shale crude, to be delivered to Phillips 66 refineries on the west and east coasts, and possibly its US Gulf Coast refineries. Deliveries will begin in May, with volumes to ramp up to about 40,000 bbl/day by November.

In a second deal, Targa Resources Partners agreed to provide rail unloading and barge loading services in Tacoma, Washington. The five-year agreement, which began in late 2012, allows Phillips 66 to provide its refineries at Ferndale, Washington, and San Francisco, California, with lower-cost US or Canadian crudes. Rail delivery capability at San Francisco could reach 30,000 bbl/day.

Under a third deal, Magellan Midstream Partners will transport cost-advantaged crudes on Magellan’s pipelines near Phillips 66’s refinery in Ponca City, Oklahoma. The project, to start up in late 2013, will replace West Texas Intermediate crude from Cushing, Oklahoma, with crude from the nearby Mississippian Lime play. Volumes under that deal should reach about 20,000 bbl/day by January 2014.

Meanwhile, Phillips 66 is also investing in its own transportation assets in Oklahoma to transport an additional 40,000 bbl/day of Mississippian Lime crude to the Ponca refinery, it added.

“We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” said Phillips 66 CEO Greg Garland.

“Increasing our utilisation of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses,” Garland added.

By: Stefan Baumgarten
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