Difference between revisions of "An Independent Evaluation of Phillips 66, its Business Strategy, and Execution"
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Simon Moore wrote on Seeking Alpha on May 10, 2012 that now that Phillips 66 is no longer part of ConocoPhillips, management is planning a clear cut move to greater emphasis on Midstream and Chemicals Business Segments. "New management's long term plan is to move to 50% Refining and Marketing, 25% Chemicals, and 25% Midstream. These latter two businesses have a much higher ROCE (return on capital employed) for PSX."<ref>[http://seekingalpha.com/article/577421-phillips-66-a-lot-of-upside-potential Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.]</ref> | Simon Moore wrote on Seeking Alpha on May 10, 2012 that now that Phillips 66 is no longer part of ConocoPhillips, management is planning a clear cut move to greater emphasis on Midstream and Chemicals Business Segments. "New management's long term plan is to move to 50% Refining and Marketing, 25% Chemicals, and 25% Midstream. These latter two businesses have a much higher ROCE (return on capital employed) for PSX."<ref>[http://seekingalpha.com/article/577421-phillips-66-a-lot-of-upside-potential Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.]</ref> | ||
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| + | ==Phillips Capital Programs== | ||
| + | [[Image:Refining capital program.jpg|thumb|right|450px|'''Capital Program for Refining and Marketing Business Segment.''' Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips wants to try to hold sustaining capital in the Refining Business Segment to depreciation or less, or about $700 million a year. "We've got about a $1 billion program in 2014. So we've got about $300 million of high return, quick hit, fast payout projects that we're going to do. These are 40% type return projects. So these are the, what I would call, is a value accretive project that we're going to do in refining. Around export facilities, increasing yields, it's around incremental investments to process more light sweet crude. It's around capturing more LPG streams and upgrading the value of LPG streams."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.]] | ||
| + | [[Image:Midstream capital program.jpg|thumb|right|400px|'''Capital Program for Midstream Business Segment.''' Phillips reported on December 6, 2013 that they plan to invest $2.167 Billion in 2014 in their Midstream Business Segment including $1.417 in direct investment and $0.750 Billion in investment with affiliate groups. Phillips expects to begin construction of a 100,000 barrel-per-day NGL fractionator and a 4.4 million-barrel-per-month liquefied petroleum gas export terminal on the U.S. Gulf Coast. In addition, several rail offloading facilities and other crude handling projects will increase the company’s access to advantaged refining feedstocks. Phillips 66 Transportation is also developing pipeline expansion and connection projects that will grow capacity and allow for greater refined product exports.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.]] | ||
| + | [[Image:Chemical capital progam.jpg|thumb|right|400px|'''Capital Program for Chemical Business Segment.''' Phillips reported on December 6, 2013 that they plan to invest $1.0 Billion in 2014 in their Refining and Marketing Business Segment down from $1.149 in 2013. Approximately 70 percent of the investment will be for sustaining capital related to reliability and maintenance, safety and environmental projects, including those to comply with Tier 3 emission standards. Other Refining capital investments will be directed toward relatively small, high-return projects, primarily to enhance use of advantaged crudes, as well as to improve product yields, increase energy efficiency and expand export capability.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.]] | ||
| + | ====December 5, 2014: Phillips Capital Progam for 2015==== | ||
| + | Phillips 66 announced on December 5, 2014 that Phillips plans a 2015 capital budget of $4.6 billion. “The 2015 capital program reflects our commitment to grow our higher-value businesses while enhancing returns in Refining,” said chairman and CEO Greg Garland. “We are executing a portfolio of major Midstream and Chemicals projects while evaluating a significant backlog of investment opportunities. We remain committed to returning capital to shareholders through dividend growth and our share repurchase program. During the year we increased our dividend 28 percent, and through Sept. 30, 2014, we returned $3.9 billion of capital to shareholders through dividends, share repurchases and the PSPI exchange. We expect double-digit increases in dividends for the next two years, and $2.6 billion remained available at the end of the third quarter under our share repurchase authorization. Our capital structure and financial flexibility allow us to fund shareholder distributions while investing in the growth of our businesses, even in this lower commodity price environment. Sources of capital include our strong balance sheet, debt and equity issuances by our MLP, and operating cash flows from a high-returning portfolio of businesses."<ref>[https://secure.marketwatch.com/story/phillips-66-announces-2015-capital-program-2014-12-05 Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.]</ref> | ||
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| + | =====Phillips to Invest $1.1 Billion in 2015 in Refining and Marketing Business Segment===== | ||
| + | Phillips 66 plans $1.1 billion of capital expenditures in Refining, approximately 75 percent of which will be sustaining capital. These investments are related to reliability and maintenance, safety and environmental projects, including compliance with the new EPA Tier 3 gasoline specifications. Discretionary Refining capital investments will be directed toward small, high-return, quick pay-out projects, primarily to enhance use of advantaged crudes and improve product yields. | ||
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| + | =====Phillips to Invest $3.750 Billion in 2015 in Midstream Business Segment===== | ||
| + | In Midstream, excluding DCP, Phillips 66 plans to invest $3.2 billion in its Natural Gas Liquids (NGL) and Transportation business lines. Midstream capital includes approximately $200 million expected to be spent by Phillips 66 Partners to support organic growth projects. In NGL, the company continues construction of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast. In Transportation, the company is investing in pipeline and rail infrastructure projects to move crude oil from the Bakken/Three Forks production area of North Dakota to market centers throughout the U.S. In addition, expansion of the Beaumont Terminal and related infrastructure opportunities are being pursued. | ||
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| + | Additional Midstream investments are planned within DCP, a 50-50 joint venture with Spectra Energy that also includes DCP Midstream Partners. DCP will leverage its infrastructure to launch new gathering, processing, and NGL growth projects, mainly in the Niobrara, Denver-Julesburg, Eagle Ford and Permian basins. DCP also expects to increase natural gas processing capacity in these basins and complete other gathering system expansions during 2015. Phillips 66’s share of DCP’s 2015 planned capital expenditures is $550 million. | ||
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| + | =====Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment===== | ||
| + | In Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in projects aimed at capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2015 capital expenditures is expected to be $1.4 billion. Funding supports advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The expected start-up for these facilities is mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem’s normal alpha olefins production capacity at Cedar Bayou continues, with estimated completion in mid-2015. | ||
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| + | =====Phillips to Invest $170 Million in 2014 in Marketing and Specialties===== | ||
| + | In Marketing and Specialties, the company plans to invest $170 million for growth and sustaining capital. The growth investment reflects Phillips 66’s continued plans to expand and enhance its fuel marketing business. | ||
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| + | =====Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities===== | ||
| + | In Corporate and Other, Phillips 66 plans to fund $155 million in projects primarily related to information technology and facilities. | ||
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| + | ====December 6, 2014: Phillips Capital Program for 2014==== | ||
| + | On December 6, 2013 Phillips announced their plans for capital expenditures in 2014 at a level of $2.7 billion, approximately 40 percent higher than its 2013 capital target. Phillips total 2014 capital program including investments in joint ventures with DCP Midstream (DCP), Chevron Phillips Chemical Company (CPChem) and WRB Refining is expected to be $4.6 billion. “The 2014 capital program is consistent with our plans to significantly grow our Midstream and Chemicals segments,” said Chairman and CEO Greg Garland. “These are businesses that can directly capitalize on North America’s energy renaissance. Our disciplined approach to capital allocation balances reinvestment in higher-valued businesses along with growing shareholder distributions. We continue to focus on funding the most attractive growth opportunities across our portfolio.”<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | =====Phillips to Invest $1.0 Billion in 2014 in Refining and Marketing Business Segment===== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $1.0 Billion in 2014 in their Refining and Marketing Business Segment down from $1.149 in 2013. Approximately 70 percent of the investment will be for sustaining capital related to reliability and maintenance, safety and environmental projects, including those to comply with Tier 3 emission standards. Other Refining capital investments will be directed toward relatively small, high-return projects, primarily to enhance use of advantaged crudes, as well as to improve product yields, increase energy efficiency and expand export capability.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips wants to try to hold sustaining capital in the Refining Business Segment to depreciation or less, or about $700 million a year. "We've got about a $1 billion program in 2014. So we've got about $300 million of high return, quick hit, fast payout projects that we're going to do. These are 40% type return projects. So these are the, what I would call, is a value accretive project that we're going to do in refining. Around export facilities, increasing yields, it's around incremental investments to process more light sweet crude. It's around capturing more LPG streams and upgrading the value of LPG streams."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
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| + | =====Phillips to Invest $2.167 Billion in 2014 in Midstream Business Segment===== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $2.167 Billion in 2014 in their Midstream Business Segment including $1.417 in direct investment and $0.750 Billion in investment with affiliate groups. Phillips expects to begin construction of a 100,000 barrel-per-day NGL fractionator and a 4.4 million-barrel-per-month liquefied petroleum gas export terminal on the U.S. Gulf Coast. In addition, several rail offloading facilities and other crude handling projects will increase the company’s access to advantaged refining feedstocks. Phillips 66 Transportation is also developing pipeline expansion and connection projects that will grow capacity and allow for greater refined product exports.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | Phillips expects to invest $750 Million in DCP, a 50/50 joint venture with Spectra Energy. DCP anticipates leveraging its existing NGL infrastructure to initiate new gathering and processing growth projects, mainly in the North and Permian regions. DCP also expects to increase natural gas processing capacity in the Denver-Julesburg Basin and complete other gathering system expansions during 2014.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | =====Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment===== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | =====Phillips to Invest $140 Million in 2014 in Marketing and Specialties===== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $140 Million in 2014 in Marketing and Specialties growth and sustaining capital. The growth investment reflects Phillips 66’s intent to expand its international fuel marketing business. The company plans to add approximately 200 new retail sites in Europe over the next five years.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | =====July 10, 2014: Phillips to Increase 2014 Budget for $1.2 Billion===== | ||
| + | FueldFix reported on July 10, 2014 that Phillips will increase its 2014 capital budget by $1.2 billion for 2014 in order to fund its liquefied petroleum gas project as well as a recent acquisition. The increase will allow the company to put more cash towards the development of a new fractionator at its Sweeny refinery and a liquid petroleum gas export terminal in Freeport, among other projects. The fractionator is expected to come online in the third quarter of 2015, and the export terminal is expected to be operational in mid-2016. The fracionator will separate natural gas liquids into components including ethane, propane and butane. Some of those products will then be exported as liquefied petroleum gas from Freeport. The entire project is slated to cost $3 billion.<ref>[http://fuelfix.com/blog/2014/07/10/phillips-66-increases-capital-budget-approves-more-buybacks/ Fuelfix. "Phillips 66 increases capital budget, approves more buybacks" July 10, 2014]</ref> | ||
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| + | ====Phillips Capital Program for 2013==== | ||
| + | Phillips reported on December 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13. 2012.]</ref> | ||
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| + | =====Phillips to Invest $1.149 Billion in 2013 in Refining and Marketing Business Segment===== | ||
| + | Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they intend to invest $1.149 Billion in 2013 in their Refining and Marketing Business Segment to improve capital efficiency. The company has identified sources of additional advantaged crudes and is taking steps to move these lower cost feedstocks to its refineries and expects to replace 500,000 BPD of higher cost feedstocks with new or advantaged crudes over the next few years.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
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| + | Other initiatives to improve margins in the R&M Business Segment include increasing clean product yields in refining and controlling costs, targeting cost reductions and value capture in excess of $200 million before-tax by the end of 2013. “Our ability to capture advantaged feedstocks, coupled with the growing international demand for refined products, enables us to maintain high utilization rates and reduce costs per unit,” said Garland. “We will continue to primarily serve domestic markets and will explore opportunities to meet growing demand overseas. Export markets support a more positive balance of trade and promote economic benefits, and jobs, here in the United States.”<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
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| + | =====Phillips to Invest $2.2 Billion in 2013 in Midstream Business Segment===== | ||
| + | Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that DCP Midstream plans to invest $2.2 billion primarily for new logistics infrastructure and NGL production during 2013.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
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| + | =====Phillips to Invest $1.1 Billion in 2013 in Chemical Business Segment===== | ||
| + | Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
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| + | =====Phillips to Transfer Transportation Assets To A Master Limited Partnership===== | ||
| + | Marketwatch reported on Decemeber 13, 2012 that Phillips will transfer transportation assets to a master limited partnership that will debut in the stock market in 2013. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL, analysts at Simmons said in a note.<ref>[http://articles.marketwatch.com/2012-12-13/markets/35786170_1_conocophillips-assets-master-limited-partnership Marketwatch. "Phillips 66 down 3.3%; announces new entity" December 13, 2012.] </ref> “We expect to use the master limited partnership as an efficient vehicle to fund growth investments in the transportation and midstream sectors,” said Phillips 66 Chairman and CEO Greg Garland. “We believe the proposed MLP will enable us to enhance value for our shareholders and increase the transparency of our business.”<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
==Governance of Phillips 66== | ==Governance of Phillips 66== | ||
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====July 30, 2012: Phil Brady Named Top Lobbyist for Phillips 66==== | ====July 30, 2012: Phil Brady Named Top Lobbyist for Phillips 66==== | ||
The Detroit News reported on July 30, 2012 that Phil Brady, the president of National Automobile Dealers Association, has been named senior vice president of government affairs for Phillips 66. Brady, who will be based in Washington, will be responsible for the company's federal, state and international policy and governmental affairs efforts. Brady has previously served in senior White House positions for President Ronald Reagan and President George H.W. Bush and also served as general counsel at the U.S Transportation Department, and in senior positions with the U.S. Justice Department and Congress.<ref>[http://www.detroitnews.com/article/20120730/AUTO01/207300435/1361/NADA-president-to-join-Phillips-66-as-top-lobbyist Detroit News. "NADA president to join Phillips 66 as top lobbyist" by David Shepardson. July 30, 2012.]</ref> “It is important that our key constituents understand the economic value that energy companies like Phillips 66 bring to our country as a U.S. manufacturer, and Phil will help us to effectively share that story,” says Phillips 66 CEO Greg Garland. “Over just the past few months as an independent company, Phillips 66 has already put together an exceptional management team and strategy to grow in meeting the energy needs of this country,” says Brady. “I look forward to joining the team to help re-introduce this iconic energy company to our government leaders.”<ref>[http://www.businesswire.com/news/home/20120730006267/en/Phillips-66-Appoints-Government-Affairs-Executive Businesswire. "Phillips 66 Appoints Government Affairs Executive" July 30, 2012.]</ref> | The Detroit News reported on July 30, 2012 that Phil Brady, the president of National Automobile Dealers Association, has been named senior vice president of government affairs for Phillips 66. Brady, who will be based in Washington, will be responsible for the company's federal, state and international policy and governmental affairs efforts. Brady has previously served in senior White House positions for President Ronald Reagan and President George H.W. Bush and also served as general counsel at the U.S Transportation Department, and in senior positions with the U.S. Justice Department and Congress.<ref>[http://www.detroitnews.com/article/20120730/AUTO01/207300435/1361/NADA-president-to-join-Phillips-66-as-top-lobbyist Detroit News. "NADA president to join Phillips 66 as top lobbyist" by David Shepardson. July 30, 2012.]</ref> “It is important that our key constituents understand the economic value that energy companies like Phillips 66 bring to our country as a U.S. manufacturer, and Phil will help us to effectively share that story,” says Phillips 66 CEO Greg Garland. “Over just the past few months as an independent company, Phillips 66 has already put together an exceptional management team and strategy to grow in meeting the energy needs of this country,” says Brady. “I look forward to joining the team to help re-introduce this iconic energy company to our government leaders.”<ref>[http://www.businesswire.com/news/home/20120730006267/en/Phillips-66-Appoints-Government-Affairs-Executive Businesswire. "Phillips 66 Appoints Government Affairs Executive" July 30, 2012.]</ref> | ||
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| + | ==Public Relations and Media Relations== | ||
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| + | ===March 6, 2015: Phillips 66 Us Marketing Wins The American Marketing Association Houston Chapter 2014 Marketer Of The Year Award=== | ||
| + | TESTING Virtual Strategy reported on March 6, 2015 that the Houston Chapter of the American Marketing Association award Phillips 66 the Marketer Of The Year Award for 2014. To address the challenge of B2B customers bypassing their US Fuels sales representatives during initial stages of the buying process, the Phillips 66 US Marketing launched an online business-to-business digital marketing program to assist sales in acquiring new customers and retaining existing customers that included a campaign geared to cross-sell/up-sell Convenience Store Alliance (CSA) to existing customers plus other tactical programs. The campaign increased the number of customers adopting programs from an average of 16 customers per month to 103 and achieved an overall 246% increase in existing customers participating in the CSA program.<ref>[http://www.virtual-strategy.com/2015/03/06/phillips-66-us-marketing-wins-american-marketing-association-houston-chapter-2014-markete#axzz3ToZRLIHD Virtual Strategy. "Phillips 66 Us Marketing Wins The American Marketing Association Houston Chapter 2014 Marketer Of The Year Award" March 6, 2014.]</ref> | ||
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| + | ===December 31, 2014: The Shredder Writes: "There’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community"=== | ||
| + | Anonymous columnist "The Shredder" wrote in the ''New Times'' on December 31, 2014 that there's "here’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community, how much Phillips 66 cares about us all, and how very much it would hurt Phillips 66’s feelings if we denied the company its rail spur project. The problem is, Phillips 66 has greased the verbal wheels by giving these people a lot of money, and then turned around and given even more money to a local PR firm to tell the rest of the community just how great Phillips 66 really is. Call me a cynic, but as soon as I know someone’s been paid to say something, they lose credibility in my eyes, and I’m speaking as someone who has never been paid. Maybe they really mean it. But if that were the case, why wouldn’t they say it without being paid?" | ||
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| + | <blockquote>The reality is that Phillips 66’s “good neighbor” moments tend to be choreographed, right down to photographs of a smiling spokesperson handing over an enormous check. And that’s OK. That’s what for-profit corporations do. It is not, however, what good neighbors do. I know, because my neighbor is still miffed about the time I offered to pay up front so my dog can freely pop squats in his yard. In fact, a company is not a neighbor at all, regardless of how many times a PR company repeats the term. A corporation is not a human being with human concerns; corporations are motivated by one thing: profit.<BR><BR> | ||
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| + | While I don’t fault Phillips 66 for behaving like a corporation any more than I fault a wild animal for behaving like a wild animal, I don’t much appreciate the fact that they’re trotting out platitudes about being there for the community in lieu of substantive discussion about the impacts of what they’re proposing. Hiring a company to attempt to wrangle and limit the media while feeding the public a heavily manipulated image of an oil company as Mr. Rogers—if Mr. Rogers was in the habit of doling out enormous checks—is a fairly oily thing to do.<ref>[http://www.newtimesslo.com/shredder/11838/good-fences/ New Times. "Good Fences" by The Shredder. December 31, 2014.]</ref></blockquote> | ||
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| + | ===December 23, 2014: Judge Rules That Phillips 66 Policy Prohibiting Santa Maria Refinery Employees from Talking to the Media Violates the Law=== | ||
| + | David Minsky reports at the Santa Maria Sun that on November 25, 2014 a National Labor Relations Board administrative law judge found that Phillips policy of prohibiting Phillips employees at the Santa Maria Refinery from speaking to reporters violated the law. According to case documents, attorneys representing Phillips 66 argued in court that the policy was meant to prohibit employees from speaking on the company’s behalf about any confidential operations. But the judge rejected this argument, saying the policy was ambiguous and violates the law because employees could “reasonably construe” that it would prohibit them from discussing, among other things, labor disputes or conditions of work. Reached by email last week, Phillips 66 spokesperson Dennis H. Nuss said the company is aware of the recent decision, but didn’t make specific comments about the case. However Nuss did write: “Our company’s top priority is the safety of everyone who works at our sites and lives in our neighboring communities. In 2012, Phillips 66 redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria Refinery, and there were no staff reductions. These changes have helped maintain and improve the refinery’s high standards for safety performance.”<ref>[http://www.santamariasun.com/news/12622/judge-rules-that-phillips-66-news-media-policy-violates-the-law/ Santa Maria Sun. "Judge rules that Phillips 66 news media policy violates the law" by David Minsky. December 25, 2014.]</ref> | ||
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| + | ===January 2, 2013: Gregg Laskoski at US News and World Report is Critical of Lack of Tranparency at Phillips 66=== | ||
| + | Gregg Laskoski wrote at US News and World Report on January 2, 2013 that after Reuters reported that some 7,700 gallons of fuel spilled from Phillips 66's Bayway refinery in Linden, N.J., after Hurricane Sandy in November, 2012, New Jersey environmental protection officials said they were not made aware of a major spill at the Bayway plant, and the refinery failed to respond to inquiries from Reuters reporters. "Too many times, history has shown us, the Phillips 66 response or lack thereof characterizes the standard practice of the oil industry. Refineries often fail or are slow to communicate problems that create significant disruptions to fuel supplies and spikes in retail gasoline prices. More often than not, scant information is provided reluctantly, if at all," writes Laskoski. "When such things occur is silence from refineries acceptable? Or does our government and the electorate who put them there have a right to know what's really going on? "<ref>[http://www.usnews.com/opinion/blogs/on-energy/2013/01/02/refineries-are-to-blame-for-high-gas-prices US News and World Report. "U.S. Deserves Candor, Transparency From Refineries" by Gregg Laskoski. January 2, 2013.]</ref> | ||
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| + | ===November 5, 2012: Motor Trend Journalist Takes Money To Be Spokesperson For Phillip 66=== | ||
| + | Matt Hardigree reported on Jalopnik on November 5, 2012 that Motor Trend's Jessi Lang is being paid to represent oil company Phillips 66 as a spokesperson who is trying to help influence young people to buy their gas, "something Motor Trend doesn't appear to be telling its readers." Last month a PR firm hired by Phillips 66 reached out to reporters with the results of a survey designed to evaluate the buying habits of "millenials" and offered a quote from Lang, who they identified as a spokesperson and host of Motor Trend's weekly automotive news roundup "Wide Open Throttle" on YouTube. "Taking payment from a potential newsmaker is a generally frowned upon practice, but Lang, and the PR firm representing Phillips 66, say Motor Trend approves of her simultaneously representing an automotive publication and a company that's part of the automotive industry," writes Hardigree who asked Lang if it was proper for her to take money from Phillips 66 and work as a journalist for Motor Trend at the same time. "I get paid by Motor Trend to be a journalist and to help educate others and that doesn't at all call into question my integrity as a writer," said Lang adding that "anyone within a capitalist society" should be compensated for their work. Motor Trend's Editor-in-Chief Ed Loh declined to comment if there is a conflict of interest. "In the case of Lang, Motor Trend, and Phillips 66 it seems they've skipped ahead from trying to woo car writers with free trips to paying them outright," writes Hardigree.<ref>[http://jalopnik.com/5957722/motor-trend-journalist-also-taking-money-to-be-a-spokesperson-for-an-oil-company Jalopnik. "Motor Trend Journalist Also Taking Money To Be A Spokesperson For An Oil Company" by Matt Hardigree. November 5, 2012.]</ref> | ||
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| + | ===September 6, 2012: Motor Trend's Jessi Lang says Drivers Can Clean Their Engines with Top Tier Gas Like Phillips 66=== | ||
| + | PR Newswire reported on September 6, 2012 that Jessi Lang, host of Motor Trend's "Wide Open Throttle" and Phillips 66 spokesperson, says that "millennials think they're saving money by seeking out cheaper gas, but what they don't realize is that the unbranded gasoline they're buying actually can cost them money in the long run by compromising their fuel economy and causing build-up in their engine. "By using branded TOP TIER gas like Phillips 66, 76 and Conoco, these drivers can clean up their engines and accrue significant savings over time -- especially now that these brands have had the detergent additive treat rate increased by more than 25 percent in all fuel grades."<ref>[http://www.prnewswire.com/news-releases/phillips-66-76-and-conoco-branded-fuels-announce-new-findings-on-millennials-gasoline-buying-habits-168754476.html PR Newswire. "Phillips 66®, 76® and Conoco® Branded Fuels Announce New Findings on Millennials' Gasoline Buying Habits" September 6, 2012.]</ref> | ||
| + | |||
| + | ==New Phillips 66 Headquarters== | ||
| + | |||
| + | ===December 17, 2014: Phillips Places Final Beam in New Headquarters=== | ||
| + | The Houston Business Journal reported on December 17, 2014 that the final beam was cautiously placed at the highest level of Phillips' new headquarters building with a ceremonial 22-foot tree placed on top. The topping off construction milestone for the headquarters will soon "bring everybody home" from a geographically fractured family of seven Phillips 66 buildings in the Houston area, said Mike Wirkowski, Phillips 66 general manager for projects. "It's a great symbol of the commitment our company has to our employees," added Debbie Adams Phillips 66 senior vice president of HSE, projects and procurement, as well as a symbol of an old company being new again. The headquarters project is running on time for Phillips 66 even though the company switched contractors from Houston-based W.S. Bellows Construction to Rhode Island-based Gilbane Building Co. in November for undisclosed reasons.<ref>[http://www.bizjournals.com/houston/morning_call/2014/12/phillips-66-tops-out-new-houston-headquarters.html?page=all Houston Business Journal. "Phillips 66 tops out new Houston headquarters (Video)" December 17, 2014.]</ref> | ||
| + | |||
| + | ===October 31, 2014: Phillips Switches Building Contractors on New Houston Headquarters=== | ||
| + | Jordan Blum reported at the Houston Business Journal on October 31, 2014 that Phillips is switching contractors for its big corporate headquarters under construction in the Westchase District terminating its deal with Houston-based W.S. Bellows Construction and has contracted with Rhode Island-based Gilbane Building Co. Dennis Nuss, Phillips 66 media relations director, did not disclose the reason for the change calling it a private contractual matter. but says that the scope, cost and timeline of the project will not be impacted, although he would not elaborate on the reason for the change. "The construction of the new Phillips 66 campus remains on schedule and is expected to be completed by mid-2016." The Phillips 66 campus is designed to house the downstream company that spun off from Houston oil major ConocoPhillips (NYSE: COP) two years ago, and will include a soccer field, café, fitness center, credit union, covered parking and training and development center. The company has leased 210,745 square feet of space for its interim headquarters at Pinnacle Westchase.<ref>[http://www.bizjournals.com/houston/blog/drilling-down/2014/10/phillips-66-switches-contractors-on-new-houston.html?page=all Houston Business Journal. "Phillips 66 switches contractors on new Houston campus" by Jordan Blum. October 31, 2014.]</ref> | ||
| + | |||
| + | ===November 22, 2013: Phillips Breaks Ground on New Headquarters Building=== | ||
| + | The Houston Business Journal reported on November 22, 2013 that Phillips broke ground on November 22, 2013 on its new 1.1 million-square-foot corporate campus in the Westchase District that will house all of the company’s 1,800 Houston-area employees once construction is finished in about three years.<ref>[http://www.bizjournals.com/houston/blog/breaking-ground/2013/11/rendering-phillips-66-breaks-ground.html Houston Business Journal. "Rendering: Phillips 66 breaks ground on new corporate campus" by Shaina Zucker. November 22, 2013.]</ref> | ||
| + | |||
| + | ===July 23, 2013: Phillips Shares Conceptual Rendering of New HQ=== | ||
| + | The Houston Chronicle reported on July 23, 2013 that Phillips' new headquarters, still in "conceptual design phase,” will include about 1.1 million square-feet of space in multiple buildings, along with a cafeteria, fitness center, coffee shop and conference center. The new facility, located on about 14 acres, will provide office space for the 1,800 employees that work for the company in Houston. Construction is expected to start by the end of the year. We are excited about our new state-of-the art Phillips 66 headquarters facility, which when built, will provide a location for all of our Houston employees to work together at one location, and it will provide our global employees with a place to meet, train and grow,” said spokeswoman Janet Grothe.<ref>[http://blog.chron.com/primeproperty/2013/07/phillips-66-reveals-rendering-of-new-hq/ Houston Chronicle. "Phillips 66 reveals rendering of new HQ" July 23, 2013.]</ref> | ||
| + | |||
| + | ===September 12, 2012: Phillips Selects Site for New Global Headquarters=== | ||
| + | Phillips reported on September 9, 2012 that the company will build its new global headquarters at a 14-acre site located off Beltway 8 West, between Westheimer Road and Briar Forest Drive. “We searched for several months for the right site to build a headquarters campus where our employees and future employees can come together to work, and develop their skills and talents,” said Greg C. Garland, chairman and chief executive officer of Phillips 66. “This property is conveniently located in the Westchase District and a location that aligns with our commitment to making our company a great place to work.” Once ground is broken at the new site, construction is expected to take between 24-36 months.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/09-12-2012.aspx Phillips 66. "Phillips 66 chooses site of new global headquarters" September 9. 2012.]</ref> | ||
| + | |||
| + | ===July 9, 2012: Interim Headquarters Selected=== | ||
| + | CSPNet reported on July 9, 2012 that Janet Grothe, senior adviser for health, safety and the environment at Phillips 66, confirmed that Phillips 66 has settled on a temporary headquarters in the Pinnacle Westchase building near ConocoPhillips' home office in the Houston "Energy Corridor." ConocoPhillips' headquarters is about eight miles away. In March, 2012 it sent an email to employees that said the new headquarters would be constructed near Interstate 10, within 10 miles of ConocoPhillips' current headquarters. The Pinnacle Westchase building fits that general description.<ref>[http://www.cspnet.com/news/corporate/articles/phillips-66-setting-shop-interim-hq CSP Net. "Phillips 66 Setting Up Shop in Interim HQ" July 9, 2012.]</ref> | ||
| + | |||
| + | ===March 20, 2012: Phillips 66 Headquarters to be Located in Houston=== | ||
| + | Houston Business Journals reported on March 20, 2012 that according to an email sent to employees, the new headquarters of refining and marketing spin-off company Phillips 66 will be near Interstate 10 and Beltway 8, within 10 miles of ConocoPhillips' current headquarters at 600 N. Dairy Ashford Road. The decision to locate in Houston was made because the company’s oil and gas infrastructure is already present. During the two- to three-year construction period on the new facility, Phillips 66 employees will be located in temporary locations in the company’s current space.<ref name=PCOLLocation>[http://www.bizjournals.com/houston/news/2012/03/20/phillips66-to-build-new-houston.html Houston Business Journal. "Phillips 66 to build new Houston headquarters" March 20, 2012.]</ref> | ||
| + | |||
| + | ==Bartlesville Technology Hub== | ||
| + | |||
| + | ===January 24, 2015: Phillips Is Looking at Controllable Expenses Not Personnel Cuts=== | ||
| + | Bartlesville Radio KWON reported on January 23, 2015 that Phillips 66 is looking at controllable costs including travel, supplies, hiring, the use of consultants, memberships and projects or resources that aren’t critical to the business. Company spokesman Summer Austin says Phillips 66 is asking all of its employees to identify areas where expenses can be cut or controlled because of lower oil prices and other economic factors. Although rumors are circulating that Phillips is looking at personnel costs and possible personnel cuts, Austin says she has not been told of any specific job cuts and when it comes to the possibility of layoffs, Phillips 66 executive leadership views layoffs as a last resort — never as a prime strategy.<ref>[http://www.bartlesvilleradio.com/pages/news/84692015/philliips-66-evaluating-controllable-expenses Bartlesville Radio KWON. "Philliips 66 Evaluating Controllable Expenses" January 23, 2015.]</ref> | ||
| + | |||
| + | ===January 23. 2015: Phillips 66's Commitment to Bartlesville Will Remain Strong=== | ||
| + | The Bartlesville Examiner-Enterprise reported on January 24, 2015 that Merl Lindstrom, vice president of technology for Phillips 66, told Bartlesville’s Daybreak Rotary Club on January 23, 2015 that the company’s commitment to the local area will remain strong. “This is a time of upheaval in the energy industry,” Lindstrom said. “Things are changing pretty quickly, and so as we move through the next few months we will certainly have some changes (in the industry), but we will do our best… We’ve been here (in Bartlesville) many, many years. We’ve been around refining since the early 1900s and continue to be there.” | ||
| + | |||
| + | Lindstrom said that approximately 1,750 Phillips 66 employees work out of the company’s offices in downtown Bartlesville and another 450 are based at the Research Center in west Bartlesville. “This is one of the largest sites anywhere in the world for the concentration of Phillips 66 employees,” Lindstrom said. “Currently, I can’t see anything changing. Our Bartlesville operations and the Research Center is a great place to be. There’s none like it. This is a great place, and we have no problems attracting people to Bartlesville.” | ||
| + | |||
| + | Lindstrom said that approximately 75 percent of the work done at the Research Center is dedicated to refining, and as the technology in producing the elements in oil and gas products evolves, Phillips 66 will be able to evolve with it. Lindstrom said the Bartlesville facility — with its partnerships with ConocoPhillips, ChevronPhillips and other companies — will be at the forefront to develop new methods and technologies.<ref>[http://examiner-enterprise.com/news/local-news/phillips-66-commitment-strong Bartlesville Examiner-Enterprise. "Phillips 66 commitment strong" by Nathan Thompson. January 23, 2015.]</ref> | ||
| + | |||
| + | ===December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay including Pilot Plant and PPS Assets in Bartlesville=== | ||
| + | Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.<ref>[http://www.businesswire.com/news/home/20150105005012/en/Chevron-Phillips-Chemical-Completes-Sale-Ryton%C2%AE-PPS#.VKv2kCvF928 Businesswire. "Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay" December 5, 2015.]</ref> | ||
| + | |||
| + | ===December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville=== | ||
| + | The Tulsa World reported on December 19, 2014 that Chevron Phillips Chemical Co. LP plans to build a polyethylene pilot plant at its research and technology facility in Bartlesville that should be completed in 2017. The new facility will replace the current site, which has been focused on “developing improvements in current resins or new polymer kind of innovations” since the 1970s. “As a global producer of polyethylene, we strive to support our customers with the latest technological advances and process improvements through the efforts of our research and development personnel,” said Don Lycette, vice president of research and technology for Chevron Phillips Chemical, in a written statement. “Chevron Phillips Chemical continues to build on a long history of scientific discoveries, particularly at our facility in Bartlesville, which was originally built in 1950 by Phillips Petroleum Co.” The new pilot plant will incorporate Chevron Phillips Chemical’s proprietary MarTech process for polyethylene production and technology that enables production of bimodal polyethylene resins for advanced applications.<ref>[http://www.tulsaworld.com/communities/bartlesville/chevron-phillips-chemical-to-build-pilot-plant-in-bartlesville/article_90cf6ab6-5dae-5c33-a9d6-85f97b9b3606.html Tulsa World. "Chevron Phillips Chemical to build pilot plant in Bartlesville" December 19, 2014.]</ref> | ||
| + | |||
| + | Philips CEO Greg Garland previously made mention of the expansion at the Research Center when he spoke to the Bartlesville Chamber of Commerce in August 2014.<ref>[http://examiner-enterprise.com/news/local-news/phillips-66-ceo-company-remains-committed-bartlesville Bartlesville Examiner. "Phillips 66 CEO: Company remains committed to Bartlesville" by Nathan Thompson. August 13, 2014.]</ref> | ||
| + | |||
| + | ===December 5, 2014: Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities=== | ||
| + | Phillips 66 announced on December 5, 2014 that in Corporate and Other, Phillips 66 plans to fund $155 million in projects primarily related to information technology and facilities.<ref>[https://secure.marketwatch.com/story/phillips-66-announces-2015-capital-program-2014-12-05 Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.]</ref> | ||
| + | |||
| + | ===November 19, 2014: Phillips Donates $50,000 to Restore Goff Tower in Bartlesville=== | ||
| + | KWON reported on November 19, 2014 that Phillips 66 donated $50,000 and the Lyons Foundation donated $20,875 to help restore Goff Tower, designed by famed architect Bruce Goff and presented in 1964 as a gift from Mrs. H.C. Price to the children of Bartlesville. Citizens are invited for the re-opening ceremony of the Sooner Park Play Tower scheduled for Wednesday, November 26th at 2 pm.<ref>[http://bartlesvilleradio.com/pages/news/80962014/goff-tower-to-be-reopened-november-26th KWOM. "Goff Tower To Be Reopened November 26th" November 19, 2014.]</ref> | ||
| + | |||
| + | ===August 13, 2014: Phillips Has No Plans to Close Any Bartlesville Facilities=== | ||
| + | Nathan Thompson reported in the Bartlesville Examiner-Enterprise on August 13, 2014 that Greg Garland told a group of community leaders at the Bartlesville Regional Chamber of Commerce forum on August 12, 2014 that the company’s commitment to Bartlesville continues and that there are no plans to close any of the Bartlesville facilities. “Bartlesville is a special and unique place,” said Garland. “It has a rich part of our heritage and our legacy. It is important today. It will be important in the future of Phillips 66… A big part of the day-to-day operations and the successes of Phillips 66 are born by the people here in Bartlesville.” Garland mentioned an expansion that is currently underway at the Research Center to continue the development of polyethylene technologies. We also have a world-class research facility here in Bartlesville,” Garland said. “That differentiates us from a Valero (Energy Corporation), or a Marathon (Oil Corporation). It is very unique to our space (in the market).” Even with expansion at the Houston headquarters, Garland said the the space is already at capacity — and the Bartlesville facilities continue to be full as well.<ref>[http://examiner-enterprise.com/news/local-news/phillips-66-ceo-company-remains-committed-bartlesville Bartlesville Examiner-Enterprise. "Phillips 66 CEO: Company remains committed to Bartlesville" by Nathan Thompson. August 13, 2014.]</ref> | ||
| + | |||
| + | ===August 13, 2014: Phillips Pledges $1,700,000 to Support STEM Education in Bartlesville=== | ||
| + | The Tulsa World reported on August 13, 2014 that Phillips will be giving $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. “We want to create a place where our students will come and be excited, be challenged and hopefully be encouraged to follow a career at a place like Phillips 66,” he said. “We want to put the right kind of tools in the hands of students in Bartlesville so they can be more successful.”<ref>[http://www.tulsaworld.com/communities/bartlesville/news/phillips-ceo-announces-million-stem-grant-for-bartlesville-schools/article_30498f4b-3a35-57a8-a307-5cc496c7dc75.html Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.]</ref> | ||
| + | |||
| + | The funds came through a Phillips 66 Signature Community Initiative grant application submitted to the company under an effort spearheaded by Scott Bilger, a Bartlesville school board member and Phillips 66 employee, and Granger Meador, a physics teacher who heads up Bartlesville High’s science department. The new laboratories and major new course offerings will be at the high school, along with Madison and Central Middle Schools. “We are just really, really excited about the opportunity this is going to provide our students,” Superintendent Gary Quinn said. “It cannot be overstated what this is going to mean to our students.” Phillips 66 has about 2,000 workers in Bartlesville.<ref>[http://www.tulsaworld.com/communities/bartlesville/news/phillips-ceo-announces-million-stem-grant-for-bartlesville-schools/article_30498f4b-3a35-57a8-a307-5cc496c7dc75.html Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.]</ref> | ||
| + | |||
| + | ===September 1, 2013: Garland Praises Bartlesville=== | ||
| + | The Bartlesville Examiner-Enterprise reported on September 1, 2013 that Garland praised the Bartlesville and state of Oklahoma for its “rich heritage” and as a source of employee talent it provides to the company. “Oklahoma is a special place to Phillips 66,” Chairman/CEO Greg Garland told a crowd at the first forum in a series hosted by the Bartlesville Regional Chamber of Commerce held Tuesday afternoon. “This is where it all started for us. It became a rich heritage.” Of the company’s 13,500 employees worldwide, Garland said Bartlesville and Houston are the two largest population centers for employees. The headquarters in Houston employs approximately 1,800. “We have nearly three thousand employees in Oklahoma today — two thousand right here in Bartlesville,” he said. “… It’s where our global services are headquartered out of, and really the service is a machine that runs Phillips 66 each and every day, so it is a very important place.” Garland also said the reputation and success of the company were built from the “giants” who first created it, and that success continues because of those giants. “We are standing on the shoulders of giants,” said Garland. “People like E. W. Marland, who started Marland Oil in 1911, and Frank and L. E. Phillips that started Phillips Petroleum in 1917. I could go on and on and list the giants that have come before us that have so well positioned this company for the success that we envoy today.”<ref>[http://examiner-enterprise.com/sections/news/local-news/phillips-66-ceo-praises-city.html Bartlesville Examiner-Enterprise. "Phillips 66 CEO praises city" September 1, 2013.]</ref> | ||
| + | |||
| + | ===October 27, 2012: Bartlesville Research Center Dodges a Bullet=== | ||
| + | Rod Walton reported in the Tulsa World on October 27, 2012 that with Phillips decision not to build a long-planned major research and training center in Colorado, Bartlesville employees are breathing a sigh of relief because many feared that their piece of the company might be headed to the Rocky Mountains. "Any time a major employer in the community makes a sizable investment in another location, it generates concerns," said David Wood, president of Bartlesville Development Corp. "The formal announcement that Phillips 66 will be selling the Louisville property puts this issue to rest." The Bartlesville research center has a long history. Phillips Petroleum Co. had its headquarters in the city from the early 20th century until the merger with Conoco Inc. in 2002. Now it looks like the research center is safe and sound for some years to come. "Without being complacent, indications are that the research center will continue to be a large, high-wage employer in Bartlesville for the foreseeable future," Wood said. "We couldn't be more pleased with that outcome."<ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20121027_49_E1_Bartle648081 Tulsa World. "Phillips 66 cancels Colorado research center, putting to rest any worry for Bartlesville" by Rod Walton. October 27, 2012.]</ref> | ||
| + | |||
| + | ===September 12, 2012: Bartlesville a Special Place for Garland=== | ||
| + | The Tulsa World reported on September 12, 2012 that Garland spoke on September 11, 2012 at a packed Bartlesville Area Chamber of Commerce Forum at the city's community center downtown carrying on a tradition started several years ago by his predecessor, ConocoPhillips CEO Jim Mulva. Garland was adamant that Bartlesville's value as a global web center, combined with its heritage as home city of the original Phillips Petroleum Co. always make it important to the company's future plans. "We have deep roots here," Garland said adding that he visits the company's local operations several times a year. "It's a cost-efficient place for us to do business. I think we made the right decision." Garland noted that office space is almost maxed out locally, so he does not see more than "modest growth" adding to the 2,000 jobs Phillips 66 already has in Bartlesville. Garland was recruited out of Texas A&M by Phillips and lived many years in Bartlesville with his wife and four children.<ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20120912_49_E1_CUTLIN341743 Tulsa World. "Spinoff of Phillips 66 positive, profitable, CEO Greg Garland tells Bartlesville chamber" by Rod Walton. September 12, 2012.]</ref> | ||
