Phillips 66 unveils 2016 capital expenditures plan for refining, NGL projects

Phillips 66 on Monday announced its 2016 capital budget of $3.6 billion, excluding Phillips 66 Partners’ capital program. The board of directors of Phillips 66 also approved a $2.0 billion increase to the company’s share repurchase program.

“The 2016 capital budget will fund Midstream growth and enhance returns in Refining,” said chairman and CEO Greg Garland. “Cash from operating activities, our MLP and a strong balance sheet allow us to fund business growth while returning capital to shareholders.”

Excluding Phillips 66 Partners’ capital spending, Phillips 66 plans to invest $2.0 billion in its midstream business lines. In natural gas liquids (NGL), the company continues construction of the 4.4 million bbl/month Freeport LPG export terminal on the US Gulf Coast, with completion expected in the second half of 2016. In addition, the budget includes spending associated with expansion of the Sweeny NGL midstream hub.

In transportation, the company is investing in the new DAPL and ETCOP pipeline projects to move crude oil from the Bakken production area of North Dakota to market centers throughout the US. Storage capacity is being added at the Beaumont Terminal in Nederland, Texas, and the company is investing in the Bayou Bridge pipeline project to move crude oil from Texas to Louisiana markets.

Phillips 66 plans $1.2 billion of capital expenditures in refining, with approximately 70% to be invested in reliability, safety and environmental projects, including compliance with the new Tier 3 gasoline specifications. 

Discretionary refining capital of about $400 million will improve product yields and lower feedstock costs. These investments include a modernization of the FCC at Bayway, and an upgrade of the vacuum tower at Billings.

In marketing and specialties, the company plans to invest about $135 million of growth and sustaining capital. This furthers Phillips 66’s plans to expand and enhance its fuel marketing business, including new retail sites in Europe.

Capital spending plans for 2016 for Phillips 66 Partners and for self-funded joint ventures DCP Midstream, Chevron Phillips Chemical and WRB Refining will be announced later this year.