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Gray Oak crude pipe on target for end of 2019 startup: Phillips 66 Partners

New York — Phillips 66 Partners said its 900,000 b/d Gray Oak pipeline providing crude transportation for Permian Basin and Eagle Ford barrels to the US Gulf Coast is on track to start up in the fourth quarter of 2019.

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"We'll continue to construct the Gray Oak Pipeline. We have received all major permits that are required and 100% of right-of-way. Approximately, 80% of the pipe has been installed and all 17 tanks are at cell height. The project remains on track to start up in the fourth quarter of this year," said Rosy Zuklic, Phillips 66 Partners' Chief Operating Officer, during Friday's second-quarter 2019 results call.

The pipeline will serve Corpus Christi, the Sweeny area, including the company's Sweeny refinery, as well as access to the Houston market. Phillips 66 Partners has a 42.25% ownership stake in the pipeline.

TERMINAL CONNECTIONS

In Corpus Christi, the Gray Oak Pipeline will connect to multiple terminals in Corpus Christi, including the South Texas Gateway Terminal currently being constructed by Buckeye Partners.

The South Texas Gateway marine export terminal will have two deepwater docks, with initial storage capacity of approximately 7 million barrels and up to 800,000 b/d of throughput capacity. Phillips 66 Partners owns a 25% interest in the terminal, which is expected to start up by mid-2020.

Phillips 66 Partners is also constructing 2.2 million barrels of additional crude storage at its Beaumont Terminal. Construction is expected to be completed in the first quarter of 2020. Once operating, the terminal will have 16.8 million barrels of total crude and refined product storage capacity.

CLIFTON RIDGE PRODUCT EXPORT PIPELINE COMPLETED

Zuklic said that during Q2 Phillips 66 Partners completed construction of the Lake Charles, Louisiana, product pipeline, connecting storage at parent company Phillips 66's 260,000 b/d Westlake refinery and its Clifton Ridge Marine Terminal.

"The connection to the terminal will provide [the refinery with an] outlet to competitively prices its product in the market. The terminal will have up to 50,000 b/d of product export capacity," she added.

Phillips 66 exported 187,000 b/d of refined products in Q2.

--Janet McGurty, janet.mcgurty@spglobal.com

--Edited by James Bambino, james.bambino@spglobal.com