| + | |||
| + | The Bartlesville Examiner-Enterprise reported on September 12, 2012 that Garland went to work for Phillips 66 as his first job out of college because of Bartlesville. “I picked this company because of Bartlesville. Four times over the course of 32 years I’ve lived here. We have good memories of Bartlesville, Oklahoma, and it’s always going to be a very special place to me personally," said Garland. “As we were approaching the repositioning and spinning Phillips 66 out of ConocoPhillips, there was never any question that Bartlesville would continue to be a strategic and important part of our company, in the support of our company operations, for a very long time."<ref>[http://examiner-enterprise.com/sections/news/local-news/ceo-city-strategic-phillips-66.html Bartlesville Examiner-Enterprise. "CEO: City strategic to Phillips 66" by Jessica Miller. September 13, 2012.]</ref> | ||
| + | |||
| + | ===May 1, 2012: Phillips Has 'Deep Roots' in Bartlesville=== | ||
| + | ConocoPhillips CEO Ryan Lance and Phillips 66 CEO Greg Garland reassured its employees in Oklahoma in an op-ed they wrote for the Bartlesville Examiner-Enterprise titled "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" that "ConocoPhillips and Phillips 66 together employ nearly 4,500 people in Oklahoma, an increase in recent years. Going forward, we will both maintain Global Services Centers in Bartlesville providing essential finance, information technology and other vital support to our personnel around the world. Elsewhere, Phillips 66 will continue operating the Ponca City Refinery, by far Oklahoma’s largest, and will remain the leading gasoline marketer. ConocoPhillips will continue producing oil and natural gas from the Anadarko Basin and the Panhandle area." Lance and Garland added that "we continue encouraging both current and incoming employees to maintain our proud tradition of community service. Bartlesville is a special place to work, live and raise a family, and we want to help keep it that way. This is an exciting time for ConocoPhillips and Phillips 66. All of our Oklahoma communities are great homes to our people and businesses, and we both look forward to long and bright futures here."<ref>[http://www.examiner-enterprise.com/sections/opinion/editorials/conocophillips-phillips-66-have-deep-roots-bartlesville.html Bartlesvile Examiner-Enterprise. "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" by Ryan Lance and Greg Garland. May 1,2012.]</ref> | ||
| + | |||
| + | ===April 29, 2012: Jim Mulva is a "True Friend of Bartlesville=== | ||
| + | The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that Jim Mulva has "proven to be a true friend to the City of Bartlesville."<ref name=PCOLBatlesvilleeditorial>[http://www.examiner-enterprise.com/sections/opinion/editorials/conocophillips-phillips-66-embark-new-future.html Bartlesville Examiner-Enterprise. "ConocoPhillips, Phillips 66 embark on a new future" April 29, 2012.]</ref> According to Rod Walton, Bartlesville was a big beneficiary of the ConocoPhillips merger and seems to have lived a charmed life economically over the past ten years. Although the home of Frank Phillips doesn't employ 9,000 company workers as it did in the early days, the 1,000 employees added since 2002 have kept downtown buildings such as Plaza and Adams full of mid-level computer, credit and other support personnel. But now Bartlesville operations are in flux and there is much uncertainty about the future. "All employees are being moved to one of the two companies, with co-workers who once sat side to side now literally shifted to separate buildings," writes Walton. ConocoPhillips will employ about 1,700 people in the downtown Plaza and Frank Phillips Tower Center buildings and in the Adams warehouse. Phillips 66's Bartlesville workforce will number 1,900 people, housed in the main Adams and Phillips buildings and the Research and Development Center on the west edge of the city.<ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20120429_49_E1_CUTLIN480302&allcom=1# Tulsa World. "ConocoPhillips streamlines with Phillips 66 refining side spinoff" by Rod Walton. April 29, 2012.]</ref> The Bartlesville Examiner-Enterprise reported on April 29, 2012 that the "split or 'repositioning' as it has been called by company officials, has required many existing local employees to shift jobs and even physically move from one building to another within the extensive downtown Bartlesville office complex" adding that "while no one can predict the future with perfect clarity, Bartlesville appears no worse for the wear during this complex process."<ref>[http://www.examiner-enterprise.com/sections/opinion/editorials/conocophillips-phillips-66-embark-new-future.html Bartlesville Examiner-Enterprise. "ConocoPhillips, Phillips 66 embark on a new future" April 29, 2012.]</ref> | ||
| + | |||
| + | ==The Stock Market and Investor Relations== | ||
| + | [[Image:Stockprice2013a.jpg|thumb|525px|'''Phillips 2013 Stock Performance.''' Phillips 66 (PSX) finished 2013 with its stock price at 77.34 up 24.24 points from its clsoing price of 53.10 on December 31, 2012 for an appreciation of 45.6% over its closing price for 2013.<ref>[https://www.google.com/finance?q=NYSE%3APSX&ei=uWVzUNDZEYSSlAP1XQ Google Finance. "PSX" January 1, 2014.]</ref> Graphic: Hugh Pickens]] | ||
| + | [[Image:Psxperformance2012.jpg|thumb|350px|'''Phillips 2012 Stock Performance.''' Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.<ref>[https://www.google.com/finance?q=NYSE%3APSX&ei=uWVzUNDZEYSSlAP1XQ Google Finance. "PSX" January 1, 2013.]</ref> Graphic: Hugh Pickens]] | ||
| + | '''<span style="color:#0000FF">Stock Market</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#The_Stock_Market_and_Investor_Relations The Stock Market and Investor Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Stock_Performance Phillips 66's Stock Performance] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Dividends_and_Stock_Repurchase Phillips 66's Dividends and Stock Repurchases] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Earnings_Conferences Earnings Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Investor_Conferences Investor Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=What_Independent_Financial_Analysts_Say_About_Phillips_66 What Financial Analysts Say About Phillips 66] | ||
| + | |||
| + | ===Stock Performance=== | ||
| + | ====January 1, 2014: Phillips Stock Appreciates 45.6% in 2013==== | ||
| + | Phillips 66 (PSX) finished 2013 with its stock price at 77.34 up 24.24 points from its closing price of 53.10 on December 31, 2012 for an appreciation of 57.4% over its closing price for 2013.<ref>[https://www.google.com/finance?q=NYSE%3APSX&ei=uWVzUNDZEYSSlAP1XQ Google Finance. "PSX" January 1, 2014.]</ref> | ||
| + | |||
| + | ====January 1, 2013: Phillips Stock Appreciates 53.10% in 2012==== | ||
| + | Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.<ref>[https://www.google.com/finance?q=NYSE%3APSX&ei=uWVzUNDZEYSSlAP1XQ Google Finance. "PSX" January 1, 2013.]</ref> | ||
| + | |||
| + | ===Dividends and Stock Repurchase=== | ||
| + | |||
| + | ====February 4, 2015: Phillips Declares Quarterly dividend of 50 Cents==== | ||
| + | Phillips 66 reported on February 4, 2015 that the board of directors of Phillips 66 has declared a quarterly dividend of 50 cents per share on Phillips 66 common stock. The dividend is payable on March 2, 2015, to shareholders of record as of the close of business on Feb. 17, 2015.<ref>[http://investor.phillips66.com/investors/news/news-release-details/2015/Phillips-66-Announces-Quarterly-Dividend/default.aspx Phillips 66. "Phillips 66 Announces Quarterly Dividend" February 4, 2015.]</ref> | ||
| + | |||
| + | ====October 1, 2014: Phillips Declares Quarterly dividend of 50 Cents==== | ||
| + | The Herald Online reported on October 1, 2014 that the board of directors of Phillips 66 declared a quarterly dividend of 50 cents per share on Phillips 66 common stock payable on Dec. 1, 2014 to shareholders of record as of the close of business on Nov. 14, 2014.<ref>[http://www.heraldonline.com/2014/10/01/6378634_phillips-66-announces-quarterly.html?sp=/100/773/385/&rh=1 Herald Online. "Phillips 66 Announces Quarterly Dividend" October 1, 2014.]</ref> | ||
| + | |||
| + | ====July 10, 2014: Phillips Declares Quarterly dividend of 50 Cents==== | ||
| + | Watchlist News reported on July 10, 2014 that Phillips announced that investors of record on August 15th will be paid a dividend of 0.50 per share on September 2nd.<ref>[http://www.watchlistnews.com/phillips-66-announces-quarterly-dividend-of-0-50-psx/55503/ Watchlist News. "Phillips 66 Announces Quarterly Dividend of $0.50 (PSX)" July 10, 2014.]</ref> | ||
| + | |||
| + | ====May 7, 2014: Phillips Declares Quarterly Dividend of 50 Cents==== | ||
| + | Reuters reported on May 7, 2014 that Phillips declared a dividend of 50 cents payable on June 2 to common shareholders of record by May 19 raising its quarterly dividend by 28 percent.<ref>[http://www.reuters.com/article/2014/05/07/phillips-66-dividends-idUSL2N0NT1N120140507 Reuters. "Phillips 66 boosts dividend by 28 percent" May 7, 2014.]</ref> | ||
| + | |||
| + | ====February 14, 2014: Garland Says Phillips Believes in Bulletproof Dividends==== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips believes in bulletproof dividends. "We think that growing shareholder distributions is key to growing total shareholder return. We believe in bullet proof dividends. We believe in not only secure but growing dividends and competitive dividends. We nearly doubled the dividends since the spin."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ====February 7, 2014: Phillips Declares Quarterly Dividend of 39 cents==== | ||
| + | Marketwatch reported on February 7, 2014 that the board of directors of Phillips has declared a quarterly dividend of 39 cents per share on Phillips 66 common stock payable on March 3, 2014, to shareholders of record at the close of business on Feb. 18, 2014.<ref>[http://www.marketwatch.com/story/phillips-66-announces-quarterly-dividend-2014-02-07?reflink=MW_news_stmp Marketwatch. "Phillips 66 Announces Quarterly Dividend" February 14, 2014.]</ref> | ||
| + | |||
| + | ====December 6, 2013: Phillips Announces New $2 Billion Share Repurchase Program==== | ||
| + | Businesswire reported on December 6, 2013 that Phillips' board of directors has approved a new $2 billion share repurchase program, consistent with the company's strategy to grow shareholder distributions. “Returning capital to our shareholders is fundamental to creating value and delivering superior total shareholder returns,” said Phillips 66 Chairman and CEO Greg Garland. “Our disciplined capital allocation process complements these distributions with capital spending and reinvestment in our higher-valued businesses.” The shares will be repurchased from time to time in the open market at the company's discretion, subject to market conditions and other factors, and in accordance with applicable regulatory requirements.<ref>[http://www.benzinga.com/pressreleases/13/12/b4136200/phillips-66-announces-new-2-billion-share-repurchase-program Businesswire. "Phillips 66 Announces New $2 Billion Share Repurchase Program" December 6, 2013.]</ref> | ||
| + | |||
| + | ====October 2, 2013: Phillips Increases Quarterly Dividend to 39 cents==== | ||
| + | Seeking Alpha reported on October 2, 2013 that the board of directors of Phillips declared a quarterly dividend of 39 cents per share on Phillips 66 common stock, representing an increase of approximately 25 percent from the prior quarter. The dividend is payable on Dec. 2, 2013, to shareholders of record at the close of business on Nov. 14, 2013. "Our objective is to consistently increase shareholder distributions, while also capturing attractive opportunities to reinvest in our businesses and grow future returns," said Phillips 66 Chairman and CEO Greg Garland. Returning capital to our shareholders remains a priority for Phillips 66, and we are pleased to deliver another increase in our quarterly dividend."<ref>[http://seekingalpha.com/news-article/7748642-phillips-66-announces-25-percent-increase-in-quarterly-dividend Seeking Alpha. "Phillips 66 Announces 25 Percent Increase in Quarterly Dividend" October 2, 2013.]</ref> | ||
| + | |||
| + | ====July 10, 2013: Phillips Declares Quarterly Dividend of 31.25 cents==== | ||
| + | istockanalyst reported on July 10, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on September 3, 2013, to shareholders of record at the close of business on August 16, 2013.<ref>[http://www.istockanalyst.com/business/news/6491842/phillips-66-announces-quarterly-dividend istockanalyst. "Phillips 66 Announces Quarterly Dividend" July 10, 2013.]</ref> | ||
| + | |||
| + | ====May 8, 2013: Phillips Declares Quarterly Dividend of 31.25 cents==== | ||
| + | The Wall Street Journal reported on May 8, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on June 3, 2013, to shareholders of record at the close of business on May 20, 2013.<ref>[http://online.wsj.com/article/PR-CO-20130508-915081.html?mod=googlenews_wsj Wall Street Journal. "Phillips 66 Announces Quarterly Dividend" May 8, 2013.]</ref> | ||
| + | |||
| + | ====February 11, 2013: Phillips Declares Quarterly Dividend of 31.25 cents==== | ||
| + | Investors Business Daily reported on February 11, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on March 1, 2013, to shareholders of record at the close of business on Feb. 18, 2013.<ref>[http://news.investors.com/newsfeed-business-wire/021113-141434434-phillips-66-announces-quarterly-dividend.aspx Investors Business Daily. "Phillips 66 Announces Quarterly Dividend" February 11, 2013.]</ref> | ||
| + | |||
| + | ====December 7, 2012: Phillips Increases Quarterly Dividend from 25 cents to 31.25 cents==== | ||
| + | Bloomberg reported on December 7, 2012 that Phillips has announced that the company is raising its quarterly dividend to 31.25 cents per share from 25 cents. The new dividend will be paid in the first quarter of 2013. Phillips 66 also said it approved the repurchase of another $1 billion in company stock. It approved the repurchase of $1 billion shares during the third quarter as well.<ref>[http://www.businessweek.com/ap/2012-12-07/phillips-66-raises-dividend-plans-new-1b-buyback Bloomberg. "Phillips 66 raises dividend, plans new $1B buyback" December 7, 2012.]</ref> | ||
| + | |||
| + | ====October 3, 2012: Phillips Increases Quarterly Dividend from 20 cents to 25 cents==== | ||
| + | Businesswire reported on October 3, 2012 that Phillips has declared a quarterly dividend of 25 cents per share on Phillips 66 common stock, representing a 25 percent increase from the prior quarter. “This 25 percent increase reinforces our objective to provide competitive and growing dividends,” said Phillips 66 Chairman and CEO Greg Garland. “Allocating capital to dividends and repurchases while continuing to invest in the growth of our business is fundamental to our philosophy of delivering shareholder value.”<ref>[http://www.businesswire.com/news/home/20121003006307/en/Phillips-66-Announces-25-Percent-Increase-Quarterly Businesswire. "Phillips 66 Announces a 25 Percent Increase in Quarterly Dividend" October 3, 2012.]</ref> | ||
| + | |||
| + | ====July 12, 2012: Phillips 66 Initiates $0.20 Quarterly Dividend==== | ||
| + | Michael Aneiro reported on Barrons on July 11, 2012 that Phillips 66 announced a quarterly common stock dividend of 20 cents per share, payable Sept. 4 to stockholders as of July 23. “Phillips 66 has a clear strategy to improve returns and to deliver a strong, competitive dividend program to our investors,” said compay chairman and CEO Greg C. Garland. “We are convinced that returns, growth and distributions create value.”<ref>[http://blogs.barrons.com/incomeinvesting/2012/07/11/phillips-66-initiates-0-20-quarterly-dividend/?mod=google_news_blog Barrons. "Phillips 66 Initiates $0.20 Quarterly Dividend" by Michael Aneiro. July 11. 2012.]</ref> | ||
| + | |||
| + | ===Stockholder's Meetings=== | ||
| + | |||
| + | ====May 8, 2013: Phillips Holds First Stockholder's Meeting in Houston==== | ||
| + | Greg Garland told Phillips stockholders at the first meeting that Phillips had executed the spin-off from ConocoPhillips flawlessly. "When you | ||
| + | think about the Company, we had a strong operating performance. We ran well," said Garland. "We stood up the Company in a very favorable margin environment, so all those things came together for really strong year of financial performance for our Company. We delivered $5.4 billion of [adjusted] net income in 2012. Our return on capital employed was 22%. We're so proud of our employees and what they accomplished in standing up the Company, but also for their commitment and their dedication in creating and capturing value for our shareholders."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2013%20PSX%20Stockholder%20MeetingTranscript.pdf Phillips 66. "Transcipt of First Stockholder's Meeting" May 8, 2013.]</ref> | ||
| + | |||
| + | Garland received questions from stockholders John Pajak who works at the Bayway Refinery and commended Phillips for its repsonse to Hurricane Sandy. Stockholder Jimmie Dunn commended Phillips on its first year performance and asked why Phillips bought back stock rather than increasing the dividends. Stockholder Governor Clements said he was very pleased with Phillips' performance. Stockholder Jim White said he was a suppler to Phillips and commended Phillips for the response post superstorm Sandy and for Phillips ongoing commitment to family values and safety. Stockholder Michael Mulvany, the business manager for a local steamfitters union headquartered out of North New Jersey, thanked Phillips for their commitment to safety. "My | ||
| + | union's relationship with that refinery goes back 103 years when Mr. John D. Rockefeller opened up Standard Oil," said Mulvany. "We've been there when it was Exxon, Tosco, ConocoPhillips and now Phillips 66. And we're hoping to be there another 103 years with all you fellows, and your good team of leadership." Stockholder Caroline Hockley asked about Phillips controlled pipelines and Garland responded that Phillips has "a state-of-the-art controlled facility, one of the newest and, I think, best in the industry in Bartlesville, Oklahoma." Stockholder Jimmie Dunn asked how he could get a tide in ConocoPhillips "beautiful hot air balloon."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2013%20PSX%20Stockholder%20MeetingTranscript.pdf Phillips 66. "Transcipt of First Stockholder's Meeting" May 8, 2013.]</ref> | ||
| + | |||
| + | ====April 17, 2013: Phillips Announces First Annual Stockholder's Meeting==== | ||
| + | The Herald Online reported on April 17, 2013 that will host its First Annual Meeting of Stockholders on Wednesday, May 8, 2013 at 9:00 a.m. CDT at the Marriott Houston Westchase at 2900 Briarpark Drive, Houston 77042. Stockholders must present an admission ticket or proof of ownership of Phillips 66 stock, as well as valid picture identification, to enter the meeting. Phillips also encourages company employees to attend the meeting.<ref>[http://www.heraldonline.com/2013/04/17/4780829/phillips-66-to-host-inaugural.html Herald Online. "Phillips 66 to Host Inaugural Meeting of Stockholders" April 17, 2013.]</ref> | ||
| + | |||
| + | ===Earnings Conferences=== | ||
| + | |||
| + | ===='''2014 Q3''': October 29, 2014: Phillips Earnings Beat Q3 Estimates on Higher Margins==== | ||
| + | Nasdaq reported on October 29, 2014 that Phillips posted adjusted third-quarter 2014 earnings of $2.02 per share, beating the Zacks Consensus Estimate of $1.69. Substantial improvement in the company's refining segment and higher marketing margins led to the outperformance.<ref>[http://www.nasdaq.com/article/phillips-66-earnings-beat-q3-estimates-on-higher-margins-analyst-blog-cm407848 Nasdaq. "Phillips 66 Earnings Beat Q3 Estimates on Higher Margins" October 29, 2014.]</ref> | ||
| + | |||
| + | The Refining segment generated adjusted earnings of $558 million compared with a loss of $30 million in the prior-year quarter. Substantial improvement in refining margins drove the impressive results. During the quarter, the company's refining utilization was 94% and clean product yield was 84%.<ref>[http://www.nasdaq.com/article/phillips-66-earnings-beat-q3-estimates-on-higher-margins-analyst-blog-cm407848 Nasdaq. "Phillips 66 Earnings Beat Q3 Estimates on Higher Margins" October 29, 2014.]</ref> Phillips said its realized refining margin was $10.89 a barrel and that a record 95 percent of its crude slate came from so-called advantaged U.S. crudes. "Our operations ran well during the third quarter, capturing strong margins in our refining and marketing businesses," said Garland.<ref>[http://in.reuters.com/article/2014/10/29/phillips66-results-idINL1N0SO0YC20141029 Reuters. "UPDATE 2-Refiner Phillips 66's third-quarter profit more than doubles" October 29, 2014.]</ref> | ||
| + | |||
| + | The Midstream segment generated adjusted quarterly earnings of $115 million compared with $147 million in the year-ago comparable quarter. The Chemicals segment generated adjusted earnings of $299 million compared with $262 million in the year-ago quarter. Earnings in the Marketing and Specialties (M&S) segment were $259 million, up from $255 million in the prior-year comparable quarter. Reduced production costs led to higher global margins which aided the results.<ref>[http://www.nasdaq.com/article/phillips-66-earnings-beat-q3-estimates-on-higher-margins-analyst-blog-cm407848 Nasdaq. "Phillips 66 Earnings Beat Q3 Estimates on Higher Margins" October 29, 2014.]</ref> | ||
| + | |||
| + | ===='''2014 Q2''': July 30, 2014: Phillips Falls Short with 10% Drop in Earnings==== | ||
| + | The Houston Business Journal reported on July 30, 2014 that Phillips fell short of estimates with a nearly 10 percent drop in second-quarter earnings from the same period in 2013 with $863 million in earnings compared to $958 million for the the second quarter of 2013. The company was boosted by its growth in the chemical sector, but its refining revenues dipped noticeably decreasing 14 percent to $390 million partly to weaker refining margins . "Chemicals earnings were driven by strong olefin and polyolefin chain margins," said Garland. "Refining benefited from higher utilization; however, our market capture rate declined."<ref>[http://www.bizjournals.com/houston/blog/drilling-down/2014/07/phillips-66-misses-mark-on-earnings.html?page=all Houston Business Journal. "Phillips 66 misses mark on earnings" by Jordan Blum. July 30, 2014.]</ref><ref>[http://www.houstonchronicle.com/business/article/Phillips-66-profit-drops-despite-good-chemistry-5658213.php Houston Chronicle. "Phillips 66 profit drops despite good chemistry" by Ryan Holeywell. July 30, 2014.]</ref> | ||
| + | |||
| + | Garland did not elaborate on a recent fire in July at a Chevron Phillips Chemical Company LLC plant in Port Arthur that involved injuries, but he did say the facility should not be shut down for much longer. "There's no reason for that unit to be down for a prolonged period of time," he said.<ref>[http://www.bizjournals.com/houston/blog/drilling-down/2014/07/phillips-66-misses-mark-on-earnings.html?page=all Houston Business Journal. "Phillips 66 misses mark on earnings" by Jordan Blum. July 30, 2014.]</ref> | ||
| + | |||
| + | Phillips also reported growth in its midstream segment growing earnings from $90 million in the April-June quarter of 2013 to $108 million this year. But Jeff Dietert, an analyst with Simmons & Company International, said the results fell short of his projection that the midstream segment would report $150 million in second-quarter profit.<ref>[http://www.houstonchronicle.com/business/article/Phillips-66-profit-drops-despite-good-chemistry-5658213.php Houston Chronicle. "Phillips 66 profit drops despite good chemistry" by Ryan Holeywell. July 30, 2014.]</ref> | ||
| + | |||
| + | ===='''2014 Q1''': April 30, 2014: Phillips Meet Expectations with First-Quarter Earnings of $1.6 Billion==== | ||
| + | The Wall Street Journal reported on April 30, 2014 that Phillips announced first-quarter earnings of $1.6 billion and adjusted earnings of $866 million excluding $706 million primarily related to the realized gain on the Phillips Specialty Products Inc. (PSPI) exchange. This compares with fourth-quarter 2013 earnings of $826 million and adjusted earnings of $808 million. "We delivered a strong quarter, with solid performance and improved margins in our Midstream and Chemicals businesses," said Greg Garland, chairman and CEO of Phillips 66. "Our Refining results were impacted by planned downtime at several of our Gulf Coast and Central Corridor refineries and tightening crude spreads."<ref>[http://online.wsj.com/article/PR-CO-20140430-910959.html Wall Street Journal. "Phillips 66 Reports First-Quarter Earnings of $1.6 Billion or $2.67 Per Share" April 30, 2014.]</ref> | ||
| + | |||
| + | Midstream recorded $188 million of earnings during the first quarter of 2014, $67 million higher than the prior quarter. The Chemicals segment reflecting Phillips's equity investment in Chevron Phillips Chemical Company LLC (CPChem) reported first-quarter 2014 Chemicals earnings of$316 million, an increase of $55 million from the prior quarter. Refining earnings were $306 million during the first quarter of 2014, compared with earnings of $418 million during the previous quarter. The decrease was primarily attributed to lower volumes due to planned turnaround and maintenance activities, as well as weaker realized refining margins. Despite higher worldwide market crack spreads, realized margins decreased mostly due to tightening crude spreads, lower clean product realizations and negative inventory impacts.<ref>[http://online.wsj.com/article/PR-CO-20140430-910959.html Wall Street Journal. "Phillips 66 Reports First-Quarter Earnings of $1.6 Billion or $2.67 Per Share" April 30, 2014.]</ref> | ||
| + | |||
| + | ===='''2013 Year''': January 29, 2014: Phillips 2013 Earnings Beat Expectations But Fall Short Of The Prior Year==== | ||
| + | The Houston Business Journal reported on January 29, 2014 that Phillips reported full-year 2013 earnings of $3.7 billion, or $6.02 per share, and adjusted earnings of $3.6 billion, or $5.89 per share. Analysts had expected full-year earnings of $5.64 per share. In 2012, Phillips 66 had earnings of $4.1 billion, or $6.48 per share, and adjusted earnings of $5.3 billion, or $8.38 per share.<ref>[http://www.bizjournals.com/houston/news/2014/01/29/phillips-66-earnings-beat-expectations-but-fall.html?page=all Houston Business Journals. "Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year" by Olivia Pulsinelli. January 29, 2014]</ref> | ||
| + | |||
| + | The Refining Business Segment TBD | ||
| + | |||
| + | The Chemical Business Segment TBD | ||
| + | |||
| + | The Midstream Business Segment TBD | ||
| + | |||
| + | ===='''2013 Q4''': January 29, 2014: Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year==== | ||
| + | The Houston Business Journal reported on January 29, 2014 that Phillips fourth-quarter earnings beat analysts’ expectations with earnings of $826 million, or $1.37 per share, and adjusted earnings of $808 million, or $1.34 per share. Analysts polled by Thomson Reuters had estimated earnings of $1.10 per share. In the fourth quarter of 2012, Phillips 66 had earnings of $708 million, or $1.11 per share, and adjusted earnings of $1.3 billion, or $2.04 per share.<ref>[http://www.bizjournals.com/houston/news/2014/01/29/phillips-66-earnings-beat-expectations-but-fall.html?page=all Houston Business Journals. "Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year" by Olivia Pulsinelli. January 29, 2014]</ref> | ||
| + | |||
| + | The Refining Business Segment earnings were up 24 percent to $450 million, but that’s also down 53 percent from adjusted earnings of $960 million in the fourth quarter of 2012. Phillips attributed the drop to lower margins in all regions except the Gulf Coast. "Margins were negatively impacted by weaker worldwide market crack spreads; however, this was partially offset by improved market capture compared with the same period last year," the company said. Marketing and specialties earnings were also down 35 percent to $73 million, due to the sale of its U.K. power generation business and lower marketing margins attributable to rising product prices in the U.S.<ref>[http://www.bizjournals.com/houston/news/2014/01/29/phillips-66-earnings-beat-expectations-but-fall.html?page=all Houston Business Journals. "Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year" by Olivia Pulsinelli. January 29, 2014]</ref> | ||
| + | |||
| + | The Chemicial Business Segment generated adjusted earnings of $261 million compared with $246 million in the comparable quarter last year. Higher polyethylene margins, equity earnings and ethylene volumes led to the increase. This was partially offset by higher costs and lower benzene margins.<ref>[http://www.nasdaq.com/article/phillips-66-beats-earnings-ests-lags-yy-analyst-blog-cm321848 Nasdaq. "Phillips 66 Beats Earnings Ests, Lags Y/Y - Analyst Blog" January 29, 2014.]</ref> | ||
| + | |||
| + | The Midstream Business Segment generated adjusted earnings of $450 million compared with earnings of $960 million in the year-ago quarter. The dismal results can be traced to lower realized refining margins, owing to decline in the average worldwide market crack spread. During the quarter, Phillips 66's refining utilization was at 92% and clean product yield was 84%.<ref>[http://www.nasdaq.com/article/phillips-66-beats-earnings-ests-lags-yy-analyst-blog-cm321848 Nasdaq. "Phillips 66 Beats Earnings Ests, Lags Y/Y - Analyst Blog" January 29, 2014.]</ref> | ||
| + | |||
| + | Segmental earnings for Marketing and Specialities were $73 million, down from $113 million from the comparable quarter last year. The decrease was primarily due to the sale of the U.K. power generation business in Jul 2013, and lower marketing margins. This was partially offset by reduced costs and higher volumes.<ref>[http://www.nasdaq.com/article/phillips-66-beats-earnings-ests-lags-yy-analyst-blog-cm321848 Nasdaq. "Phillips 66 Beats Earnings Ests, Lags Y/Y - Analyst Blog" January 29, 2014.]</ref> | ||
| + | |||
| + | In the reported quarter, Phillips 66 generated $865 million of cash from operations. It also returned $876 million of capital to shareholders. Of this, $232 million was disbursed as dividends while $644 million was used to repurchase 9.9 million shares of common stock.<ref>[http://www.nasdaq.com/article/phillips-66-beats-earnings-ests-lags-yy-analyst-blog-cm321848 Nasdaq. "Phillips 66 Beats Earnings Ests, Lags Y/Y - Analyst Blog" January 29, 2014.]</ref> | ||
| + | |||
| + | ===='''2013 Q3''': October 30, 2013:Phillips Profits are Down in Third Quarter Due to Refining Losses==== | ||
| + | Olivia Pulsinelli reported in the Houston Business Journal that Phillips' earnings for the third quarter were $535 million, or 87 cents per share, compared to $1.6 billion, or $2.51 per share, a year earlier. Analysts polled by Thomson Reuters had expected a profit of 94 cents per share. Although the company’s midstream, chemicals, and marketing and specialties businesses were up compared to last year, the refining business posted a $2 million loss. "We ran well during the quarter," said Garland. "Weaker refining margins had a significant impact on our earnings. Chemicals posted strong earnings as a result of solid utilization rates and good margins."<ref>[http://www.bizjournals.com/houston/news/2013/10/30/phillips-66-reports-lower-q3-profit-on.html Houston Business Journal. "Phillips 66's Q3 profit hit by refining loss" by Olivia Pulsinelli. October 30, 2013.]</ref> | ||
| + | |||
| + | ===='''2013 Q2''': July 31, 2013: Phillips Earnings Disappoint with 19% Drop in Earnings for 2nd Quarter ==== | ||
| + | FuelFix reported on July 131, 2013 that Phillips underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. “We should have run better and our earnings results reflect this,” said Garland. Phillips 66′s adjusted earnings per share of about $1.50 was well below analyst expectations of about $1. 81 for that figure.<ref>[http://fuelfix.com/blog/2013/07/31/phillips-66-earnings-fall-with-disappointments/ FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.]</ref> | ||
| + | |||
| + | Garland cited two reasons for the disappointing earnings. First, Phillips' extended downtime at its facilities, including a refinery and a chemical plant, contributed to $175 million in lost profit. One of the outages, an extended maintenance period at a chemical plant in Port Arthur, lasted for 91 days, the duration of an entire quarter of the year. Second, higher domestic oil prices pushed down profits as the gap between the price of West Texas Intermediate, a benchmark for domestic crude, and Brent, a measure of international oil prices, narrowed substantially during the second quarter. That trend is expected to continue through the remainder of the year, with Brent currently around $107 and WTI at about $105. U.S. refiners had previously enjoyed a huge advantage over their foreign competitors because WTI prices were as much as $20 lower than Brent prices , with some U.S. crudes priced far lower because there was limited access to foreign markets.<ref>[http://fuelfix.com/blog/2013/07/31/phillips-66-earnings-fall-with-disappointments/ FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.]</ref> | ||
| + | |||
| + | ===='''2013 Q1''': May 1, 2013: Phillips' Profit in 1st Quarter Doubles from Previous Year to $2.23 per Share==== | ||
| + | Bloomberg reported on May 1, 2013 that Phillips net income for the 1st quarter rose to $1.41 billion, or $2.23 a share, from $636 million, or $1, a year earlier as the margin between oil costs and fuel prices widened and its chemical business improved. Greg Garland has said he’s focused on chemicals, pipelines and natural gas processing to reduce the volatility that comes with refining earnings. “This company is a different animal because the growth opportunities are not on the refining side of the business,” said Fadel Gheit, an analyst at Oppenheimer & Co. Refining profits rose as the margin between the cost of West Texas Intermediate oil and the price at which refiners sell fuel rose 20 percent to an average of $32.689 a barrel in the January-to-March period, according to data compiled by Bloomberg.<ref>[http://www.bloomberg.com/news/2013-05-01/phillips-66-quarter-profit-doubles-on-refining-chemicals.html Bloomberg. "Phillips 66 Quarter Profit Doubles on Refining, Chemicals" by Bradley Olsen. May 1, 2013.]</ref> | ||
| + | |||
| + | Phillips 66 has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.<ref>[http://www.foxbusiness.com/news/2013/05/01/phillips-66-profit-surges-aims-to-use-all-cheap-domestic-crude/ Fox Business. "Phillips 66 Profit Surges; Aims to Use All Cheap, Domestic Crude" May 1, 2013.]</ref> | ||
| + | |||
| + | ===='''2012 Q4''': January 31, 2013: Phillips 66 Adjusted Profit Beats 4th Quarter Estimates But Gross Profits Down 65% When Including Impairment Charge==== | ||
| + | Bloomberg reported on January 31, 2013 that Phillips beat fourth-quarter profit estimates by 37 cents more than the $1.69 average of 16 analysts' estimates compiled by Bloomberg. Adjusted earnings for the quarter were $1.31 billion or $2.06 per share, compared to adjusted earnings of $379 million or $0.60 per share in the same period last year. However these adjusted profit figures exclude a writedown of the value of the company's interest in a plant in Malaysia of $2.06 a share. If the writedown is included, then the company reported a 65 percent decline in profit for the fourth quarter from last year as an impairment charge more than offset higher refining and chemical margins.<ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20130131_49_E4_CUTLIN948006 Tulsa World. "Phillips 66 profit beats estimates" by Bradley Olsen. January 31, 2013.]</ref><ref>[http://www.nasdaq.com/article/phillips-66-q4-profit-down-65-on-impairment-charge-20130130-00751#.UTD8G6KOSQ0 Nasdaq. "Phillips 66 Q4 Profit Down 65% On Impairment Charge" January 30, 2013.]</ref> | ||
| + | |||
| + | The company has rallied along with other U.S. refiners by boosting access to a growing supply of domestic crude that has become cheaper than overseas oil. U.S. refiners in some regions paid an average of $17.48 less for every barrel they processed compared to the global benchmark oil price, according to data compiled by Bloomberg. "They're taking advantage of the God-given gift of very wide crude discounts and cheap natural gas," Fadel Gheit, a New York-based analyst with Oppenheimer & Co., said in a telephone interview. "They are putting the money to good use, and it's reflected in the stock price."<ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20130131_49_E4_CUTLIN948006 Tulsa World. "Phillips 66 profit beats estimates" by Bradley Olsen. January 31, 2013.]</ref> | ||
| + | |||
| + | ===='''2012 Q3''': October 31, 2012: Phillips 66 Beats Analyst Expectations with 3rd Quarter Profits of $1.6 billion or $2.51 per share==== | ||
| + | Reuters reported on October 31, 2012 that Phillips announced 3rd quarters profits of $1.6 billion or $2.51 per share, compared with $1 billion or $1.65 per share a year earlier. Analysts on average had expected a profit of $2.35 per share, according to Thomson Reuters I/B/E/S.<ref>[http://www.reuters.com/article/2012/10/31/phillips66-earnings-idUSL1E8LV25920121031 Reuters. "UPDATE 3-Phillips 66 quarterly profit up on good margins" October 31, 2012.]</ref> | ||
| + | |||
| + | Increased access to cheaper crude oil from the United States and Canada boosted Phillips 66's quarterly profits above analyst expectations with more than half of the company's refining capacity in the central corridor of the U.S. with access to cheaper crudes in North Dakota, Texas, Kansas and other states, executives told analysts during Phillips 66's third-quarter earnings conference call. "Our U.S. advantaged crudes increased from 52 percent last year to 61 percent to date in 2012," Chief Financial Officer Greg Maxwell said.<ref>[http://www.reuters.com/article/2012/10/31/phillips66-earnings-idUSL1E8LV25920121031 Reuters. "UPDATE 3-Phillips 66 quarterly profit up on good margins" October 31, 2012.]</ref> | ||
| + | |||
| + | =====October 10, 2012: Phillips 66 to Announce Third-Quarter Financial Results on October 31===== | ||
| + | Phillips announced on October 10, 2012 that the company will release its third-quarter financial results on October 31, 2012 and host a conference call to discuss the company’s third-quarter performance and provide an update on strategic initiatives.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/10-10-2012.aspx Phillips 66. "Phillips 66 to Announce Third-Quarter Financial Results" October 10, 2012.]</ref> | ||
| + | |||
| + | ===='''2012 Q2''': August 1, 2012: Phillips announces Profits up 14% in Second-Quarter Earnings Call==== | ||
| + | Reuters reported on August 2, 2012 that Phillips 66 posted a 14 percent jump in second-quarter profit with a net income of $1.18 billion, or $1.86 per share, up from $1.04 billion, or $1.64 per share, a year earlier. Chief Financial Officer Greg Maxwell told analysts the company's capital expenditures for 2012 would range between $1 billion and $1.5 billion. Phillips 66 said it would retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there. Garland said Phillips 66 "really likes" its Midwest and Gulf Coast refineries, which have easier access to cheaper Canadian and inland U.S. crudes. "The East and West Coast refineries are challenged refineries, and we think there are opportunities to improve them," Garland told Reuters in a post-call interview. Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude. Garland said the Bayway Refinery and Ferndale Refinery were "absolutely" more likely to stay in the company's portfolio if Phillips 66 can increase the amount of Bakken crude they run, backing out other more expensive crudes. Bayway can run up to 100,000 bpd of light crude, while Ferndale can run 50,000 and Phillips plans to rail Bakken crude to both plants. Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems. Garland says that the company is not planning potential acquisitions -- refineries or other assets -- at this time. "There's nothing really interesting to us at this time," says Garland.<ref>[http://in.reuters.com/article/2012/08/01/us-phillips66-results-idINBRE8700OV20120801 Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012]</ref> | ||
| + | |||
| + | =====Plan to Get Advantaged Crudes to Every Refinery===== | ||
| + | Garland said that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day. "We are trying to get those crudes to every refinery we can. But clearly to Ferndale on the West Coast to Bayway on the East Coast, we think Ferndale can probably run 50,000 barrels a day of Bakken crude. Wood River, we can run up to 90,000 to 120,000 barrels a day of shale type crudes there. Ponca about 60,000 barrels a day. Bayway, 100,000 barrels a day of shale type crudes that we can advantage, that we can move into Bayway. Smaller Rodeo we can get at 30,000 barrels a day and Sweeny about 40,000 barrels a day. And then Alliance, we are running today Eagle Ford crude and some Bakken crude in Alliance, but ultimately 50,000 to 90,000 barrels a day. So we have a plan to get advantaged crude into most of our refineries."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012]</ref> | ||
| + | |||
| + | =====June 28, 2012: Phillips 66 to Hold First Earnings Call on August 1===== | ||
| + | Phillips 66 issued a press release on June 28, 2012 announcing that Phillips will issue its second-quarter earnings report on August 1 and Greg Garland and Executive Vice President and Chief Financial Officer Greg G. Maxwell will host a webcast to discuss the company’s second-quarter performance and provide an update on how the company is delivering on its strategy.<ref>[http://www.businesswire.com/news/home/20120628005637/en/Phillips-66-Hold-Earnings-Call BusinessWire. "Phillips 66 to Hold First Earnings Call" June 28, 2012.]</ref> | ||
| + | |||
| + | ===Investor Conferences=== | ||
| + | |||
| + | ====September 4, 2014: Phillips Presents at Barclay CEO Energy-Power Conference==== | ||
| + | Greg Garland made a presentation to analysts at the Barclay CEO Energy-Power Conference on September 3, 2014. "So here is our strategy, growth, returns, distributions. We have an unyielding commitment to operational excellence, which for us is personal safety, process safety, environmental excellence reliability, cost management and a commitment to have a high performing organization. So right people, at the right place, at the right time to execute the plan, and having people that know how to win and are committed to differentiating shareholder value. So that's kind of the strategy."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | "As we look at our refining business, it's run well, it's optimized, it's minimized capital investments. We won't invest in advantaged crude at the front end, exports on the backend, yield capture, energy efficiency, but really very disciplined capital investment in our refining business. Midstream business, aggressive growth and we'll go through that today as we move into the presentation. Chemicals, aggressive growth; selective growth in our marketing and specialties businesses. We're executing well. We've identified lot of growth opportunities in the company, we'll talk about today. A lot of them around midstream and logistics, ultimately destined for our master limited partnership. We've raised the dividend 28% in May and June. The board approved additional $2 billion share repurchase, so we're at $7 billion total authorization on share repurchases."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | ====May 21, 2014: Phillips 66 presents at UBS Global Oil & Gas Conference==== | ||
| + | TBD | ||
| + | |||
| + | ====April 10, 2014: Phillips Presents at Phillips 66 Analyst Meeting==== | ||
| + | Phillips reported that Greg Garland, Clayton Reasor, Tim Taylor, and Greg Maxwell presented at an Analyst Meeting on April 10, 2014. "Part of our vision is to double the enterprise value of our Company based upon its historical implied value, said Garland. "We were thoughtful, we are very purposeful in how we structured Phillips 66 from the very beginning and the assets that went into the Company. We believe that our four main business segments are more valuable together than they would be separated, and we do test that continually. We think that we access lower cost of capital. We think that, looking across the value chain, that we can optimize. We can direct capital to its highest and most best use. And then finally, we can grow quicker."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-analyst-mtg-transcript.pdf Phillips 66. "Analyst Meeting" April 10, 2014.]</ref> | ||
| + | |||
| + | ====March 6, 2014: Phillips 66 presents at Bank of America Merrill Lynch 2014 Refining Conference==== | ||
| + | Phillips reported that Clayton Reasor and Greg Maxwell presented at Bank of America Merrill Lynch 2014 Refining Conference on March 6, 2014. "We’ve got two very good refineries on the West Coast – one in San Francisco, one in L.A. – about 230,000 barrels a day of total capacity, 110,000 barrels a day of coking capacity. They are positive cash flow, they are positive net income," said Reasor. "Capital requirements aren’t that significant. So those refineries are well positioned, but they’re generating single-digit returns and struggle as far as attracting capital. We’ve talked about how to improve performance in California, and for us, it’s around increasing the amount of advantaged crude, so how do we find ways of getting Canadian crude into California? We’re in the comment period right now at Santa Maria, a 30,000 or 35,000-barrel-a-day unit train rail unloading facility, and hopefully that will be permitted. We’re also looking at other things in California to improve the performances of those businesses. But for us, we believe California will struggle being competitive in the export market, given the costs there and the lack of advantaged crudes, and longer term, we look at California and wonder if it’s something that we need to continue to own in order to grow our chemicals industry business."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-BAML-Transcript.pdf Phillips 66. "Bank of America Merrill Lynch 2014 Refining Conference" March 6, 2014.]</ref> | ||
| + | |||
| + | ====February 12, 2014: Phillips presents at Credit Suisse Energy Summit ==== | ||
| + | Phillips reported that Greg Garland Clayton Reasor presented at the Credit Suisse Energy Summit on February 12, 2014. Garland told security analysts that the Refining Business Segment is always is going to be a very volatile business for Phillips. "We don't see that changing in the future. I think small changes in operating rates in infrastructure are going to create dislocations. I think having a large system like we have, having a very sophisticated and large commercial organization like we have, we're going to be able to take advantage of those opportunities that come our way."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Phillips 66. "Credit Suisse Energy Summit" February 12, 2014.]</ref> | ||
| + | |||
| + | ====August 29, 2013: Phillips presents at Barclays CEO Energy-Power Conference==== | ||
| + | Phillips reported that Greg Garland presented at Barclays CEO Energy-Power Conference on August 29, 2013. "It's going to be an energy century as you think about it; it's going to be a century of opportunity," said Garland. "We're very optimistic about the growth in U.S. manufacturing as people see $3.50 natural gas; they're looking at 8% unemployment. They see the investment that the industry is making in infrastructure and petrochemical facilities and etc. And we think at Phillips 66 we're extremely well-positioned to play our part in this changing American energy landscape and that we can be one of the premier companies in this space in terms of creating jobs, capturing value, providing energy and improving lives."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Barclays_091213_Final.pdf Phillips 66. "Barclays CEO Energy-Power Conference" August 29, 2013.]</ref> | ||
| + | |||
| + | ====May 21, 2013: Phillips Presents at UBS Global Oil & Gas Conference==== | ||
| + | Phillips reported that Greg Maxwell presented at the UBS Global Oil & Gas Conference on May 21, 2013. "We can run some lights in San Francisco. As far as working towards getting advantaged crudes into that, we're looking at options to take down via pipeline -- I mean via rail cars, and then also going over to the waterfront and barging down into those refineries," said Maxwell. "With regard to San Francisco and LA, land is expensive and short to come by. We have to do some permitting. And then also, bringing it in via tankers, we have to get some permitting as well. So all that's underway."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2013%20UBS%20Oil%20and%20Gas%20Conference.pdf Phillips 66. "UBS Global Oil & Gas Conference" May 21, 2013.]</ref> | ||
| + | |||
| + | ====May 15, 2013: Phillips Presents at the Citi Global Energy and Utilities Conference==== | ||
| + | Phillips reported that Tim Taylor and Greg Maxwell presented at the Citi Global Energy and Utilities Conference on May 15, 2013. "Rail for us is a relatively minor percentage of our total movement, and so we look at rail as a mobile pipeline," said Taylor at the conference. "And clearly today some of the northern plays are more oriented toward rail versus the access that you have by pipe in the southern part of the U.S. So I see rail as playing a role, but we still like pipelines. It’s more economical. But there is a lot of flexibility in rail, so I think rail continues to be a piece, but it’s not going to become the dominant mode or the primary focus."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Citi%20Global%20Energy%20and%20Utilities%20Conference.pdf Phillips 66. "Citi Global Energy and Utilities Conference" May 15, 2013.]</ref> | ||
| + | |||
| + | ====March 18, 2013: Phillips Presents at the Howard Weil 41st Annual Energy Conference==== | ||
| + | Phillips reported that they presented at the Howard Weil 41st Annual Energy Conference on March 18, 2013.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Howard%20Weil%202013.pdf Phillips 66. Slide Presentation at the Howard Weil 41st Annual Energy Conference]</ref> | ||
| + | |||
| + | ====February 28, 2013: Phillips to Present at Bank of America Merrill Lynch 2013 Refining Conference on March 7==== | ||
| + | The Fort Mills Times reports that Larry Ziemba, executive vice president, Refining, Project Development and Procurement of Phillips 66 will speak at the Bank of America Merrill Lynch 2013 Refining Conference in New York on Thursday, March 7 to discuss the company’s plans to enhance refining returns, as well as its overall strategy for growth and value creation.<ref>[http://www.fortmilltimes.com/2013/02/28/2525329/phillips-66-to-present-at-bank.html Fort Mills Times. "Phillips 66 to Present at Bank of America Merrill Lynch 2013 Refining Conference" February 28, 2013.]</ref> | ||
