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Phillips 66 reduces US SPR loan to 700,000 barrels as constraints ease

Washington — Phillips 66 has decided to only take 700,000 barrels of crude from the US emergency stockpile -- 400,000 barrels of sweet and 300,000 barrels of sour -- as crude deliveries started back up with the reopening of the port of Lake Charles, Louisiana.

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The US Department of Energy on Thursday authorized a loan of 1 million barrels -- 400,000 barrels of sweet and 600,000 barrels of sour -- to Phillips 66's 260,000 b/d Westlake refinery in Lake Charles as a result of Harvey supply disruptions.

The Phillips 66 refinery -- along with CITGO's 475,000 b/d plant and Calcasieu Refining's 104,000 b/d plant -- are no longer cut off from tanker deliveries now that the Calcasieu Ship Channel and Lake Charles port have reopened, eliminating their need for further SPR loans.



Channing Hayden, director of navigation for the Lake Charles Harbor and Terminal District, said the queue of 19 inbound vessels and two outbound vessels has mostly cleared since the waterway reopened around 3 am Thursday.

"We're basically back to normal operations," he said.

Hayden did not know how many of those vessels might be heading to the refineries.

"I do know we had some tankers -- both crude and product," he said.

Phillips 66 spokesman Dennis Nuss said Friday the company's Westlake refinery decided it no longer needed to borrow the additional 300,000 barrels of sour crude allocated by DOE.

"As certain things open back up, then that would obviously help our supply and we wouldn't need it all," Nuss said.

The loaned government crude was already flowing by pipeline from the SPR's West Hackberry cavern to the nearby refinery Thursday.

"That's happening pretty quickly. It's in progress," Nuss said.

DOE has not released a timeline for when Phillips 66 must repay the loan.

As to whether Phillips 66 will request more SPR crude for any other Gulf Coast refineries, Nuss said: "That option is always there as we look at the logistics challenges that are out there and as things start to come back online."

(This version of the story adds details on Lake Charles port reopening.)

--Meghan Gordon, meghan.gordon@spglobal.com

--Edited by James Leech, james.leech@spglobal.com