The Phillips 66 refinery located in Ponca City, Oklahoma will get an upgrade as part of the company’s new 2020 capital program announced over the weekend. Phillips 66 revealed at capital budget of $3.3 billion, net $0.5 billion expected cash capital contributions from joint venture partners.
The adjusted capital budget includes $0.9 billion for Phillips 66 Partners. Its refining capital budget includes $0.6 billion for reliability, safety and environmental projects. The refining capital will also fund fluid catalytic cracking unit upgrades at the Ponca City and Sweeny refineries, renewable diesel projects and other high-return, quick-payout projects.
“The 2020 capital program supports our strategy to grow high-value businesses, improve returns, and ensure safe, reliable and environmentally responsible operations,” said Greg Garland, chairman and CEO of Phillips 66. “We are investing in attractive growth and return projects that further build out and enhance our integrated system, and funding $1.2 billion of sustaining capital for operating excellence projects.”
He said the long-term objective is to reinvest 60% of cash flow back into the business and return 40% to shareholders through dividends and share buybacks.
The Midstream budget, excluding Phillips 66 Partners, primarily reflects funding for the Liberty and Red Oak crude oil pipelines and 450,000 barrels per day of additional fractionation capacity at the Sweeny Hub.
Phillips 66 announced in 2018 that it intended to spend $1.5 billion on infrastructure upgrades near its Houston Ship Channel facilities to serve the Permian Basin. The company said it would expand the Sweeny Hub with the construction of two fractionators and commercial operations were expected to begin in late 2020.
The Phillips 66 Partners budget includes investments in the Gray Oak Pipeline, the C2G Pipeline, the South Texas Gateway Terminal and the Bakken Pipeline, as well as sustaining capital.
Phillips 66’s proportionate share of capital spending by joint ventures DCP Midstream, LLC (DCP Midstream), Chevron Phillips Chemical Company LLC (CPChem) and WRB Refining LP (WRB) is expected to be $1.2 billion. Capital spending by these three major joint ventures is expected to be self-funded.
DCP Midstream’s expected capital spend includes funding for Fracs 2 and 3 at the Phillips 66 Sweeny Hub. CPChem’s growth capital will fund continuing development of world-scale petrochemicals projects in the U.S. Gulf Coast and Qatar that would add ethylene and derivative capacity, as well as debottlenecking opportunities on existing units. WRB’s expected capital spend will be directed to sustaining projects and distillate yield enhancement.