| + | |||
| + | ====February 5, 2013: Taylor Tells Credit Suisse Energy Summit That Canadian Crude is Being Transported to California Refineries==== | ||
| + | Reuters reported on February 5, 201 that Tim Taylor, Phillips executive vice president for commercial, marketing, transportation and business development, told the Credit Suisse energy conference that Phillips has begun moving cut-price Canadian crude to its California refineries at Los Angeles and San Francisco via rail. "We're beginning to deliver Canadian crude to our California refineries by rail," said Taylor. Garland told Reuters on January 30, 2013 that Phillips was looking at coiled tube cars that are suited to bitumen in Canada's heavy oil deposits that must be heated in order to flow.<ref>[http://www.reuters.com/article/2013/02/05/phillips66-california-crude-idUSL1N0B5JMJ20130205 Reuters. "UPDATE 1-Phillips 66 moving some Canadian crude to Calif. refineries" by Kristen Hays. February 5, 2013.]</ref> | ||
| + | |||
| + | ====January 22, 2013: Phillips 66 to Present at Credit Suisse Energy Summit on February 5, 2013==== | ||
| + | Daily Finance reported on January 22, 2013 that Tim Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 will speak to investors and securities analysts at the Credit Suisse Energy Summit in Vail, Colo. on February 5, 2013 to discuss the company's strategy to enhance refining returns, grow midstream infrastructure and chemicals capacity, and increase distributions to shareholders.<ref>[http://www.dailyfinance.com/2013/01/22/phillips-66-to-present-at-credit-suisse-energy-sum/ Daily Finance. "Phillips 66 to Present at Credit Suisse Energy Summit" January 22, 2013.]</ref> | ||
| + | |||
| + | ====December 13, 2012: Phillips Announces 2013 Capital Program at Inaugural Analyst Meeting==== | ||
| + | Phillips reported on Decmeber 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13. 2012.]</ref> | ||
| + | |||
| + | * See [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Phillips_Capital_Program_for_2013 Phillips Capital Programs for 2013] | ||
| + | |||
| + | ====November 27, 2012: Greg Garland to Host Inaugural Analyst Meeting on December 13==== | ||
| + | Marketwatch reported on November 27, 2012 that Greg Garland and other executives at Phillip 66 will discuss the company's strategic objectives, including its plans to enhance returns, grow profitably and increase shareholder distributions at an Inaugural Analyst Meeting in New York on December 13, 2012. | ||
| + | |||
| + | ====November 13, 2012: Tim Taylor Presents at Bank of America Merrill Lynch 2012 Global Energy Conference==== | ||
| + | 4-traders reported on November 5, 2013 that Tim G. Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 spoke to investors and securities analysts at the Bank of America Merrill Lynch 2012 Global Energy Conference in Miami, Fla. on November 13, 2012 with an overview of the company and its strategic initiatives.<ref>[http://www.4-traders.com/PHILLIPS-66-10447684/news/Phillips-66-to-Present-at-Bank-of-America-Merrill-Lynch-2012-Global-Energy-Conference-15470911/ 4-traders. "Phillips 66: to Present at Bank of America Merrill Lynch 2012 Global Energy Conference" November 5, 2012.]</ref> | ||
| + | |||
| + | ====September 5, 2012: Garland Speaks at Barclays CEO Energy-Power Conference==== | ||
| + | Phillips 66 reported that Phillips CEO Greg C. Garland spoke to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | * See [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.] | ||
| + | |||
| + | ====August 22, 2012: Garland to Speak at Barclays CEO Energy-Power Conference on September 5==== | ||
| + | Marketwatch reported on August 22, 2012 that Phillips CEO Greg C. Garland will speak to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 20120 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.<ref>[http://www.marketwatch.com/story/phillips-66-to-present-at-barclays-ceo-energy-power-conference-2012-08-22 Marketwatch. "Phillips 66 to Present at Barclays CEO Energy-Power Conference" August 22, 2012.]</ref> | ||
| + | |||
| + | ====June 5, 2012: Garland Presents Phillips Strategy for Growth to the Citi Global Energy Conference==== | ||
| + | On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | =====Refining and Marketing Strategy===== | ||
| + | Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | Phillips also wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | When asked a question about rationalizing refining capacity by closing down plants Garland said it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | =====Midstream Strategy===== | ||
| + | Garland said there are s large opportunities in terms of midstream investment in gas gathering and processing, NGL fractionation, and distribution and that Phillips has a a very aggressive investment profile in the midstream space. "We have about $7 billion of projects identified, underway in this space and so you think at the DCP JV level spending kind of $500 million a year, historical capex, we’re moving that up to about $2 billion a year," said Garland. "We also have our own embedded midstream business within Phillips 66. It’s primarily pipelines and ownership in fractionators at Conway, Borger, and Belvieu. Good business generates good returns for us in a growth area for us and we would consider growth in this area around fractionation, around LPG exports."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | =====Chemical Strategy===== | ||
| + | Garland says the NGLs that are coming on over the next 10 years are going to be feedstocks for the petrochemicals business and that the Joint Venture with Chevron is well positioned for that.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | ====June 5, 2012: Garland Presents to Investors at Citi Global Energy Conference==== | ||
| + | On May 29, 2012 Phillips 66 announced that CEO Greg Garland will speak to investors and securities analysts on June 5, 2012 at the 2012 Citi Global Energy Conference partipating n a roundtable discussion, providing a brief company overview and engaging in Q&A with investors.<ref>[http://www.thestreet.com/story/11557338/1/phillips-66-to-participate-in-citi-global-energy-conference.html TheStreet.com "Phillips 66 To Participate In Citi Global Energy Conference" May 29, 2012.]</ref> | ||
| + | |||
| + | ====May 24, 2012: Clayton Reasor Presents to UBS Global Oil and Gas Conference==== | ||
| + | On May 17, 2012 Phillips 66 announced that Clayton Reasor, Phillips 66 senior vice president for Investor Relations, Strategy and Corporate Affairs, will speak to investors and securities analysts on May 24, 2012 at the UBS Global Oil and Gas Conference in Austin, Texas about Phillips 66's strategic priorities, including plans for growth and returns enhancement.<ref>[https://secure.marketwatch.com/story/phillips-66-to-present-at-ubs-global-oil-and-gas-conference-2012-05-17 Marketwatch. "Phillips 66 to Present at UBS Global Oil and Gas Conference" May 17, 2012.]</ref> | ||
| + | |||
| + | ===Other Investor News=== | ||
| + | |||
| + | ====July 23, 2013: Phillips 66 Partners raises $377.8 million in IPO==== | ||
| + | Businessweek reported on July 23, 2013 that Phillips 66 Partners LP raised $377.8 million from its initial public offering of stock. 16.4 million shares sold at at $23 up from 15 million shares the partnership had expected to sell for $19 to $21 each. The banks managing the deal may buy another 2.5 million shares if there's demand for them and if they do, the public will own about 26 percent of Phillips 66 Partners. Phillips 66 will own the rest of it. The shares are expected to start trading on the New York Stock Exchange Tuesday under the "PSXP" ticker symbol.<ref>[http://www.businessweek.com/ap/2013-07-23/phillips-66-partners-raises-377-dot-8m-in-ipo Businessweek. "Phillips 66 Partners raises $377.8M in IPO" July 23, 2013.]</ref> | ||
| + | |||
| + | ====July 15, 2013: Phillips 66 Partners Plans $315 million IPO==== | ||
| + | Fox Business reported on July 15, 2013 that Phillips 66 Partners plans an initial public offering will likely total as much as $315 million that will include certain pipeline, terminal and storage systems—used for crude oil and refined petroleum product—in the Central and Gulf Coast regions. The IPO of approximately 15 million shares is expected to price in a range of $19 to $21 a share, according to a filing with the Securities and Exchange Commission.<ref>[http://www.foxbusiness.com/investing/2013/07/15/phillips-66-partners-eyes-ipo-315m/ Fox Business. "Phillips 66 Partners Eyes IPO of $315M" by Matthew Pocco. July 15, 2013.]</ref> | ||
| + | |||
| + | ====March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO==== | ||
| + | Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.<ref>[http://www.reuters.com/article/2013/03/27/us-phillips66-mlp-idUSBRE92Q1C120130327 Reuters. "Phillips 66 midstream vehicle registers for $300 million IPO" March 27, 2013.]</ref> | ||
| + | |||
| + | ====July 3, 2012: Phillips Recommends Stockholders Reject TRC Mini-Tender Offer==== | ||
| + | CSP Net reported on July 3, 2012 that Phillips 66 Co. has recommended that shareholders not tender their shares in response to an unsolicited mini-tender offer that TRC Capital Corp. TRC is offering to purchase up to three million shares, or less than 0.48% of Phillips 66's outstanding common stock at an offer price of $31.30 per share represents a 4.78% discount to the Phillips 66 closing share price on June 25, 2012, the day prior to the commencement of TRC's mini-tender offer. "Phillips 66 strongly recommends investors obtain current market quotes for their shares of common stock and consult with their financial advisors with respect to TRC's offer," the company said. "The company does not endorse and is not associated with TRC's unsolicited mini-tender offer."<ref>[http://www.cspnet.com/news/corporate/articles/phillips-66-stands-tall CSP Net. "Phillips 66 Stands Tall: Recommends shareholders reject mini-tender offer by TRC" July 3, 2012.]</ref> | ||
| + | |||
| + | ====June 7, 2012: Garland says Phillips Deserves a Higher P/E==== | ||
| + | On June 7, 2012 Barrons reported that Greg Garland said that Phillips is a lot more than just an oil refiner and deserves a higher price/earnings multiple than the paltry P/E ratio that refiners now garner. "We don't want the Street to just give us a refining multiple," Garland said in an interview in New York. Philips shares, at around 32, trade for less than seven times projected-2012 profits of $4.90 a share and yield 2.5% based on the company's targeted quarterly dividend of 20 cents that is set to begin in the third quarter. Garland says that Phillips has gotten about 60% of its profits on average over the past three years from higher-return businesses, principally chemicals and so-called midstream assets, including pipelines and processing facilities that handle natural-gas liquids. The chemical and midstream operations generate 20%-plus returns on capital and offer significant reinvestment opportunities.<ref>[http://online.barrons.com/article/SB50001424053111904470204577452521119565672.html?mod=BOL_hpp_highlight_bottom Barrons. "Wall Street Should Pump Up Phillips 66's P/E" by Andrew Bary. June 9, 2012.]</ref> | ||
| + | |||
| + | ====May 2, 2012: Phillips Rings Wall Street's Opening Bell==== | ||
| + | On May 2, 2012, executives and employees from Phillips 66 celebrated the company's first week of regular trading on the New York Stock Exchange by ringing the opening bell. Chairman and Chief Executive Officer Greg C. Garland led the delegation, which included employees from its Houston Headquarters and Bayway Refinery in Linden, N.J.<ref>[https://secure.marketwatch.com/story/phillips-66-rings-opening-bell-at-new-york-stock-exchange-2012-05-02 MarketWatch. "Phillips 66 Rings Opening Bell at New York Stock Exchange" May 2, 2012.]</ref> | ||
| + | |||
| + | ====April 23, 2012: Phillips to Join S&P 500==== | ||
| + | It was announced on April 23, 2010 that Phillips 66 will join the the S&P 500.<ref>[http://www.rdmag.com/News/FeedsAP/2012/04/energy-phillips-66-to-replace-supervalu-in-s-p-500/ R&D Magazine. "Phillips 66 to replace Supervalu in S&P 500" April 23, 2010]</ref> | ||
| + | |||
| + | ====April 17, 2012: Howard Thill says Phillips Will Have Increased Flexibility==== | ||
| + | On April 17, 2012 Howard Thill, Marathon Oil’s vice president of investor relations and public affairs, spoke about the ConocPhillips split at Oklahoma State University’s energy conference in Oklahoma City. “It’s about enhanced flexibility — the ability to focus on an individual asset or set of assets,” Thill said. “When you have a very large conglomerate, it’s very difficult to be able to generate enough information at a low enough level to give investors that transparency into the business,” Thill said. “Independent refiners and independent exploration and production companies disclose much more information about their companies than a major integrated because from a major integrated standpoint, the scale is so large that it just doesn’t make a difference in that respect.”<ref>[http://newsok.com/phillips-66-stations-return-to-oklahoma/article/3680381/?page=2 The Daily Oklahoma. "Phillips 66 stations return to Oklahoma" by Adam Wilmoth. May 31, 2012.]</ref> | ||
| + | |||
| + | ====April 4, 2012: ConocoPhillips Board of Directors Votes to Create Two New Companies==== | ||
| + | On April 4, 2012 ConocoPhillips' board of directors announced that two new companies will be separated through the distribution of shares of Phillips 66 to holders of ConocoPhillips common stock. This distribution is expected to occur after market close on April 30, 2012. ConocoPhillips shareholders will receive one share of Phillips 66 common stock for every two shares of ConocoPhillips common stock held at the close of business on the record date of April 16, 2012.<ref>[http://www.investorvillage.com/mbthread.asp?mb=296&tid=11614472&showall=1 ConocoPhillips. "ConocoPhillips’ Board of Directors Approves Spin-off of Phillips 66" April 4, 2012]</ref> | ||
==Operational Excellence== | ==Operational Excellence== | ||
| Line 619: | Line 1,044: | ||
====August 1, 2012: Plan to Reduce Controllable Cost by 5% with Optimize 66 Program==== | ====August 1, 2012: Plan to Reduce Controllable Cost by 5% with Optimize 66 Program==== | ||
Phillips was asked by Paul Sankey of Deutsche Bank during their second-quarters earnings report on August 1, 2012 about the $4 billion of controllable costs and if Phillips had set a target for a 5% reduction in controllable costs for around $200 million of savings. "Yes. Controllable cost, we put a number out there $200 million. We think it is a good number," said Garland. "I frankly think we will do better than that. We tend to always exceed. We have got a program we call Optimize 66 that we are working across this budgeting process, which we are in the middle of now. And people are looking at all avenues to improve efficiency and reduce costs. And, frankly, [the boys] have come up with some great ideas from their early work that I have seen. So I think that the $200 million is a good number for a target."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012]</ref> | Phillips was asked by Paul Sankey of Deutsche Bank during their second-quarters earnings report on August 1, 2012 about the $4 billion of controllable costs and if Phillips had set a target for a 5% reduction in controllable costs for around $200 million of savings. "Yes. Controllable cost, we put a number out there $200 million. We think it is a good number," said Garland. "I frankly think we will do better than that. We tend to always exceed. We have got a program we call Optimize 66 that we are working across this budgeting process, which we are in the middle of now. And people are looking at all avenues to improve efficiency and reduce costs. And, frankly, [the boys] have come up with some great ideas from their early work that I have seen. So I think that the $200 million is a good number for a target."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012]</ref> | ||
| + | |||
| + | ==Labor Relations and Human Resources== | ||
| + | |||
| + | ===Labor Relations and Issues with Employees=== | ||
| + | |||
| + | ====March 12, 2015: Union Says Tentative Agreement Reached to End US Refinery Strike==== | ||
| + | Reuters reported on March 12, 2015 that the United Steelworkers union and oil companies have reached a tentative deal to end the largest U.S. refinery strike in 35 years, say people familiar with the negotiations. The tentative contract contains language that addresses worker fatigue, which is tied to accidents, and the use of contractors versus unionized labor. It also safeguards gains made in previous contracts, the union and sources said. They added that annual wage increases would be 2.5 percent in the first year, 3 percent each in years two and three, and 3.5 percent in the fourth year. The deal, which still needs to be ratified, may not end strikes right away at all refineries that have suffered walkouts as local union chapters could still need to work out pending issues. "We salute the solidarity exhibited by our membership," said USW International President Leo Gerard. "There was no way we would have won vast improvements in safety and staffing without it."<ref>[http://www.reuters.com/article/2015/03/13/us-refineries-labor-strike-idUSKBN0M82EB20150313 Reuters. "Union says tentative deal reached to end U.S. refinery strike" March 12, 2015.]</ref> | ||
| + | |||
| + | ====March 11, 2015: Union Signals Possible Proposal Coming That Will End US Refinery Strike==== | ||
| + | Reuters reported on March 11, 2015 that the United Steelworkers union (USW) signaled that lead refinery owner representative Shell Oil Co may offer a possible settlement in the coming days that could end the largest refinery strike in 35 years. In a message issued on Wednesday night, the union said it was assembling its policy committee, which represents the rank and file, to review proposals from industry during contract talks. The national agreement being negotiated by the USW and Shell Oil will set the floor on pay and benefits as well as set standards on some safety issues. That agreement must be combined with agreements on local issues at each refinery and chemical plant and then voted on by the membership of the local union for the contract to take effect at each site. At the striking plants, it would likely take about two weeks for approval of a contract and the return of workers to their jobs.<ref>[http://www.reuters.com/article/2015/03/11/us-refineries-labor-strike-talks-idUSKBN0M72MP20150311 Reuters. "Union signals possible proposal coming to end U.S. refinery strike" March 11, 2015.]</ref> | ||
| + | |||
| + | ====February 23, 2015: USW Workers on Strike at Twelve Refineries Nationwide==== | ||
| + | Reuters reported on February 23, 2015 that as of February 23, 2015 USW workers are on strike at the following twelve refineries and petrochemical facilities involving 6,000 workers. Motiva issued a statement saying that its labor contract with the union at the Port Arthur facility expired at midnight on Friday and that contracts for its facilities in Norco and Convent, Louisiana expired on Saturday. Strike organizers said that workers remained in place at the two other Motiva refineries in Louisiana as of Monday morning. The refineries affected nationwide include<ref>[http://www.bizjournals.com/sanantonio/news/2015/02/23/oil-workers-strike-expands-to-another-texas.html?page=all San Antonio Business Journals. "Oil workers strike expands to another Texas refinery, Tesoro workers still on picket line" by Sergio Chapa. February 23, 2015.]</ref> | ||
| + | * Motive Port Arthur refinery in Port Arthur, Texas | ||
| + | * LyondellBasell in Houston, Texas; | ||
| + | * Marathon Galveston Bay Refinery in Texas City, Texas; | ||
| + | * Marathon Houston Green Cogeneration facility, Texas City, Texas; | ||
| + | * Marathon Refinery, Catlettsburg, Ky.; | ||
| + | * Shell Deer Park Refinery, Deer Park, Texas; | ||
| + | * Shell Deer Park Chemical Plant, Deer Park, Texas; | ||
| + | * Tesoro Anacortes Refinery, Anacortes, Wash.; | ||
| + | * Tesoro Martinez Refinery, Martinez, Calif.; and | ||
| + | * Tesoro Carson Refinery, Carson, Calif. | ||
| + | * BP Refinery, Witing, Ind. | ||
| + | * BP Refinery, Toledo Ohio | ||
| + | |||
| + | ====February 21, 2015: Strike Expands to Additional Refineries Including the Nations Largest Refinery at Port Arthur, Texas==== | ||
| + | Reuters reported on February 21, 2015 that US refinery strike widened as workers walked off their jobs at the nation's largest refinery, Motiva's 600,250 barrel per day (bpd) refinery in Port Arthur, Texas. The strike may complicate operations at the Port Arthur refinery, which failed to restore its second largest crude distillation unit (CDU) to full production after restarting on Friday following a three-day shutdown to fix leaking piping, sources told Reuters. The refinery's largest CDU, which has a rated capacity of 325,000 bpd is running at about 200,000 bpd, the sources said, because a 60,000 bpd hydrocracking unit is shut due to a malfunction. The hydrocracker produces motor fuel, primarily diesel, which has become a lucrative export for U.S. refiners. Motiva is also overhauling the 92,000 bpd gasoline-producing fluidic catalytic cracking unit at the refinery. It is scheduled to restart in the first half of March. It was shut in early January. | ||
| + | |||
| + | The USW also gave notices on Friday of strikes to begin in 24 hours at Motiva's 235,000 bpd Convent, Louisiana and 238,000 bpd Norco, Louisiana refineries and the Shell Oil Co chemical plant in Norco, the union said. "The industry’s refusal to meaningfully address safety issues through good faith bargaining gave us no other option but to expand our work stoppage," USW International President Leo Gerard said in a statement. A Shell spokesman said the company was disappointed by the Port Arthur walkout and strike notices to the Louisiana plants. "We believe this move sets the wrong tone for both parties to move forward and reach an agreement," said Shell spokesman Ray Fisher. "We remain committed to continued safe operations and productive negotiations."<ref>[http://www.reuters.com/article/2015/02/21/us-refineries-labor-strike-idUSKBN0LP06420150221 Reuters. "U.S. refinery strike widens to include nation's largest refinery" by Erwin Seba. February 21, 2015.]</ref> | ||
| + | |||
| + | ====February 16, 2015: US Refinery Strike Could Spread Over Safe Staffing==== | ||
| + | Reuters reported on February 16, 2015 that with bout 5,200 workers from nine refineries walking picket lines, a strike by US refinery workers that entered its 16th day could spread if there is no progress in talks this week with plant owners on safe staffing levels, said the lead negotiator for the United Steelworkers union (USW). "The longer that this strike rolls on, the more people that will be affected," said Gary Beevers, USW international vice president. For the union, the use of non-union contractors and lack of an industry-wide policy on preventing worker fatigue are key obstacles to safe staffing. "We're going to talk about safe staffing one way or the other," Beevers said.<ref>[http://www.reuters.com/article/2015/02/16/us-refineries-labor-strike-idUSKBN0LK1WV20150216 Reuters. "USW leader: U.S. refinery strike could spread over safe staffing" February 16, 2015.]</ref> | ||
| + | |||
| + | ====February 15, 2015: Managers Bunk Down at US Refineries Amid Safety Concerns as Strike Enters Third Week==== | ||
| + | Reuters reported on February 15, 2015 that US oil refinery managers are going to the mats, sleeping on recently purchased mattresses inside rental trailers inside the refineries, during the biggest fight with union workers in 35 years, as the strike enters its third week and experts and some employees say raises concerns over safety and operations. John Ostberg, a non-union control engineer who works in the main computerized control center at Toledo, quit his job on Monday weeks before he was scheduled to retire. For months, Ostberg has been warning his bosses in emails about their plans to rely on replacement workers and supervisors if a strike occurred. He feared they were not properly trained, or too far removed from the frontlines, to respond to unit upsets and other problems that can escalate quickly without experienced intervention. “Management says it’s safe. I disagree,” said Ostberg a 56-year-old engineer who worked at Toledo since 1980 and helped run the refinery operating center, known locally as the ROC, the heart of the plant. Behind a blast-proof wall, Ostberg and others monitor the dozens of units that populate the refinery to ensure things are running properly and alert USW workers manning the units when they are not. “I sit behind a blast-proof wall, so I’m not worried about my safety," says Ostberg. "But I fear for everyone else.” | ||
| + | |||
| + | In dozens of interviews with local USW workers, craftsman and experts, a portrait of the day-to-day role they play emerges: monitoring large electronic boards that detect problems, turning valves, checking the quality of refined products and overseeing work permits. But their biggest contribution, the people say, is serving as the refinery’s frontline defense when things go wrong. At least three of the nine U.S. oil refineries targeted by a nationwide strike of USW members have reported upsets and unplanned repairs since their workers walked out on Feb 1. There is no indication of what caused the upsets, none of which resulted in any harm or serious damage to equipment.<ref>[http://www.reuters.com/article/2015/02/15/us-refinery-operations-labor-strike-idUSKBN0LJ0HR20150215 Reuters. "Managers bunk down at U.S. refineries as strike enters third week" by Jarrett Renshaw. February 15, 2015.]</ref> | ||
| + | |||
| + | ====February 8, 2015: Workers Expand Strike to Two More Refineries==== | ||
| + | AP reported on February 8, 2015 that members of the United Steelworkers union walked off their jobs at refineries in Whiting, Indiana, and Toledo, Ohio, joining a walkout that began this week at nine other refineries. BP’s Whiting refinery employs about 1,860 employees, more than 1,000 of whom are represented by the steelworkers. The Toledo refinery, which it owns 50-50 with Canada’s Husky Energy, has about 600 workers, including more than 300 steelworkers. Union spokeswoman Lynne Hancock said the workers are seeking better health care benefits and limits on the use of contractors to replace union members in maintenance jobs. She said wages are not an issue. The Whiting and Toledo plants will be staffed by replacements including retirees and former front-line workers who now hold salaried jobs, said BP spokesman Scott Dean.<ref>[http://chicago.suntimes.com/business/7/71/353484/steelworkers-refinery-strike-bp-whiting Chicago Sun-Times. "Steelworkers expand strike to 2 BP refineries in Midwest" February 8, 2015.]</ref> | ||
| + | |||
| + | ====February 7, 2015: Phillips 66 Refinery Workers Stage Informational Picket in Billings to Highlight Understaffing, Safety, and Fatigue==== | ||
| + | KXLH reported on February 7, 2015 that about 70 union workers and their families held an informational picket for solidarity holding signs reading "Solidarity is Strength" and "Understaffing does not equal Safe Refineries." Billings is home to a Phillips 66 refinery. | ||
| + | |||
| + | President of the local group for Phillips 66 with United Steel Workers Wade Johnson said its also a display of community. Johnson added that "a safe community is important to the guys who work at this plant, it always has been. We take that very seriously," Johnson said. "And understaffing is a serious threat to community and the safety of the community." When asked why understaffing was a threat, Johnson said workers get fatigued. "On paper, these facilities tell us that they're giving us enough staffing. But then they'll pull 10 to 15 percent of the people out on any given week to do other projects. Other people have to cover that with overtime," Johnson said. "I just think we want folks to know that we're part of this community," he said. "All of these actions across the country are community actions. We're trying to get local folks hired at these facilities and we're trying to get enough of us hired so we're not always tired."<ref>[http://www.kxlh.com/story/28053374/union-workers-stage-informational-picket-outside-conocophillips-facility-in-billings KXHL. "http://www.kxlh.com/story/28053374/union-workers-stage-informational-picket-outside-conocophillips-facility-in-billings" February 7, 2015.]</ref> | ||
| + | |||
| + | ====February 6, 2015: Refinery Workers Strike to Extend to Next Week==== | ||
| + | The Hill reported on February 6, 2015 that workers at nine oil refineries will carry on their strike until next week after their union rejected the sixth contract offer from Royal Dutch Shell. “The parties have recessed and have agreed to resume talks,” said Shell spokesman Ray Fisher. The union wants more rules to reduce worker fatigue, a 6 percent pay bump and measures to prioritize union members for work over contract workers. The 50 percent drop in oil prices is making negotiating tougher for the union than in previous negotiating attempts a giving Shell a major bargaining chip, Reuters said.<ref>[http://thehill.com/policy/energy-environment/231973-oil-refinery-strike-to-extend-to-next-week The Hill. "Oil refinery strike to extend to next week" February 6, 2015.]</ref> | ||
| + | |||
| + | On February 4, 2015, two refineries affected by the strike - Tesoro Corp's Los Angeles-area refinery in Carson, California, and Marathon Petroleum Corp's Galveston Bay Refinery in Texas City, Texas - reported leaks to regulators. Strikes could complicate the ability of the companies to carry out maintenance work after the upsets, analysts say.<ref>[http://www.reuters.com/article/2015/02/06/us-refineries-labor-rejection-idUSKBN0L92ZG20150206 Reuters. "Union rejects sixth refinery offer from Shell; talks next week" by Erwin Seba. February 5, 2015.]</ref> | ||
| + | |||
| + | ====February 4, 2015: Workers at Santa Maria Refinery Concerned About Fatigue Policy, Show Solidarity with Union Strikers==== | ||
| + | The New Times reports that since January 28, 2015 a rotating group of members the United Steelworkers (USW) Local 534 chapter have been picketing at the gates of the Phillips 66 Santa Maria Refinery in Nipomo to show solidarity with the work stoppage involving roughly 3,800 workers at nine refineries that started on February 1, 2015. “We are just picketing and not on strike yet, but it’s important for us to express ourselves and show solidarity with the USW,” said Juan Zepeda, the financial secretary/treasurer of the local USW chapter and a sulfur plant operator at the Santa Maria Refinery. “The picketing shows [Phillips 66] that they haven’t torn us apart yet.” “At this time, there hasn’t yet been a decision to expand the work stoppage,” said Nashville-based USW spokeswoman Lynne Hancock. “More refineries could soon join the strike if necessary, but | ||
| + | that decision would be made at the national level.” | ||
| + | |||
| + | Outside the Santa Maria Refinery, Zepeda said 10 to 15 workers have been picketing every day for about a week, adding that—other than showing solidarity—the local USW chapter’s biggest issue is installing a new “fatigue policy” to give overworked employees some relief. “I can work anywhere from 110 to 148 hours in a two-week period, and that’s typical—it’s almost impossible for refinery workers to have family time,” Zepeda said. “You can only squeeze a nickel so hard before it starts to hurt the other side. “It’s also a ticking time bomb, it’s a refinery where a lot can go up in flames,” he added. “You’ve got to have people that are alert and have their wits about them—you can’t live with some zombie at the controls.” | ||
| + | |||
| + | “Once national bargaining is completed, Phillips 66 will be negotiating a new bargaining contract with the local USW unions that represent each of our refineries covered by expiring contracts,” says Phillips 66 spokesman Dennis Nuss. “We are committed to reaching a new agreement that is good for our employees and protects the future of some of the best jobs in American industry. “We are hopeful that we can achieve this goal without any interruption to our operations,” he added. “In addition to competitive wages and benefits, we expect the next contract to support our local efforts to improve safety and productivity.”<ref>[http://www.newtimesslo.com/news/11980/phillips-66-santa-maria-refinery-workers-show-solidarity-with-union-strikers/ New Times. "Phillips 66 Santa Maria Refinery workers show solidarity with union strikers" by Rhys Heyden. Feburary 4, 2015.]</ref> | ||
| + | |||
| + | ====February 3, 2015: Tesoro's Martinez Refinery Shuts Down as Oil Workers Strike Goes Into Second Day==== | ||
| + | Bloomberg reported on February 3, 2015 that Tesoro Corp. is shutting half of its 166,000-barrel-a-day Martinez plant in California that wasn’t already idled for maintenance. The facility already had about half its processing capacity offline for maintenance. The company has “successfully transitioned and are operating” the Anacortes and Carson refineries, said Tesoro spokeswoman Tina Barbee. | ||
| + | |||
| + | Management has taken control of operations at six other refineries after union workers walked out of the plants in the biggest strike since 1980. At Marathon’s 451,000-barrel-a-day Galveston Bay refinery, as many as 45 union workers were taking turns picketing in four-hour shifts. David Jones, a 56-year-old pipefitter who has worked at the refinery for almost half his life, said many of the refinery’s supervisors have never worked its processors and other complex machinery before, or at least in many years. “I wouldn’t be surprised if the place isn’t running in a couple weeks,” Jones said. “It’s a very complicated facility. It’s not like getting in a car and driving away.” More refineries are standing by to join the sites on strike, according to two people familiar with the plan who asked not to be identified because the information isn’t public. Refiners may cut operating rates “a little” during the strike, says John Auers. “They won’t push the units as hard. The key will be to run them reliably and safely.”<ref>[http://www.bloomberg.com/news/articles/2015-02-01/oil-workers-in-u-s-begin-first-large-scale-strike-since-1980 Bloomberg. "Refinery Shuts as U.S. Oil Workers Strike Reaches Second Day" February 3, 2015.]</ref> | ||
| + | |||
| + | ====February 1, 2015: Refinery Workers Go On Strike at Nine Refineries==== | ||
| + | Reuters reported on February 2, 2015 that union workers were on strike for a second day on Monday at nine U.S. refineries and chemical plants as they sought a new national contract with oil companies covering laborers at 63 plants. Shell activated a strike contingency plan at its joint venture refinery and chemical plant in Deer Park, Texas, to keep operating normally. Tesoro said management was operating its refinery in Carson, California, and that managers would take over from union workers at its plant in Anacortes, Washington, in the next 24-48 hours. Besides Shell and Tesoro, the USW said strikes were called at three plants belonging to Marathon Petroleum Corp (MPC.N) in Texas and Kentucky, and LyondellBasell Industries NV's (LYB.N) plant near Houston. At least two of the plants on the list have a history of deadly accidents. The United Steelworkers said all other refineries it represents would operate under rolling 24-hour contract extensions. The union is seeking annual pay raises double the size of those in the last agreement. It also wants work that has been given in the past to non-union contractors to start going to USW members, a tighter policy to prevent workplace fatigue, and reductions in members' out-of-pocket payments for healthcare.<ref>[http://www.reuters.com/article/2015/02/02/us-refineries-labor-strikes-idUSKBN0L60CL20150202 Reuters. "U.S. workers strike for second day at nine refineries; one to shut" by Erwin Seba. February 2, 2015.]</ref> | ||
| + | |||
| + | ====January 30, 2015: Union Workers Reject Oil Company's Offer as Contract Set to Expire==== | ||
| + | Reuters reported on January 30, 2015 that union negotiators said the latest proposal from oil companies for a new three-year contract for U.S. refinery workers was rejected on Friday because it failed meet to members' objectives. The announcement came 28 hours before the current contract covering hourly workers at 63 refineries accounting for two-thirds of U.S. refinery capacity is set to expire. "Industry's latest offer fails to address issues that matter to USW members," said the text message to union members, which was also sent to the media. "All units instructed to reject." This is third offer from lead industry negotiator Royal Dutch Shell Plc that USW negotiators have rejected since talks began on Jan. 21. The USW is seeking annual pay raises double those of the last agreement negotiated in 2012. It also wants work that has been given in the past to non-union contractors to start going to USW members along with a tighter policy to prevent workplace fatigue and reductions in members' out-of-pocket payments for healthcare. The union and refineries have both prepared for a possible strike, which the union signaled on Monday may be needed to win concessions from the oil companies.<ref>[http://www.reuters.com/article/2015/01/31/refineries-labor-talks-idUSL1N0VA03H20150131 Reuters. "Union says rejects U.S. refinery workers contract offer on Friday" January 30, 2015.]</ref> | ||
| + | |||
| + | ====January 30, 2015: DCP Midstream to Cut Workforce by 20%==== | ||
| + | Natural Gas Intelligence reported on January 30, 2015 that DCP Midstream, a 50-50 joint venture between Phillips 66 and Spectra Energy, has announced it was cutting its workforce by 20% and closing a regional office. The Oklahoma City office is to close, and the workforce is being reduced in the Tulsa office and Midland, TX, office. Functions would be primarily moved to Denver headquarters and the Houston regional office. "With a 90-year history, we are repositioning ourselves for the long term and ensuring we have a sustainable workforce that meets our future needs," said CEO Wouter van Kempen. "While this transition is difficult, we are establishing DCP for continued growth founded upon a culture of operational excellence."<ref>[http://www.naturalgasintel.com/articles/101221-dcp-midstream-cuts-workforce-by-20 Natural Gas Intelligence. "DCP Midstream Cuts Workforce by 20%" January 30, 2015.]</ref> | ||
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| + | ====January 26, 2015: Refinery Workers May Have to Strike==== | ||
| + | Reuters reported on January 26, 2015 that the United Steelworkers union (USW) signaled on January 26, 2015 a strike by U.S. refinery workers may be necessary to win what it calls a fair contract from oil companies. "Challenging bargaining continues," the USW said in a text message to members on Monday night. "Industry still isn't getting serious. Local unions are preparing to do whatever it takes to win fair contracts." Union and oil company negotiators met for a sixth day of negotiations on Monday ahead of the current contract expiring at 12:01 a.m. on Sunday in the time zone where each refinery is located. Refineries have been preparing for a possible strike by training temporary replacement workers and by placing trailers on refinery grounds as quarters for the replacement workers.<ref>[http://www.reuters.com/article/2015/01/27/refinery-labor-talks-idUSL1N0V605G20150127 Reuters. "Union signals U.S. refinery workers may have to strike" January 27, 2015.]</ref> | ||
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| + | ====January 25, 2015: With One Week of Bargaining Left, Refinery Workers Union Says Talks Are Going Slow==== | ||
| + | Reuters reported on January 25, 2015 that wiith just a week of bargaining left until the national contract for U.S. refinery workers expires, the United Steelworkers union (USW) said talks with oil company representatives for a new pact were going slow, according to a Twitter message sent to members. "It's time for the industry to get serious about addressing issues that matter to USW members," the message said. "Be ready to stand up and fight back!" The USW rejected the first industry proposal on January 23, 2015, calling it "inadequate and offensive," according to a message sent to members. The Steelworkers are seeking annual pay raises double those of the last agreement. The union also wants work given to non-union contractors to go to USW members, a tighter policy to prevent fatigue and reductions in members' out-of-pocket payments for health care. The union and refiners have made preparations for a possible strike in February. The last nationwide refinery workers' strike was in 1980 and lasted for three months.<ref>[http://www.reuters.com/article/2015/01/25/refinery-labor-talks-idUSL1N0V404L20150125 Reuters. "Union says U.S. refinery workers' contract talks moving slowly" January 25, 2015]</ref> | ||
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| + | ====December 23, 2014: Judge Rules That Phillips 66 Policy Prohibiting Santa Maria Refinery Employees from Talking to the Media Violates the Law==== | ||
| + | David Minsky reports at the Santa Maria Sun that on November 25, 2014 a National Labor Relations Board administrative law judge found that Phillips policy of prohibiting Phillips employees at the Santa Maria Refinery from speaking to reporters violated the law. According to case documents, attorneys representing Phillips 66 argued in court that the policy was meant to prohibit employees from speaking on the company’s behalf about any confidential operations. But the judge rejected this argument, saying the policy was ambiguous and violates the law because employees could “reasonably construe” that it would prohibit them from discussing, among other things, labor disputes or conditions of work. Reached by email last week, Phillips 66 spokesperson Dennis H. Nuss said the company is aware of the recent decision, but didn’t make specific comments about the case. However Nuss did write: “Our company’s top priority is the safety of everyone who works at our sites and lives in our neighboring communities. In 2012, Phillips 66 redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria Refinery, and there were no staff reductions. These changes have helped maintain and improve the refinery’s high standards for safety performance.”<ref>[http://www.santamariasun.com/news/12622/judge-rules-that-phillips-66-news-media-policy-violates-the-law/ Santa Maria Sun. "Judge rules that Phillips 66 news media policy violates the law" by David Minsky. December 25, 2014.]</ref> | ||
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| + | ====November 13, 2014: Phillips 66 Workers Return to Work at Humber Refinery After Three Day Wildcat Strike Over Safety Issues==== | ||
| + | BBC and Harrogate reported on November 13, 2014 that striking workers have returned to work at Phillips 66's Humber Refinery after three days of industrial action claiming safety concerns following a gas leak last week in which two people were taken to the hospital. Engineering construction employees at the Humber Refinery decided at a mass meeting to return to work after spending three days on strike. The GMB union, which said it was aware of a health and safety issue on the site, said a meeting was being held between shop stewards and managers to finalise details of a return to work. Phillips said it would hold meetings with staff and the managers of contract companies and would "engage in open and honest dialogue to address any concerns outstanding and will work to reach a satisfactory conclusion". "Safety is the Humber Refinery's number one priority," it added.<ref>[http://www.bbc.com/news/uk-england-humber-30039805 BBC. "Humber Refinery workers return to work after strike" November 14, 2014.]</ref><ref>[http://www.harrogateadvertiser.co.uk/news/regional/refinery-workers-end-wildcat-strike-1-6950375 Harrogate. "Refinery workers end wildcat strike" November 13, 2014.]</ref> | ||
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| + | The Grimsby Telegraph reported on November 13, 2014 that that contractors voted to go back to work today, following days of walkouts amid safety concerns. "This morning, contractors have returned to work," said spokeswoman Nina Stobart. "Phillips 66 will engage in open and honest dialogue to address any concerns outstanding and will work to reach a satisfactory conclusion. Safety is the Humber Refinery’s number one priority."<ref>[http://www.grimsbytelegraph.co.uk/BREAKING-Workers-vote-work-following-days-strikes/story-24527438-detail/story.html Grimsby Telegraph "UPDATE: Workers vote to go back to work following days of strikes at South Killingholme's Phillips 66 oil refinery" November 13, 2014]</ref> | ||
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| + | Despite the vote for 'yes', one disgruntled worker said: "They've asked for a show of hands and the group is clearly split; they're not going to do anything until someone is killed." Contract workers initially walked out on Monday after claiming that refinery bosses had reneged on an agreement to meet them in person following a gas leak at the site last Wednesday, which left two people requiring hospital treatment. “The employer has climbed down a bit but Phillips 66 do not want us in the meetings with contractors as they seem to be anti-Union but they are creating a recipe for disaster," Shaune Clarkson, regional organiser for GMB.<ref>[http://www.grimsbytelegraph.co.uk/BREAKING-Workers-vote-work-following-days-strikes/story-24527438-detail/story.html Grimsby Telegraph "UPDATE: Workers vote to go back to work following days of strikes at South Killingholme's Phillips 66 oil refinery" November 13, 2014]</ref> | ||
| + | |||
| + | ====November 12, 2014: Humber Refinery Workers Walk Out for Third Day Over Safety Issues==== | ||
| + | BBC reported on November 12, 2014 that 450 contract employees have stopped working at the Humber Refinery in South Killingholme for the thirdday claiming concerns over "safety issues". GMB union officer Shaune Clarkson said his members wanted "reassurance" from management that the plant was safe. A spokeswoman for Phillips 66 said: "This morning, despite the repeated offers by the refinery management to meet face to face with each company and their staff, the contractors voted to stay off work for a third day in unofficial action." The company said the refinery was "not being impacted by this action".<ref>[http://www.bbc.com/news/uk-england-humber-30019505 BBC. "Humber Refinery workers walk out for a third day in safety row" November 12, 2014.]</ref> | ||
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| + | The GMB union national officer Phil Whitehurst said: "Following a major stoppage of work we have been advised that there is a major health and safety issue on the site. GMB has been refused access to the site in order to resolve what has been described to us as a major hazard. We urge the company to allow the union on to the site to try to resolve the issue as quickly as possible for the safety of workers and the public."<ref>[http://www.shropshirestar.com/news/uk-news/2014/11/12/refinery-workers-continue-strike/ Shipshire Star. "Refinery workers continue strike" November 12, 2014.]</ref> | ||
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| + | ====November 11, 2014: Hundreds of Humber Refinery Workers Walk Out for Second Day Over Safety Issues==== | ||
| + | BBC reported on November 11, 2014 that hundreds of contract workers have downed tools for a second day at Phillips 66's Humber Refinery over "safety concerns" after two workers were injured by a steam leak on October 30, 2014. Phillips employs 1,000 contractors and 750 staff. Mechanical engineers, scaffolders, welders and pipe-fitters are among the workers who have walked out. GMB union officer Shaune Clarkson said his members wanted a meeting with management to discuss safety at the plant. "The most important thing when you walk through those gates in the morning is you get home safely to your families at night," said Clarkson. "All we want, and all the men want, is a reassurance that is going to happen." A company spokeswoman said Philips 66 had been holding an "ongoing dialogue with contractor management over the last week to discuss their issues, many of which relate to onsite communications".<ref>[http://www.bbc.com/news/uk-england-humber-30001987 BBC. "Humber Refinery workers walk out for a second day in safety row" November 11, 2014.]</ref> | ||
| + | |||
| + | ====November 10, 2014: 450 Contract Employees Walk Out at Humber Refinery Over Safety Concerns==== | ||
| + | BBC reported on November 10, 2014 that 450 contract workers walked out at Phillips 66's Humber Refinery on November 10, 2014. The "unofficial" action is over communication issues at the site. However the GMB union says it's over safety concerns after a gas leak at the site last week in which two men were injured. Phillips 66 confirmed there had been "a small gas release on a unit during some routine maintenance work at the Humber Refinery" last Wednesday. "All we want is a reassurance that the site is safe [and] some safety issues addressed. Unfortunately, the employer has failed to do that and because of that then men have reacted," said GMB union officer Shaune Clarkson. "This is the straw that's broke the camel's back." A company spokeswoman said: "We can confirm that earlier today, at approximately midday, a number of contract workers left site in unofficial action. "We have been in ongoing dialogue with contractor management over the last week to discuss their issues, many of which relate to onsite communications, and will continue to work with them to reach a satisfactory conclusion."<ref>[http://www.bbc.com/news/uk-england-humber-29994598 BBC. "Humber Refinery workers walk out in safety row" November 10, 2014.]</ref> | ||
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| + | BBC reported on October 30, 2014 that two workers were injured by a steam leak at the Humber Refinery at 09:30 GMT. Phillips said the pair had been taken to Pinderfields Hospital in Wakefield by air ambulance. The company has given no more information on the employees' injuries and said it was offering support and assistance to their families.<ref>[http://www.bbc.com/news/uk-england-humber-24744580 BBC. "Two injured at North Lincolnshire oil refinery" October 30, 2014.]</ref> | ||
| + | |||
| + | ====November 1, 2014: US Refinery Union Workers Seek Substantial Raises==== | ||
