By Collin Eaton HOUSTON, June 19 (Reuters) - U.S. oil refiner Phillips 66
<PSX.N> is proposing a deepwater crude export terminal off the U.S. Gulf
Coast, the company said on Wednesday, challenging at least eight other
projects aiming to send U.S. shale oil to world markets. The project,
called Bluewater Texas Terminal LLC, signals another major expansion of
its logistics operations.
The fourth largest U.S. refiner last week formed
joint ventures to build pipelines linking shale fields in West Texas and
North Dakota to the Cushing, Oklahoma, oil hub and the U.S. Gulf Coast.
Phillips 66 has applied for federal and state permits to build an export
port about 20 miles (32 km) off Corpus Christi, Texas, and related crude
pipelines, according to documents viewed by Reuters and people familiar
with the filings. The people did not want to be named because the
information is not public.
The project, which is being developed with the
Port of Corpus Christi, would compete with nearby shale export terminals
proposed by investor Carlyle Group <CG.O> and commodities trader Trafigura
AG. Its project would be at least the ninth project proposed for the Gulf
Coast. [nL1N21C1KZ] U.S. crude exports hit 3.12 million barrels per day
(bpd) this month from zero before the U.S. lifted a ban on exports in late
2015. Shale oil from fields in Texas, Colorado, New Mexico and North
Dakota is projected to push U.S. output to 12.32 million bpd this year,
according to U.S. forecasts.
Phillips 66's proposed project "would provide
an additional safe and environmentally sustainable solution for the export
of abundant domestic crude oil supplies from major shale basins to global
markets," spokesman Dennis Nuss said. The offshore port would provide an
outlet for oil coming from recently proposed Liberty and Red Oak pipeline
joint ventures that start in early 2021. Phillips will operate the $1.6
billion Liberty pipeline and help finance the $2.5 billion Red Oak
Phillips 66 aims to reinvest 60 percent of its annual cash flow
into its business, Chief Executive Greg Garland said on Tuesday during a
presentation at a JPMorgan Chase & Co energy conference in New York. He
did not mention the project at the conference. "We'll do $1.5 billion to
$2.5 billion of growth investments" and spend a similar amount of cash
flow on share buybacks each year, Garland said.
Bluewater Texas Terminal
has proposed to run two 30-inch oil pipelines to buoys off San Jose Island
in San Patricio County, according to a May 2019 document outlining the
project. The facility could load up to 1.56 million bpd, nearly the
capacity of a supertanker. If approved by the U.S. Maritime
Administration, U.S. Coast Guard and Texas regulators, operations could
begin in mid-2021, said a person familiar with its plans. Phillips 66
currently owns a 25% stake in Buckeye Partners LP's <BPL.N> South Texas
Gateway export terminal, which is under construction in Corpus Christi.
U.S. pipeline operator Enterprise Products Partners LP <EPD.N> in May had
hired RBC Capital Markets LLC to advise on the sale of its 50% stake in a
recently completed Corpus Christi oil export terminal, according to a
marketing document viewed by Reuters.