Demand for Permian crude leads to expansion of pipeline under construction

Even as a Phillips 66 Partners pipeline is under construction the Permian Basin, the company is expanding its capacity.

The company announced it will expand the Gray Oaks crude pipeline to 900,000 b/d because of the strong demand to move Permian crude to the US Gulf Coast.

“The Partnership is constructing the Gray Oak Pipeline, which will provide crude oil transportation from the Permian and Eagle Ford to destinations in Corpus Christi and Freeport, including the Phillips 66 Sweeny Refinery. Supported by customer commitments, capacity of the pipeline will be 900,000 b/d,” Phillips 66 Partners said in its third-quarter earning statement.

In September, Phillips 66 Partners held a successful open season on the Eagle Ford segment of the line, cementing enough firm shipping commitments to expand the line’s capacity from 800,000 b/d to 900,000 b/d.

Phillips 66 Partners has a 75% ownership interest in the pipeline project, and third parties have options to acquire an interest in the pipeline that could reduce its ownership to 42.25% by year end. Gray Oak Pipeline is anticipated to be in service by the end of 2019.

In Corpus Christi, the Gray Oak Pipeline will connect to the new South Texas Gateway Terminal under development by Buckeye Partners. The marine terminal will have an initial storage capacity of 3.4 million barrels and is expected to begin operations by the end of 2019. Phillips 66 Partners owns a 25% interest in the terminal. — Janet McGurty,

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