| + | Hydrocarbon Processing reported on November 3, 2014 that United Steelworkers, which represents about two-thirds of workers at US refineries, said its members want a “substantial” increase in wages, stronger rules to prevent fatigue and measures to keep union workers rather than contract employees on the job, said Gary Beevers, the USW international vice president who manages the union’s oil sector. Beevers said the union is ready for the biggest fight in his time as leader. For the first time in at least 20 years, members decided to set aside funds for workers should they have to strike. “The last two cycles of bargaining happened when the economy was rough, and we tried to find some reasonable solutions and we did,” Beevers said. “Today, the oil industry is making good money. The price of oil is down. It’s time that we get serious about some things we’ve seen erode over the last several years.” Phillips 66, the largest US refining company by market value, more than doubled profits in the third quarter as crude costs fell. Tesoro and Marathon quadrupled their net income. Beevers said he senses that refiners are “looking for a fight” in this cycle of contract talks. “I’m expecting the most difficult negotiations that I’ve seen in the three terms as vice president of the oil sector,” he said. “We have an industry that has very, very good profits telling us we don’t deserve a good piece of the pie, and we disagree.”<ref>[http://www.hydrocarbonprocessing.com/Article/3396798/Latest-News/US-refinery-union-workers-seek-substantial-raises.html Hydrocarbon Processing. "US refinery union workers seek substantial raises" by Lynn Doan. November 3, 2014.]</ref> | ||
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| + | ====April 16, 2014: Health and Safety Specialists at Santa Maria Refinery Claim They Were Punished for Unionizing==== | ||
| + | Colin Rigley reported at the New Times on April 16, 2014 that health and safety specialists at Phillips' Santa Maria Refinery allege Phillips officials warned them in January, 2012 that if they joined the United Steelworkers Union they would lose hours, be stripped of managerial powers, and as many as three of them could lose their jobs. “The insinuation here was that, ‘We may not need all of you,’” one of the specialists said in a written statement submitted to the labor board.<ref>[http://www.newtimesslo.com/news/10840/organized-opposition-phillips-66-health-and-safety-specialists-allege-they-were-punished-for-unionizing/ New Times. "Organized opposition: Phillips 66 health and safety specialists allege they were punished for unionizing" by Colin Rigley. April 14, 2014.]</ref> | ||
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| + | When the newly unionized group went to the bargaining table in December, 2012, the specialists say in a complaint filed with the National Labor Relations Board that Phillips management carried out its threats. Phillips' proposed contract on December 10, 2012 allegedly included the threatened reductions of hours and responsibilities. The refinery’s health and safety specialists serve as organizers of the plant’s emergency response crew. Though none of the health and safety specialists was fired, three of them were transferred from their primary roles into regular plant operations, according to the complaint. The union is seeking to recover lost wages for the health and safety specialists, and to have their original job functions restored. Those lost wages totaled as much as $17,000 per year for some employees. In its complaint, the union further alleges that Phillips 66 bargained in bad faith when it imposed the 2012 contract.<ref>[http://www.newtimesslo.com/news/10840/organized-opposition-phillips-66-health-and-safety-specialists-allege-they-were-punished-for-unionizing/ New Times. "Organized opposition: Phillips 66 health and safety specialists allege they were punished for unionizing" by Colin Rigley. April 14, 2014.]</ref> | ||
| + | |||
| + | Phillips 66, in its responses to the union’s complaint, said the company reduced the five health and safety specialists to two as part of regular staffing changes, and the job functions were distributed across other personnel. “There is no value more important in our company than ensuring the safety of everyone who works at our sites as well as the safety of our neighboring communities,” Phillips spokesman Dennis Nuss said in a written statement to New Times. “In 2012, Phillips 66 redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria Refinery, and there were no staff reductions. These changes have helped maintain and improve the refinery’s high standards for safety performance.”<ref>[http://www.newtimesslo.com/news/10840/organized-opposition-phillips-66-health-and-safety-specialists-allege-they-were-punished-for-unionizing/ New Times. "Organized opposition: Phillips 66 health and safety specialists allege they were punished for unionizing" by Colin Rigley. April 14, 2014.]</ref> | ||
| + | |||
| + | In addition to the reduced contract for health and safety specialists, the union alleges that the company violated federal labor laws when it implemented “news media guidelines” in October 2012. Those guidelines instructed employees not to speak to news media and, “It is against company policy for anyone but an authorized company spokespersons [sic] to speak to the news media.” The company defends its policy as a routine business practice that violated no labor laws.<ref>[http://www.newtimesslo.com/news/10840/organized-opposition-phillips-66-health-and-safety-specialists-allege-they-were-punished-for-unionizing/ New Times. "Organized opposition: Phillips 66 health and safety specialists allege they were punished for unionizing" by Colin Rigley. April 14, 2014.]</ref> | ||
| + | |||
| + | ====September 30, 2013: Contractors at Humber Refinery Protest Against Cuts to Breaks==== | ||
| + | The Grimsby Telegraph reported on September 30, 2013 that more than 100 contractors at the Humber Refinery in Killingholme held on early morning protest on their own time outside the gates of the refinery to protest Phillips' plan to cut the 20 minute mid-morning refreshment break that goes into force January 1. "Everyone knows the importance of a break, especially in this kind of workplace." said one contractor who declined to be identified. "We need the tea break to refresh, to cool off and rehydrate."<ref>[http://www.thisisgrimsby.co.uk/VIDEO-Phillips66-contractors-early-morning/story-19864124-detail/story.html#axzz2gTTNdjRW Grimsby Telegraph. "Phillis66 Contractors' Early Morning Protest Against Cuts to Breaks" September 30, 2013.]</ref> The Grimsby Telegraph reported on October 1, 2013 that over 100 contractors met with union representatives and held a indicative vote through a show of hands to bring about the process of a legal vote for strike action over Phillips' plan to remove their 20 minute morning break starting January 2014. "When we are up there working in the freezing cold we need that tea break to warm up, when we are out there in the blistering heat we need that tea break to cool down," said an unidentified contrator. "They tell us safety first and tell us to follow guidelines but taking this break away means we are not following safety guidelines. When they are sat in ivory towers they can have their tea breaks still."<ref>[http://www.thisisgrimsby.co.uk/VIDEO-Phillips-66-contractors-hold-vote-consider/story-19869463-detail/story.html#axzz2gTTNdjRW Grimsby Telegraph. "Phillips 66 contractors hold vote to consider industrial action" October 1, 2013.]</ref> | ||
| + | |||
| + | ====December 13, 2012: Safety Changes At Santa Maria Refinery Pit Workers Against Management==== | ||
| + | Matt Fountain reported in the New Times on December 13, 2012 that before December 10, 2012, Phillips 66 employed five health and safety shift specialists at the Santa Maria refinery, who worked onsite in 12-hour shifts but that after the specialists became members of USW Local 534, relations between management and the team have grown shakier. Last month, word came down: The five were being split up. Two would work the regular daylight shift as “safety coordinators” and the other three would be reassigned to the operations emergency response team, essentially the lowest position in terms of safety. According to Fountain, along with the reassignments came severe pay cuts—some to the tune of $12 an hour less, according to knowledgeable sources. The changes were finalized December 10, 2012. In their place, management delegated their responsibilities to plant employees, though at a far lower degree than what the health and safety shift specialists did, according to USW staff representative Ron Espinoza. Instead of having an all-encompassing EMT and search and rescue-certified expert on site, now the only EMT on site will be the front gate security guard, according to union reps and plant employees. The problem with the guard assuming response duties, they said, is that guards aren’t equipped or authorized to access many of the higher-risk areas of the facility. “We do believe it’s retaliation,” USW staff representative Espinoza told New Times. “They’re coming after them, and doing a fairly good job at it.”<ref>[http://www.newtimesslo.com/cover/8753/redefining-safety/ New Times. "Re(de)fining safety" by Matt Fountain. December 13, 2012.]</ref> | ||
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| + | In January 2012, members of the USW Local 534 took to the picket lines outside the plant’s gates to protest the management’s hard-line on their then-ongoing labor negotiations. One of the issues of contention: a “fatigue policy” for work schedules. And another: safety equipment improvements.<ref>[http://www.newtimesslo.com/cover/8753/redefining-safety/ New Times. "Re(de)fining safety" by Matt Fountain. December 13, 2012.]</ref> | ||
| + | |||
| + | In response to a long list of questions regarding the specialist team and safety conditions at the plant, Phillips 66 Spokesman Rich Johnson provided the following statement in an e-mail to New Times: “There is no value more important in our company than ensuring the safety of everyone who works at our sites as well as the safety of our neighboring communities. Over the past year, we have redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria refinery, and there have been no staff reductions. We expect these changes will help maintain and improve the refinery’s high standards for safety and performance.”<ref>[http://www.newtimesslo.com/cover/8753/redefining-safety/ New Times. "Re(de)fining safety" by Matt Fountain. December 13, 2012.]</ref> | ||
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| + | According to Fountain, plant operators seem to be upset over the reorganizing of the safety department, as well, as they’ll now be seeing additional job duties and training requirements on top of an already-full workload. “I love this company, I obviously have no problem with Big Oil, [Phillips is] good to the environment—it’s just the way their mentality is,” one employee told New Times. “These [HSS specialists] make [the company] look better if an emergency happens, but there’s a calculated risk, and if they can get away with something, they will. “It’s going to take somebody high in the chain to say stop. That’s the way these people think,” he added.<ref>[http://www.newtimesslo.com/cover/8753/redefining-safety/ New Times. "Re(de)fining safety" by Matt Fountain. December 13, 2012.]</ref> | ||
| + | |||
| + | ====September 10, 2012: Union Contract Ratified with 52 percent of Bayway Refinery Workers Voting in Favor==== | ||
| + | Reuters reported on September 10, 2012 that union members at Phillips 66 Bayway refinery ratified a three-year contract with 52 percent of the 288 members of the Teamsters union at the refinery voting in favor of the contract which takes effect on October 1, 2012. Union leadership recommended the contract be accepted but | ||
| + | several members of the union expressed displeasure with some of the work rights and quality of life changes in the new contract.<ref>[http://in.reuters.com/article/2012/09/10/refinery-operations-phillips-bayway-idINL1E8KA5PE20120910 Reuters. "Phillips 66 Bayway refinery workers ratify contract" September 10, 2012.]</ref> | ||
| + | |||
| + | ====September 7, 2012: Bayway Refinery Workers Vote on New Union Contract==== | ||
| + | Reuters reported on September 7, 2012 that members of the Teamsters Union at Bayway refinery vote on September 7, 2012 on whether to ratify their latest labor contract. The existing union contract ends on October 1, 2012 but if the contract is voted down there will not be an immediate strike but rather a return to negotiations. Contract negotiations began in June which provided a longer window for the talks. Although The contract was recommended by the union's executive board, according to a source familiar with the situation, some union members plan to vote against the contract which includes issues concerning work rules, overtime pay, and scheduling changes. Rich Johnson, a spokesman for Phillips 66, said the company would prefer to wait until after the ratification vote before offering any comment.<ref>[http://in.reuters.com/article/2012/09/07/refinery-operations-phillips66-bayway-idINL2E8K7CB620120907 Reuters. "Phillips 66 Bayway refinery workers to vote on contract Friday" September 7, 2012.]</ref> | ||
| + | |||
| + | ====August 30, 2012: Refinery Operators Expected to Decline by 14% by 2020==== | ||
| + | Fox News reported on August 30, 2012 that over the next decade, the number of Petroleum Pump System Operators, Refinery Operators and Gaugers is expected to decline by 14% from 44,200 in 2010 to 38,000 by 2020.<ref>[http://www.foxbusiness.com/personal-finance/2012/08/30/americas-10-disappearing-jobs/ Fox News. "America’s 10 Disappearing Jobs" August 30, 2012.]</ref> | ||
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| + | ====May 30, 2012: Phillips Fires 21 Union Workers, 3 Supervisors at Billing Refinery for Stealing Hours==== | ||
| + | The Billings Gazette reported on May 30, 2012 that according to Wade Johnson, president of the United Steelworkers International union in Billing that twenty-one pipefitters, welders and insulators and three supervisors were fired from the Phillips 66 refinery on May 30, 2012. “They were certainly not given an option of keeping their jobs,” said Johnson. “So, I would call that being fired.” Rich Johnson, a Phillips 66 spokesman based in Houston, said the company took some individual personnel actions. “I can tell you we took personnel actions against employees today,” said Johnson said. “But it is our company policy not to comment on personnel matters.” According to KTVQ TX the workers were fired for for knowingly violating policy in regard to hours worked at the refinery. "There are no mass layoffs taking place at the refinery," said Johnson.<ref>[http://billingsgazette.com/news/local/phillips-billings-refinery-fires-union-workers-supervisors/article_90ae1588-9fd6-5723-a930-ddc8eef210b8.html Billings Gazette. "Phillips 66 refinery in Billings fires 21 union workers, 3 supervisors" May 30, 2012.]</ref><ref>[http://www.ktvq.com/news/local-refinery-fires-two-dozen-employees-for-stealing-time/ KTVQ TX. "Local refinery fires two dozen employees, for stealing time" May 30, 2012.]</ref> | ||
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| + | KTVQ reported on May 31, 2012 that the United Steelworkers International union says it plans to fight the dismissal of 21 union employees at the Billings Phillips 66 refinery. Union president, Wade Johnson, with the United Steelworkers International in Billings, says the union believes the employees were wrongfully discharged.<ref>[http://www.ktvq.com/news/union-representative-says-employees-wrongfully-discharged-from-phillips-66/ KTVQ. "Union representative says employees wrongfully discharged from Phillips 66" by Q2 News. May 31, 2012.]</ref> According to a comment to the story by Kathy Reinhardt the fired workers were called in to work extra hours so that turnaround could be completed at the refinery. According to a comment by Jonathon Sapp the supervisor who called the men in to work should have been held responsible.<ref>[http://www.ktvq.com/news/union-representative-says-employees-wrongfully-discharged-from-phillips-66/ KTVQ. "Union representative says employees wrongfully discharged from Phillips 66" by Q2 News. May 31, 2012.]</ref> | ||
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| + | ===Employee Benefits=== | ||
| + | |||
| + | ====August 20, 2014: Phillips Has One of the Top Rated 401k Plans in Houston==== | ||
| + | Olivia Pulsinelli reported at the Houston Business Journal on August 20, 2014 that Phillips 66 has one of the 25 top-ranked 401(k) plans in Houston, according to a new list from BrightScope Inc., an independent financial information and investment research company. Phillips plan has 87% employee participation and is rated No 7 in Houston.<ref>[http://www.bizjournals.com/houston/morning_call/2014/08/which-companies-have-the-best-401-k-plans-in.html Houston Business Journal. "Which companies have the best 401(k) plans in Houston?" by Olivia Pulsinelli. August 25, 2014.]</ref> | ||
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| + | ====April 1, 2014: Phillips Headquarters Employees Have On-Site Dentist==== | ||
| + | The Houston Business Journal reported on April 1, 2014 that Phillips has added an in-house dentist at its campus converting a 660-square-foot conference room on the company’s first floor at its interim headquarters at Pinnacle Westchase. The on-site dentists will also be included at Philips 66's new building in the Westchase District. “It opened in mid-February and they have already seen 211 patient at the Phillips 66 Dental Office,” said Charles Lusk, CEO of Onsite Solutions. “It’s the wave of the future. Some groups offer mobile clinics that set up in the parking lot, but who would want to use that?" Having a dental office on site for employees and their families to use is convenient for staff and lucrative for employers. “The reality of the matter is an employee can spend four hours of his or her day for one dental appointment, when you factor in drive-time. It’s not conducive to a good work day,” said Lusk. “By having an office on site, you’re increasing productivity as well as the likelihood that someone will even go to the dentist, which makes for a healthier person.” “Some corporations are just more innovative than others. They are doing it because they know their competitors are going to do it,” Lusk said. “Phillips 66 is very forward-thinking and wanted to get up in front of the trend.”<ref>[http://www.bizjournals.com/houston/blog/breaking-ground/2014/04/fighting-decay-to-retain-employees.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+industry_20+%28Industry+Commercial+Real+Estate%29&page=all Houston Business Journal. "Fighting decay to retain employees" by Jenny Aldridge. April 1, 2014.]</ref> | ||
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| + | ==Philanthropic and Community Benefits== | ||
| + | ===February 26, 2015: Phillips Donates $20,000 to Southern Illinois University Edwardsville School of Engineering=== | ||
| + | The Riverbender reported on February 26, 2015 that the Phillips 66 Wood River Refinery donated $20,000 to the Southern Illinois University Edwardsville School of Engineering on February 24, 2015 to provide support for equipment, activities and 10 scholarships to students at SIUE’s Engineering Summer Camp who demonstrate financial need. “The Phillips 66 Wood River Refinery has an emphasis on outreach, particularly in education that betters our community,” said Melissa Erker, director of government and community affairs for Phillips 66. “With this partnership, we have the ability to enhance the community by supporting science, technology, engineering and math (STEM) at SIUE.<ref>[http://www.riverbender.com/articles/details/phillips-66-wood-river-refinery-sponsors-siue-summer-camps-6123.cfm Riverbender. "Phillips 66 Wood River Refinery Sponsors SIUE Summer Camps" February 26, 2015.]</ref> | ||
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| + | ===February 13, 2015: Phillips Donates $25,000 to Rolling Hills Elementary School in Amarillo=== | ||
| + | My High Plains reported on February 13, 2015 that Phillips 66 donated $25,000 to Rolling Hills Elementary School to pay for smart boards in the classroom and to help the STEM (Science, Technology, Engineering and Math) program. Rolling Hills Principal Richard Kelly said, "Give kids those extra resources that they need to be more successfull in the classrooms and give teachers the extra resources to kind of get those kids using those types of technology down here, so that when they get into middle school or high school it's just like using their cell phone."<ref>[http://www.myhighplains.com/story/d/story/phillips-66-presents-25000-to-rolling-hills-elemen/36528/AcR8GcZuEE-RBK6ft8uYQw My Hih Plains. "Phillips 66 Presents $25,000 to Rolling Hills Elementary" by Sheryl Proctor. February 13, 2015.]</ref> | ||
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| + | ===January 30, 2015: Phillips Donates $15,000 to West Texas A&M=== | ||
| + | My High Plains reported on January 30, 2015 that Phillips donated $15,000 to West Texas A&M University. Support for the University will come in many forms such as a named classroom and funding for summer engineering camps along with assistance for student organizations, career expos and other career-related areas.<ref>[http://www.myhighplains.com/story/d/story/phillips-donates-15000-to-wt/21386/NqQZ3mBGKkuIIOevZaEmRA My High Plains. "Phillips Donates $15,000 to WT" by Karl Wehmhoener. January 30, 2015.]</ref> | ||
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| + | ===January 30, 2015: Attucks Community Alliance in Ponca City Receives $20,000 from Phillips for CPR Equipment=== | ||
| + | The Ponca City News reported on January 30, 2015 that Phillips donated $20,000 to the Attucks Community Center to provide CPR and AED training for organizations on the west and south side of Ponca City. Dave Klanica, manager Health and Safety, Phillips 66 Ponca City Refinery stated “We are pleased to work with Attucks Community Alliance and selected organizations on this project. There are organizations that serve high volumes of people such as The Mission, The Senior Center, The Salvation Army, Friendship Feast, Attucks Community Center, and others. If, through this small investment of time and money we can save one life we are more than glad that we can make an important difference.”<ref>[http://assets.mediaspanonline.com/prod/11462847/pcn-2015-01-30-a-008.pdf Ponca City News. "Attucks Community Alliance Receives Phillips 66 Grant" January 30, 2015.]</ref> | ||
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| + | ===January 29, 2015: Phillips Bayway Refinery Donates $29,000 for Paramedic Radios in New Jersey=== | ||
| + | New Jersey reported on January 29, 2015 that Phillips 66 has donated $29,000 to purchase replacement mobile and portable paramedic radios that communicate with all the local towns to enhance communication during responses to the community.<ref>[http://www.nj.com/suburbannews/index.ssf/2015/01/phillips_66_awards_29000_grant.html New Jersey. "Phillips 66 awards $29,000 grant to RWJ Rahway" January 29, 2015.]</ref> | ||
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| + | ===January 22, 2015: Phillips Makes $75,000 Grant for Playground Equipment in Ponca City=== | ||
| + | The Ponca City News reported on January 22, 2015 that Phillips 66 made a grant of $75,000 to the City of Ponca City to install new playground equipment at McGraw Park. “The City of Ponca City and the Parks and Recreation Department are happy to have received this grant. This opportunity will allow us to install playground equipment that we had not planned to do in the near future,” says Jim Sindelar, Parks and Recreation Director, who applied for a one-time special grant offered by Phillips 66 for Environmental and Safety related project. “Phillips 66 is glad that we could be a part of this project. This is just one way that we, Phillips 66, show our investment in the community," says Sara King, Environmental Manager at Phillips' Ponca City Refinery. "Playground parks, like the future one at McGraw Park, provide a place for our families to exercise, socialize, and enjoy the outdoors. Phillips 66 is committed to making a positive difference in the communities where we live and do business.”<ref>[http://assets.mediaspanonline.com/prod/11438132/pcn-2015-01-22-0-001.pdf Ponca City News. "City Receives Phillips 66 Grant For Equipment At McGraw Park" January 22, 2015.]</ref> | ||
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| + | The Ponca City Refinery is Phillips 66's most profitable refinery earning $83,000,000 in profit for Phillips in the third quarter of 2014 for an annualized profit of $331,000,000.<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Q3-News-Release-Slides-FINAL_v001_k94fx2.pdf Phillips 66. "Third Quarter Conference Call" October 29, 2014.]</ref><ref>[http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Appendix_1:_Profitability_of_Ponca_City_Refinery_in_Q3_2014 Ponca City Refinery "Profitability of Ponca City Refinery in Q3 2014" analysis by Hugh Pickens October 31, 2014.]</ref> In August, 2014 Phillips made a $1,700,000 grant to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. Ponca City's grant application for a similar program was turned down by Phillips 66.<ref>[http://www.tulsaworld.com/communities/bartlesville/news/phillips-ceo-announces-million-stem-grant-for-bartlesville-schools/article_30498f4b-3a35-57a8-a307-5cc496c7dc75.html Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.]</ref> | ||
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| + | ===January 21, 2015: Phillips Donates $15,000 to Louisiana Tech University=== | ||
| + | Louisiana Tech University reported on January 21, 2015 that Phillips has donated $15,000 to the College of Engineering and Science to help the College continue to provide students with innovative, hands-on education to prepare future industry leaders for companies like Phillips 66. The gift from Phillips 66 will provide funding for field trips, visiting speakers, equipment upgrades and scholarships to enhance student experiences in classrooms and laboratories. “We are extremely grateful for Phillips 66 support of the College and our programs,” said Dr. Hisham Hegab, dean of the College of Engineering and Science at Louisiana Tech. “Industry support such as this is key to providing our students with an enhanced academic experience that is relevant to the careers they will pursue when they graduate.”<ref>[http://news.latech.edu/2015/01/21/coes-receives-gift-from-phillips-66-to-support-student-education-experiences/ Louisiana Tech University. "COES receives gift from Phillips 66 to support student education, experiences" by Dave Guerin. January 21, 2015.]</ref> | ||
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| + | ===December 31, 2014: The Shredder Writes: "There’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community"=== | ||
| + | Anonymous columnist "The Shredder" wrote in the ''New Times'' on December 31, 2014 that there's "here’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community, how much Phillips 66 cares about us all, and how very much it would hurt Phillips 66’s feelings if we denied the company its rail spur project. The problem is, Phillips 66 has greased the verbal wheels by giving these people a lot of money, and then turned around and given even more money to a local PR firm to tell the rest of the community just how great Phillips 66 really is. Call me a cynic, but as soon as I know someone’s been paid to say something, they lose credibility in my eyes, and I’m speaking as someone who has never been paid. Maybe they really mean it. But if that were the case, why wouldn’t they say it without being paid?" | ||
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| + | <blockquote>The reality is that Phillips 66’s “good neighbor” moments tend to be choreographed, right down to photographs of a smiling spokesperson handing over an enormous check. And that’s OK. That’s what for-profit corporations do. It is not, however, what good neighbors do. I know, because my neighbor is still miffed about the time I offered to pay up front so my dog can freely pop squats in his yard. In fact, a company is not a neighbor at all, regardless of how many times a PR company repeats the term. A corporation is not a human being with human concerns; corporations are motivated by one thing: profit.<BR><BR> | ||
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| + | While I don’t fault Phillips 66 for behaving like a corporation any more than I fault a wild animal for behaving like a wild animal, I don’t much appreciate the fact that they’re trotting out platitudes about being there for the community in lieu of substantive discussion about the impacts of what they’re proposing. Hiring a company to attempt to wrangle and limit the media while feeding the public a heavily manipulated image of an oil company as Mr. Rogers—if Mr. Rogers was in the habit of doling out enormous checks—is a fairly oily thing to do.<ref>[http://www.newtimesslo.com/shredder/11838/good-fences/ New Times. "Good Fences" by The Shredder. December 31, 2014.]</ref></blockquote> | ||
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| + | ===December 30, 2014: Phillips Donates $100,000 to Belle Chasse YMCA=== | ||
| + | The Plaquemines Gazette reported on December 30, 2014 that Phillips presented a $100,000 grant to the YMCA of Greater New Orleans on December 22, 2014 that will allow the YMCA in Belle Chasse to build an outdoor walking and jogging track around their facility. “Phillips 66’s Alliance Refinery recently recognized a need for a safe place, free from traffic, for walkers and joggers to exercise outside. Without even being asked to do so, they have now provided a means to our YMCA Belle Chasse facility to meet this community need. Thank you Phillips 66 for your generosity,” said YMCA of Greater New Orleans’ President and Chief Executive Officer Gordon Wadge.<ref>[http://plaqueminesgazette.com/news/phillips-66-grants-100k-belle-chasse-ymca Plaquemines Gazette. "PHILLIPS 66 GRANTS $100K TO BELLE CHASSE YMCA" December 30, 2014.]</ref> | ||
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| + | ===December 23, 2014: Phillips Donates $30,000 to Santa Maria Museum=== | ||
| + | The Paso Roble Daily News reported on December 23, 2014 that volunteers from the San Luis Obispo Railroad Museum received a $30,000 contribution from Phillips earmarked to help complete the museum’s ambitious model railroad room, a scale model depiction of the rail industry in SLO as it looked in the early part of the 20th century. According to Museum volunteer Arnold Jonas, the group hosted a tour of its facility for Phillips 66 officials in late fall and received a positive reaction. “Several of the people touring our museum were from out of state and were frankly amazed at what our group of volunteers has accomplished,” said Jonas. “And not only was the group impressed by the museum, they were intrigued by our emphasis on education and our interest in telling the story of the railroad in our county. Apparently that paved the way for our grant approval,” he said. “All of us involved in the oil industry are aware of the role the local railroad played – and continues to play – in keeping our product moving,” said Bill Schroll, manager of the Phillips 66 Santa Maria Refinery located on the Nipomo Mesa. “We are delighted to help educate residents and areas visitors about the rich history of the railroads and their role on the Central Coast, including the dynamic partnership that continues between our industries,” he said.<ref>[http://pasoroblesdailynews.com/slo-railroad-museum-receives-30000-donation/30267/ Paso Roble Daily News. "SLO Railroad Museum receives $30,000 donation" December 23, 2014.]</ref> | ||
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| + | ===December 20, 2014: Phillips Gives $155,000 to Westlake Fire Department and Police=== | ||
| + | American Press reported on December 20, 2014 that Phillips 66 has given the Westlake police and fire departments $115,000 under the company’s Community Signature Initiative, which aids communities with emergency preparedness and safety efforts. “We had this in the works since September before the election,” said Steve Geiger, plant manager of Phillips 66’s Westlake refinery. “So we reached out to the police and fire departments and told them we had the opportunity to get a grant. So we basically collected the needs of the community and went back to our corporate office and said this is what we see as a benefit to the community.” Mayor Bob Hardey said the money will be split between the two departments. The Fire Department will get $60,000; the Police Department will get $55,000.<ref>[http://www.americanpress.com/Phillips-66-gives-Westlake--115k-police--fire-grant American Press. "Phillips 66 gives Westlake $115k police, fire grant" by Frank DeCesare. December 20, 2014.]</ref> | ||
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| + | ===December 10, 2015: Phillips Makes $40,000 Grant to Billings Firefighters=== | ||
| + | The Billings Gazette reported on December 10, 2014 that Phillips has made a $40,000 grant to help protect Billings residents from potentially slower fire and other emergency response times by allowing for videoconference training for firefighters. Fire Chief Paul Dextras and City Administrator Tina Volek announced the grant Friday in an email to Billings City Council members. Volek wrote that she wants to invite Phillips 66 officials to an upcoming City Council meeting “to recognize their contributions to this important piece of the training program that Chief Dextras has helped lead during his time with the department.” The videoconference system will be used widely, Dextras said. “Probably 70-80 percent of our training sessions can be broadcast,” he said. “Embracing this technology will allow us to do so much more. It’s huge for the Fire Department in a lot of ways, and it shows the neat things that Phillips 66 does by contributing to the community.”<ref>[http://billingsgazette.com/news/local/government-and-politics/grant-from-phillips-will-allow-firefighters-to-videoconference/article_84cc4749-2462-5e08-91fd-a0335b8782b2.html Billings Gazette. "Grant from Phillips 66 will allow firefighters to videoconference" by Mike Ferguson. December10, 2014.]</ref> | ||
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| + | ===December 9, 2014: Phillips Contributes Over $200,000 to Southwest Illinois Division of United Way=== | ||
| + | The Telegraph reported on December 9, 2014 that Phillips 66 Wood River Refinery was the second highest contributor to the Southwest Illinois Division of United Way contributing more than $200,000 of the $1,700,000 total.<ref>[http://www.thetelegraph.com/news/news/50835222/Area-United-Way-efforts-raise-$1.7M The Telegraph. "Area United Way efforts raise $1.7M" December 9, 2014.]</ref> | ||
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| + | ===December 8, 2014: Phillips Donates $100,000 to Build Bike Trail in Bethalto=== | ||
| + | The Alton Daily News reported on December 8, 2014 that Phillips has given a grant of $100,000 to to create a bike trail in the Village of Bethalto to compliment its park system.<ref>[http://www.altondailynews.com/news/details.cfm?clientid=17&id=154802 Alton Daily News. "Proposed Bike Trail Gets Grant" December 8, 2014.]</ref> | ||
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| + | ===December 5, 2014: Phillips 66 Donates $50,000 for ZooMontana Wolverine Habitat=== | ||
| + | The Billings Gazette reported on December 5, 2014 that Phillips 66 has donated $50,000 to ZooMontana to build a new wolverine habitat and exhibit. “Phillips 66 is committed to both community and environmental education, so we felt this was a great mix of the two,” said Shea Dawson, the Billings refinery’s manager of finance and public affairs, in a news release. “We look forward to the process of helping ZooMontana construct this exciting exhibit.” The new habitat will be located near the junction in the zoo’s central area that leads to either the wolf or tiger habitats. Designs are underway, and zoo officials hope to put it out for bid soon. Construction likely will begin in the summer of 2015.<ref>[http://billingsgazette.com/news/local/phillips-donates-k-for-zoomontana-wolverine-habitat/article_f5c2167d-e57e-51f8-a61f-d6a792c824a2.html Billings Gazette. "Phillips 66 donates $50K for ZooMontana wolverine habitat" by Zach Benoit. December 5, 2014.]</ref> | ||
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| + | ===November 20, 2013: Village of Roxana Will Not Have to Repay Million of Dollars to Philips 66 in Tax Assessment Case=== | ||
| + | The Alton Daily News reported on November 20, 2014 that the local school district of the village of Roxana will not have to repay millions of dollars that the Madison County State’s Attorney says it overtaxed Phillips 66 for the Wood River Refinery. An agreement between numerous taxing bodies and the owners of the Phillips 66 Wood River Refinery has been reached that would eliminate repayment for taxes collected in 2011 and 2012, and lower the refinery’s 2013 assessed value by about $100-million. Phillips filed an objection earlier this year over the amount of taxes levied by the Village of Roxana, the Roxana Park District, Roxana Library District and the Roxana School District. Parties still have to sign off on the agreement.<ref>[http://altondailynews.com/news/details.cfm?clientid=17&id=152804 Alton Daily News. "Settlement Agreement For Refinery" November 20, 2014.]</ref> | ||
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| + | ===November 19, 2014: Phillips Donates $50,000 to Restore Goff Tower in Bartlesville=== | ||
| + | KWON reported on November 19, 2014 that Phillips 66 donated $50,000 and the Lyons Foundation donated $20,875 to help restore Goff Tower, designed by famed architect Bruce Goff and presented in 1964 as a gift from Mrs. H.C. Price to the children of Bartlesville. Citizens are invited for the re-opening ceremony of the Sooner Park Play Tower scheduled for Wednesday, November 26th at 2 pm.<ref>[http://bartlesvilleradio.com/pages/news/80962014/goff-tower-to-be-reopened-november-26th KWOM. "Goff Tower To Be Reopened November 26th" November 19, 2014.]</ref> | ||
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| + | ===November 18, 2014: Phillips Donates $250,000 to Upgrade Storm Warning Systems Around Wood River Refinery=== | ||
| + | KSDK reported on November 28, 2014 that Phillips 66 Wood River Refinery is donaring $250,000 to three local communities to upgrade their storm warning systems by installing new sirens. Phillips has also put money aside for educational programming, including severe weather preparedness programs that will be taught in schools and at municipal fire departments and will fund a National Weather Service spotters training course.<ref>[http://www.ksdk.com/story/news/local/2014/11/18/phillips-66-wood-river-refinery-tornado-sirens/19215801/ KSDK. "3 communities to get upgraded tornado sirens" November 28, 2014.]</ref> Wood River Fire Chief Steve Alexander says much of the credit for this agreement goes to Phillips 66.<ref>[http://www.altondailynews.com/news/details.cfm?clientid=17&id=152501 Alton Daily News. "Tornado Siren Project" by Doug Jenkins. November 28, 2014.]</ref> | ||
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| + | ===October 30, 2014: Phillips Donates $1 Million to Texas A&M new Engineering Education Complex (EEC)=== | ||
| + | Texas A&M reported on October 30, 2014 that Phillips made a $1 million donation to the Texas A&M Foundation that will support the university’s new Engineering Education Complex (EEC). “Phillips 66 is committed to investing in education,” said Greg C. Garland, chairman and CEO of Phillips 66, and a Texas A&M chemical engineering graduate. “We need leaders from schools such as Texas A&M who will challenge the status quo and create solutions to meet rising energy needs in the decades ahead.” The company’s contribution will be used to create the “Phillips 66 Experiential Learning Laboratory” within the EEC. The new lab will help better prepare engineering students to meet the evolving needs of the engineering marketplace.<ref>[http://engineering.tamu.edu/news/2014/10/30/texas-am-engineering-education-complex-receives-major-donation-from-phillips-66 Texas A&M. "Texas A&M Engineering Education Complex receives major donation from Phillips 66" October 30, 2014.]</ref> | ||
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| + | Philips CEO Greg Garland is a 1980 graduate of Texas A&M.<ref>[http://investor.phillips66.com/investors/governance/executive-leadership-team/person-details/default.aspx?ItemId=5ad00be6-a4ea-4476-b0dd-b5d1e7be225b Phillips 66. "Greg Garland" retrieved November 5, 2015.]</ref> | ||
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| + | ===October 28, 2014: Phillips Donates $100,000 to Lagrange High School in Lake Charles=== | ||
| + | KPLC TV reported on October 28, 2014 that Phillips donated $100,000 to LaGrange High to update the school's science labs. "It's very exciting to be in a lab here today," said Calcasieu Parish Superintendent Karl Bruchhaus. "Phillips 66 has been a great partner and has provided an opportunity for LaGrange High School to have a few things that no other high school that I'm familiar with has the benefit of."<ref>[http://www.kplctv.com/story/27146785/lagrange-receives-100000-grant-from-phillips-66 KPLC Tv. "LaGrange receives $100,000 grant from Phillips 66" October 28, 2014.]</ref> | ||
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| + | ===October 7, 2014: Phillips Makes $40,000 Grant to 'Pheasants Forever'=== | ||
| + | The Billings Gazette reported on October 7, 2014 that Phillips awarded a $40,000 grant to 'Pheasants Forever' to help upland birds, other wildlife and bird hunters in Eastern Montana. The conservation group announced this week that the money would go to hiring a seasonal habitat technician, the purchase of a truck and trailer and to accelerate upland habitat work on public lands in Yellowstone, Big Horn and Treasure counties by the Montana Habitat Partnership. “The partnership’s work provides community members the opportunity to spend half a day hunting or running their dog in great habitat close to Billings,” said Dan Bailey, Pheasants Forever’s regional representative for Montana. “As private land becomes increasingly difficult to access, especially around metropolitan areas like Billings, improving the existing habitat to create high-quality public land is more important than ever.”<ref>[http://billingsgazette.com/lifestyles/recreation/grant-funds-new-upland-habitat-position/article_e26ccfd8-2297-5ca0-a624-4f9d8431ecbb.html Billings Gazette. "Grant funds new upland habitat position" October 7, 2014.]</ref> | ||
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| + | ===September 9, 2014: Phillips Donates $500,000 to Oklahoma State University=== | ||
| + | The Stillwater News Press reported on September 9, 2014 that Phillips has donated $500,000 to open the Phillips 66 Student Plaza as part of the college’s new Student Excellence Center. The center will provide a nexus of social, career and academic opportunities for the college’s more than 4,300 engineering, architecture and engineering technology students and allow students to enjoy the outdoors while studying in groups, working on laptops or enjoying lunch with friends. Engineering, architecture and engineering technology students will help design large natural-gas barbeques, a tailgate kitchen, and other features enhancing the plaza. “We are so grateful for Phillips 66’s generosity and vision,” says Paul Tikalsky, dean of the College of Engineering, Architecture and Technology. “Through the Phillips 66 Student Plaza, students across the various college disciplines will have a central location to collaborate and develop our community of scholars. Their interactions, and the programs and exhibitions this beautiful outdoor area hosts, will excite students about the future and the grand challenges they will help solve.”<ref>[http://www.stwnewspress.com/news/article_fe8c3378-3837-11e4-ba6f-0019bb2963f4.html Stillwater News Press. "Oklahoma State University receives $500,000 gift from Phillips 66" September 9, 2013.]</ref> | ||
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| + | This contribution is in addition to Phillips 66’s annual support for the Phillips 66 SHIELD (Students Heightening Involvement in Education, Learning and Development) Scholars Program as well as support for the Multicultural Engineering Program, scholarships, equipment, and student retention programs in CEAT and other colleges at OSU. “Phillips 66 continues to provide wonderful careers for many of our graduates and make generous contributions across the university,” Tikalsky says. “But their true gift is creating the next generation of intellectual capital for our nation.”<ref>[http://www.stwnewspress.com/news/article_fe8c3378-3837-11e4-ba6f-0019bb2963f4.html Stillwater News Press. "Oklahoma State University receives $500,000 gift from Phillips 66" September 9, 2013.]</ref> | ||
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| + | ===September 3, 2014: Ponca City Refinery Donates Two Used Firetrucks to Volunteers=== | ||
| + | The Ponca City News reported on September 3, 2014 that Phillips 66 Ponca City has donated a 1990 Ford Fire Engine to the Fairfax Volunteer Fire Department and a 1989 Ford Fire Engine to the Osage Cove Volunteer Fire Department. “We are happy that others can use this equipment. Other options were to sell or scrap them, but we think gifting to area volunteer fire departments is a good use for the communities they serve," said Dave Klanica, the Ponca City Refinery Safety Manager.<ref>[http://assets.mediaspanonline.com/prod/11012285/pcn-2014-09-03-a-002.pdf Ponca City News. "Phillips 66 Donates Fire Trucks To Two Volunteer Departments" September 3, 2014.]</ref> | ||
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| + | ===September 2, 2014: Phillips Gives $750,000 to Louisiana State University to Fund Interactive Classroom=== | ||
| + | The New Orleans Times-Picayune reported on September 2, 2014 that Phillips 66 is giving LSU $750,000 to fund an interactive education classroom in the newly renovated College of Engineering. "This new learning community will accelerate our efforts to prepare graduates to meet the environmental, social, economic, scientific, creative and educational challenges that confront the nation and world in the 21st century," Rsaid ick Koubek, dean and Bert S. Turner Chair in the College of Engineering.<ref>[http://www.nola.com/business/baton-rouge/index.ssf/2014/09/phillips_66_gives_750k_for_lsu.html New Orleans Times-Picayune. "Phillips 66 gives $750k for LSU College of Engineering interactive classroom" by Quincy Hodges. September 2, 2014.]</ref> | ||
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| + | ===August 15, 2014: Phillips and Chevron Pledge $1,6000,000 to Fund Petrochemical Academy in Sweeny=== | ||
| + | Hydrocarbon Proecssing reported on August 15, 2014 that Phillips 66 and Chevron Phillips Chemical are making an initial combined contribution of $1.6 million to help fund the creation of a petrochemical academy with the Sweeny Independent School District as part of their continued commitment to education and workforce development initiatives in the communities where they operate. The $1.6 million combined contribution by Phillips 66 and Chevron Phillips Chemical will support the purchase of equipment, building renovations, and scholarships for juniors and seniors enrolled in Sweeny ISD and surrounding school systems. Subsequent contributions will be made in coming years to help cover ongoing maintenance and operation costs and additional equipment. We have significant growth plans for our operations in this region, so it’s exciting to know that students who enroll in classes at the academy will gain college-level skills before they even graduate high school,” said Willie Tempton, Refinery Manager at Phillips Sweeny Refinery. “That means a well-trained workforce for industry in our area and good paying jobs for young Texans looking for a career right here at home.”<ref>[http://www.hydrocarbonprocessing.com/Article/3371564/Latest-News/Phillips-66-Chevron-Phillips-to-fund-new-Texas-petrochemical-academy.html Hydrocarbon Processing. "Phillips 66, Chevron Phillips to fund new Texas petrochemical academy" Augusut 15, 2014.]</ref> | ||
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| + | ===August 13, 2014: Phillips Pledges $1,700,000 to Support STEM Education in Bartlesville=== | ||
| + | The Tulsa World reported on August 13, 2014 that Phillips will be giving $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. “We want to create a place where our students will come and be excited, be challenged and hopefully be encouraged to follow a career at a place like Phillips 66,” he said. “We want to put the right kind of tools in the hands of students in Bartlesville so they can be more successful.”<ref>[http://www.tulsaworld.com/communities/bartlesville/news/phillips-ceo-announces-million-stem-grant-for-bartlesville-schools/article_30498f4b-3a35-57a8-a307-5cc496c7dc75.html Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.]</ref> | ||
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| + | The funds came through a Phillips 66 Signature Community Initiative grant application submitted to the company under an effort spearheaded by Scott Bilger, a Bartlesville school board member and Phillips 66 employee, and Granger Meador, a physics teacher who heads up Bartlesville High’s science department. The new laboratories and major new course offerings will be at the high school, along with Madison and Central Middle Schools. “We are just really, really excited about the opportunity this is going to provide our students,” Superintendent Gary Quinn said. “It cannot be overstated what this is going to mean to our students.” Phillips 66 has about 2,000 workers in Bartlesville.<ref>[http://www.tulsaworld.com/communities/bartlesville/news/phillips-ceo-announces-million-stem-grant-for-bartlesville-schools/article_30498f4b-3a35-57a8-a307-5cc496c7dc75.html Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.]</ref> | ||
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| + | ===July 9, 2014: Phillips Pledges $750,000 to Support STEM Education in Billings=== | ||
| + | The Billings Gazette reported on July 9, 2014 that has pledged to donate $750,000 over three years to support enhanced science, technology, engineering and math (STEM) education in Billings School District 2 elementary and middle schools. Ray Rigdon, the refinery's manager, said that the donation comes from Phillips 66's Signature Community Initiative, in which it partners with local groups and nonprofits to address targeted, defined issues within the community. "It makes a meaningful investment ... to solve specific community problems with meaningful results," said Rigdon. The money will also fund a technology training center for teachers, students and community members that is expected to open in the fall at Orchard.<ref>[http://billingsgazette.com/news/local/education/phillips-gives-k-to-sd-s-science-technology-program/article_853f9820-875f-55f9-941c-ed5b5fb0525d.html Billings Gazette. "Phillips 66 gives $750K to SD2's science, technology program" by Zach Benoit. July 9, 2014.]</ref> | ||
| + | |||
| + | ===June 27, 2014: Phillips Awards Nine Scholarships to Students Whose Parents Work at Wood River Refinery=== | ||
