Phillips 66 has recently announced its 2017 capital budget of US$2.7 billion. The plan includes US$1.3 billion for midstream growth and US$0.9 billion for enhancing refining returns and supporting operating.
“The 2017 capital programme is consistent with our disciplined approach to capital allocation,” said Chairman and CEO of Phillips 66, Greg Garland. “Returns on our investments are important and the reduction in capital spending from prior years reflects that fewer projects meet our return thresholds in the current business environment. We continue to invest sustaining capital to ensure our assets run safely and reliably. We are committed to maintaining a strong balance sheet and financial flexibility.”
The company plans to invest US$1.5 billion in the midstream sector, specifically its natural gas liquids (NGL) and transportation businesses. The company is focused on developing its existing infrastructure’s footprint, including continued expansion of the Beaumont terminal and investing in pipelines.
Midstream capital encompasses the expected spending of Phillips 66 Partners of US$437 million. Expansion capital will be in support of organic projects, such as the Bayou Bridge pipeline, which will connect the Beaumont terminal with St. James (Louisiana). The western leg of the pipeline began operation in April 2016, while the eastern leg is expected to be completed in 2Q17.
The company plans for US$905 million of capital expenditures and investments in refining.
In marketing and specialties, the company plans to invest US$132 million of growth and sustaining capital. The growth investment reflects Phillips 66’s continued plans to expand and enhance its fuels marketing business. It plans to fund US$112 million in corporate projects, primarily relating to information technology and facilities.
Phillips 66’s proportionate share of capital spending by joint ventures Chevron Phillips Chemical Company LLC, DCP Midstream, LLC and WRB Refining LP is expected to be US$1.1 billion. Including these equity affiliates, the company’s total 2017 capital programme is projected to be US$3.8 billion.
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