| + | The Edwardsville Intelligencer reported on June 27, 2014 that Phillips has awarded nine college scholarships of $16,000 to local high school seniors whose parents work for Phillips at the Wood River Refinery. The awards are based on academic excellence, community service and financial need. “This scholarship program reflects Phillips 66’s commitment to the communities where we live and operate and builds on our corporate vision of improving lives,” said Melissa Erker. “We congratulate these students on their achievements inside and outside the classroom and wish them every success in college." The Phillips 66 Dependent Scholarship Program will annually award as many as 66 four-year scholarships of $16,000 each for higher education at any accredited institution. Scholarship Management Services, a neutral, third-party administrator of educational assistance programs, selects the recipients and manages the program for Phillips 66.<ref>[http://www.theintelligencer.com/local_news/article_dd7a6704-fe17-11e3-8fa6-001a4bcf887a.html Edwardsville Intelligencer. "Phillips 66 awards 9 scholarships" June 27, 2014.]</ref> | ||
| + | |||
| + | ===June 10, 2014: Phillips Honored with Philanthropy Award at Bayway Refinery=== | ||
| + | New Jersey reported on June 10, 2014 that Trinitas Health Foundation honored Phillips with a Philanthropy Award at the Trinitas Health Foundation’s “Passion for Our Patients” Gala. Gary Horan, FACHE, President and Chief Executive Officer noted, "Phillips 66 Bayway Refinery exemplifies how philanthropy connects a community. Throughout our partnership, they have helped financially including generous assistance to acquire a digital endoscopy scanner, breast health imaging equipment, C.O.R.E. (Center of Regional Education) Building Project, Outpatient Electronic Medical Records Project, Emergency Department Patient Cardiac Monitors Upgrade Project, and with in-kind donations of office furniture for the Women's Clinic. They've also answered patients' direct needs with donations of clothing and toys. We are thrilled to honor Phillips 66 at the Gala."<ref>[http://www.nj.com/suburbannews/index.ssf/2014/06/trinitas_health_foundation_hon.html New Jersey. "Trinitas Health Foundation honors Phillips 66 with Philanthropy Award" June 10, 2017.]</ref><ref>[http://www.trinitashospital.org/news_display.asp?ID=474 Trinitas regional Medical Center. "Phillips 66 to be Honored at Trinitas Gala" March 26, 2014.]</ref> | ||
| + | |||
| + | "Our relationship with Trinitas began more than two decades ago, and we are pleased to be honored tonight," said Mary Phillips, Community Relations Coordinator. "Many of our employees and neighbors call Trinitas their community hospital, and assisting our neighbors in the communities where we operate our business is consistent with our values of safety, honor, and commitment. We are looking forward to being honored and receiving the Trinitas Celebrating Philanthropy Award." <ref>[http://www.nj.com/suburbannews/index.ssf/2014/06/trinitas_health_foundation_hon.html New Jersey. "Trinitas Health Foundation honors Phillips 66 with Philanthropy Award" June 10, 2017.]</ref><ref>[http://www.trinitashospital.org/news_display.asp?ID=474 Trinitas regional Medical Center. "Phillips 66 to be Honored at Trinitas Gala" March 26, 2014.]</ref> | ||
| + | |||
| + | ===April 22, 104: Phillips Donates $500,000 to University of Texas=== | ||
| + | Adam Hamze reported at the Daily Texas on April 22, 2014 that Phillips donated $500,000 to the University of Texas to support programs within the Cockrell School of Engineering, McCombs School of Business and College of Natural Sciences. A large portion of the gift, which will be split between the three schools, will help fund the Phillips 66 SHIELD Scholar program, which provides a number of resources, including scholarships, professional development and community service opportunities, for students pursuing careers in the energy industry. “It’s very symbiotic — these relationships with these companies are definitely two-way streets,” said Donnell Roy, corporate and foundation relations director at McCombs. “They also support programs such as information management that is strategic to building a talented pipeline of students that can be potentially recruited into Phillips 66.”<ref>[http://www.dailytexanonline.com/news/2014/04/22/phillips-66-donates-500000-to-ut The Daily texas. "Phillips 66 donates $500,000 to UT" by Adam Hamze. April 22, 2014.]</ref> | ||
| + | |||
| + | Rex Bennett, Phillips 66 president of specialties and business development, said the company is constantly looking for new, young employees. “Phillips 66 is always looking for new voices with unique thoughts and different perspectives to help our company succeed,” Bennett said. “We’ve built a strong pipeline at the University of Texas that will enable us to recruit those who will help us all prosper — both now and in the future.”<ref>[http://www.dailytexanonline.com/news/2014/04/22/phillips-66-donates-500000-to-ut The Daily texas. "Phillips 66 donates $500,000 to UT" by Adam Hamze. April 22, 2014.]</ref> | ||
| + | |||
| + | ===November 15, 2013: Phillips Honored for Outstanding Philanthropy at Ferndale Refinery by Association of Fundraising Professionals – Washington Chapter=== | ||
| + | Mauri Ingram reported at the Whatcom Community Foundation on November 15, 2013 that the Association of Fundraising Professionals – Washington Chapter honored Phillips 66 Ferndale Refinery for Outstanding Philanthropic Corporation. For nearly 60 years the Ferndale Refinery has provided millions of dollars and thousands of volunteer hours to support communities throughout Whatcom County. With a focus on education, the environment and health and safety, Phillips 66 supports a variety of nonprofit organizations with direct donations and generous employee volunteer and matching gift programs.<ref>[http://www.whatcomcf.org/news/phillips-66-and-mike-hammes-honored-for-outstanding-philanthropy/ Whatcom Community Foundation. "Phillips 66 and Mike Hammes Honored for Outstanding Philanthropy" by Mauri Ingram. November 15, 2013.]</ref> | ||
| + | |||
| + | Among the organizations benefiting from the company’s contributions are the United Way of Whatcom County, Whatcom Land Trust, Northwest Straits Marine Conservation Initiative, Bellingham Technical College, the Ferndale School District, Ferndale Chamber of Commerce, and Ferndale Boys & Girls Club. Phillips 66 also supports nonprofits in other Washington cities where it does business, such as Tacoma and Spokane. “Phillips 66 is an outstanding philanthropic leader that takes great pride in being a good neighbor and in helping make this a wonderful place to live and work,” wrote Mauri Ingram, president and Chief Executive of the Whatcom Community Foundation in nominating Phillips 66 for this honor.<ref>[http://www.whatcomcf.org/news/phillips-66-and-mike-hammes-honored-for-outstanding-philanthropy/ Whatcom Community Foundation. "Phillips 66 and Mike Hammes Honored for Outstanding Philanthropy" by Mauri Ingram. November 15, 2013.]</ref> | ||
| + | |||
| + | ==Refineries and Marketing Business Segment== | ||
| + | [[Image:Rocerefining2012.jpg|thumb|500px|The return on capital for the Refinery and Marketing Business Segment at Phillips 66 has increased dramatically in recent years. However Christopher Helman writes in Forbes magazine that Phillips 66′s most profitable refineries of the past couple years are in Mid-Continent because of the the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing, Oklahoma", writes Helman adding that over the next three to five years those wide differentials will collapse to the transportation differential. “So more like $3 to $5 a barrel. It’s not going to be $20 forever.”<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/?ss=strategies-solutions Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref>Derivative Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | [[Image:Pipelines.jpg|thumb|600px|Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent — from Texas north to Montana including the Borger refinery, Ponca City, Wood River and Billings. The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing," writes Helman. "The bottleneck that kept oil from getting out of Cushing also kept its price at a record-wide discount relative to its rival European benchmark Brent crude. At one point last year you could buy a barrel of WTI for $27 less than a barrel of Brent. Historically WTI has been slightly more expensive." Photo: National Energy Board of Canada Click graphic to enlarge.]] | ||
| + | [[Image:Brent WTI Spread.gif|thumb|600px|James Hamilton reports on Econobrowwer that on July 19, 2013 West Texas Intermediate sold for the same price as Brent for the first time in almost three years.<ref>[http://www.econbrowser.com/archives/2013/07/brentwti_spread_2.html Econobrowser. "Brent-WTI spread disappears-- for now" by James Hamilton. July 21, 2013.]</ref> Graph: James Hamilton]] | ||
| + | Garland said during his analyst call on April 9, 2012 that the refining and marketing segment has one of the broadest geographic bases of our peers. Phillips 66 has 15 refineries and 2.2 million barrels a day of capacity and is the sixth largest non-governmental controlled refiner in the world, the second largest US refiner. Phillips 66 is the only independent downstream to have significant ownership and interest in gas gathering and processing in the global petrochemicals business.<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
| + | |||
| + | ===Annual Capital Plan for Refining Business Segment=== | ||
| + | |||
| + | =====December 5, 2014: Phillips to Invest $1.1 Billion in 2015 in Refining and Marketing Business Segment===== | ||
| + | Phillips 66 announced on December 5, 2014 that Phillips 66 plans $1.1 billion of capital expenditures in Refining, approximately 75 percent of which will be sustaining capital. These investments are related to reliability and maintenance, safety and environmental projects, including compliance with the new EPA Tier 3 gasoline specifications. Discretionary Refining capital investments will be directed toward small, high-return, quick pay-out projects, primarily to enhance use of advantaged crudes and improve product yields.<ref>[https://secure.marketwatch.com/story/phillips-66-announces-2015-capital-program-2014-12-05 Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.]</ref> | ||
| + | |||
| + | ===Geographic Diversity of Refineries=== | ||
| + | |||
| + | ====September 5, 2012: Philips Geographic Footprint is a Very Competitive Advantage==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips has the broadest geographic segment within our peer group. "We think this geographic footprint gives us a very competitive advantage. It's a great platform for capturing advantaged feedstock and optimizing the product placement that comes out of the refineries. You can see 15 refineries, 11 in the US. We have substantial infrastructure that supports the refineries in terms of 15,000 miles of pipe, 50 some odd terminals, barges, railcars, etc."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ===Cyclical Nature of Refining=== | ||
| + | |||
| + | ====February 14, 2014: Garland Says Refining is Always Going to be a Volatile Business for Phillips==== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that the Refining Business Segment is always is going to be a very volatile business for Phillips. "We don't see that changing in the future. I think small changes in operating rates in infrastructure are going to create dislocations. I think having a large system like we have, having a very sophisticated and large commercial organization like we have, we're going to be able to take advantage of those opportunities that come our way."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ===Refining and Marketing Earnings=== | ||
| + | [[Image:Rocerefining2012.jpg|thumb|500px|Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that he expects a 15% ROCE in the R&M Business Segment going forward. "My view is that, refining historically has been kind of a 10% to 12% business," said Garland. "We think we have plans in place to advantage crude capture, yields, cost reduction, that we can move it 400 basis points. So it’s a 15% business going forward for us versus a 30% return business in Chemicals. And probably Midstream business 15% to 17% returns is kind of what we’re looking in fact."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref>Derivative Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | ====January 30, 2013: Garland Says Phillips Expects 15% ROCE in R&M Business Segment Going Forward==== | ||
| + | In answer to a question from Blake Fernandez of Howard Weil Incorporated, Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that he expects a 15% ROCE in the R&M Business Segment going forward. "My view is that, refining historically has been kind of a 10% to 12% business," said Garland. "We think we have plans in place to advantage crude capture, yields, cost reduction, that we can move it 400 basis points. So it’s a 15% business going forward for us versus a 30% return business in Chemicals. And probably Midstream business 15% to 17% returns is kind of what we’re looking in fact. So, to the extent that we have 30% and 40% return projects in refining, we’re going to do those. I think, I mean we do get challenged by people all the time or we under investing in refining. At this point, we don’t think so. I don’t think there’s any opportunities out there, we feel that we’ve missed in terms of an investment opportunity in the refining space. Our focus is going to be very disciplined. We’re going to restrict capital in this space. We’re going to improve returns in this space. And so we don’t see a change required in our strategy at this point in time."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
| + | |||
| + | ====January 30, 2013: Garland Announces 22% ROCE in R&M Business Segment for 2012==== | ||
| + | Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips return on capital employed for the R&M segment, which includes over $3 billion in goodwill improved to 22% for 2012, up from a 12% return for 2011. "The earnings of all four of our refining regions increased primarily due to improved refining margins," said Garland. "The improvements in refining margins, reflects not only higher market crack spreads, but also an improved feedstock advantage especially in the Gulf Coast, in the Central Corridor regions. The improvements in feedstock advantage increased earnings in the Gulf Coast by over $200 million and by over $100 million in the Central Corridor. Finally, other refining was up this quarter compared to last year, primarily due to movements of Canadian crude supply to several of our refineries."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
| + | |||
| + | ====August 1, 2012: Phillips announces Annualized R&M Adjusted Net Profit of 17% for Second-Quarter, 2012==== | ||
| + | Reuters reported on August 2, 2012 that Phillips 66 posted an annualized 17 percent adjusted profit for the R&M Business Segment for the 2nd quarter of 2012. "The adjusted net profit for 2011 was 12%. Refining and Marketing generated $1.2 billion in adjusted earnings," said Phillips Chief Financial Officer Greg Maxwell. "The $437 million | ||
| + | improvement was primarily driven by much stronger refining margins particularly in the US Midcontinent and Europe."<ref>[http://in.reuters.com/article/2012/08/01/us-phillips66-results-idINBRE8700OV20120801 Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012]</ref><ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Phillips 66. "Transcript of Q2 2012 Phillips 66 Earnings Conference Call" August 1,2012.]</ref> | ||
| + | |||
| + | ====May 24, 2012: Phillips 66 Expects Global Refining Margins to Drop in 2012 and 2013==== | ||
| + | * See also [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/UBS_PSX_Reasor.pdf Presentation by Clayton Reasor to UBS Conference] May 24, 2012 | ||
| + | NASDAQ reported on May 24, 2012 that Clayton Reasor, Phillips 66's senior vice president of strategy and corporate affairs, said that Phillips 66 expects global refining margins to drop in 2012 and 2013 and that US gasoline demand growth in the U.S. and Europe is expected to continue to fall, while demand for distillate fuels, such as heating oil and diesel, is expected to jump, driven by growth in developing countries. "What we need to do as a refining company is ship out our yield away from gasoline to distillate to the extent we can," said Reasor. "As gasoline demand continues to fall in the U.S. we need to find markets for our products." Part of Phillips 66's strategy to become more profitable is boosting its fuels exports to more than 200,000 barrels per day by the middle of the decade, up from 100,000 barrels a day last year.<ref>[http://www.nasdaq.com/article/phillips-66-executive-wti-brent-spread-to-narrow-sharply-by-2013-20120524-00820 NASDAQ. "Phillips 66 Executive: WTI-Brent Spread To Narrow Sharply By 2013" May 24, 2013.]</ref> | ||
| + | |||
| + | ====April 23, 2012: ConocoPhillips Reports 2012 Q1 Earnings==== | ||
| + | ConocoPhillips announced on April 23, 2012 that for Q1 2012, R&M’s worldwide crude oil capacity utilization rate was 91 percent, reflecting minimal unplanned downtime. The U.S. refining capacity utilization rate was 89 percent and the international rate was 97 percent. In addition, the worldwide clean product yield remained at 84 percent. R&M earnings were $452 million, compared with $482 million a year ago. The slight decrease was primarily due to lower refining margins, partially offset by higher marketing margins. Refining margins decreased as the impact of less favorable crude differentials more than offset improved market crack spreads. Pre-tax turnaround expenses for the quarter were $176 million, in line with expectations.<ref>[http://eon.businesswire.com/news/eon/20120423005517/en/Earnings/repositioning Businesswire. "ConocoPhillips Reports First-Quarter Earnings of $2.9 Billion or $2.27 Per Share" April 23, 2012]</ref> | ||
| + | |||
| + | ==Increasing Profitability in the Refining and Marketing Business Segment== | ||
| + | [[Image:Greg garland stockholders.jpg|thumb|450px|Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that there are five things Phillips is doing to in refining and marketing in to enhance returns and capital efficiency. "We think we have 400 basis points of improvement in ROCE in this business and there's five things that we're doing to drive that." Photo courtesy of Phillips 66]] | ||
| + | [[Image:400 basis points.jpg|thumb|450px|Steps Phillips will take to improve returns by 400 basis points. Graphic from Phillips 3rd Quarter Presentation to Analysts on December 12, 2013.]] | ||
| + | [[Image:Shift to advantaged crude.jpg|thumb|right|450px|Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips will get more advantaged crude in front of refineries. "We're well on our way. Last year, we're 74%, up 10%. As you move to into the fourth quarter, we pushed that up to 90%. So our real opportunities are the East Coast and the West Coast today. I think we've got good advantaged crude in the midcon and in the Gulf Coast, where 51% of our or 55% of our capacity resides today."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013. ]] | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that there are five things Phillips is doing to in refining and marketing in to enhance returns and capital efficiency."We think we have 400 basis points of improvement in ROCE in this business and there's five things that we're doing to drive that."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Increase_Profitability_by_Getting_More_Advantaged_Crude_in_Front_of_Refineries Process More Advantaged Crudes] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Increase_Profitability_by_Increasing_Exports Expand Export Capability] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Increase_Profitability_by_Increasing_Clean_Product_Yields Increase Clean Product Yields] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Operational_Excellence Decrease Costs] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Phillips.27_Divestiture_of_Non-Core_Assets_Through_Sale.2C_Exchange.2C_or_Closure Optimize Portfolio] | ||
| + | |||
| + | Garland told analysts at Barclays CEO Energy-Power Conference on September 3, 2014 that the refining business is run well, optimized business. "Operating excellence is key. Putting advantaged crude to the front of refineries, working our yields, improving our yields at our refineries and working on our cost structure is the key of what we're trying to accomplish here. $13 billion of capital employed in this business, it's a huge base. And when you think about 400 basis points of improvement in a business of this scale, that's huge. It's about $600 million of net income improvement. $400 million of that comes from advantaged crude capture, $200 million is around yields and cost reduction. So significant improvement in our base refining business. We view this as moving from a 10% to a 14% return on capital employed business."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | ===Increase Profitability by Getting More Advantaged Crude in Front of Refineries=== | ||
| + | |||
| + | =====March 23, 2015: Operations at Ponca City Refinery Have Improved with Crude from Nearby Mississippian Lime Shale===== | ||
| + | Reuters reported on March 23, 2015 that Phillips 66 has added trucks and offloading equipment at several of its refineries including the Ponca City refinery to help reduce its reliance on oil coming from Cushing, Oklahoma, the nation's biggest crude oil crossroads and storage hub. At Cushing, a growing volume of Canadian oil sands is often mixed with lighter domestic shale crude, resulting in blends that can be less profitable than similar oil fresh from the field. While the blends of these crudes may technically meet the API gravity ceiling of 42 at Cushing, industry players say the mixes can be inconsistent in makeup and generate less income because the most desirable stuff is often missing. The blends tend to produce a higher proportion of fuel at two ends of the spectrum: light ends like gasoline, demand for which has dimmed in recent years, and lower-value heavy products like fuel oil and asphalt. What's missing are middle distillates like diesel, where growing demand and profitability lies. | ||
| + | "You end up with a dumbbell-like material rich in front and back ends, neither of which refineries find most profitable," said Dennis Sutton, a former chemist and retired crude quality expert with Marathon Petroleum Corp who now heads the Crude Oil Quality Association. | ||
| + | |||
| + | Phillips 66 executives say operations at its 200,000-barrel-per-day refinery in Ponca City, Oklahoma, only 62 miles (100 km) from Cushing, have improved since it began getting more of its crude directly from wells in the Mississippian Lime shale patch nearby. "That's really the key," Phillips 66 President Tim Taylor told Reuters. "With Cushing, you can get a blended barrel that hits the spec, but it's not as consistent as you'd like."<ref>[https://en-maktoob.news.yahoo.com/u-refiners-turn-tanker-trucks-avoid-dumbbell-crudes-040352640--finance.html Reuters. "U.S. refiners turn to tanker trucks to avoid 'dumbbell' crudes" by Kristen Hays. March 23, 2015.]</ref> | ||
| + | |||
| + | =====March 2, 2015: Garland Sees Brent-WTI spread Widening to t $6-10/bl===== | ||
| + | Argus Media reported on March 2, 2015 that Phillips CEO Greg Garland sees the Brent-WTI differential widening to $6-10/bl. Inventories of crude storage at Cushing have gained for 12 consecutive weeks at an average pace of 2mn bl per week. Inventories climbed during the week ending 20 February by 2.4mn bl to 48.7mn bl, the highest level since June 2013. Stock levels have doubled since the end of October, growing at a pace unmatched in more than 10 years of records kept by the Energy Information Administration (EIA). "I believe that Cushing is going to fill or close to fill to the operating level, and that will carry over through a decent portion of the year in terms of impacting inland versus coastal crude differentials," says HollyFrontier chief executive Mike Jennings.<ref>[http://www.argusmedia.com/News/Article?id=1001222 Argus Media. "Analysis: Cushing storage on track to fill by May" March 2, 2015.]</ref> | ||
| + | |||
| + | ====January 5, 2015: Wood River Refinery Spokeswoman Says Falling Oil Prices Have Not Impacted Phillips' Business==== | ||
| + | Will Buss reported at BDM.com on January 8, 2015 that spokeswoman Melissa Erker of the Phillips 66 Wood River Refinery in Roxana says that falling crude oil prices have not impacted Phillips 66's business because it is not extracting oil from the ground, but purchasing it at a low price. “If we’re paying less for the product and we’re getting less for gasoline, there is really no impact,” Erker said.<ref>[http://www.bnd.com/2015/01/08/3599753_cheap-gas-makes-petroleum-industry.html?rh=1 BDM.com "Cheap gas prices not all good news: Metro-east oil companies affected" by Will Buss. January 5, 2015.]</ref> | ||
| + | |||
| + | ====November 21, 2014: Ferndale Unloads First Train of Bakken Produced Crude==== | ||
| + | Argus reported on November 21, 2014 that Phillips 66 received the first unit train of Bakken produced oil earlier this week at its new crude-by-rail facility at its 96,000 b/d refinery in Ferndale, Washington. The 30,000 b/d rail unloading site is designed to unload 54 cars simultaneously. Midstream companies and refiners see Washington state as a growing market for discounted North American crudes and a possible gateway to reach California. All Washington state refiners, including Shell and Tesoro, have invested in rail facilities, and three midstream firms have announced plans to unload crude and transload barrels to ships out of the Port of Grays Harbor.<ref>[http://www.argusmedia.com/News/Article?id=952366 Argus. "Ferndale refinery unloads first Bakken train" November 21, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Phillips Increased Advantaged Crude to 95% in Third Quarter==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that during the third quarter, 95% of Phillips U.S. crude slate was advantaged, and this compares with 93% last quarter and this was tied to increased advantaged crude at the Alliance Refinery. "During the quarter, 95% of our U.S. crude slate was advantaged, and this compares with 93% last quarter. This represents a record quarter for us. The improvement was tied to increased crude runs at our Alliance Refinery after their second-quarter turnaround, and was also due to certain crudes becoming advantaged relative to Brent." | ||
| + | |||
| + | "Alliance came back on after turnarounds, so you had more exposure to light and medium grades with that," added Tim Taylor. "And then there was less availability of Maya, the crude, and that was backfilled with more light medium. So we had a mix - effect that gave more exposure to light medium versus heavy in the third quarter."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Phillips Began Operations of 75,000 bpd Rail Facility at Bayway Refinery in August==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that in August, Phillips began operations at its 75,000 barrel a day rail rack at the Bayway Refinery. "We're constructing a rail loading facility with up to 200,000 barrels a day of capacity in North Dakota. In August, our Company began operations at its 75,000 barrel a day rail rack at the Bayway Refinery, and the 30,000 barrel a day rail rack at our Ferndale Refinery is in the commissioning phase. | ||
| + | This quarter, we improved our advantaged crude capture to 95%." | ||
| + | |||
| + | Garland added that even with the rail rack coming online, Phillips would continue to barge Gulf Coast crude over to the East Coast. " I think we'll continue to do both. We've actually run the Jones Act ship up around the Bayway also, and so I think you'll see us continue to do both."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 28, 2014: Phillips Partners with Energy Transfer to Build Bakken Crude Oil Pipelines==== | ||
| + | Businesswire reported on October 28, 2014 that Phillips and Energy Transfer have formed two joint ventures to develop the previously announced Dakota Access Pipeline (DAPL) and Energy Transfer Crude Oil Pipeline (ETCOP) projects. Energy Transfer holds a 75 percent interest in each joint venture and will operate both pipeline systems. Phillips 66 owns the remaining 25 percent interests and will fund its proportionate share of the construction costs. The DAPL and ETCOP projects are expected to begin commercial operations in the fourth quarter of 2016. “Energy Transfer is a valued partner with a proven track record of developing major interstate pipelines,” said Greg Garland, chairman and CEO of Phillips 66. “These joint-venture projects will allow Phillips 66 to increase its access to advantaged North American crude oil and add to the momentum we are building in our Midstream business.”<ref>[http://www.businesswire.com/news/home/20141028005255/en/Phillips-66-Joint-Venture-Partner-Energy-Transfer Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.]</ref> | ||
| + | |||
| + | DAPL is expected to deliver in excess of 450,000 barrels per day of crude oil from the Bakken/Three Forks production area in North Dakota to market centers in the Midwest. DAPL will provide shippers with access to Midwestern refineries, unit-train rail loading facilities to facilitate deliveries to East Coast refineries, and the Gulf Coast market through an interconnection in Patoka, Illinois, with ETCOP.<ref>[http://www.businesswire.com/news/home/20141028005255/en/Phillips-66-Joint-Venture-Partner-Energy-Transfer Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.]</ref> | ||
| + | |||
| + | ETCOP will provide crude oil transportation service from the Midwest to the Sunoco Logistics Partners and Phillips 66 storage terminals located in Nederland, Texas.<ref>[http://www.businesswire.com/news/home/20141028005255/en/Phillips-66-Joint-Venture-Partner-Energy-Transfer Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.]</ref> | ||
| + | |||
| + | ====September 3, 2014: Phillips to Add Another Jones Act Vessel to its Fleet==== | ||
| + | Greg Garland told analysts at the Barclays CEO Energy-Power Conference on September 3, 2014 that Phillips is adding another Jones Act Vessel to its fleet. "And logistics around the Gulf Coast are going to be important and an opportunity to create a lot of value. We currently have two Jones Act vessels that we use. Starting in January, we're adding a third Jones Act to the fleet. So we've added capability there coming up this January." Garland added that Phillips can use their Jones Act Vessels to move crude oil from the Texas Gulf Coast to Bayway.<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | ====September 3, 2014: Phillips to Build North Dakota Origination Rail Terminal for Bakken Crude==== | ||
| + | Argus reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips will build a rail-loading facility permitted to handle up to 200,000 b/d of Bakken crude, the first time a US refiner has directly owned a North Dakota origination terminal.<ref>[http://www.argusmedia.com/News/Article?id=926054 Argus Media. "Phillips 66 to build Bakken rail facility" September 3, 2014.]</ref> "The thing I would say is in terms of North Dakota, we acquired 700 acres of land. We have permits in hand and engineering to construct a new rail loading facility. This is permitted up to 200,000 barrels a day. We'll probably do about a 160,000 barrels a day, about 300,000 barrels of storage there."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | ====September 3, 2014: Phillips to Buy 500 More Railcars To Move Crude to Coastal Refineries==== | ||
| + | Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips has ordered another 500 railcars to increase its fleet to 3,700 railcars. which will allow it to eventually move up to 185,000 barrels per day (bpd) of North Dakota Bakken crude oil to its refineries on the East and West coasts.<ref>[http://www.reuters.com/article/2014/09/03/phillips-66-crude-railway-idUSL1N0R40ZQ20140903 Reuters. "Phillips 66 says adding railcars to move crude to coastal refineries" September 3, 2014.]</ref> | ||
| + | |||
| + | ====September 3, 2014: Garland Disappointed with Lengthy Permit Process for Rail Offloading at Santa Maria Refinery==== | ||
| + | Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips was "disappointed" in the lengthy permitting process for a rail offloading project at its refinery in Santa Maria, California, but remained optimistic it would be built. The rail project would bring in about 40,000 bpd of heavy oil, like that produced in Canada rather than light Bakken crude, according to the company. A local planning commission meeting to consider approving the project has been pushed to January from April to allow an environmental impact report produced in late 2013 to be recirculated for more public comment.<ref>[http://www.reuters.com/article/2014/09/03/phillips-66-crude-railway-idUSL1N0R419N20140903 Reuters. "Phillips 66 says adding railcars to move crude to coastal refineries" September 3, 2014.]</ref> | ||
| + | |||
| + | ====September 3, 2014: Phillips Receives First Crude-Only Train at Bayway Refinery==== | ||
| + | Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Bayway Refinery in Linden, New Jersey, received its first crude-only train at the plant's newly expanded offloading system. The system can take up to 70,000 bpd, in addition to up to 75,000 bpd from a joint venture with Global Partners.<ref>[http://www.reuters.com/article/2014/09/03/phillips-66-crude-railway-idUSL1N0R40ZQ20140903 Reuters. "Phillips 66 says adding railcars to move crude to coastal refineries" September 3, 2014.]</ref> "So let me start on the East Coast at Bayway. We've built the 70,000 barrel a day rail rack. It's operational. We unloaded our first unit train in August, August 5. We can do one unit train a day there at Bayway. That was a global deal. We can do 50,000 to 75,000 a day in the global deal. And then we have our Jones Act vessels also to move crude around from the Texas Gulf Coast to Bayway."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | ====September 3, 2014: Rail Off-loading System On Track for 4th Quarter Start at Ferndale Refinery==== | ||
| + | Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips 66's 30,000-bpd offloading system at Ferndale Refinery is on track to start up in the fourth quarter. <ref>[http://www.reuters.com/article/2014/09/03/phillips-66-crude-railway-idUSL1N0R40ZQ20140903 Reuters. "Phillips 66 says adding railcars to move crude to coastal refineries" September 3, 2014.]</ref> "Thinking about California, work in process, I would say, in terms of putting advantaged crude into California. Ferndale, we have a rail rack under construction, 30,000 barrels a day. It will be ready by the fourth quarter of this year. We're disappointed in the progress to permit our Santa Maria rail rack 40,000 a day, but we have – we're optimistic that we'll get that done. It just takes time in California to get these things permitted."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | ====July 30, 2014: Narrowing Crude Differentials Negatively Impacted Phillips Realized Margins in 2014 Second Quarter==== | ||
| + | Greg Maxwell told analysts during the 2nd quarter earnings conference on July 30, 2014 that narrowing crude differentials negatively impacted Phillips realized margins. "Realized Refining margins decreased in all of our regions exception for the Western Pacific region. The decrease was driven by weaker distillate market cracks reduced seasonal blending activity, gasoline activity and also lower secondary product realizations," said Maxwell. "In addition, narrowing crude differentials negatively impacted our realized margins. In the Gulf Coast, the LLS Maya differential narrowed by $5.32 per barrel, impacting our Sweeny and our Lake Charles refineries. And on the East Coast the Bakken Brent differential narrowed by $1.43 per barrel impacting our Bayway refinery."<ref>[http://seekingalpha.com/article/2360575-phillips-66s-psx-ceo-greg-garland-on-q2-2014-results-earnings-call-transcript Seeking Alpha. "Phillips 66's (PSX) CEO Greg Garland on Q2 2014 Results - Earnings Call Transcript" July 30, 2014.]</ref> | ||
| + | |||
| + | ====March 12, 2014: Brent-WTI Spread Narrows While Heavy and Sour Canadian Crude Oil Maintain High Margins==== | ||
| + | Isac Simon writes at "The Motley Fool" that with the Cushing Marketlink pipeline coming online in late January, inventories at the Cushing storage hub of the West Texas Intermediate have eased causing the Brent-WTI spread to shrink to less than $7 a barrel. "Since the two most widely traded crude oil benchmarks diverged in late 2010, a narrowing spread between Brent and WTI has never been a good sign for refiners," writes Simon. "Throughout 2012 and during the fourth quarter of 2013, U.S. refiners enjoyed a solid run -- thanks to the availability of the deeply discounted West Texas Intermediate crude oil when compared against the internationally traded Brent. As a result, refiners such as HollyFrontier, Marathon Petroleum, Valero Energy Corporation, and Phillips 66 could buy cheaper feedstock, while maintaining global prices for refined products."<ref>[http://www.fool.com/investing/general/2014/03/12/the-death-of-the-brent-wti-spread-are-refiners-goi.aspx The Motley Fool. "The Death of the Brent-WTI Spread: Are Refiners Going to Get Crushed?" by Isac Simon. March 12, 2014.]</ref> | ||
| + | |||
| + | However sour and heavy variants of crude oil are much cheaper than their light and sweet counterparts and higher volumes of heavy crude -- or bituminous crude -- from Canada's tar sands are slowly making way by rail to the Gulf Coast where most refineries are located according to Simon. "Phillips 66 is expecting 2,000 railcars to be delivered in 2013-2014. These high-capacity railcars will be used primarily to deliver Bakken crude oil to its Bayway and Ferndale refineries. Out of its 11 refineries in the United States, eight are capable of refining heavy sour crude," writes Simon. "Both Canadian crude and the price-advantaged Bakken sweet crude are trading at a discount to the West Texas Intermediate. So while the Brent-WTI spread may be narrowing, there's a different market force at work -- that of directly transporting cheap crude by rail. The better prepared refiner is well on its way to take advantage."<ref>[http://www.fool.com/investing/general/2014/03/12/the-death-of-the-brent-wti-spread-are-refiners-goi.aspx The Motley Fool. "The Death of the Brent-WTI Spread: Are Refiners Going to Get Crushed?" by Isac Simon. March 12, 2014.]</ref> | ||
| + | |||
| + | ====February 12, 2014: Garland Says Phillips Will Get More Advantaged Crude in Front of Refineries==== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips will get more advantaged crude in front of refineries. "We're well on our way. Last year, we're 74%, up 10%. As you move to into the fourth quarter, we pushed that up to 90%. So our real opportunities are the East Coast and the West Coast today. I think we've got good advantaged crude in the midcon and in the Gulf Coast, where 51% of our or 55% of our capacity resides today. We're working on our clean product yields. There's $60 million to $100 million of value creation there by pushing our yields. We're working on decreasing operating costs and then we're working on portfolio management in terms of rightsizing the portfolio."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ""We have an extensive system of railcars, pipelines, barges, access to ocean-going ships. We're using that in the value capture for advantaged crude to the front end of our refineries," said Garland. "You'll see us expand this system over time. You'll see us add more railcars, more unloading capability and we're working the East and West Coast right now. Bayway we have the rail rack at Bayway. 75,000 barrels a day will come on later this year. On the West Coast, we have the rail rack at Ferndale that'll come on later this year, 35,000 a day. We're in the middle of a comment period on permitting for our Santa Maria rail rack. We're actively working other third-party rail unloading facilities in southern California.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ====January 30, 2014: in the Fourth Quarter, 94% of Phillips Crude Slate Was Advantaged==== | ||
| + | Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that 94% of Phillips' US crude slate was advantaged. "Our realized margin was $10.75 per barrel, with a market capture rate of 112%. The global crude utilization rate was 92%, and our clean product yield was 84%. During the quarter, 94% of the Company's US crude slate was advantaged, and this compares with 66% last quarter. The increase was largely driven by additional domestic crude's consistently trading at a discount to Brent. We will cover this in more detail on slide 13. The 2013 adjusted return on capital employed for refining was 13%, and the average capital employed for this segment was $14.3 billion," said Garland. "On an annual basis, our advantaged crude slate has increased from 62% in 2012, to 74% in 2013. And this is due to processing an additional 118,000 barrels per day of tight oil, additional domestic crude's that consistently trade at a discount to Brent, as well as higher volumes of heavy Canadian crudes."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
| + | |||
| + | ====October 30, 2013: Phillips May Buy More Railcars to Move Advantaged Crude to US Refineries==== | ||
| + | Reuters reported on October 30, 2013 that Garland told analysts during the third quarter earnings conference call that Phillips may buy more railcars to move advantaged crude from North Dakota and Canada to its refineries. This would be on top of the 2,000 railcars already expected for delivery this year of which the company has to date received 1,270.<ref>[http://www.reuters.com/article/2013/10/30/phillips66-crude-rail-idUSL1N0IK1PP20131030 Reuters. "Phillips 66 may buy more railcars to move crude to U.S. refineries-CEO" October 30, 2013.]</ref> | ||
| + | |||
| + | Phillips Bayway refinery had been running about 100,000 barrels per day of U.S. crudes in place of imports - from Texas via tanker and North Dakota's Bakken via rail and barge but the company cut rail shipments to 30,000 bpd day when the discount of U.S. crude benchmark West Texas Intermediate to London's Brent all but dried up during the quarter. The discount of North Dakota Bakken crude to WTI also narrowed. However, Phillips 66 is ramping rail shipments back up and running less imported crude now that the spread has widened to more than $10 a barrel. "The spreads now incent us to run Bakken at Bayway today," said Tim Taylor, executive vice president for commercial, marketing, transportation and business development, in a post-call interview.<ref>[http://www.reuters.com/article/2013/10/30/phillips66-crude-rail-idUSL1N0IK1PP20131030 Reuters. "Phillips 66 may buy more railcars to move crude to U.S. refineries-CEO" October 30, 2013.]</ref> | ||
| + | |||
| + | Phillips 66 is building a new rail offloading facility at Bayway to further increase shipments by 75,000 bpd by the second half of 2014. The company also received all necessary permits to build a similar facility at its 100,000 bpd refinery in Ferndale, Washington, to handle 30,000 bpd also by the second half of next year.<ref>[http://www.reuters.com/article/2013/10/30/phillips66-crude-rail-idUSL1N0IK1PP20131030 Reuters. "Phillips 66 may buy more railcars to move crude to U.S. refineries-CEO" October 30, 2013.]</ref> | ||
| + | |||
| + | ====July 31, 2013: Narrowing of WTI-Brent Gap Contributes to Disappointing Earnings for Phillips' 2nd Quarter==== | ||
| + | FuelFix reported on July 131, 2013 that Phillips underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. “We should have run better and our earnings results reflect this,” said Garland. Phillips 66′s adjusted earnings per share of about $1.50 was well below analyst expectations of about $1. 81 for that figure.<ref>[http://fuelfix.com/blog/2013/07/31/phillips-66-earnings-fall-with-disappointments/ FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.]</ref> | ||
| + | |||
| + | Higher domestic oil prices pushed down profits as the gap between the price of West Texas Intermediate, a benchmark for domestic crude, and Brent, a measure of international oil prices, narrowed substantially during the second quarter. That trend is expected to continue through the remainder of the year, with Brent currently around $107 and WTI at about $105. U.S. refiners had previously enjoyed a huge advantage over their foreign competitors because WTI prices were as much as $20 lower than Brent prices , with some U.S. crudes priced far lower because there was limited access to foreign markets.<ref>[http://fuelfix.com/blog/2013/07/31/phillips-66-earnings-fall-with-disappointments/ FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.]</ref> | ||
| + | |||
| + | ====July 31, 2013: Phillips Has Taken Delivery of 650 Rail Cars Out of 2,000==== | ||
| + | FuelFix reported on July 31, 2013 that Phillips has already taken delivery of 650 rail cars of the 2,000 that they ordered in 2012. “These cars will be used to transport advantaged crude to Phillips 66 refineries on the east and west coasts," said Garland. “Phillips 66 has been an early mover on adding logistical infrastructure to improve its flexibility of taking lower cost domestic crudes to refineries across its portfolio and this flexibility we believe will lower their feedstock costs over the long run,” said Jeff Dietert, and analyst for Simmons & Co. International.<ref>[http://fuelfix.com/blog/2013/07/31/phillips-66-earnings-fall-with-disappointments/ FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.]</ref> | ||
| + | |||
| + | ====July 21, 2013: Brent-WTI Spread Disappears For Now==== | ||
| + | James Hamilton reports on Econobrowwer that on July 19, 2013 West Texas Intermediate sold for the same price as Brent for the first time in almost three years. "Since 2010, infrastructure for transport and delivery of crude to U.S. refiners by rail and barge has grown tremendously," writes Hamilton. "This has narrowed the Brent-WTI spread, but is not enough to eliminate it, since pipelines are an economically more efficient (and environmentally more friendly) way to transport oil." However Hamilton adds that other projects will also likely soon be bringing even more oil from Canada and the U.S. into Cushing including the 600,000 b/d from the South Flanagan project and another 800,000 b/d that could be delivered through the proposed Canada-to- Nebraska leg of the Keystone project. "All of this means that the elimination of the Brent-WTI spread may prove to be a short-lived phenomenon."<ref>[http://www.econbrowser.com/archives/2013/07/brentwti_spread_2.html Econobrowser. "Brent-WTI spread disappears-- for now" by James Hamilton. July 21, 2013.]</ref> | ||
| + | |||
| + | ====May 21, 2013: Phillips Plans to Increase Advantaged Crude Processing to 100% Within the Next Few Years==== | ||
| + | Greg Maxwell, Executive Vice-President for Finance and Phillips CFO, told analysts at the UBS Global Oil and Gas Conference on May 21, 2013 that the first and largest lever in improving earnings is increasing advantaged crude processing. "We are well-positioned to utilize the emerging advantaged crudes in our domestic refineries. For example, from a sensitivity perspective, $1 per barrel change in our crude cost, if we can capture $1 a barrel change, that improves our net income by $440 million per year. And already, we're running shale crudes at eight of our domestic refineries. We increased our advantaged crude runs from 52% in 2011 to 62% in 2012, and 68% in the first quarter of this year. These crudes are being delivered via truck, and being delivered by rail, barge, ocean-going vessel, and also by pipelines. And our plan is to be able to run 100% advantaged crudes within the next few years."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20UBS%20Global%20Oil%20and%20Gas%20Conference.pdf Phillips 66. "Phillips 66 presentation at UBS Global Oil and Gas Conference" May 21, 2013.]</ref> | ||
| + | |||
| + | ====May 1, 2013: Phillips Increases Share of Advantaged Crude to 68%==== | ||
| + | Fox News reported on May 1, 2013 that Phillips has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.<ref>[http://www.foxbusiness.com/news/2013/05/01/phillips-66-profit-surges-aims-to-use-all-cheap-domestic-crude/ Fox Business. "Phillips 66 Profit Surges; Aims to Use All Cheap, Domestic Crude" May 1, 2013.]</ref> | ||
| + | |||
| + | ====March 20, 2013: Phillips Signs Deals to Boost Deliveries of Cheap Crude by Pipeline and Rail==== | ||
| + | Eliot Caroom reported on Bloomberg on March 20, 2013 that Phillips will increase deliveries of cheaper crudes to its refineries nationwide by as much as 130,000 barrels a day under three transportation deals and a new investment.<ref>[http://www.bloomberg.com/news/2013-03-20/phillips-66-signs-deals-to-boost-oil-deliveries-by-pipe-rail.html Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Eliot Caroom. March 20, 2013.]</ref> | ||
| + | |||
| + | First is a three-year deal with Enbridge Energy Partners LP for loading rail cars with up to 35,000 to 45,000 barrels a day of Bakkan crude from Enbridge’s terminal in Berthold, North Dakota. The crude will be delivered to Bayway Refinery on the east coast and Ferndale Refinery on the West Coast. Some crude could also be sent to Gulf Coast refineries at Lake Charles, Alliance, and Sweeney.<ref>[http://www.bloomberg.com/news/2013-03-20/phillips-66-signs-deals-to-boost-oil-deliveries-by-pipe-rail.html Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Eliot Caroom. March 20, 2013.]</ref> | ||
| + | |||
| + | Second is a pact with Targa Resources Partners LP (NGLS) for five years to provide rail-unloading and barge-loading services in Tacoma, Washington for about 30,000 barrels a day of U.S. and Canadian crudes that will go to the Ferndale Refinery. Phillips’s Rodeo refinery near San Francisco could also receive crude deliveries, displacing imports from outside North America.<ref>[http://www.bloomberg.com/news/2013-03-20/phillips-66-signs-deals-to-boost-oil-deliveries-by-pipe-rail.html Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Elliot Caroom. March 20, 2013.]</ref> | ||
| + | |||
| + | Finally Phillips has signed a pipeline deal with Magellan Midstream Partners LP (MMP) to move 20,000 barrels a day of crude to near the Marland Refinery in Ponca City, replacing West Texas Intermediate from Cushing with oil from the Mississippian Lime play. Magellan service will begin in late 2013, reaching full volume by January 2014. Phillips will also invest in its own Oklahoma assets to transport an additional 40,000 barrels a day of Mississippian Lime to Ponca City. Mississippian Lime crude comes from the Anadarko Basin, which spans Oklahoma and neighboring states. Two new pipelines carrying the grade are planned to start service this year, according to a February EIA report. “We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” Greg Garland, Phillips 66 chairman and chief executive officer, said in the statement. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses.”<ref>[http://www.bloomberg.com/news/2013-03-20/phillips-66-signs-deals-to-boost-oil-deliveries-by-pipe-rail.html Bloomberg. "Phillips 66 Signs Deals to Boost Oil Deliveries by Pipe, Rail" by Eliot Caroom. March 20, 2013.]</ref> | ||
| + | |||
| + | ====January 30, 2013: Garland Says Phillips is Running More Advantaged Crude==== | ||
| + | Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips is running more advantaged crudes with 67% of Phillips U.S. crude in advantaged crude compared to 57% in the fourth quarter of last year.<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
| + | |||
| + | ====January 30, 2013: Garland Says Feedstock Advantage Increased Earnings for $300 Million for 2012==== | ||
| + | Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that improvements in feedstock advantage increased earnings in the Gulf Coast by over $200 million and by over $100 million in the Central Corridor. "The positive $3.69 per barrel adjustment per feedstocks stems from running certain crudes and other feedstocks that are priced lower than our benchmark crudes," said Garland. "For example, our feedstock advantage this quarter was primarily related to running for an heavy-sour crudes at our Gulf Coast refineries and Canadian crudes in our refineries in the Central Corridor. In addition, our crude slate is increased to include more shale crudes, primarily Bakken and Eagle. Finally, the other category primarily reflects the impacts of volume gain and product differentials."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
| + | |||
| + | ====January 8, 2013: Global Partners to Deliver 50,000 bpd of Bakken Crude to Bayway Refinery==== | ||
| + | The Boston Globe reported on January 8, 2013 that Global Partners LP has signed a five-year contract with Phillips 66 to deliver crude oil from North Dakota to Bayway Refinery using its rail transloading, logistics, and transportation system to deliver about 91 million barrels of crude oil to the Phillips refinery over the life of the contract. That equates to approximately 50,000 barrels per day.<ref>[http://bostonglobe.com/business/2013/01/08/global-partners-and-phillips-sign-long-term-crude-transportation-and-logistics-contract/99Xnbipt3QgpifNqNUAO4L/story.html Boston Globe. "Global Partners and Phillips 66 sign long-term crude oil contract" by Chris Ready. January 8, 2013.]</ref> “Global has established a ‘virtual pipeline’ for the reliable transportation of Bakken crude,” said Tim Taylor, Executive Vice President, Commercial, Marketing, Transportation & Business Development of Phillips 66. “Our five-year agreement with Global assures us long-term access to advantaged crude for our Bayway refinery through what we believe is a cost competitive origin-to-destination supply system to the East Coast.” The Bakken crude oil is expected to be transloaded at Basin Transload LLC’s North Dakota rail facilities.<ref>[http://www.businesswire.com/news/home/20130108006168/en Businesswire "Global Partners and Phillips 66 Sign Long-Term Crude Transportation and Logistics Contract" January 8, 2013.]</ref> | ||
| + | |||
| + | ====December 13, 2012: Phillips Announces Marine Charter Agreements to Supply Alliance and Bayway Refineries==== | ||
| + | Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they had recently signed time charter agreements for two medium-range Jones Act marine vessels that will supply the Alliance and Bayway refineries, and potentially the company’s other Gulf Coast refineries, with Eagle Ford crude beginning in early 2013.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
| + | |||
| + | ====September 19, 2012: Greg Garland Says Structural Change in Crude Prices Provide an Opportunity for US Refiners==== | ||
| + | Fuelfix reported on September 19, 2012 that with new shale crudes coming on there has been a structural change in crude prices that presents a real opportunity for the U.S. refining businesses. "You still have 2 to 3 million barrels a day of new light sweet crude coming on out of these new shale plays," said Garland. "And I think ultimately there’s 2 to 3 million barrels a day of Canadian heavy that comes south. I think the U.S. is going to find itself, particularly the mid-continent areas and the Gulf Coast areas — where 51 percent of our capacity is — with an advantaged crude price versus the rest of the world. That’s a structural change."<ref>[http://fuelfix.com/blog/2012/09/19/phillips-66-ceo-says-exports-will-ease-u-s-refining-challenges/ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.]</ref> | ||
| + | |||
| + | ====September 5, 2012: All Three Business Segments Are Well Positioned to Take Advantage of the Prolific Shale Plays and the Canadian Heavy==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that all three business segments, the R&M business, the Midstream business, and the Chemicals business, are well positioned to take advantage of the prolific shale plays and the Canadian heavy. "A big source of competitive advantage we think we can have in our business is the access to advantaged crudes. It's 75% of our cost structure, a lot of work going across the Company in accessing these advantaged crudes."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ====August 15, 2012: Crack Spread is $29.05 a barrel for Texas and Midwest Refiners==== | ||
| + | Paragon reported on August 15, 2012 that new crude production from Texas and the Midwest has resulted in profits reaching their highest levels since 2007 with the difference between the cost of crude and the price companies could sell fuel 9crack spread) in the April-June quarter at $29.05 a barrel according to data collected from Bloomberg. "The prospects for U.S. refiners have turned around dramatically," said John Auers, senior vice president of Turner Mason & Co., a petroleum and refinery consulting company. "Cheap crude has given an advantage to the U.S. refining system, already the most advanced, most complex and most efficient in the world." U.S. refiners have outperformed all other energy sectors in the S&P 500 Index with an average gain of 42 percent. In comparison the S&P 500 Integrated Oil & Gas Index has gained just 2.85 percent year-to-date.<ref>[http://www.sys-con.com/node/2331128 Paragon. "U.S. Refiners Soaring in 2012" August 15, 2012.]</ref> | ||
| + | |||
| + | ====August 1, 2012: The Spread between Brent and Bakken Crude is still around $19/barrel==== | ||
| + | Michael Fitzsimmons wrote on Seeking Alpha on August 1, 2012 that in February2, 102 Fitzsimmons wrote that the price differential between WTI and Brent (then $19/barrel) would tighten up once the Seaway pipeline was reversed. "I was wrong in my prediction. What I missed was the huge increase in oil production coming out of the Bakken (now over 600,000 bpd) and Eagle Ford shales," writes Fitzsimmons. "While I was expecting production to increase, I had no idea it would increase at such a rate as to pretty much fill up Seaway and still be left with the same problem as before it was reversed."<ref>[http://seekingalpha.com/article/769351-phillips-66-hits-a-home-run Seeking Alpha. "Phillips 66 Hits A Home Run" by Michael Fitzsimmons. August 1. 2012.]</ref> | ||
| + | |||
| + | ====August 1, 2012: Phillips to Buy 2,000 Rail Cars to Move Bakken Crude to Bayway and Ferndale Refineries==== | ||
| + | Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude.<ref>[http://in.reuters.com/article/2012/08/01/us-phillips66-results-idINBRE8700OV20120801 Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012]</ref> | ||
| + | |||
| + | ====June 5, 2012: Phillips May Add Several Thousand Railroad Cars in an Effort to Expand Capacity==== | ||
| + | Streetinsider reported on Jun 5, 2012 that Phillips may purchase a "couple thousand" additional rail cars to provide transportation from US shale formations to refineries.<ref>[http://www.streetinsider.com/Insiders+Blog/Phillips+66+(PSX)+May+Look+to+Add+Couple+Thousand+Rail+Cars+in+Effort+to+Expand+Capacity/7495530.html Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.]</ref> The railroad cars would cost $200 million and enable Phillips to carry 120,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.<ref>[http://www.foxbusiness.com/news/2012/06/08/phillips-66-to-boost-rail-capacity-for-oil-transport-ft/ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.]</ref> "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.<ref>[http://www.reuters.com/article/2012/06/08/us-phillips-oil-rail-idUSBRE85713A20120608 Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.]</ref> | ||
| + | |||
| + | ====June 5, 2012: Garland Wants to Get More Advantaged Crude to the Front End of Refineries==== | ||
| + | On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | ====June 5, 2012: Greg Garland Wants a Pipeline on Wheels to Get the Barrels in Front of the Facilities==== | ||
| + | Streetinsider reported on Jun 5, 2012 that Phillips may purchase a "couple thousand" additional rail cars to provide transportation from US shale formations to refineries.<ref>[http://www.streetinsider.com/Insiders+Blog/Phillips+66+(PSX)+May+Look+to+Add+Couple+Thousand+Rail+Cars+in+Effort+to+Expand+Capacity/7495530.html Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.]</ref> The railroad cars would cost $200 million and enable Phillips to carry 120,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.<ref>[http://www.foxbusiness.com/news/2012/06/08/phillips-66-to-boost-rail-capacity-for-oil-transport-ft/ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.]</ref> "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.<ref>[http://www.reuters.com/article/2012/06/08/us-phillips-oil-rail-idUSBRE85713A20120608 Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.]</ref> | ||
| + | |||
| + | Simone Sebastian reported in the Houston Chronicle on July 2, 2012 that the nation's energy transportation network is undergoing a multibillion-dollar overhaul, as oil and natural gas production surges in new regions of the country and energy producers charge into new areas with technology that can reach oil and natural gas trapped in shale and other tight rock formations leaving pools of crude and gas stranded far from the Gulf Coast refineries and petrochemical plants that need them. "Where it used to be isn't where it is now. Where it needs to go isn't where it used to go," says Terrance McGill, president of fuel carrier Enbridge Energy. "You're seeing this fundamental shift of crude oil across the country." Phillips 66 CEO Greg Garland says his company is considering buying 2,000 more rail cars that could carry an additional 150,000 barrels a day from shale regions (PDF) to its refineries across the country because the glut of crude oil pouring out of the newly tapped shale oil plays like North Dakota’s Bakken has kept the price of Mid-Continent crude at a record-wide discount of up to $27 per barrel relative to its rival European benchmark Brent crude because there is not enough pipeline capacity to get Bakken crude to Gulf coast refineries. "That's a pipeline on wheels," says Garland. "You'll see us stepping out and doing some more things around infrastructure. Like everyone else, we're doing everything we can to get more barrels in front of those facilities."<ref>[http://www.chron.com/business/article/Nation-s-energy-transportation-getting-a-revamp-3674957.php Houston Chronicle. "Nation's energy transportation getting a revamp" by Simone Sebastian. July 3, 2012.]</ref><ref>[http://slashdot.org/firehose.pl?op=view&type=submission&id=2140103 Slashdot. "US Energy Transportation Gets Multibillion-Dollar Revamp" by Hugh Pickens. July 2, 2012.]</ref> | ||
| + | |||
| + | ====May 24, 2012: Clayton Reasor Says Price Spread between West Texas Intermediate Crude and Brent Crude futures Likely to Narrow Sharply in 2013==== | ||
| + | NASDAQ reported on May 24, 2012 that according to Clayton Reasor, Phillips 66's senior vice president of strategy and corporate affairs, the price spread between West Texas Intermediate crude and Brent crude futures is likely to narrow sharply in 2013 as increased domestic pipeline capacity relieves the glut created by new shale-oil supplies. "The WTI-Brent differential will narrow as the onshore pipeline capacity is built up and removes some of the bottlenecks that exist between Cushing and the Gulf Coast," said Reasor.<ref>[http://www.nasdaq.com/article/phillips-66-executive-wti-brent-spread-to-narrow-sharply-by-2013-20120524-00820 NASDAQ. "Phillips 66 Executive: WTI-Brent Spread To Narrow Sharply By 2013" May 24, 2013.]</ref> | ||
| + | |||
| + | ====May 22, 2012: New Pipelines to Bring Bakken Crude to Ponca City Refinery and Cushing==== | ||
| + | Janet McGurty wrote in the Calgary Herald on May 22, 2012 that Kinder Morgan’s Pony Express Pipeline and Belle Fourche Pipeline are looking for shippers to use their newly planned pipeline to send their light, sweet crude from outside Baker, Montana, just over the state line from North Dakota’s booming Bakken oil shale play, about 1,000 miles southeast to Ponca City, home of Phillips 66 refinery before continuing on to the oil storage hub of Cushing, Oklahoma. Once the Pony Express reaches Cushing it will be near the Seaway pipeline, now able to carry 150,000 bpd of oil to the Gulf Coast with expansion plans to over 400,000 in the works. Although plans are on the book to move Bakken crude north and east, production in the region topped 510,000 bpd in March and is expected to continue to expand.<ref>[http://www.calgaryherald.com/business/Kinder+Morgan+begin+Pony+Express+crude+pipeline/6658988/story.html Calgary Herald. "Kinder Morgan to begin Pony Express crude pipeline" by Janet McGurty. May 22, 2012.]</ref> | ||
| + | |||
| + | ====May 15, 2012: Gregory J. Millman Says Mid-Continent Refineries Have Access to Cheap, High Quality Crudes==== | ||
| + | Gregory J. Millman wrote in the Wall Street Journal on May 15, 2012 that mid-continent refineries have access to high quality crudes that are cheap because there are no pipelines to carry them to world markets, and therefore they are in superabundant supply. Since the product price is a world market price, and refineries have access to export markets, those that can use cheaper crudes enjoy fatter margins and are more profitable than those who cannot.<ref>[http://online.wsj.com/article/BT-CO-20120515-704911.html Wall Street Journal. "Delta Refines A Fallacy" by Gregory J. Millman. May 15, 2012.]</ref> | ||
| + | |||
| + | ====May 10, 2012: Simon Moore Says New Pipelines Will Bring Bakken Oil to Mid-Continent Refineries==== | ||
| + | Simon Moore writes on Seeking Alpha on May 10, 2012 that with all the new piplines getting ready to come online to move Bakken Oil to Cushing, starting material for refineries in the Mid-Continent Segment will soon become relatively cheaper which will benefit Phillips 66 with three Gulf coast refineries with a total capacity of 733 MMbpd for the next several years. Moore notes that the Seaqay Pipline reversal will go online on May 17, 2012 brining 150,000 barrels/day of light sweet crude from Cushing, Oklahoma to the Gulf Coast and there are currently plans to expand the pipeline to approximately 400,000 barrels/day and then to 850,000 barrels/day. In addition the new Flanagan South Pipeline will move another 585,000 barrels/day from Illinois to Cushing. Finally the Bakken Express Pipeline from Oneok (OKE) will move 200,000 barrels/day from the Bakken to Cushing. "PSX stands to benefit from the extra crude that will be piped from Cushing to the Gulf Coast increasingly over time."<ref>[http://seekingalpha.com/article/577421-phillips-66-a-lot-of-upside-potential Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.]</ref> | ||
| + | |||
| + | ====May 1, 2012: Phillips 66 Plans to Run More Shale Oil==== | ||
| + | [[Image:Railroadtankcars.jpg|thumb|right|550px|Phillips may purchase 2,000 additional rail cars to provide transportation from US shale formations to refineries.<ref>[http://www.streetinsider.com/Insiders+Blog/Phillips+66+(PSX)+May+Look+to+Add+Couple+Thousand+Rail+Cars+in+Effort+to+Expand+Capacity/7495530.html Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.]</ref> The railroad cars would cost $200 million and enable Phillips to carry 150,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.<ref>[http://www.foxbusiness.com/news/2012/06/08/phillips-66-to-boost-rail-capacity-for-oil-transport-ft/ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.]</ref> "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.<ref>[http://www.reuters.com/article/2012/06/08/us-phillips-oil-rail-idUSBRE85713A20120608 Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.]</ref> Photo: [https://secure.flickr.com/photos/modelrailroadmuseum/6244516494/ Railroad Tank Cars] by San Diego Model Railroad Museum Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)]] | ||
| + | Kristen Hays wrote on Reuters on May 1, 2012 that Greg Garland says the Phillips 66 aims to process more shale oil "everywhere we can get it." Garland added that several refineries are already well positioned to receive shale oil, such as its 247,000 barrels-per-day (bpd) refinery in Sweeny, Texas, in proximity to the state's prolific Eagle Ford shale play, or Midwest plants. The company last fall also ran unit trains from the Bakken shale oil play in North Dakota to its 238,000 bpd Bayway refinery in Linden, New Jersey, and has taken trains to West Coast refineries. "You'll see us stepping out and doing some more things around infrastructure," he said. "Like everyone else, we're doing everything we can to get more barrels in front of those facilities."<ref>[http://www.reuters.com/article/2012/05/01/phillips-66-ceo-idUSL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" by Kristen Hays. May 1, 2012.]</ref> | ||
| + | |||
| + | ====May 1, 2012: Investments in refining will enhance its export abilities and connections to lower-cost crude==== | ||
| + | Garland told the Houston Chronicle on May 1, 2012 that investments in refining will enhance its export abilities and connections to lower-cost crude. "But you won't see us investing to increase refining capacity," Garland says. Garland says that Phillips 66 will execute a number of strategies to revitalize the refining business. Phillips 66 will target lower-cost oil and focus more of its refining capacity on producing diesel and other high-yield fuels. The company also will ramp up exports to foreign markets that offer higher prices for their fuel.<ref>[http://www.chron.com/business/article/Phillips-66-s-route-to-focus-on-refining-3526007.php Houston Chronicle. "Phillips 66's route to focus on refining, pipelines" by Simone Sebastian. May 1, 2012.]</ref> | ||
| + | |||
| + | ====April 30, 2012: Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent==== | ||
| + | According to Christopher Helman writing in Forbes magazine, Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent — from Texas north to Montana including the Sweeny refinery [sic], Ponca City, Wood River and Billings. The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing," writes Helman. "The bottleneck that kept oil from getting out of Cushing also kept its price at a record-wide discount relative to its rival European benchmark Brent crude. At one point last year you could buy a barrel of WTI for $27 less than a barrel of Brent. Historically WTI has been slightly more expensive." In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries. However, this opportunity is not going to last long term because there will soon be plenty of new options for getting crude out of Cushing and Garland agrees that the price differential will collapse. “Over three to five years those wide differentials that we’re seeing in the Midcon will collapse to the transportation differential,” he told me. “So more like $3 to $5 a barrel. It’s not going to be $20 forever.”<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/?ss=strategies-solutions Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> | ||
| + | |||
| + | ===Increase Profitability by Increasing Exports=== | ||
| + | [[Image:Export capacity.jpg|thumb|right|450px|Greg Garland disclosed during the 4th quarter earnings conference call on January 29, 2014 that Phillips exported nearly 200,000 barrels a day. "Our total export capacity is just over 400,000 barrels per day, up from 285,000 barrels at the end of 2012." Garland added that the increase in export capacity is primarily Gulf Coast. "I think we will continue to push the limits. We are looking for cheap ways that we can just get more barrels across there. Certainly, we have stated our ultimate target is about 500 a day, but almost all that increase is going to be on the Gulf Coast. Minor debottlenecks on the West Coast, and then we have underutilized capacity today on the East Coast."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/PSX_2013Q4_EarningsCall_Transcript.pdf Phillips 66. "Q4 2013 Phillips 66 Earnings Conference Call" January 29, 2014.]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013. ]] | ||
| + | ====August 13, 2014: Phillips Evaluates Export of Super-Light Crude Oil==== | ||
| + | Kristen Hays reported at Reuters on August 13, 2014 that Phillips is evaluating the export of super-light crude oil known as condensate, after two industry peers received U.S. government approval to ship it overseas after minimal processing but declined to say if it has sought formal permission to export condensate from the U.S. Department of Commerce, which is tasked with interpreting exceptions to a decades-old ban on crude exports. "We're evaluating the process and seeking a better understanding," said Chris Chandler, Phillips 66's head of natural gas liquids (NGLs). "That process is still a little unclear to us." Asked if the export facility could potentially export condensate that has been minimally processed, Chandler said: "This Freeport facility has a lot of expansion possibilities. It's close to the Gulf of Mexico, three miles from open water. We have the capability of doing a lot more here than we do currently."<ref>[http://www.reuters.com/article/2014/08/13/phillips66-exports-terminal-idUSL2N0QI2GH20140813 Reuters. "Phillips 66 says evaluating condensate export process, seeking clarity" by Kristen Hays. August 13, 2014.]</ref> | ||
| + | |||
| + | ====May 7, 2014: Garland Softens Position - Doesn't Oppose Crude Oil Exports==== | ||
| + | Fuelfix reported on May 7, 2014 that Garland said Phillips doesn’t oppose exporting U.S. oil, putting the company at odds with other independent refiners who have lobbied aggressively against lifting the nation’s crude exports ban. In the past, Garland has expressed outright support for lifting the ban, garnering him attention for reportedly being the first major refining head to take that position. According to Fuelfix, Garland is now taking a slightly softer position. “We’ve never said we’re for — we’ve said we don’t oppose,” Garland said. “In our view, it’s time to have an honest, open dialogue about energy policy in the U.S., and we need to be holistic in that,” Garland continued. Garland said he isn’t very confident U.S. policy on crude exports will change any time soon. “In an election year, I think it’s going to be difficult for Congress to move on this issue simply because they have too many other things on their plate,” Garland said. “Politically, it’s a very difficult thing right now.”<ref>[http://fuelfix.com/blog/2014/05/07/phillips-66-ceo-says-he-doesnt-oppose-crude-exports/ Fuelfix. "Refining chief: We don’t oppose US oil exports" by Ryan Holeywell. May 7, 2014.]</ref> | ||
| + | |||
| + | ====April 11, 2014: Phillips Exports Oil to Canada==== | ||
| + | Reuters reported on April 11, 2014 that after securing an export license in 2013, Phillips is now exporting oil to Canada. A Phillipsspokesman declined to say where in Canada its exports are headed and in what volume and did not disclose if the oil will reach its destination via rail or barges. "As a matter of practice, Phillips 66 does not comment on commercial activity," said spokesman Dennis Nuss. The United States does not allow exports of its own oil, but makes exceptions such as barrels going to Canada and re-exports of foreign oil.<ref>[http://www.reuters.com/article/2014/04/11/usa-exports-oil-idUSL2N0N30UM20140411 Reuters. "Phillips 66 says exporting U.S. oil to Canada" April 11, 2014.]</ref> | ||
| + | |||
| + | ====April 11, 2014: Phillips to Build Splitter at Sweeny Refinery to Process Condensates into Fuel Components that Can Be Exported==== | ||
| + | Reuters reported on April 11, 2014 that Phillips plans to build a condensate splitter at Sweeny refinery which will allow it to process condensates into fuel components that can be exported.<ref>[http://www.reuters.com/article/2014/04/11/usa-exports-oil-idUSL2N0N30UM20140411 Reuters. "Phillips 66 says exporting U.S. oil to Canada" April 11, 2014.]</ref> | ||
| + | |||
| + | ====March 5, 2014: BP Skirts US Crude Export Ban with Mini-Refineries: Phillips May Follow Suit==== | ||
| + | Bloomberg reports that the oil industry is pressuring President Barack Obama to end the 41-year-old ban on most crude exports but British Petroleum (BP) isn’t waiting for a decision. The British oil giant has signed on to take at least 80 percent of the capacity of a new $360 million mini-refinery in Houston that will process crude just enough to escape restrictions on sales outside the country. “It’s a relatively inexpensive way around the export prohibition,” says Judith Dwarkin “You can lightly ruffle the hydrocarbons and they are considered processed and then they aren’t subject to the ban.” Amid a flood of new US oil], the demand for simple, one-step plants capable of transforming raw crude into exportable products such as propane is feeding a construction boom along the Gulf Coast. The first such mini-refinery, built for 1/10 the cost of a complex, full-scale refinery, is scheduled to open the first phase of its 100,000 barrel-a-day crude processing plant in July, The mini-refineries take advantage of the law that [http://fuelfix.com/blog/2014/01/05/us-oil-glut-stirs-up-political-dilemma/ allows products refined from oil to be sold overseas, though not the raw crude itself]. "The international buyers of these products will likely need to refine them further, so this is basically a veiled form of condensate exports,” says Leo Mariani.<ref>[http://www.bloomberg.com/news/2014-03-06/bp-splitter-refinery-seen-skirting-u-s-oil-export-ban.html Bloomberg. "BP Splitter Refinery Seen Skirting U.S. Oil Export Ban" by Alex Nussbaum and Bradley Olson. March 6, 2014.]</ref><ref>[http://news.slashdot.org/story/14/03/07/0524236/bp-finds-way-to-bypass-us-crude-export-ban Slashdot. "BP Finds Way To Bypass US Crude Export Ban" by Hugh Pickens. March 7, 2014.]</ref><ref>[http://news.slashdot.org/story/13/10/07/1321200/us-now-produces-more-oil-and-gas-than-russia-and-saudi-arabia Slashdot. "US Now Produces More Oil and Gas Than Russia and Saudi Arabia" by Hugh Pickens. October 7, 2014.]</ref> | ||
| + | |||
| + | According to Bloomberg, three additional plants have been proposed by other pipeline or trading companies, and refiners including Valero and Phillips said they may follow suit.<ref>[http://www.bloomberg.com/news/2014-03-06/bp-splitter-refinery-seen-skirting-u-s-oil-export-ban.html Bloomberg. "BP Splitter Refinery Seen Skirting U.S. Oil Export Ban" by Alex Nussbaum and Bradley Olson. March 6, 2014.]</ref> | ||
| + | |||
| + | ====February 19, 2014: Christopher Helman Says the US Oil Boom is Not So Bad for Refinery Owners==== | ||
| + | Christopher Helman wrote at Forbes Magazine on February 19, 2014 that increasingly, the oil giants seem to have realized that there’s better returns to be made, with fewer headaches, by turning their focus back to the USA and that it’s the smaller operators that have been able to capitalize best on the unconventional oil and gas revolution. "Thanks to the U.S. oil boom, refineries in this country are chronically oversupplied with cheap oil (as witnessed by the discount of WTI to Brent) and will continue to be as long as oil exports remain prohibited. This frustrates the small independent drillers who would like to sidestep the refiners and export their crude to the world market (if it weren’t prohibited). But it’s not so bad if you happen to own a refinery; then you can capture much of that differential by exporting finished gasoline and diesel to the world market," writes Helman. "That’s why Exxon, Chevron and Shell are unlikely to jettison any U.S. refineries as long as this dynamic remains. On the contrary, notes Deutsche Bank’s oil analyst Paul Sankey, we may soon see the day when a big independent oil producer buys a small refining company — “relative multiples would make this a highly accretive move,” Sankey wrote." | ||
| + | |||
| + | ====February 14, 2014: Garland Says Phillips is Well Placed to Compete in the Export Market to South America==== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips is well placed to compete in the export market. "We have 7 coastal refineries, so roughly 75% of our domestic capacity is on the coast. These are going to be the best position refineries to participate in the export opportunities that we see," said Garland. "We believe that you're going to have to access the export markets to be able to continue to run high utilization rates and hence our focus on growing our export capability to 500,000 barrels a day." Garland said that in December we sold 250,000 barrels a day to Latin America and South America. "We do believe that the U.S. refining business is really well positioned to compete in those export markets. You have an energy price advantage over European and Asian refiners. You have -- you're in the right zip code so you have a transportation cost advantage. Then you factor in an advantaged crude position. So these refineries and when you look at the complexity, size and the scale of the U.S. refining business, well positioned to compete in the export markets. That's true of Phillips 66 also."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ====January 29, 2014: Garland Reiterates Support of Crude Exports==== | ||
| + | In response to a question from Doug Leggate of Merrill Lynch, Greg Garland reiterated his support for crudge exports during the 4th quarter earnings conference call on January 29, 2014. "I think I came out in May of 2012, and said we wouldn't be opposed to lifting the ban on crude exports. We do encourage a thoughtful and broad conversation around energy policy in our country, and I think you have got to look at that holistically. It is not just crude exports, but it is also infrastructure. And that could be pipelines, that could be marine, and I think you just can't take one of them and pull it out separately. So we don't oppose lifting the crude ban. But I think you have got to look at RFS. You have got to look at infrastructure pipeline. Can we approve a pipeline or not in this country? All the way to marine infrastructure limitations that we have in this country. So and generally we are free-traders, but we would like to see a free market also."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/PSX_2013Q4_EarningsCall_Transcript.pdf Phillips 66. "Q4 2013 Phillips 66 Earnings Conference Call" January 29, 2014.]</ref> | ||
| + | |||
| + | ====January 29, 2014: Phillips Hits New Record Exporting 200,000 BPD, Ultimate Target is 500,000 BPD==== | ||
| + | Greg Garland disclosed during the 4th quarter earnings conference call on January 29, 2014 that Phillips exported nearly 200,000 barrels a day. "Our total export capacity is just over 400,000 barrels per day, up from 285,000 barrels at the end of 2012." Garland added that the increase in export capacity is primarily Gulf Coast. "I think we will continue to push the limits. We are looking for cheap ways that we can just get more barrels across there. Certainly, we have stated our ultimate target is about 500 a day, but almost all that increase is going to be on the Gulf Coast. Minor debottlenecks on the West Coast, and then we have underutilized capacity today on the East Coast."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/PSX_2013Q4_EarningsCall_Transcript.pdf Phillips 66. "Q4 2013 Phillips 66 Earnings Conference Call" January 29, 2014.]</ref> | ||
| + | |||
| + | ====May 21, 2013: Phillips is Increasing Export Capabilities==== | ||
| + | Greg Maxwell, Executive Vice-President for Finance and Phillips CFO, told analysts at the UBS Global Oil and Gas Conference on May 21, 2013 that Phillips is increasing export capabilities. "We have projects in progress to increase export capability from our Gulf Coast and our West Coast refineries by 115,000 barrels per day over the next few years. And during the first quarter, we moved 150,000 barrels per day into the export market. And these projects position us with the capability to export up to 30% of our total clean product production from our coastal refineries."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20UBS%20Global%20Oil%20and%20Gas%20Conference.pdf Phillips 66. "Phillips 66 presentation at UBS Global Oil and Gas Conference" May 21, 2013.]</ref> | ||
| + | |||
| + | ====January 10, 2013: Michael Fitzsimmons Writes that Garland's Support of Crude Exports is Grounded in Confidence in the Future and in Relations with ConocoPhillips==== | ||
| + | Michael Fitzsimmons wrote in Seeking Alpha on January 10, 2013 that Fitzsimmons has a theory as to why Phillips CEO Garland has unpredictably come public in December in support of is supporting crude oil exports: Could it be that Phillips 66's position on the crude oil export question goes back to its relationship to - ConocoPhillips? After all, Fitzsimmons says, since the spin-off many COP executives and employees likely hold stock in PSX, and vice-versa. Fitzsimmons says that COP produces over 130,000 boe/day of high quality light-sweet crude in the Eagle Ford - very close to PSX's Texas refineries. "Even though the companies are now separate publicly traded entities, you know that COP and PSX management talk turkey quite often. So I wonder what PSX might get from COP in return for publicly supporting crude exports? First dibs on Eagle Ford production at a favorable rate? Discounts on natural gas feedstock for its refinery and chemical operations? Discounts on WCS from COP's top-tier position in the Canadian oil sands? The point is this - by working in tandem, there is certainly room for COP and PSX to optimize the overall returns for both companies."<ref>[http://seekingalpha.com/article/1939601-phillips-66-unpredictably-supports-crude-oil-exports-why Seeking Alpha. "Phillips 66 Unpredictably Supports Crude Oil Exports - Why?" by Michael Fitzsimmons. January 10, 2013.]</ref> | ||
| + | |||
| + | "While an easing of the crude oil export ban will likely reduce the Brent/WTI spread and thus crimp profits in the company's refining sector, I take it as a very bullish and almost cocky indicator of the confidence PSX management has in its future - exports or no exports. I also believe COP and PSX will work closely together to maximize the benefits to both companies should the ban on crude oil exports be lifted or substantially eased - something I see as very likely."<ref>[http://seekingalpha.com/article/1939601-phillips-66-unpredictably-supports-crude-oil-exports-why Seeking Alpha. "Phillips 66 Unpredictably Supports Crude Oil Exports - Why?" by Michael Fitzsimmons. January 10, 2013.]</ref> | ||
| + | |||
| + | ====December 13, 2012: Garland Supports Exports of Crude Oil==== | ||
| + | Reuters reported on December 13, 2013 that Phillips 66 CEO Greg Garland told reporters at a lunch in New York that Phillips would support exports of crude oil from the United States, arguing the boost they would give the country's economy would trump the higher costs for the company and for American consumers. "When you think about what is good for U.S. economy, what drives job growth... all of these are reasons why we support crude oil exports," said Garland. "If we're allowed to export refined products I think others should be allowed to export the crude they produce." Garland is the first head of a major refiner to speak openly in favor of exporting crude.<ref>[http://www.reuters.com/article/2012/12/13/phillips66-crude-exports-idUSL1E8NDBXR20121213 Reuters. "Refiner Phillips 66 would support U.S. crude oil exports-CEO" December 13, 2013.]</ref> | ||
| + | |||
| + | The United States in the past three years has become a major exporter of gasoline, jet fuel, and diesel as domestic demand has fallen in reaction to higher prices and a slow economic recovery. Some say the decades old ban on crude oil exports is outdated should North America become energy independent in the coming years, though it is likely to be a fiercely fought political issue. Garland said that U.S. sea-borne crude oil imports could be as low as 2 million barrels per day (bpd) within five years. The drop in sea-borne imports, from a peak above 8 million bpd in the middle of the last decade, has led many to speculate the U.S. could eventually become a net exporter of crude.<ref>[http://www.reuters.com/article/2012/12/13/phillips66-crude-exports-idUSL1E8NDBXR20121213 Reuters. "Refiner Phillips 66 would support U.S. crude oil exports-CEO" December 13, 2013.]</ref> | ||
| + | |||
| + | Garland praised the cheap energy-led "renaissance" in American manufacturing. "We consider ourselves a manufacturing company... Last year the biggest export from the United States was not planes or automobiles but refined products - and that's the first time since the 1940s."<ref>[http://www.reuters.com/article/2012/12/13/phillips66-crude-exports-idUSL1E8NDBXR20121213 Reuters. "Refiner Phillips 66 would support U.S. crude oil exports-CEO" December 13, 2013.]</ref> | ||
| + | |||
| + | ====September 19, 2012: Phillips Plans to Increase Exports to 220,000 bbl by End of 2013==== | ||
| + | FuelFix reported on September 19, 2012 that Phillips 66 exported about 100,000 barrels a day and plans to increase daily exports to 220,000 by the end of 2013. "If we can export to make more money, we’ll do that. If we can sell in the U.S. and optimize earnings, we’ll do that too. But to date, exporting has actually gotten us a higher price than selling in the U.S." Garland added that it doesn't take a huge investment to increase exports. "These aren’t huge investments. It’s access to tanks and pipes and dock space. It’s less than $100 million of investment for us to do this." Garland says that demand is down in the United States, so increasing exports is beneficial for the country. "Last year, the U.S. industry’s No. 1 export oil products, gasoline and diesel essentially. When we think about exports, we think it’s great for the country. It makes jobs for us. Ultimately, I think it results in better prices for American consumers. We are running our refineries harder, we are spreading those fixed costs over more barrels. So what you are seeing is relatively high utilization rates in the U.S. refining industry today even though demand has been down."<ref>[http://fuelfix.com/blog/2012/09/19/phillips-66-ceo-says-exports-will-ease-u-s-refining-challenges/ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.]</ref> | ||
| + | |||
| + | ===Increase Profitability by Increasing Clean Product Yields=== | ||
| + | [[Image:Distillate yields.jpg|thumb|right|450px|Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that there's $60 million to $100 million of value creation by pushing our clean yields.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conferecne May 21, 2013. ]] | ||
| + | ====February 12, 2014: Garland Says Phillips is Pushing Our Clean Yields==== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that there's $60 million to $100 million of value creation by pushing our clean yields.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ====January 29, 2014: Phillips Benefited from Clean Product Differentials==== | ||
| + | Greg Garland told analysts at the fourth quarter earnings conference on January 29, 2014 that Phillips benefited from clean product differentials. "During the quarter, we realized better prices on average for clean products, compared with the benchmark prices. In addition, as RIN prices moderated, the benefit of resulting lower expenses is reflected in this bar."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/PSX_2013Q4_EarningsCall_Transcript.pdf Phillips 66. "Q4 2013 Phillips 66 Earnings Conference Call" January 29, 2014.]</ref> | ||
| + | |||
| + | ====May 21, 2013: Phillips Plans to Increase Product Yields==== | ||
| + | Greg Maxwell, Executive Vice-President for Finance and Phillips CFO, told analysts at the UBS Global Oil and Gas Conference on May 21, 2013 that Phillips plans to increase product yields. "Over the last few years, we've increased our total clean product yields by 2% percent with an emphasis on maximizing our diesel yield. As you know, global demand for diesel is strong and growing. Our distillate yield is 3% higher than the United States industry average. And we believe we have a peer leading distillate yield. This is worth approximately $150 million in net income per year based on today's market prices. And 11 of our refineries have small projects to increase both clean product and diesel yields."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20UBS%20Global%20Oil%20and%20Gas%20Conference.pdf Phillips 66. "Phillips 66 presentation at UBS Global Oil and Gas Conference " May 21, 2013.]</ref> | ||
| + | |||
| + | ====April 9, 2012: Garland Wants to Increase Clean Product Yields==== | ||
| + | "As we look at our refining business, we pulled capital down over the past couple years. Our sustaining level of capital in the R&M segment is about $1 billion a year. We will focus some incremental spend in R&M on margin improvement projects. We think that there's opportunities to capture more feed stock advantaged crudes. We can drive our clean product yields, increase our export capability. 1% improvement in clean product yield gives us about $100 million to $150 million of net income improvement. If we can capture $1 a barrel of WTI/Brent differential, it's worth about $90 million of net income. There is powerful economic incentives to capture these margin improvements."<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
| + | |||
| + | ====June 5, 2012: Garland Wants to Increase Clean Product Yields==== | ||
| + | On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns. Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity." Phillips wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | ===Increase Profitability by Decreasing Costs=== | ||
| + | |||
| + | See * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Operational_Excellence Operational Excellence] | ||
| + | |||
| + | ===Increase Profitability by Optimizing Portfolio=== | ||
| + | |||
| + | See * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Phillips.27_Divestiture_of_Non-Core_Assets_Through_Sale.2C_Exchange.2C_or_Closure Phillips' Divestiture of Non-Core Assets Through Sale, Exchange, or Closure] | ||
| + | |||
| + | ==Phillips' Divestiture of Non-Core Assets Through Sale, Exchange, or Closure== | ||
| + | [[Image:WhitegateAerial2.JPG|thumb|right|450px|Phillips announced in June, 2013 that they want to sell the Whitegate Refinery in Cork, Ireland.<ref>[http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips. "US Refining as of March 31, 2011"]</ref> [http://www.phillips66.co.uk/EN/newscentre/photo_library/pages/whitegate.aspx Courtesy of ConocoPhillips]]] | ||
| + | [[Image:Wilmingtonrefinery.jpg|thumb|right|450px|At the Phillips Third Quarter Earnings Conference on October 31, 2012 Tim Taylor said that when Phillips looks at its California refineries, it's been one of the more challenged markets from a recovery standpoint post-recession. Asked if California would still remain part of Phillips' core portfolio Taylor replied that right now California is in the lower performing part of Phillips portfolio. "So I think that if our assessment would become that it's going to be challenged for some period of time, we've either got to find a way to improve that operation or find some other way to deal with that."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Third%20Quarter%202012%20Earnings%20Transcript.pdf Philips 66. "Phillips Third Quarter Earnings Conference" October 31, 2012]</ref> [http://www.flickr.com/photos/41421441@N02/5936548396/ Photo of Wilmington Refinery by unzarjones] Flicker Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0)]] | ||
| + | [[Image:Alliancerefineryflooding.jpg|thumb|right|450px|Phillips announced on May 1, 2012 that the Alliance Refinery in Belle Chasse, Louisiana was for sale. Phillips announced in August, 2012 that they had changed their mind and that the Alliance Refinery was no longer for sale. Photo: Lower Mississippi Riverkeeper Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)]] | ||
| + | [[Image:Trainerrefinery.jpg|thumb|right|450px|Phillips sold Trainer Refinery in Trainer, Pennsylvania to Delta Airlines in June, 2012.<ref>[http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips. "US Refining as of March 31, 2011"]</ref> [http://www.phillips66.com/EN/newsroom/image-gallery/Pages/index.aspx Photo by Phillips 66]]] | ||
| + | |||
| + | ===February 16, 2015: Phillips 66 Sells Interests in Three Pipeline Systems to Phillips 66 Partners=== | ||
| + | Reuters reported on February 16, 2015 that Phillips 66 is sellings interests in three pipeline systems to Phillips 66 Partners, a master limited partnership formed by Phillips 66, for a total of $1.01 billion. The deal includes two natural gas pipeline systems based in Texas, as well as a 19.46 percent interest in the Explorer Pipeline Company, which operates a pipeline carrying refined products between the Gulf Coast and the Midwest in the United States.<ref>[http://www.reuters.com/article/2015/02/16/us-phillips-66-m-a-phillps-66-ptns-idUSKBN0LK1YB20150216 Reuters. "Phillips 66 Partners to expand Texas operations in $1 billion deal" February 16, 2015.]</ref> | ||
| + | |||
| + | ===February 9, 2015: Phillips Completes Sale of Bantry Bay Oil Terminal in West Cork, Ireland=== | ||
| + | Houston Business Journal reported on February 9, 2015 that Phillips 66 has completed the sale of the Bantry Bay Oil Terminal in West Cork, Ireland to a new Houston energy company founded last year by the Warburg Pincus LLC private equity firm. "We are pleased to have acquired the Bantry Bay Terminal, which serves as a critical commercial link in northwest Europe for crude and refined products," Zenith CEO Jeffrey Armstrong said in a prepared statement. "The terminal's attractive deepwater location on Bantry Bay enables our customers to take advantage of many trade opportunities, and the terminal will remain an important part of Ireland's strategic petroleum reserve." The terminal, located on Whiddy Island in Bantry Bay, has a storage capacity of more than 8 million barrels and is one of the largest in Europe. Zenith said it intends to continue operating the terminal on a commercial basis.<ref>[http://www.bizjournals.com/houston/blog/drilling-down/2015/02/new-houston-energy-company-buys-major-oil-terminal.html Houston Business Journal. "New Houston energy company buys major oil terminal from Phillips 66" by Jordan Blum. February 9, 2015.]</ref> | ||
| + | |||
| + | ===February 9, 2015: Forbes Says Delta Made a Mistake Buying the Trainer Refinery from Phillips 66=== | ||
| + | Christopher Helman wrote in Forbes Magazine on February 9, 2015 that two-and-a-half years after Delta Airlines decision to buy the Trainer Refinery from Phillips 66 Delta has sunk $420 million of capital into the refinery, which has generated roughly $100 million of losses. "This deal is even more idiotic now than it was then,” says Ed Hirs. Buying a refinery just isn’t a big hedge against fuel prices because the real cost of fuel is the oil, not the refining. “It’s as wrongheaded as buying a bakery to hedge against rising bread prices,” says Hirs. “If you really want to hedge your bread price, then buy a wheat field. Likewise, if these guys want to hedge fuel prices what they should buy are oilfields–which are on sale right now.” Delta would have been better off just waiting for oil prices to fall and then locking in lower fuel prices in the futures market. Instead it’s stuck with an expensive albatross. | ||
| + | |||
| + | Delta still tries to put a good face on Trainer. After sinking some $40 million more into the plant in 2014, Delta said in a December presentation that Trainer was profitable in the fourth quarter because fuel prices did not fall quite as fast as crude oil.<ref>[http://www.forbes.com/sites/christopherhelman/2015/01/21/how-cheap-oil-has-delta-air-lines-jet-fooled/ Forbes Magazine. "How Cheap Oil Has Delta Air Lines Jet Fooled" by Christopher Helman. February 9, 2015.]</ref> | ||
| + | |||
| + | ===December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay=== | ||
| + | Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.<ref>[http://www.businesswire.com/news/home/20150105005012/en/Chevron-Phillips-Chemical-Completes-Sale-Ryton%C2%AE-PPS#.VKv2kCvF928 Businesswire. "Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay" December 5, 2015.]</ref> | ||
| + | |||
| + | ===November 12, 2014: Phillips to Sell Maleka Refinery for $635 Million=== | ||
| + | FuelFix reported on November 12, 2014 that Phillips has made a deal to sell its 47-percent stake in a Malaysian refinery for $635 million in cash that is expected to close at the end of 2014. “This divestiture allows us to redeploy resources to more strategic areas of our business,” said Larry Ziemba, executive vice president of refining for Phillips 66, in a written statement. Dean Acosta, a spokesman for Phillips 66, said the firm won’t have a refining presence in Asia after the deal closes. “We continually evaluate the assets in our portfolio to identify opportunities to significantly enhance returns,” Acosta said in an email. “We do that through portfolio management as well as improving margins on our current assets.”<ref>[http://fuelfix.com/blog/2014/11/12/phillips-66-to-sell-refining-stake-in-asia-for-635m/ FuelFix. "Phillips 66 to sell refining stake in Asia for $635M" November 12, 2014.]</ref> | ||
| + | |||
| + | ===October 29, 2014: Sale of Maleka Refinery is an Ongoing Process=== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the sale of the Melaka Refinery is an ongoing process. "We have an ongoing process at Melaka. And I think our expectation is certainly end of this year, first quarter next year, that we'll complete that process."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ===October 29, 2014: Sale of Whitegate Refinery is a Failed Process=== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the sale of the Whitegate Refinery is a failed process. "Whitegate, really a failed process. No interest in someone buying the Whitegate Refinery, so that asset is essentially off the market for now."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ===September 4, 2014: Chevron Phillips to Sell Performance Polymers Business for $220 Million=== | ||
| + | Bloomberg reported on September 4, 2014 that Chevron Phillips has agreed to sell Ryton polyphenylene sulphide plants, a performance polymers business, to Belgian chemical maker Solvay for $220 million to expand its offering of lightweight plastics for replacing heavier metal parts in cars. “Ryton PPS fits neatly with our unique specialty polymers portfolio and reinforces our unrivalled capabilities to provide solutions to our customers in dynamic innovative end-markets,” said Augusto Di Donfrancesco, president of Solvay Specialty Polymers. Solvay will gain Ryton PPS sites in Texas and Oklahoma, and a plant in Belgium. Solvay plans to invest in a PPS production technology developed by Chevron Phillips that hasn’t “achieved its full potential,” the company said. Completion of the deal is expected in the fourth quarter.<ref>[http://www.bloomberg.com/news/2014-09-04/solvay-buys-chevron-phillips-car-plastics-unit-for-220-million.html Bloomberg. "Solvay Buys Chevron Phillips Car-Plastics Unit for $220 Million" by Andrew Noel. September 4, 2014.]</ref> | ||
| + | |||
| + | ===August 28, 2014: Phillips Sells Whiddy Oil Terminal=== | ||
| + | The Irish Examiner reported on Augusut 28, 2014 that Phillips has reached an agreement to sell the Whiddy Island oil terminal in Bantry, which holds a third of Ireland’s strategic oil reserves, to the US startup, Zenith Energy. “We understand from Phillips 66 that Zenith intend to continue operating the terminal on a commercial basis. The Bantry terminal will therefore remain an important element of Irish oil infrastructure, regardless of its ownership,” said the Department of Energy Communications, Energy and Natural Resources. Phillips 66 employs 30 people directly at the site and the operation indirectly supports 100 contractor jobs. The Whiddy facility, which has a storage capacity of 7.5 million tonnes, is considered one of the best fuel storage facilities in Europe following significant investment over the past 15 years.<ref>[http://www.irishexaminer.com/ireland/whiddy-oil-terminal-sold-to-us-company-283849.html Irish Examiner. "Whiddy oil terminal sold to US company" by Claire O'Sullivan. Augusut 28, 2014.]</ref> | ||
| + | |||
| + | ===April 3, 2014: Phillips Gives Up Trying to Sell Whitegate Refinery=== | ||
| + | Alison Sider reported in the WSJ on April 3, 2014 that after nearly a year of trying to sell its Whitegate refinery in Ireland, Phillips is calling off the search for a buyer and will just keep running it. “Based on the level of interest from potential buyers, we will take the next step in the sales process for the Bantry Bay storage terminal only,” company spokesman Rich Johnson said. According to Sider European refineries are struggling because fuel demand in the region is down amid a sluggish economy, plus there’s increasing competition from plants in the Middle East, Asia and even the U.S.<ref>[http://blogs.wsj.com/corporate-intelligence/2014/04/03/trying-to-sell-an-oil-refinery-in-the-british-isles-good-luck/?mg=blogs-wsj&url=http%253A%252F%252Fblogs.wsj.com%252Fcorporate-intelligence%252F2014%252F04%252F03%252Ftrying-to-sell-an-oil-refinery-in-the-british-isles-good-luck WSJ. "Trying to Sell an Oil Refinery in the British Isles? Good Luck" by Alison Sider. April 3, 2014.]</ref> | ||
| + | |||
| + | ===February 14, 2014: Garland Says Phillips Has Gotten Good at Selling the Good Things=== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips has gotten very good at selling the good things but now Phillips is going to have to get very good at selling the not-so-good things. "I think we've demonstrated that we're willing to create value for shareholders by deal. So we sold ICHP, the power plant, nice ten multiple for that facility in 2013 or was it 2012, 2013 we closed. Then the flow improver deal was just a deal that had to be done. Nice multiple for the, effective ten multiple tax-free transaction. It made a lot of sense for a big shareholder of our Company, but also made a lot of sense for Phillips 66. It was done like-kind exchange, share exchange for the business. So that deal needed to be done. We're starting to run out of those deals in the portfolio. We've gotten very good at selling the good things. I told Clayton we're going to have to get very good at selling the not-so-good things."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ===February 14, 2014: Garland Says Phillips Expects to Sell Melaka and Whitegate in 2014=== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips expects to sell Melaka and Whitegate Refineries in 2014. "We've gotten very good at selling the good things. I told Clayton we're going to have to get very good at selling the not-so-good things. Certainly [we] have a process underway with Whitegate. We have a process underway with Melaka. What I would say in that you should expect that we will draw those processes to a conclusion in 2014.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
| + | |||
| + | ===February 14, 2014: Phillips to Sell Gold Product Pipeline System to Phillips 66 Partners for $700 million=== | ||
| + | The Oil and Gas Journal reported on February 14, 2014 that Phillips will sell the Gold Product Pipeline System, also known as the “Gold Line System,” and the Medford Spheres, two newly constructed refinery-grade propylene storage spheres, for a total consideration of $700 million. | ||
| + | |||
| + | The Gold Line system shuttles approximately 132,000 barrels per day of refined products from a Phillips 66 refinery in Borger, Texas, north to Cahokia, Ill. It also includes two lateral lines, and four terminals with 4.3 million barrels of aggregate storage capacity. | ||
| + | |||
| + | The two propylene storage systems are located in Medford, Okla., with a combined capacity of 70,000 barrels. The units will serve as a temporary stopover for refinery-grade propylene coming from the Phillips 66 refinery in Ponca City, Okla., en route to the major natural gas liquids hub in Mont Belvieu, Texas. It also includes two lateral lines, and four terminals with 4.3 million barrels of aggregate storage capacity. | ||
| + | |||
| + | Phillips 66 and the partnership will enter into transportation, storage, and terminaling agreements that include minimum throughput volume commitments, with terms ranging from 5 to 10 years. The minimum volume commitments account for more than 80% of expected throughput volumes. The partnership expects these assets to contribute EBITDA of approximately $65 million to $70 million in their first full year of operation. Annual maintenance capital expenditures are initially expected to be between $3 million to $4 million.<ref>[http://www.ogfj.com/articles/2014/02/phillips-66-partners-to-acquire-700m-in-phillips-66-assets.html Oil and Gas Journal. "Phillips 66 Partners to acquire $700M in Phillips 66 assets" February 14, 2014.]</ref><ref>[http://www.dailyfinance.com/2014/02/14/this-could-be-a-big-buy-for-phillips-66-partners-l/ Daily Finance. "This Could Be a Big Buy for Phillips 66 Partners LP" by Aimee Duffy. February 14, 2014.]</ref> | ||
| + | |||
| + | ===January 30, 2014: Garland Says the West Coast is a Challenged Environment=== | ||
| + | Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that the West Coast is a very challenged environment for refineries. "It is a high cost area to operate. Our assets are good assets. We are on a path to fix it, I would say. As you think about, a net income positive, single-digit return business, and how do we get crude advantaged to the West Coast? So I think, you can ask me in April, we will probably tell you more about what we are doing to get advantaged crudes into California. But it is a combination of investments and third-party as we work that. And then, I think we said openly that all options for California I think are on the table, in terms of those assets, whether it could be a spin, an IPO, variable MLP, a joint venture. As you look at the West Coast, we think those are valuable assets ultimately, because there is -- we have 110,000-barrels a day of coking capacity there. And so, those assets in the future will probably be worth more than what people think they are worth today, is my view. And I mean, the California market is a big market as everyone knows, and so, we have a continuing interest there. But as we think through the assets, our path today is to make it better and more profitable, run those assets well. We don't see any big capital investments in front of us on the West Coast, and so, the hold option really cost us nothing."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
| + | |||
| + | ===December 30, 2013: Phillips Sells Specialty Products Unit to Warren Buffett's Berkshire Hathaway for $1.4 Billion=== | ||
| + | Phillips reported on December 30, 2013 that Berkshire Hathaway Inc. is acquiring Phillips Specialty Products Inc., a flow improver business, from Phillips 66 in exchange for shares of Phillips 66 common stock currently held by Berkshire Hathaway. PSPI leads the science of drag reduction and specializes in developing polymers to maximize the flow potential of pipelines. “Berkshire Hathaway made a strong offer for our high-performing flow improver business,” said Greg Garland. “This transaction optimizes our portfolio and focuses growth on our Midstream and Chemicals businesses.”<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2013NewsReleases/Pages/12-30-2013.aspx Phillips 66. "Berkshire Hathaway to acquire flow improver business from Phillips 66" December 30, 2013.]</ref> | ||
| + | |||
| + | Wells Fargo analyst Roger D. Read said Phillips 66's entire specialty division generates about $250 million in annual earnings before interest, taxes, depreciation and amortization (EBITDA), with PSPI generating just a portion of those earnings. Read estimates that the specialty unit will generate just 4% of Phillips 66's 2014 EBITDA and that PSPI was sold a premium price relative to the firm's valuation. Buffett and Berkshire appear able to afford a premium priced PSPI acquisition using Phillips 66 shares. Berkshire Hathaway marked the cost of its Phillips 66 shares at $660 million in its 2012 shareholder letter. Meanwhile, the stock-for-PSPI swap will come with tax advantages for Berkshire Hathaway. "The cash-rich split "is a way for a holder of appreciated stock to dispose of it in a very tax efficient way," says Robert Willens, an independent tax expert. "The distribution of PSPI to BRK is intended, no doubt, to qualify under Sec. 355 of the Internal Revenue Code. If its does, neither PSX nor BRK will recognize gain on the exchange of the stock of PSPI for BRK's PSX stock."<ref>[http://www.thestreet.com/story/12191517/1/buffetts-berkshire-plays-both-sides-of-phillips-66-breakup.html The Street. "Buffett's Berkshire Plays Both Sides of Phillips 66 Breakup" by Antoine Gara. | ||
| + | December 31, 2013.]</ref> | ||
| + | |||
| + | Antoine Gara wrote at ''The Street'' that "one wonders whether Phillips 66's sale of its PSPI unit to a large shareholder raises conflicts of interest." "That's especially the case since Berkshire will be paring its stake in Phillips 66 significantly through the PSPI acquisition. A press release announcing the deal and an 8-k filing with the Securities and Exchange Commission also don't list any advisors on the stock transaction."<ref>[http://www.thestreet.com/story/12191517/1/buffetts-berkshire-plays-both-sides-of-phillips-66-breakup.html The Street. "Buffett's Berkshire Plays Both Sides of Phillips 66 Breakup" by Antoine Gara. | ||
| + | December 31, 2013.]</ref> | ||
| + | |||
| + | ===October 30, 2013: Garland Says East Coast and West Coasts Refineries are in Challenged Markets=== | ||
| + | Garland told analysts at the third quarter earnings conference that Bayway is a great asset and a challenged market. "But when we look at our assets around the Midcontinent and Gulf Coast, we think those are pretty good assets, and long-term those assets will probably be in our portfolio, because if we think about West Coast and East Coast and U.S, it is not necessarily true, Atlantic Basin is a very challenging place if you well know," said Garland. "If you look at that, 30,000 feet the market that we are in North America and Europe aren't going to be growing market, in fact they're probably declining markets. And so the opportunity to employ capital and make a good return on that is just more difficult. I’d rather move into the higher valued businesses in midstream in chemical and we have been pretty consistent about that. But we are always going to look at our portfolio and optimize the portfolio."<ref>[http://seekingalpha.com/article/1787822-phillips-66s-ceo-discusses-q3-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.]</ref> | ||
| + | |||
| + | ===October 30, 2013: Garland Says Phillips Still Looking to Sell Whitegate Refinery and Its Interest in Melaka Refinery=== | ||
| + | Garland told analysts at the third quarter earnings conference on October 30, 2013 that Phillips is still looking at "selling possibly our Whitegate refinery in Ireland and our interest in the Melaka refinery in Malaysia, and so those efforts continue. We’re in the process of evaluating specifically the opportunities around Whitegate. So I think those have been the pieces of portfolio for us that long-term are really where the strategic interest is."<ref>[http://seekingalpha.com/article/1787822-phillips-66s-ceo-discusses-q3-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.]</ref> | ||
| + | |||
| + | ===September 12, 2013: Phillips 66 says It Has Buyers Interested in Whitegate Refinery=== | ||
| + | Greg Garland told analysts at the Barclays Energy-Power Conference in New York that Phillips has potential buyers interested in its Whitegate Refinery. Garland declined to elaborate, but analysts had speculated that buyers would be tough to find.<ref>[http://www.reuters.com/article/2013/09/12/phillips66-refineries-ceo-idUSL2N0H811D20130912 Reuters. "Phillips 66 says buyers interested in Ireland refinery" September 12, 2013.]</ref> | ||
| + | |||
| + | ===July 15, 2013: Phillips Creates Phillips 66 Partners LP, a Master Limited Partnership with Pipline Assets=== | ||
| + | Phillips announced on July 15, 2013 that they were creating Phillips 66 Partners LP, a limited partnership and subsidiary of Phillips 66, with an initial public offering of 15,000,000 common units, representing limited partner interests. The common units are expected to trade on the New York Stock Exchange under the ticker symbol “PSXP.” The partnership’s assets include the Clifton Ridge crude oil pipeline, terminal and storage system in Louisiana; the Sweeny to Pasadena refined petroleum product pipeline, terminal and storage system in Texas; and the Hartford Connector refined petroleum product pipeline, terminal and storage system in Illinois.<ref>[http://www.phillips66partners.com/EN/newsroom/news-releases/all/Pages/07-15-2013.aspx Phillips 66 Partners. "Phillips 66 Partners Launches Initial Public Offering" July 15, 2013.]</ref> | ||
| + | |||
| + | ===June 10, 2013: Phillips Wants to Sell Whitegate Refinery=== | ||
| + | Reuters reported on June 11, 2013 that Phillips wants to sell the Whitegate Refinery in Cork, Ireland. However Seth Kleinman, head of energy research at Citigroup says the odds of finding a buyer look slim and that the refinery would probably have to be shut down as it will be hard to find a buyer for it. In the meantime Phillips will continue to operate the refinery. "Phillips 66 intends to continue operating the assets as usual during the marketing process, which is expected to last for several months," said company spokesman Rich Johnson in a statement.<ref>[http://www.reuters.com/article/2013/06/11/phillips66-refinery-ireland-idUSL2N0EN0Q820130611 Reuters. "UPDATE 1-Phillips 66 to sell Ireland's sole refinery" June 10, 2013.]</ref> | ||
| + | |||
| + | Europe's refining sector has been struggling because of over capacity and Coryton refinery in the UK, owned by the bankrupt Petroplus group, closed last year after administrators failed to find a buyer for it. Micheal Martin, the leader of Ireland's main opposition party Fianna Fail, said the sale of the refinery had potentially serious consequences for its economy as it is the only refinery in Ireland supplying about one third of Ireland's oil products. "Whitegate is a key strategic asset. It provides one third of all our transportation fuel and is a long-term principal supplier to the National Oil Reserves Agency. The threat to its future has serious implications for Ireland's energy supply and consequently for our economy," Martin said in a statement. "It has been a major employer in the area for decades, supporting hundreds of jobs directly and indirectly. Its loss would be a serious blow to local economy."<ref>[http://www.reuters.com/article/2013/06/11/phillips66-refinery-ireland-idUSL2N0EN0Q820130611 Reuters. "UPDATE 1-Phillips 66 to sell Ireland's sole refinery" June 10, 2013.]</ref> | ||
| + | |||
| + | "The move is part of a fire sale of Irish assets by Phillips," writes James Detar on Investor's Business Daily. "which is also selling an oil and refined products storage terminal in Bantry Bay in County Cork, and its Ireland wholesale marketing business."<ref>[http://news.investors.com/business/061113-659557-exxon-mobil-phillips-66-chevron-dealing-assets.htm Investor's Business Daily. "Exxon, Phillips 66, Chevron In Major Oil Asset Deals" by James Detar. June 11, 2012.]</ref> | ||
| + | |||
| + | ===May 11, 2013: Phillips Sells Power Plant at Humber Refinery=== | ||
| + | The Grimsby Telegraph reported on May 11, 2013 that the 1,220 MWe power plant employing 56 people and providing steam and electricity to Phillips 66's Humber Refinery, steam to the neighboring Lindsey refinery, and electricity to the National Grid is being sold to the Vitol Group, based in Switzerland, for an undisclosed sum. Expanded at a cost of £210 million in 2010, the power plant has at least twice been subject of a review by ConocoPhillips and by Phillips 66. "While a high-quality business and asset, ICHP was determined not be a core asset for Phillips 66's business strategy," said Brian Coffman, general manager of Phillips 66 Humber Refinery, and lead executive in the UK. "ICHP is a good solid business with strong potential in the UK electricity market."<ref>[http://www.thisisgrimsby.co.uk/Swiss-firm-buy-state-art-Phillips-66-power-plant/story-18956301-detail/story.html#axzz2SzMUDq1p Grimsby Telegraph. "Swiss firm to buy out plant" May 11, 2013.]</ref> | ||
| + | |||
| + | ===March 7, 2013: Phillips May Sell Refineries in Europe and Asia if the Price is Right=== | ||
| + | Alison Sider reported at Hyrdocarbon Processing on March 7, 2013 that Larry Ziemba, executive vice president for refining, project development and procurement, told analysts that, for the right price, the company would consider selling its 71,000 barrel-per-day refinery in Cork, Ireland, its 47 percent interest in the 170,000 barrels per day (bpd) Melaka, Malaysia Refinery and its 18.75 percent stake in the 300,000 bpd Mineraloelrafnerie Oberrhein GmbH refinery in Southwest Germany. "They're really not strategic," said Ziemba. The company's stake in Malaysia's Maleka refinery is a holdover from Phillips 66's days as the refining arm of ConocoPhillips, which had upstream operations in Malaysia. Now, "it might be worth more to Petronas or someone else than it is to us," said Ziemba.<ref>[http://www.hydrocarbonprocessing.com/Article/3165815/Latest-News/Phillips-66-mulls-sale-of-European-Asian-refineries.html Hydrocarbon Processing. "Phillips 66 mulls sale of European, Asian refineries" by Alison Sider.]</ref><ref>[http://uk.reuters.com/article/2013/03/07/phillips66-refineries-sale-idUKL1N0BZAW720130307 Reuters. "UPDATE 1-Phillips 66 may shed some non-US refineries -executive" March 7, 2013.]</ref> | ||
| + | |||
| + | Ziemba added that most of Phillips refining capacity is located in the US, where the company is looking to take full advantage of booming production of relatively inexpensive "advantaged" crude-oil and that the share of "advantaged" oil has grown from 52% of the crude Phillips 66 ran in 2011, to 70% by the end of 2012. "Ultimately, our objective is to push all the Brent crudes out of our system," said Ziemba.<ref>[http://www.hydrocarbonprocessing.com/Article/3165815/Latest-News/Phillips-66-mulls-sale-of-European-Asian-refineries.html Hydrocarbon Processing. "Phillips 66 mulls sale of European, Asian refineries" by Alison Sider.]</ref><ref>[http://uk.reuters.com/article/2013/03/07/phillips66-refineries-sale-idUKL1N0BZAW720130307 Reuters. "UPDATE 1-Phillips 66 may shed some non-US refineries -executive" March 7, 2013.]</ref> | ||
| + | |||
| + | ===January 30, 2013: Garland Does Not Rule Out a Sale of Los Angeles Refinery and San Francisco Refinery=== | ||
| + | Reuters reports that Greg Garland told investors on January 30, 2013 at the 4th quarter earnings conference that Phillips did not rule out a sale of Phillips two California refineries, one at Los Angeles and one at San Francisco, given challenges with state regulatory requirements and high costs. "We're studying any and all options for California in terms of where do we go long-term in the business," said Garland. "We are doing everything we can to improve it. I don't feel it's a distressed asset. We want to take our time and be thoughtful."<ref>[http://www.reuters.com/article/2013/01/30/phillips66-california-idUSL1N0AZC0K20130130 Reuters. "Phillips 66 mulling options for California refineries" by Kristen Hays.]</ref> | ||
| + | |||
| + | Garland told analysts that Phillips 66 was looking at getting railcars capable of hauling even cheaper Canadian heavy crude to the company's refineries in California. However, he said resistance to such a move was likely. A 2006 California law requiring sharp cuts in emissions has a component that would require refineries to run crudes produced in environmentally friendly ways. Canadian crude production comes with high emissions. Plus, California has the huge Monterey shale, estimated by the U.S. government to have more reserves than the prolific Eagle Ford in Texas or Bakken in North Dakota. But output has been spotty with geology that differs from those other plays. Given those uncertainties, Garland told Reuters in an interview that for the time being, Phillips 66 will focus on improving the California refineries' single-digit returns while studying a possible sale, joint venture or spinoff. "The option value to hold California is zero. It really costs us nothing."<ref>[http://www.reuters.com/article/2013/01/30/phillips66-california-idUSL1N0AZC0K20130130 Reuters. "Phillips 66 mulling options for California refineries" by Kristen Hays.]</ref> | ||
| + | |||
| + | ===December 13, 2012: Phillips Likely to Sell Whitegate Refinery in Ireland and its stake in Melaka Refinery in Malaysia=== | ||
| + | Reuters reported on December 13, 2012 that Greg Garland told reporters on December 13, 2012 that Phillips will likely look to sell its Whitegate refinery in Cork, Ireland, and its stake in the 2 Melaka refinery in Malaysia. Phillips plans to retain stakes in the refineries it owns in the United Kingdom and Germany. "We don't envision growing in the Asian refining space," said Garland.<ref>[http://www.reuters.com/article/2012/12/13/phillips66-forecast-sales-idUSL1E8ND9OE20121213 Reuters. "Phillips considers sale of Irish, Malaysian refining stakes" December 13, 2012.]</ref> | ||
| + | |||
| + | ===December 13, 2012: Phillips to Transfer Transportation Assets to a Master Limited Partnership=== | ||
| + | Marketwatch reported on Decmeber 13, 2012 that Phillips will transfer transportation assets to a master limited partnership that will debut in the stock market in 2013. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL, analysts at Simmons said in a note.<ref>[http://articles.marketwatch.com/2012-12-13/markets/35786170_1_conocophillips-assets-master-limited-partnership Marketwatch. "Phillips 66 down 3.3%; announces new entity" December 13, 2012.] </ref> “We expect to use the master limited partnership as an efficient vehicle to fund growth investments in the transportation and midstream sectors,” said Phillips 66 Chairman and CEO Greg Garland. “We believe the proposed MLP will enable us to enhance value for our shareholders and increase the transparency of our business.”<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
| + | |||
| + | ===December 3, 2012: Standard and Poor Says Some Phillips Facilities Are Candidates for Divestiture or Closure=== | ||
| + | Standard and Poor reported on December 3, 2012 that the overall quality of Phillips operations is mixed, with some facilities being candidates for divestiture or closure over the next few years. "Notwithstanding the relatively favorable market conditions at times over the past year, we view long-range industry fundamentals as difficult given persisting excess production capacity globally and a secular decline in demand for some key transportation fuel products in developed markets," the report says. "While we believe that Phillips 66 Co. will be able to further improve the operating performance of its refining assets, we expect opportunities for doing so will be mostly incremental in nature."<ref>[http://www.reuters.com/article/2012/12/03/idUSWNA040320121203 Reuters. "S&P rates Phillips 66 Co. 'BBB' with stable outlook" by Standard and Poor. December 3, 2012.]</ref> | ||
| + | |||
| + | ===October 31, 2012: California Refineries are in Lower Performing Part of Refinery Portfolio and Must Improve=== | ||
| + | Tim Taylor was asked at the Phillips Third Quarter Earnings Conference on October 31, 2012 if Phillips' position with its two major refineries in California was sufficiently advantaged to warrant continued participation and replied that when Phillips looks at the West Coast, it's been one of the more challenged markets from a recovery standpoint post-recession. "In California, specifically, it's a tough regulatory environment, as well, so costs are higher. And there is a lot of potential additional costs as new regulations come into effect. That said, it's still a very significant market and we think it's really important to look at how can we get some of these crudes out of the middle part of the country into the West Coast, particularly California. So we're working hard on that to try and change that. The comment I'd make in Washington is that that's got a natural access to the Bakken in North Dakota and Canadian crudes. We separate the Washington piece from the California piece that way. But everyone's working hard to look at some crude solutions for the West Coast to improve its competitive position."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Third%20Quarter%202012%20Earnings%20Transcript.pdf Philips 66. "Phillips Third Quarter Earnings Conference" October 31, 2012]</ref> | ||
| + | |||
| + | "I think we look at the market and say demand continues to struggle out there, as well, post-recession," added Taylor. "And then I think you look more fundamentally at the operating environment and the costs associated with particularly the environmental regulations. And we think that's going to continue to keep pressure on operations and operating costs out there. So, yes, I would say that from a California perspective it is one of the more challenged parts of our portfolio in terms of the basic value equation. So that's why we're still looking at the crude side of it. And continuing to stay abreast and on top of what it's going to take to comply with things like AB32 to really maintain your operations out there."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Third%20Quarter%202012%20Earnings%20Transcript.pdf Philips 66. "Phillips Third Quarter Earnings Conference" October 31, 2012]</ref> | ||
| + | |||
| + | Asked if California would still remain part of Phillips' core portfolio Taylor replied that right now California is in the lower performing part of Phillips portfolio. "So I think that if our assessment would become that it's going to be challenged for some period of time, we've either got to find a way to improve that operation or find some other way to deal with that."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Third%20Quarter%202012%20Earnings%20Transcript.pdf Philips 66. "Phillips Third Quarter Earnings Conference" October 31, 2012]</ref> | ||
| + | |||
| + | ===October 17, 2012: Phillips Decides Not to Build Research and Training Campus in Louisville, Colorado=== | ||
| + | Timescall reported on October 17, 2012 that Phillips has decided not to build a a global training center and research and development campus, a facility heralded for its potential to bring thousands of jobs and an economic boom, in Louisville, Colorado and plans to sell the 432-acre property off U.S. 36. "The uses that ConocoPhillips originally envisioned for this site don't really fit into Phillips 66's long-term plans at this time," said Louisville Mayor Bob Muckle. After the split from ConocoPhillips, Phillips 66 acquired the research facility in Bartlesville, Okla., and moved forward on plans to establish an international training center at its new corporate headquarters in Houston. "After careful consideration of the needs of the new company and its employees, Phillips 66 has decided to sell its 432-acre property in Louisville, Colo.," said Phillips 66 officials in the statement. "Phillips 66's predecessor company, ConocoPhillips, purchased the Louisville property in 2008. As a result of the repositioning of ConocoPhillips into two independent energy companies, the Louisville site became an asset of Phillips 66." The campus was to be constructed in three phases: the opening of 1.6 million square feet of office, research, training and hotel space by 2013, another 150,000 square feet by 2018 and the final 750,000 square feet by 2032.<ref>[http://www.timescall.com/ci_21792880/phillips-66-sell-432-acre-campus-louisville?source=most_viewed TimesCall. "Phillips 66 to sell 432-acre campus in Louisville" by Alice Wallace. October 17, 2012.]</ref> | ||
| + | |||
| + | ===October 9. 2012: Phillips Sells Riverhead, NY Marine Petroleum Terminal=== | ||
| + | The Sacramento Bee reported on October 9, 2012 that Phillips announced the sale of the Riverhead, N.Y., marine petroleum terminal and associated assets to United Refining Co. for an undisclosed sum. The terminal is located on the north shore of Long Island in New York and is used as a storage and shipment hub for crude, heavy fuel, diesel and gasoline. It has the only deep-water loading and unloading platform on the East Coast.<ref>[http://www.sacbee.com/2012/10/09/4895543/united-refining-to-buy-phillips.html Sacramento Bee. "United Refining to buy Phillips 66 terminal" October 9, 2012.]</ref> | ||
| + | |||
| + | ===September 19, 2012: Greg Garland Says There's No Need to Expand Refining Capacity=== | ||
| + | Fuelfix reported on September 19, 2012 that no need to expand the refining capacity at Phillips 66. "This market is well supplied," said Garland. "I think we have the opportunity to improve margins and improve returns because of these structural changes in crude and the opportunity to uplift export. But even for us, while looking at exports, the refineries tend to have very localized markets. So you think globally, but act locally in this business for the most part."<ref>[http://fuelfix.com/blog/2012/09/19/phillips-66-ceo-says-exports-will-ease-u-s-refining-challenges/ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.]</ref> | ||
| + | |||
| + | ===September 19, 2012: Greg Garland Says Underperforming Refineries Could be Sold=== | ||
| + | Garland added that in the future there could be more sales of refineries. "We have $50 billion in assets and in the last six years we’ve sold $10 billion. You would expect that some assets are really good and some aren’t quite as good. Over time you want to move the under-performing assets and take that money and invest it in higher performing assets. That’s business.," said Garland. "I don’t have any refineries today that have a huge capital requirement. It’s not that we’re in dire straights and we have to do something with any asset we have. It becomes a question of what assets do we think long-term will provide the highest returns in the portfolio. And the ones that don’t meet that criteria, what can we do to fix them? I would prefer to fix them first. And we’re going to give people time to do that. But ultimately, if we can’t get a way to fix them, we’ll see if someone will pay something for them, more than they’re worth."<ref>[http://fuelfix.com/blog/2012/09/19/phillips-66-ceo-says-exports-will-ease-u-s-refining-challenges/ FuelFix. "Phillips 66 CEO says exports will ease U.S. refining challenges" September 19, 2012.]</ref> | ||
| + | |||
| + | ===September 5, 2012: Garland says Phillips Will Always Work the Tail of its Portfolio=== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that over the last six years Phillips has sold $10 billion of $50 billion worth of assets and that investors should expect that over time that Phillips will always work the tail in its portfolio. "We're not going to be real specific about which assets that we might sell. But you should expect that we'll always manage that core. We did have Alliance on the market. The offers came -- we had 20 people go through the data room. We probably had four offers, none really serious. We think that with LLS and where it's going, we see more opportunity for Alliance in the future than we saw a year ago when we put it on the market. But yes, you should always expect that we're going to have some rationalization of the portfolio."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ===August 1, 2012: Phillips Does Not Have Plans to Acquire Additional Refineries=== | ||
| + | Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 is not planning potential acquisitions -- refineries or other assets -- at this time. "We have looked at what is out there on the market right now in acquisitions and there is nothing really interesting to us at this time," said Phillips CEO Greg Garland. "So we have got our plate full in terms of executing the plan around improving our base R&M business, improving margins, [and] returns."<ref>[http://in.reuters.com/article/2012/08/01/us-phillips66-results-idINBRE8700OV20120801 Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012]</ref><ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012]</ref> | ||
| + | |||
| + | ===August 1, 2012: Phillips Won't Sell Alliance Refinery=== | ||
| + | Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 has decided to retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there.<ref>[http://in.reuters.com/article/2012/08/01/us-phillips66-results-idINBRE8700OV20120801 Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012]</ref> | ||
| + | |||
| + | ===June 13, 2012: Delta Airlines Set to Close its Landmark Deal on June 22 to buy Phillips Trainer Refinery=== | ||
| + | * See [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66%2C_its_Business_Strategy%2C_and_Execution#June_13.2C_2012:_Delta_Airlines_Set_to_Close_its_Landmark_Deal_on_June_22_to_buy_the_Trainer_Refinery Delta Airlines Set to Close its Landmark Deal on June 22 to buy Trainer Refinery] | ||
| + | |||
| + | ===June 7, 2012: Greg Garland says Phillips has no plans to Buy or Expand its Portfolio of 11 Domestic Refineries=== | ||
| + | In an interview with Barrons published June 7, 2012 Phillips CEO Greg Garland said that Phillips has no plans to buy or expand its portfolio of 11 domestic refineries. Philips has an advantage because about 60% of its crude comes at advantageous prices relative to the world market thanks in part to the company's midcontinent presence where crude-production growth has depressed prices.<ref>[http://online.barrons.com/article/SB50001424053111904470204577452521119565672.html?mod=BOL_hpp_highlight_bottom Barrons. "Wall Street Should Pump Up Phillips 66's P/E" by Andrew Bary. June 9, 2012.]</ref> | ||
| + | |||
| + | ===June 5, 2012: Garland Says It Takes a Lot of Money to Close Down a Refinery=== | ||
| + | When asked a question about rationalizing refining capacity by closing down plants Garland said at the Investor Conference on June 5, 2012 that it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20Citi%20Global%20Energy%20Conference.pdf Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.]</ref> | ||
| + | |||
| + | ===June 5, 2012: Phillips 66 Reconsiders Sale of Alliance Refinery=== | ||
| + | Nasdaq reported on June 5, 2012 that Phillips 66 CEO Greg Garland told financial analysts during an investors conference that although Phillips 66 has been considering the sale of its Alliance refinery in Belle Chasse, Louisiana since December 2011, the company is now rethinking the prospect amid falling prices for Light Louisiana Sweet (LLS) crude oil and may not put the refinery up for sale after all. "Our view of that refinery has increased," said Garland. "We think LLS will become an advantaged crude." hillips 66 and other refiners have been rearranging their geographic footprint to take advantage of a boom in US oil and natural gas production that has scrambled the refining map. Refineries with access to new, discounted oil in the U.S. midcontinent have prospered, while coastal refineries have seen profit margins decline.<ref>[http://www.nasdaq.com/article/phillips-66-ceo-louisiana-refinery-sale-decision-to-come-in-summer-20120605-01567 Nasdaq. "Phillips 66 CEO: Louisiana Refinery Sale Decision to Come in Summer" by Ben Lefebre. June 5, 2012.]</ref> LLS sold for about $95 a barrel Tuesday, down nearly 17% since December. The premium of about $12 LLS commands over inland-crude-oil benchmark West Texas Intermediate should fall as more WTI crude comes to the Gulf Coast via pipelines and rail cars.<ref>[http://www.foxbusiness.com/news/2012/06/05/phillips-66-ceo-says-decision-on-louisiana-refinery-will-come-in-summer/ Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.]</ref> | ||
| + | |||
| + | According to an article in the Wall Street Journal on June 7, 2012, it may be difficult for Phillips to find a buyer for the Alliance Refinery because long term US gasoline consumption is falling. "Other refineries all have assets on the chopping block, but in a world where domestic fuel sales are in long-term decline, potential buyers are in short supply," write Ben Lefebre. However lower crude prices are making the economics of refining attractive again. "There may be a gleam of hope for Gulf Coast refiner profitability," writes Lefebre. "Exports are growing and Gulf Coast crude economics are getting better. The surge in domestic crude production could bring down the cost of regional oil benchmark Light Louisiana Sweet, giving refines in the region a distinct advantage, refiners and analysts have said."<ref>[http://blogs.wsj.com/deals/2012/06/07/phillips-66-rethinks-plan-to-sell-louisiana-refinery/ Wall Street Journal. "Phillips 66 Rethinks Plan to Sell Louisiana Refinery" by Ben Lefebvre. June 7, 2012.]</ref> | ||
| + | |||
| + | ===June 5, 2012: Fox News reports Sunoco and BP Have Refineries on the Selling Block=== | ||
| + | Other refineries are on the selling block include Sunoco's 35,000-barrel-a-day refinery in Philadelphia. Sunuco closed its refinery in Marcus Hook in December, 2011. BP PLC (BP, BP.LN) is also trying to sell its 265,000-barrel-a-day Carson refinery in California.<ref>[http://www.foxbusiness.com/news/2012/06/05/phillips-66-ceo-says-decision-on-louisiana-refinery-will-come-in-summer/ Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.]</ref> | ||
| + | |||
| + | ===May 23, 2012: Morningstar Analyst Recommends Sale of Underperforming Refining Assets=== | ||
| + | According to Allen Good writing in Morningstar on May 23, 2012 Phillips 66 needs to start selling underperforming assets in their Refining and Marketing Business Segment and Phillips 66's refinery assets are definitely a mixed bag. Phillips' four Mid-Continent refineries in Billings, Ponca City, Wood River, and Borger "are some of the company's best positioned, given their access to discount domestic and Canadian crudes." The three Gulf Coast refineries in Alliance, Lake Charles and Sweeny facilities are some of the most attractive in Phillips portfolio, given their size and complexity says Good. Phillips has already let it be known that the Alliance Refinery is up for sale at the right price but "we won't let it go cheap." The two refineries in California at Los Angeles and San Fransisco face higher costs and environmental regulation which weighs on their value. "Efforts to boost cost-advantaged feedstock should help, but a weak economy in the short term and regulatory capital spending in the long term will be headwinds." Finally the sale or closure of the one remaining East Coast refinery at Bayway in Linden, NJ would "further high-grade the portfolio" although Greg Garland has already said that Bayway will be the "last refinery standing" in PADD I.<ref>[http://seekingalpha.com/article/612561-conocophillips-and-phillips-66-stand-apart-from-peers Seeking Alpha. "ConocoPhillips And Phillips 66 Stand Apart From Peers" by Alen Good. Mary 23, 2012.]</ref> | ||
| + | |||
| + | ===May 1, 2012: Phillips Sells Trainer Refinery to Delta Airlines=== | ||
| + | * See [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66%2C_its_Business_Strategy%2C_and_Execution#May_1.2C_2012:_Phillips_66_Sells_Trainer_Refinery Phillips Sells Trainer Refinery to Delta Airlines] | ||
| + | |||
| + | ===May 1, 2012: Phillips 66 is Trying to Sell Alliance Refinery=== | ||
| + | Reuters reported on May 1, 2012 that Greg Garland says that Phillips 66 aims to double refined product exports to 200,000 bpd in the next two years, but its 247,000 bpd Alliance refinery in Belle Chasse, Louisiana -- which runs light-sweet crude -- is on the block. Increasing U.S. light-sweet inland shale oil output along with more infrastructure to move it to the refinery-heavy Gulf Coast means more advantaged crude prices could show up in the region in the coming years, increasing Alliance's value, Garland said. If the price isn't right for what he called "a good export platform for us," Phillips 66 will keep it, Garland said. "We wouldn't let the refinery go cheap."<ref>[http://www.reuters.com/article/2012/05/01/phillips-66-ceo-idUSL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" by Kristen Hays. May 1, 2012.]</ref> | ||
| + | |||
| + | ===July 14, 2011: Greg Garland says “There’s enough refineries in the world today"=== | ||
| + | In recent years ConocoPhillips has sold a European refinery and backed out of a big project with Saudi Aramco to build a brand-new refinery in Saudi Arabia. Phillips 66 is looking to sell its Alliance refinery in Louisiana and its Trainer plant in Pennsylvania “We’ve been selling and shutting down unprofitable assets,” says Garland. “There’s enough refineries in the world today." “No one knows these assets better than the guys at ConocoPhillips; if they think it’s a good idea to jettison this baggage, shouldn’t you too?” says Ed Hirs, a professor of energy economics at the University of Houston. “No one is going to want to buy into Phillips 66. They have no growth, no upside and huge environmental liabilities."<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/?ss=strategies-solutions Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> Jim Mulva reiterated in his conference call to financial analysts on July 14, 2011 in answering a question by Ed Westlake of Credit Suisse that "if we have an alternative to sell one of the less sophisticated refineries in a way, we are not going to delay until this is done accomplishing and doing that."<ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/downstream_spinoff-2011-07-14.pdf ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/Restructuring%20Analyst%20presentation%207-14-11.pdf ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.]</ref> | ||
| + | |||
| + | ==Phillips Expansion, Construction, Acquisitions and Purchases== | ||
| + | ===November 6, 2014: Phillips May Be Interested in Purchasing Citgo's Lemont Refinery=== | ||
| + | Reuters reported on November 6, 2014 that potential buyers from at least six leading oil companies including Phillips 66 have visited Citgo Petroleum Corp’s 172,045 bpd refinery in Lemont, Illinois. The Lemont Refinery is considered attractive because it enjoys consistent profits because it runs cheap oil from Canada's tar sands fields in Alberta, and not heavy Venezuelan crude as do the Citgo's other two refineries for sale at Lake Charles, Louisiana and Corpus Christi, Texas. Sources told Reuters that teams from the following companies have carried out detailed inspections of the Illinois refinery: India's Reliance Industries, independent refiner PBF Energy, U.S. West Coast refiner Tesoro Corp, Marathon Petroleum Corp, Valero Energy Corp and Phillips 66. Representatives from Phillips 66 visited the Lemont refinery this week, sources said. Marathon, Phillips 66, Tesoro and Valero representatives declined to discuss their companies' possible interest in Citgo's assets. PBF and Reliance did not reply to requests for comment. Some refiners take the opportunity of a site visit while a refinery is being offered for sale to gain intelligence on how a competitor operates.<ref>[https://uk.news.yahoo.com/exclusive-many-buyers-kicking-tires-193809849.html#OtrGFaq Reuters. "Exclusive: Potential buyers checking out two Citgo refineries -sources" November 6, 2014.]</ref> | ||
| + | |||
| + | ===October 29, 2014: Chevron Phillips Considers New Ethylene Cracker=== | ||
| + | Argus reported on October 29, 2014 that Chevron Phillips continues to consider new US construction projects, including whether to build a new ethylene cracker, but those discussions are still early in the process and no decisions have been made. "We still think the US Gulf coast is still the best place to invest, and we wouldn't hesitate to go forward with a second cracker. But the challenge is where do you put it and what are you going to feed it," said chief executive Greg Garland.<ref>[http://www.argusmedia.com/News/Article?id=939255 Argus Media. "CP Chem Port Arthur unit to restart in 4Q" October 29, 2014.]</ref> | ||
| + | |||
| + | ===October 28, 2014: Phillips Partners with Energy Transfer to Build Bakken Crude Oil Pipelines=== | ||
| + | Businesswire reported on October 28, 2014 that Phillips and Energy Transfer have formed two joint ventures to develop the previously announced Dakota Access Pipeline (DAPL) and Energy Transfer Crude Oil Pipeline (ETCOP) projects. Energy Transfer holds a 75 percent interest in each joint venture and will operate both pipeline systems. Phillips 66 owns the remaining 25 percent interests and will fund its proportionate share of the construction costs. The DAPL and ETCOP projects are expected to begin commercial operations in the fourth quarter of 2016. “Energy Transfer is a valued partner with a proven track record of developing major interstate pipelines,” said Greg Garland, chairman and CEO of Phillips 66. “These joint-venture projects will allow Phillips 66 to increase its access to advantaged North American crude oil and add to the momentum we are building in our Midstream business.”<ref>[http://www.businesswire.com/news/home/20141028005255/en/Phillips-66-Joint-Venture-Partner-Energy-Transfer Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.]</ref> | ||
| + | |||
| + | DAPL is expected to deliver in excess of 450,000 barrels per day of crude oil from the Bakken/Three Forks production area in North Dakota to market centers in the Midwest. DAPL will provide shippers with access to Midwestern refineries, unit-train rail loading facilities to facilitate deliveries to East Coast refineries, and the Gulf Coast market through an interconnection in Patoka, Illinois, with ETCOP.<ref>[http://www.businesswire.com/news/home/20141028005255/en/Phillips-66-Joint-Venture-Partner-Energy-Transfer Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.]</ref> | ||
| + | |||
| + | ETCOP will provide crude oil transportation service from the Midwest to the Sunoco Logistics Partners and Phillips 66 storage terminals located in Nederland, Texas.<ref>[http://www.businesswire.com/news/home/20141028005255/en/Phillips-66-Joint-Venture-Partner-Energy-Transfer Businesswire. "Phillips 66 Becomes Joint Venture Partner with Energy Transfer to Build Bakken Crude Oil Pipelines" October 28, 2014.]</ref> | ||
| + | |||
| + | ===September 3, 2014: Truck Loading Facility at Ponca City Refinery to Have 100,000 b/d Capability by mid-2015=== | ||
| + | Greg Garland told analysts at Barclays CEO Energy-Power Conference on September 3, 2014 that Phillips has invested in a truck loading facility at the Ponca City Refinery for indigenous Oklahoma crudes with a capability of 70,000 barrels a day, that by mid-2015 the facility will have a capability of 100,000 barrels a day, and that the Magellan pipe will bring another 20,000 barrels a day to Ponca City. "So, we're buying indigenous Oklahoma crudes at the wellhead, very consistent product, we know what we're getting and that's translating into better yields at the refinery, good throughputs," said Garland. "And so, as we go to wellhead and buy, we know the crude, the quality of the crude that's coming in, and another opportunity to leverage our expertise in our commercial business into our refining business."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | ===September 3, 2014: Phillips Acquires 100% of Cogen Facility at Sweeny to Prevent a Recurrence of 2013 Outages=== | ||
| + | Greg Garland told analysts at Barclays CEO energy-Power Conference on September 3, 2014 that Phillips wants to prevent a reccurence of the electrical problems that plagued Sweeny in the first and second quarters of 2013. "We took out our other equity owner, 50% owner of the 440 megawatt Cogen facility at Sweeny. when you think about the existing investment we have, the new investment going in at Sweeny, both from PSX and also CPChem, we want to make sure we harden that electrical infrastructure. You remember in the first quarter and second quarter of last year, we had some issues, mostly related to our third-party providers. We want to ensure that we've got that well in hand and we don't have that ever happen to us again and so that was part of the reason for that.<ref>[http://investor.phillips66.com/files/doc_presentations/2014/PSX-BarclaysCEOConfTransSept2014.pdf Barclays CEO Energy-Power Conference. "Presentation by Greg Garland" September 3, 2014.]</ref> | ||
| + | |||
| + | FuelFix reported on July 31, 2013 that Phillips 66 underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. The refinery at Sweeny had two power outages that were a major problem. “We had a second power outage in the second quarter and in my view that’s unacceptable,” Garland said. The refinery is powered both by an on-site generation facility and by a power company. The power company was the cause of the two outages. “To me, personally, the biggest disappointment in the quarter was having a second power outage at Sweeny,” Garland added.<ref>[http://fuelfix.com/blog/2013/07/31/phillips-66-earnings-fall-with-disappointments/ FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.]</ref> | ||
| + | |||
| + | ===September 3, 2014: Phillips to Build North Dakota Origination Rail Terminal for Bakken Crude=== | ||
| + | Argus reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips will build a rail-loading facility permitted to handle up to 200,000 b/d of Bakken crude, the first time a US refiner has directly owned a North Dakota origination terminal. We have permits in hand in engineering to construct a new rail-loading facility. This is permitted up to 200,000 b/d. We'll probably do about 160,000 b/d" and build about 300,000 bl in storage said Garland.<ref>[http://www.argusmedia.com/News/Article?id=926054 Argus Media. "Phillips 66 to build Bakken rail facility" September 3, 2014.]</ref> | ||
| + | |||
| + | ===August 13, 2014: Phillips Breaks Ground on LPG Export Terminal at Freeport=== | ||
| + | Jordan Blum reported in the Houston Business Journal on August 13, 2014 that Phillips broke ground on its $1 billion liquefied petroleum gas export terminal — its first ever — in Freeport to sell propane, butane and more to international markets. The project, which is expected to be completed in mid-2016, will export 4.4 million barrels of fuel a month to countries in Europe and Asia. The terminal will get the fuel from its Sweeny complex in Old Ocean and its Gulf Coast Fractionators facility in Mont Belvieu. "We are investing, we are building and we are growing," Phillips 66 Chairman and CEO Greg Garland said at the groundbreaking. "The projects we're breaking ground on … total more than $3 billion of investment for our company, … and it's happening right here in our own backyard in the communities of Sweeny and Freeport." Freeport has advantages over operating out of the Houston Ship Channel because Freeport is 3 miles from deep water, compared to 50 miles for the channel says Jim Webster, Phillips 66’s general manager of midstream.<ref>[http://www.bizjournals.com/houston/blog/drilling-down/2014/08/phillips-66-breaks-ground-in-freeport.html?page=all Houston Business Journal. "Phillips 66 breaks ground in Freeport" by Jordan Blum. August 13, 2014.]</ref> | ||
| + | |||
| + | ===August 7, 2014: Phillips Not Interested in Purchasing Citgo Refineries=== | ||
| + | CSPNet reported on August 7, 2014 that Venezuela, strapped for cash at home and staring down costly litigation overseas, is considering a deal for CITGO Petroleum which has three U.S. refineries with combined capacity of approximately 750,000 barrels per day but the offer does not appear to be drawing much interest from other refiners. "I think we've consistently said we have better opportunities to invest in our midstream and chemicals business," says Garland.<ref>[http://www.cspnet.com/industry-news-analysis/corporate-news/articles/who-might-buy-citgo-petroleum CSP Net. "Who Might Buy CITGO Petroleum?" August 7, 2014.]</ref> | ||
| + | |||
| + | ===June 23, 2014: Phillips to Acquire Lubricant Manufacturer Spectrum Corp=== | ||
| + | Olivia Pulsinelli reported in the Houston Business Journal on June 23, 2014 that Phillips is acquiring Memphis-based Spectrum Corp. a specialty lubricants company from Dominus Capital LP as it plans to grow its lubricants business. There are approximately 225 employees working at Spectrum today who will become Phillips 66 employees upon closing of the transaction,” a Phillips 66 spokesman told the Houston Business Journal. “The acquisition of Spectrum complements our strong-performing lubricants business by increasing our access to specialized global lubricants markets and is in line with our strategy to selectively grow our marketing and specialties segment,” Tim Taylor, president of Phillips 66, said in a statement. “It also creates new opportunities to expand our worldwide lubricants customer base.”<ref>[http://www.bizjournals.com/houston/news/2014/06/23/phillips-66-to-acquire-lubricant-manufacturer-grow.html Houston Business Journal. "Phillips 66 to acquire lubricant manufacturer, grow segment" by Olivia Pulsinelli. June 23, 104.]</ref> | ||
| + | |||
| + | ===June 5, 2014: Phillips Buys Big Oil Storage Terminal On Gulf Coast=== | ||
| + | Fuelfix reported on June 5, 2014 that Phillips plans to purchase the Beaumont Terminal, capable of carrying 7.1 million barrels of oil equivalent, from Chevron subsidiary UNOCAL. “This acquisition supports our midstream growth strategy,” said Tim Taylor. “Given our expectations for increasing volumes of North American crude oil movements into the Gulf Coast region and growth in refined product exports, the Beaumont Terminal is well positioned to serve this growing market while providing significant expansion potential.”<ref>[http://fuelfix.com/blog/2014/06/05/phillips-66-buys-big-oil-storage-terminal-on-gulf-coast/ FuelFix. "Phillips 66 buys big oil storage terminal on Gulf Coast" June 5, 2014.]</ref> | ||
| + | |||
| + | ===September 29, 2013: Coker Reactors Moved into Place at Ponca City Refinery=== | ||
| + | The Ponca City News reported on September 30, 2013 that two $70 million, 232 ton coker reactors manufactured in Japan were moved into place into two slots on the working platform at the Ponca City Refinery on September 29, 2013 and carefully lowered into position by the Mammoet PTC-140 heavy lift crane.<ref>[http://assets.mediaspanonline.com/prod/9878116/pcn-2013-09-30-0-001.pdf Ponca City News. "A Tight Fit" September 30, 2013.]</ref> | ||
| + | |||
| + | ==Marketing and Special Products== | ||
| + | Phillips 66 treats marketing and special products as part of the R&M Business Segment but a significant portion of the earnings of R&M are not related directly to refining. Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that marketing and special products is a very stable business that brings in $500 million to $700 million of annnual net income. "When we talk about marketing in the US, we do not own any stations. We market through branded wholesale stations in the US. There's about 8,000 branded stations that are marketed under either the Phillips 66, the Conoco, or the 76 brand. About half of our marketing margin is actually moved through unbranded wholesale. In Europe, we do sell direct. We have about 900 stations in Germany and Austria, another 250 stations in Switzerland in a joint venture with Coop. In Germany and Austria, we -- Switzerland and UK we market under the JET brand. Extremely high market efficiency out of these stations. Strong ROCEs in excess of 30%. We like the European retail presence. We look at the European market. It's a lot like North America. It's really a flat to declining market. So we will grow, but we'll grow marginally in the European business. We're also a large top three supplier of lubricants in the US, the other business we like and we'll continue to grow that business."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ===Marketing=== | ||
| + | |||
| + | ====December 5, 2014: Phillips to Invest $170 Million in 2014 in Marketing and Specialties==== | ||
| + | Phillips 66 announced on December 5, 2014 that in Marketing and Specialties, the company plans to invest $170 million for growth and sustaining capital. The growth investment reflects Phillips 66’s continued plans to expand and enhance its fuel marketing business.<ref>[https://secure.marketwatch.com/story/phillips-66-announces-2015-capital-program-2014-12-05 Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.]</ref> | ||
| + | |||
| + | ====December 6, 2013: Phillips to Invest $140 Million in 2014 in Marketing and Specialties==== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $140 Million in 2014 in Marketing and Specialties growth and sustaining capital. The growth investment reflects Phillips 66’s intent to expand its international fuel marketing business. The company plans to add approximately 200 new retail sites in Europe over the next five years.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
| + | |||
| + | ====September 26, 2013: Former Phillips 66 Marketer Shuns Big Oil for E15==== | ||
| + | Domestic Fuel reported on September 26, 2013 that Scott Zaremba, a Kansas retailer who sold fuel under the Phillips 66 brand for 28 years, has decided to drop Phillips 66 so he can offer consumers the choice of E15 ethanol. “They changed the rules mid-stream for what they would allow me to do once E15 came out,” said Zaremba. “And so I re-branded my locations to Zarco USA and created a brand of American Fuels.” Zaremba says it was necessary to offer something else, becoming the first retailer in the nation to offer E15 and hopes others will follow his lead and break with Big Oil and choose the cleaner, more economical and stable renewable fuel, ethanol. “We see the great opportunity now of being able to give the consumer a choice, reduce our dependency on foreign oil, and move forward being able to have something for the consumer that will give them higher octane in a cleaner burning product, and give stability to our economy.”<ref>[http://domesticfuel.com/2013/09/26/former-phillips-66-marketer-shuns-big-oil-for-e15/ Domestic Fuels. "Former Phillips 66 Marketer Shuns Big Oil for E15" by John Davis. September 26, 2013.]</ref> | ||
| + | |||
| + | ====June 10, 2013: Phillips Forces Gas Station Owners to Either Label or Stop Selling Gasoline Blended with 15 percent Ethanol==== | ||
| + | Cezary Podkul reported on Fox Business on June 10, 2013 that according to new Phillips 66 guidelines any gasoline with more than 10 percent ethanol has to be served from a separate, yellow hose with the aim of distinguishing E15 from other Phillips 66-branded gasolines with 10 percent or less ethanol. On April 1, Zaremba received a notice from Phillips 66, the nation's third-largest refiner, that he could no longer sell the E15 fuel from his regular black fuel hoses, as he had been selling it since last July. "He has other options, but they aren't cheap - or very feasible," writes Podkul. "For example, it would cost $100,000 to $250,000 to install new stand-alone gas pumps for E15, Zaremba said. Or he can always pay a $412,000 fee to Phillips 66 to break his marketing contract - expensive options that have so far kept him in compliance with the Phillips 66 guidelines, the only way he said he could." Phillips 66 Spokesman Dennis Nuss said in a statement that they were simply part of an occasional update to its brand standards meant "to ensure a positive and consistent customer experience at the pump." Oil producers say they are just doing the responsible thing - holding firm to a 10 percent maximum blend of ethanol in gasoline, or E10 - because anything more than that can cause engine damage in many vehicles on the road today.<ref>[http://www.foxbusiness.com/news/2013/06/10/insight-ethanol-lobby-sees-red-over-yellow-gas-hose-in-kansas42582/?intcmp=trending Fox Business. "Insight: Ethanol lobby sees red over a yellow gas hose in Kansas" by Cezary Podkul. June 10, 2013.]</ref> | ||
| + | |||
| + | ====May 14, 2013: Phillips to Celebrate New Company During Marketing Conference==== | ||
| + | CSP Daily News reported on May 14, 2013 that Phillips will have booths manned by informed company representatives from the fuels, lubricants and aviation divisions to promote Phillips 66 Lubricants, Phillips 66 Motor Fuels Marketing and Phillips 66 Aviation at the 2013 Marketing Conference & Trade Show from May 21 to May 24 2013 at the Aria Resort in Las Vegas. Phillips chose the theme "New Energy, New Possibilities" to celebrate the establishment and spirit of the new corporation. "The theme expands on our excitement and passion for providing you new opportunities, ideas and ways to help grow your business," the company said. "Expect informative and beneficial breakout sessions, engaging speakers, a comprehensive trade show, exciting entertainment and much more."<ref>[http://www.cspnet.com/news/fuels/articles/phillips-66-celebrate-new-company-during-marketing-conference CSP Daily News. "Phillips 66 to Celebrate New Company During Marketing Conference" May 14. 2013.]</ref> | ||
| + | |||
| + | ====January 2, 2013: California Sues Phillips for Environmental Violations at Gas Stations==== | ||
| + | Bloomberg reported on January 2, 2013 that California Attorney General Kamala Harris and and seven county district attorneys filed a complaint on January 2, 2013 in state court seeking an order to force ConocoPhillips and Phillips 66 to comply with California’s laws for underground gasoline storage tanks as well as unspecified civil penalties for violating the state’s health and safety code. “The state’s hazardous waste laws help protect our residents from contaminated groundwater,” Harris said in a statement. “This lawsuit safeguards public health by ensuring proper maintenance of the tanks that store fuel beneath many California communities.” The People v. Phillips 66, RG13661894, Superior Court of California, Alameda County (Oakland) accuses the two companies of improperly monitoring, inspecting and maintaining underground storage tanks.<ref>[http://www.bloomberg.com/news/2013-01-03/phillips-66-and-conocophillips-sued-by-california-over-tanks-1-.html Bloomberg. "Phillips 66 and ConocoPhillips Sued by California Over Tanks" by Edvard Pettersson. January 2, 2013.]</ref> | ||
| + | |||
| + | ===Specialty Coke=== | ||
| + | |||
| + | ====September 5, 2012: Garland Says Speciality Coke Provides Stable Earnings==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the specialty coke business provides stable earnings and really slightly stronger earnings in the base refining business. "As we think about specialty coke, really two types, anode coke and the needle coke. Anode coke is critical to the production of aluminum. We think the aluminum market grows about 5% to 7% a year. We have about a 7% market share of global demand in this business. So this business provides stable earnings and really slightly stronger earnings in the base refining business. We also make a needle grade coke at two of our refineries. It's the only type of coke that's used to make graphite anodes in the steel recycling industry. This industry is growing about 2% to 4% a year, very high profit for us. This is based upon proprietary PSX technology. So you'll see us grow this business over time.<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ===Specialty Lubricants=== | ||
| + | |||
| + | ====June 23, 2014: Phillips to Acquire Lubricant Manufacturer Spectrum Corp==== | ||
| + | Olivia Pulsinelli reported in the Houston Business Journal on June 23, 2014 that Phillips is acquiring Memphis-based Spectrum Corp. a specialty lubricants company from Dominus Capital LP as it plans to grow its lubricants business. There are approximately 225 employees working at Spectrum today who will become Phillips 66 employees upon closing of the transaction,” a Phillips 66 spokesman told the Houston Business Journal. “The acquisition of Spectrum complements our strong-performing lubricants business by increasing our access to specialized global lubricants markets and is in line with our strategy to selectively grow our marketing and specialties segment,” Tim Taylor, president of Phillips 66, said in a statement. “It also creates new opportunities to expand our worldwide lubricants customer base.”<ref>[http://www.bizjournals.com/houston/news/2014/06/23/phillips-66-to-acquire-lubricant-manufacturer-grow.html Houston Business Journal. "Phillips 66 to acquire lubricant manufacturer, grow segment" by Olivia Pulsinelli. June 23, 104.]</ref> | ||
| + | |||
| + | ==Technology Development== | ||
| + | |||
| + | ===Proprietary Technology=== | ||
| + | |||
| + | ====CPChem's Proprietary Technology==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that CPChem's success is partly based upon their proprietary technology. "We think this ensures low cost. It ensures competitive position via the other peers out there."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ===Research Center=== | ||
| + | |||
| + | ====October 27, 2012: Bartlesville Research Center Dodges a Bullet==== | ||
| + | Rod Walton reported in the Tulsa World on October 27, 2012 that with Phillips decision not to build a long-planned major research and training center in Colorado, Bartlesville employees are breathing a sigh of relief because many feared that their piece of the company might be headed to the Rocky Mountains. "Any time a major employer in the community makes a sizable investment in another location, it generates concerns," said David Wood, president of Bartlesville Development Corp. "The formal announcement that Phillips 66 will be selling the Louisville property puts this issue to rest." The Bartlesville research center has a long history. Phillips Petroleum Co. had its headquarters in the city from the early 20th century until the merger with Conoco Inc. in 2002. Now it looks like the research center is safe and sound for some years to come. "Without being complacent, indications are that the research center will continue to be a large, high-wage employer in Bartlesville for the foreseeable future," Wood said. "We couldn't be more pleased with that outcome."<ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20121027_49_E1_Bartle648081 Tulsa World. "Phillips 66 cancels Colorado research center, putting to rest any worry for Bartlesville" by Rod Walton. October 27, 2012.]</ref> | ||
| + | |||
| + | ====October 17, 2012: Phillips Decides Not to Build Research and Training Campus in Louisville, Colorado==== | ||
| + | Timescall reported on October 17, 2012 that Phillips has decided not to build a a global training center and research and development campus, a facility heralded for its potential to bring thousands of jobs and an economic boom, in Louisville, Colorado and plans to sell the 432-acre property off U.S. 36. "The uses that ConocoPhillips originally envisioned for this site don't really fit into Phillips 66's long-term plans at this time," said Louisville Mayor Bob Muckle. After the split from ConocoPhillips, Phillips 66 acquired the research facility in Bartlesville, Okla., and moved forward on plans to establish an international training center at its new corporate headquarters in Houston. "After careful consideration of the needs of the new company and its employees, Phillips 66 has decided to sell its 432-acre property in Louisville, Colo.," said Phillips 66 officials in the statement. "Phillips 66's predecessor company, ConocoPhillips, purchased the Louisville property in 2008. As a result of the repositioning of ConocoPhillips into two independent energy companies, the Louisville site became an asset of Phillips 66." The campus was to be constructed in three phases: the opening of 1.6 million square feet of office, research, training and hotel space by 2013, another 150,000 square feet by 2018 and the final 750,000 square feet by 2032.<ref>[http://www.timescall.com/ci_21792880/phillips-66-sell-432-acre-campus-louisville?source=most_viewed TimesCall. "Phillips 66 to sell 432-acre campus in Louisville" by Alice Wallace. October 17, 2012.]</ref> | ||
| + | |||
| + | ===New Technology=== | ||
| + | ====December 11, 2013: Phillips to Develop Algae Crude Oil with Sapphire Energy==== | ||
| + | UPI reported on December 11, 2013 that Phillips is teaming with green crude oil producer Sapphire Energy expand Sapphire's test program in New Mexico to show algae can be converted to crude oil using traditional refining methods. "We believe this joint development project with Sapphire Energy could produce a refinery-ready, sustainable product for Phillips 66, creating yet another exciting opportunity in this rapidly changing energy landscape," Merl Lindstrom, a vice president in charge of technological develops for Phillips. Sapphire said it expects to have a commercial demonstration project up and running by 2015 and be able to produce as much as 23 million barrels of green crude oil per year by 2025.<ref>[http://www.upi.com/Business_News/Energy-Resources/2013/12/11/Phillips-66-Sapphire-Energy-to-develop-green-crude-oil/UPI-94891386766009/ UPI. "Phillips 66, Sapphire Energy to develop green crude oil" December 11, 2013.]</ref> | ||
| + | |||
| + | ====August 21, 2012: Team Sets New world Record in Power Conversion Efficiency for Polymer-based Organic Photovoltaic (OPV) Cells==== | ||
| + | Marketwatch reported on August 21, 2012 that Phillips 66, the South China University of Technology (SCUT), and Solarmer Energy, Inc. successfully set a new world record in power conversion efficiency for polymer-based organic photovoltaic (OPV) cells with a 9.31 percent efficiency certified by the Newport Technology & Application Center's Photovoltaic Lab in Long Beach, CA. "The breakthrough in efficiency offers a good opportunity for the commercialization of the organic photovoltaic technology," said Dr. Byron Johnson, manager of Sustainability Technologies at Phillips 66. "This marks an important milestone for the industry and has the potential to deliver truly low cost energy for the world." OPV is lightweight, has a better performance in low light and is easier to manufacture -- making it a potentially cost-effective renewable energy technology on par with current conventional energy technologies.<ref>[http://www.marketwatch.com/story/phillips-66-china-university-of-technology-and-solarmer-energy-set-a-world-record-in-solar-power-conversion-efficiency-2012-08-21 Marketwatch. "Team Sets New world Record in Power Conversion Efficiency for Polymer-based Organic Photovoltaic (OPV) Cells" August 21, 2012.]</ref> | ||
| + | |||
| + | ===Technology Transfer=== | ||
| + | |||
| + | ====March 21, 2013: Phillips 66 to License E-Gas™ Technology to CB&I==== | ||
| + | Hydrocarbon Processing reported on March 21, 2013 that Phillips has entered into an agreement with CB&I to provide Phillips E-Gas solids gasification technology, a process that converts coal or petcoke into syngas, which can be used for power generation or further converted to substitute natural gas, hydrogen and downstream methanol-related chemicals production. Financial details were not disclosed. “We look forward to adding the E-Gas Technology to our portfolio, which will mark our entry into the syngas value chain," said Daniel McCarthy, group president of CB&I’s technology operating group. "It also will bring added synergy to our delayed coking technology offering for integrated power generation, and other options to the refining and power industries."<ref>[http://www.hydrocarbonprocessing.com/Article/3176030/Latest-News/CB-I-to-acquire-Phillips-66-syngas-technology.html Hydrocarbon Processing. "CB&I to acquire Phillips 66 syngas technology" March 21, 2013.]</ref> | ||
| + | |||
| + | ====May 21, 2012: Phillips 66 to License E-Gas™ Technology to India's Planned Gasification Plants at Jamnagar==== | ||
| + | Phillips 66 announced on May 21, 2012 that it will will license its E-Gas™ Technology to Reliance and provide process engineering design and technical support relating to Reliance's Jamnagar site, the largest refining complex in the world, with an aggregate refining capacity of 1.3 million barrels of oil per day. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas that will be used as feedstock for a new chemical complex and will fuel the refinery's existing gas turbine power generation units. “We look forward to this opportunity to work with Reliance on the largest gasification project in the world,” said Rex Bennett, President, Specialties and Business Development at Phillips 66. “Our E-Gas™ Technology will be used to turn petcoke and coal into clean, reliable energy for Reliance’s refinery and petrochemical plant operations.”<ref>[https://secure.marketwatch.com/story/phillips-66s-e-gastm-technology-selected-for-reliance-industries-gasification-project-2012-05-21 Businesswire. "Phillips 66's E-Gas(TM) Technology Selected for Reliance Industries' Gasification Project" May 21, 2012.]</ref> | ||
| + | |||
| + | ==Index of Sections== | ||
| + | |||
| + | '''<span style="color:#0000FF">Major Sections of this report include:</span>''' | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Corporate</span>''' | ||
| + | *[http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Creation_of_Phillips_66 Creation of Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Governance_of_Phillips_66 Governance of Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Greg_Garland.2C_Chairman.2C_President_and_CEO_of_Phillips_66 CEO Greg Garland] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Board_of_Directors Phillips Board of Directors] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Management_and_Governance_Effectiveness_at_Phillips_66 Management Effectiveness] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Strategic and Financial</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Strategic_Vision_for_Phillips_66 Strategic Vision for Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Phillips_Capital_Programs Phillips Capital Programs] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Financial_Stability_of_Phillips_66_and_Risk_Management Financial Stability] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Stock Market</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#The_Stock_Market_and_Investor_Relations The Stock Market and Investor Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Stock_Performance Phillips 66's Stock Performance] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Dividends_and_Stock_Repurchase Phillips 66's Dividends and Stock Repurchases] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Earnings_Conferences Earnings Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Investor_Conferences Investor Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=What_Independent_Financial_Analysts_Say_About_Phillips_66 What Financial Analysts Say About Phillips 66] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Safety, Environment, Legal, Labor</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Safety_and_Environment Safety and Environment] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Litigation_and_Legal_Issues_with_Phillips Litigation and Legal Issues with Phillips] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Operational_Excellence Operational Excellence] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Labor_Relations_and_Human_Resources Labor Relations and Human Resources] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Government_Relations Government Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Public_Relations_and_Media_Relations Media Relations and Public Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Philanthropic_and_Community_Benefits Philanthropic and Community Benefits] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Refineries and Marketing Business Segments</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Refineries_and_Marketing_Business_Segment Refineries and Marketing Business Segment] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Refinery_Status#News.2C_Issues.2C_and_Status_at_Other_Refineries Phillips 66 Refinery Status] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Increasing_Profitability_in_the_Refining_and_Marketing_Business_Segment Increasing Profitability in the Refining and Marketing Business Segment] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Phillips.27_Divestiture_of_Non-Core_Assets_Through_Sale.2C_Exchange.2C_or_Closure Phillips' Divestiture of Non-Core Assets Through Sale, Exchange, or Closure] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Phillips_Expansion.2C_Construction.2C_Acquisitions_and_Purchases Phillips Acquisitions and Purchases] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Marketing_and_Special_Products Marketing and Special Products] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Technology_Development Technology Development] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Detailed Look at Ponca City Refinery</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_its_Century-Old_Oil_Refining_History Ponca City and its Century-Old Oil Legacy and History] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#How_Much_Money_Does_the_Marland_Refinery_in_Ponca_City_Earn_for_Phillips_66.3F How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_the_.22Merger_of_Equals.22_with_Phillips_in_2001 Ponca City and the "Merger of Equals" with Phillips in 2001] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_the_Spinoff_of_Phillips_66_in_2012 Ponca City and the Spinoff of Phillips 66 in 2012] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#News_from_the_Ponca_City_Refinery Latest News from the Refinery in Ponca City] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Other Business Segments</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Chemical_Business_Segment_within_Phillips_66 Chemical Business Segment within Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Midstream_Business_Segment_within_Phillips_66 Midstream Business Segment within Phillips 66] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Other Locations</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#New_Phillips_66_Headquarters New Houston Headquarters] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Bartlesville_Technology_Hub Bartlesville Technology Hub] | ||
| + | |||
| + | <html><HR></html> | ||
| + | '''<span style="color:#0000FF">Reference</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Conclusions Conclusions] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#External_Links External Links] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#References References] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#About_the_Author About the Author] | ||
| + | <html><HR></html> | ||
| + | |||
| + | ==How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?== | ||
| + | [[Image:Phillips praises bartlesville.jpg|thumb|550px|On September 2, 2013 the ''Ponca City News'' reported on Phillips CEO Greg Garland's speech to the Bartlesville Chamber of Commerce with the front page headline ''Phillips 66 CEO Praises Bartlesville Contributions.'']] | ||
| + | [[Image:Marlandportrait.jpg|thumb|400px|Portrait of E. W. Marland, founder of the Marland Oil Company and builder of the Marland Refinery in Ponca City. Portrait hangs in the original board room adjacent to Marland's office in the Marland Refinery. On February 1, 2013 Phillips honored E. W. Marland by hosting members of the Ponca City Chamber of Commerce in the Marland boardroom. Photo: Hugh Pickens All Rights Reserved]] | ||
| + | [[Image:ewmarlandrefinery.jpg|thumb|550px|Phillips 66's Marland Refinery in Ponca City is the most profitable refinery of Phillips 66's fourteen worldwide refineries, contributing a net profit of over $500 million in 2011 to Phillips bottom line. For 2012, profits are on target for the Marland Refinery in Ponca City to contribute of over $600 million of net profit to Phillips bottom line. Based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will '''contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012''' to Phillips bottom line. Derivative Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | [[Image:Phillipsbusinesssegments.JPG|thumb|550px|There are three leading operating segments in the new company: Chemicals, Midstream, and Refining and Marketing. The refinery in Ponca City falls in the Refining and Marketing Business Segment (R&M) which has a much lower ROCE (Return on Capital Employed) than the other two Phillips 66 business segments. ROCE is a ratio used in finance, valuation, and accounting that compares earnings with capital invested in the company is used to prove the value the business gains from its assets and liabilities. ROCE returns are from Phillips 66 profit figures for 2011. Derivative Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | [[Image:Railroadtankcars.jpg|thumb|right|550px|Phillips may purchase 2,000 additional rail cars to provide transportation from US shale formations to refineries.<ref>[http://www.streetinsider.com/Insiders+Blog/Phillips+66+(PSX)+May+Look+to+Add+Couple+Thousand+Rail+Cars+in+Effort+to+Expand+Capacity/7495530.html Streetinsider. "Phillips 66 (PSX) May Look to Add 'Couple Thousand' Rail Cars in Effort to Expand Capacity" June 5, 2012.]</ref> The railroad cars would cost $200 million and enable Phillips to carry 150,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.<ref>[http://www.foxbusiness.com/news/2012/06/08/phillips-66-to-boost-rail-capacity-for-oil-transport-ft/ Fox Business. "Phillips 66 To Boost Rail Capacity for Oil Transport - FT" June 6, 2012.]</ref> "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.<ref>[http://www.reuters.com/article/2012/06/08/us-phillips-oil-rail-idUSBRE85713A20120608 Reuters. "Phillips 66 to buy 2,000 rail cars to transport oil" June 8, 2012.]</ref> Photo: [https://secure.flickr.com/photos/modelrailroadmuseum/6244516494/ Railroad Tank Cars] by San Diego Model Railroad Museum Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)]] | ||
| + | The Phillips 66 Refinery located in Ponca City, Oklahoma, has a published crude oil processing capacity of 187,000 barrels per day<ref>[http://www.poncacitynews.com/Noon-Lions-Host-Pete-Stynes Ponca City News. "Stynes Shares Refinery Update With Noon Lions" October 14, 2012.]</ref> making it by far the largest refinery in Oklahoma.<ref>[http://www.examiner-enterprise.com/sections/opinion/editorials/conocophillips-phillips-66-have-deep-roots-bartlesville.html Bartlesvile Examiner-Enterprise. "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" by Ryan Lance and Greg Garland. May 1,2012.]</ref> The refinery processes a mixture of light, medium and heavy crude oil. Most of the crude oil processed is received by pipeline from the Gulf of Mexico, Oklahoma, Texas and Canada. Additional foreign crude is purchased into the Gulf Coast and delivered by pipeline. The Ponca City Refinery is a high-conversion facility that produces a full range of products, including gasoline, diesel fuel, jet fuel, LPG and anode-grade petroleum coke. Its facilities include fluid catalytic cracking, delayed coking and hydrodesulfurization units. Finished petroleum products are shipped by truck, railcar, and company-owned and common-carrier pipelines to markets throughout the Mid-Continent Region.<ref>[http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips. "Worldwide Refining"]</ref> | ||
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| + | The Phillips 66 Refinery in Ponca City '''contributed a net profit of over $500 million in 2011 to Phillips bottom line''', making it the most profitable of Phillips 66's fifteen worldwide refineries. | ||
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| + | Based on Phillips' second quarter earnings report for 2012 and the realized crack spread of $26.34 for mid-continent refineries (Borger Refinery, Billings Refinery, Marland Refinery in Ponca City, and Wood River in Ravena, Illinois), profits are on target for the Marland Refinery in Ponca City to '''contribute over $600 million of net profits in 2012''' to Phillips bottom line. | ||
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| + | Based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will '''contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012''' to Phillips bottom line. | ||
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| + | ===Background=== | ||
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| + | ====How Oil Prices are Set==== | ||
| + | When an oil producer sells to a refiner, they generally agree to a price set on an exchange such as the New York Mercantile Exchange. After the oil is refined into gasoline, it is sold by the refiner to a distributor, again pegged to the price of wholesale gasoline on an exchange. Finally, gas station owners set their own prices based on how much they paid for their last shipment, how much they will have to pay for their next shipment, and, perhaps most importantly, how much their competitor is charging. Oil companies and refiners have to accept whatever price the market settles on -- it has no relation to their cost of doing business. When oil prices are high, oil companies make a lot of money, but they can't force the price of oil up.<ref>[http://www.usatoday.com/USCP/PNI/Business/2012-03-23-BCUSGas-PricesReality-Check3rd-LdWritethru_ST_U.htm USA Today. "What — and who — makes gasoline prices rise" by Jonathon Fahey. March 23, 2012.]</ref> | ||
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| + | Large refiners like Phillips have the capital resources and ability to use their infrastructure to maximize the difference between the spot prices and final product. For decades the mid-continental oil benchmark, West Texas Intermediate (WTI) was priced at a premium above other benchmarks such as North Sea Brent. At the start of 2010 this began to change radically. Brent became more expensive and the last few months Brent has sold around $15-$25 higher than WTI. Even more, interior continental oil plays like Niobrara (Colorado) and the Bakken (North Dakota) have sold for as low as $40 under Brent. Phillips is able to take advantage of the cheap mid-continent oil available to their refineries in Billings, Borger, Ponca City, and Ravena to buy crude oil cheap and sell the refined products high with record realized crack spreads for the mid-continent refineries of $26.34 per barrel reported by Phillips for the 2nd quarter of 2012.<ref>[http://seekingalpha.com/article/856721-phillips-66-this-refining-stock-is-pumping-out-cash Seeking Alpha. "Phillips 66: This Refining Stock Is Pumping Out Cash" by Richard Evans. September 10, 2012.]</ref> | ||
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| + | ====Benchmarks==== | ||
| + | There are two benchmarks for oil prices that are very important to determining the profitability of the refinery at Ponca City: Brent and West Texas Intermediate (WTI). Brent Crude is a major trading classification of sweet light crude oil comprising Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation). Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.<ref>[https://en.wikipedia.org/wiki/Brent_Crude Wikipedia. "Brent Crude"]</ref> West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of Chicago Mercantile Exchange's oil futures contracts. The price of WTI is often referenced in news reports on oil prices, alongside the price of Brent crude from the North Sea.<ref>[https://en.wikipedia.org/wiki/West_Texas_Intermediate Wikipedia. "West Texas Intermediate"]</ref> | ||
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| + | Prior to September 2010, there existed a typical price difference per barrel of between +/-3 USD/bbl compared to WTI and OPEC Basket.<ref>[https://en.wikipedia.org/wiki/Brent_Crude Wikipedia. "Brent Crude"]</ref> Since the autumn of 2010 there has been a significant divergence in price compared to WT with a $10-$15 spread between the two developing that has remained ever since.<ref>[http://www.econbrowser.com/archives/2011/04/brentwti_spread_1.html Econbrowser. "Brent-WTI spread" by James Hamilton. April 17, 2011.]</ref>. Many reasons have been given for this widening divergence ranging from a speculative change away from WTI trading (although not supported by trading volumes), Dollar currency movements, regional demand variations, and even politics. The depletion of the North Sea oil fields is one explanation for the divergence in forward prices.<ref>[https://en.wikipedia.org/wiki/Brent_Crude Wikipedia. "Brent Crude"]</ref> According to James Hamilton writing at Econbrowser, the gap is essentially a geographic difference between the price paid for oil in the central United States and that paid on the U.S. coasts and anywhere else in the world.<ref>[http://www.econbrowser.com/archives/2011/04/brentwti_spread_1.html Econbrowser. "Brent-WTI spread" by James Hamilton. April 17, 2011.]</ref> In February 2011 the divergence reached $16 during a supply glut, record stockpiles, at Cushing, Oklahoma and is currently (August 2011) above $23. Historically the different price spreads are based on physical variations in supply and demand (short term).<ref>[https://en.wikipedia.org/wiki/Brent_Crude Wikipedia. "Brent Crude"]</ref> | ||
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| + | Barclays Plc (BARC) cut its 2012 forecast for West Texas Intermediate oil on July 5. WTI will average $96 a barrel this year and Brent will average $113, according to a report published today by analysts Paul Horsnell and Amrita Sen in London. That’s down from $105 for WTI and $120 for Brent that the bank had projected in a report on June 25. So right now the differential is $17 per barrel.<ref>[http://www.businessweek.com/news/2012-07-05/barclays-cuts-2012-oil-price-forecasts-for-wti-brent Businessweek. "Barclays Cuts 2012 Oil Price Forecasts for WTI, Brent" July 5, 2012]</ref> | ||
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| + | ====Advantaged Oil==== | ||
| + | Companies that have pipelines in the Mid-Continent region - which is to say, the Texas Panhandle, Oklahoma, Kansas - are inherently in a position to source cheap crude. And companies that have refining assets on the coasts - the West Coast, the East Coast and the Gulf Coast - are in a much tougher position when it comes to sourcing cheap crude because, generally speaking, they have to buy crude that's imported. And import crudes are at a premium to WTI.<ref>[http://finance.yahoo.com/news/WTI-And-Import-Crude-Price-twst-1117871655.html Wall Street Journal. "WTI And Import Crude Price Differentials Create Profit Margin Advantages For Mid Continent Refiners Over Coastal Peers; Imports Currently Trade At $10 Premium Over West Texas Intermediate" an interview with Pavel Molchanov. January 9, 2012.]</ref> | ||
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| + | The CEO of Phillips 66 says to process more shale oil "everywhere we can get it." "We want to increase our exposure in both the West Coast and East Coast for some of those advantaged barrels."<ref>[http://af.reuters.com/article/idAFL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.]</ref> That includes more rail unloading, rail cars and storage to facilitate, in the medium term, movement of cheaper inland crude to coastal markets until more pipelines are built to alleviate bottlenecks, he said. Phillips 66 is the only refiner that has plants in all U.S.markets.<ref>[http://af.reuters.com/article/idAFL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.]</ref> Garland noted several refineries are already well positioned to receive shale oil, such as its 247,000 barrels-per-day (bpd)refinery in Sweeny, Texas, in proximity to the state's prolific Eagle Ford shale play, or Midwest plants.<ref>[http://af.reuters.com/article/idAFL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.]</ref> | ||
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| + | Last fall Phillips 66 also ran unit trains from the Bakken shale oil play in North Dakota to its 238,000 bpd Bayway refinery in Linden, New Jersey, and has taken trains to West Coast refineries.<ref>[http://af.reuters.com/article/idAFL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.]</ref> "You'll see us stepping out and doing some more things around infrastructure," he said. "Like everyone else, we're doing everything we can to get more barrels in front of those facilities."<ref>[http://af.reuters.com/article/idAFL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.]</ref> Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shale related crudes.<ref>[http://af.reuters.com/article/idAFL1E8G1DJR20120501 Reuters. "Phillips 66 aims to run more shale oil" May 1, 2012.]</ref> | ||
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| + | ====Mid-Continent Oil==== | ||
| + | Phillips 66 has 15 refineries globally and 2.2 million barrels a day of capacity. "When we think about our refining business we like to think about it in four segments. One is the Mid-Continent, about 21% of our capacity is there. Margins have been very strong in this area, as you know," says Phillips 66 CEO Greg Garland.<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> "Our largest region is the Gulf Coast, about 33% of our capacity is there.We have large economy of scale here. We have very complex refineries on the Gulf Coast. The Western US and Pacific region is about 20%, includes our interests in the Melaka refinery.The West Coast has typically had high margins historically, but the last couple years has been challenged in part due to the economic slowdown in California."<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
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| + | Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent — from Texas north to Montana including the Borger refinery, Ponca City, Wood River and Billings. <ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/2/ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing," writes Helman. "The bottleneck that kept oil from getting out of Cushing also kept its price at a record-wide discount relative to its rival European benchmark Brent crude.<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/2/ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> At one point last year you could buy a barrel of WTI for $27 less than a barrel of Brent.<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/2/ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries.<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/2/ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> | ||
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| + | ====Phillips to Run More Mississippi Lime Shale Crude through the Ponca City Refinery==== | ||
| + | [[Image:Mississippilime.jpg|thumb|right|400px|Mississippi Lime Oil Producing Formations around Ponca City are shown in brown. Mississippi Lime - porous limestone formations in northern Oklahoma and southern Kansas has been yielding reservoirs to horizontal operators such as SandRidge, Chesapeake, Devon and Tulsa-based Eagle Energy LLC during the past two years. The "new" reserves actually lie slightly below formations that were big producers 100 years ago. One advantage of the Mississippi Lime is that limestone's porosity and natural fractures can mean less expense on the drilling and hydraulic fracturing parts of the project. Expenses can total half and even a fourth of typical unconventional well efforts. Another advantage is that there is already plenty of seismic data available for the area from past exploration and drilling. Map created by Hugh Pickens and is a derivative creation from a similar map in the Tulsa World by David Housh.]] | ||
| + | Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems.<ref>[http://in.reuters.com/article/2012/08/01/us-phillips66-results-idINBRE8700OV20120801 Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012]</ref> Rod Walton reported in the Tulsa World on September 24, 2011 that Mississippi Lime - porous limestone formations in northern Oklahoma and southern Kansas has been yielding reservoirs to horizontal operators such as SandRidge, Chesapeake, Devon and Tulsa-based Eagle Energy LLC during the past two years. The "new" reserves actually lie slightly below formations that were big producers 100 years ago. Phillips Petroleum Co., for instance, made its name in the nearby Burbank Field, on the eastern edge of the play that includes Osage, Pawnee, Kay, Garfield, Woods, Alfalfa and other northern Oklahoma counties. "It's sort of amazing that all of this has been sitting there and waiting for horizontal drilling," says Eagle CEO Steve Antry. "The vertical wells hardly drained any of that." The move now is toward the deposits containing mostly oil and natural gas liquids. <ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20110924_49_e1_cutlin919814 Tulsa World. "Horizontal drilling breathes new life into Mississippi Lime oil region" by Rod Walton. September 9, 2011.]</ref> | ||
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| + | The Mississippi Lime's ratio is often 52 to 55 percent oil, according to reports. "We're into the second tier of this renaissance," says Chip Minty, a spokesman for Oklahoma City-based Devon Energy Corp. "Now what we're doing is taking the same technology beyond the shales to the carbonates, such as limestone." One advantage of the Mississippi Lime is that limestone's porosity and natural fractures can mean less expense on the drilling and hydraulic fracturing parts of the project. Expenses can total half and even a fourth of typical unconventional well efforts. Another advantage is that there is already plenty of seismic data available for the area from past exploration and drilling. "It's a reasonably low-cost play where hydrocarbons have been found before, with a lot of wells drilled in the past," says RAM spokesman Robert Phaneuf. And that gives you good data points."<ref>[http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20110924_49_e1_cutlin919814 Tulsa World. "Horizontal drilling breathes new life into Mississippi Lime oil region" by Rod Walton. September 9, 2011.]</ref> | ||
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| + | ===Methodology for Determining the Profitability of the Ponca City Refinery=== | ||
| + | [[Image:Rm profitability.jpg|thumb|right|600px|The adjusted earnings (profit) from the Refining and MarketingBusiness Segment of Phillips 66 for the years 2009, 2010, and 2011. From a presentation by Clayton Reasor, Senior Vice President for Strategy and Corporate Affairs to industry analysts on May 24, 2012. Click on the figure to enlarge.]] | ||
| + | [[Image:usrefineries.jpg|thumb|600px|Phillips 66 has 15 refineries globally and 2.2 million barrels a day of capacity. "When we think about our refining business we like to think about it in four segments. One is the Mid-Continent, about 21% of our capacity is there. Margins have been very strong in this area, as you know. Our largest region is the Gulf Coast, about 33% of our capacity is there.We have large economy of scale here. We have very complex refineries on the Gulf Coast. The Western US and Pacific region is about 20%, includes our interests in the Melaka refinery.The West Coast has typically had high margins historically, but the last couple years has been challenged in part due to the economic slowdown in California." Derivative Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | The methodology for determining the profitability of the refinery at Ponca City is to begin with a very crude estimate of profitability using figures from Phillips 66 presentations to financial analysts, and then to drill down into these figures and add in additional factors, refining the figures through more detailed scenarios to come up with a better estimate. | ||
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| + | Phillips 66 does not break out their profitability by refinery. However they do provide the profitability of the Refining and Marketing Business Segment and they break out the profitability of their domestic refineries and their international refineries. Further Phillips 66 CEO Greg Garalnd has provided guidance as to the what portion of the R&M Business Segment is due to advantaged oil that is TI related and refined in Phillips Mid-Continent refineries at Borger, Ponca City, Wood River, and Billings. | ||
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| + | In addition, on August 1, 2012 Philips 66 publicly reported the realized crack spreads during their 2nd quarter 2012 presentation to financial analysts for Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific refineries. | ||
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| + | Our methodology will look at the following scenarios: | ||
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| + | * Scenario 1: Look at the Total R&M Segment Profitability and divide it equally into Phillips 66's fifteen worldwide refineries | ||
| + | * Scenario 2: Look at the Total R&M Segment Profitability for domestic refineries only and divide it into Phillips 66's eleven domestic refineries by throughput capacity | ||
| + | * Scenario 3: Determine what the profit contribution has been for advantaged West Texas Intermediate-related crude (WTI) and allocate the portion attributable to the Ponca City Refinery based on the refinery's throughput capacity | ||
| + | * Scenario 4: Determine the portion of the R&M Profitability which is not attributable to advantaged TI-related oil and allocate it to each refinery based on throughput capacity. Include a correction factor for the portion of the R&M profitability that is attributable to Marketing. | ||
| + | * Scenario 5: Determine the sum of TI-related net income (Scenario 3) and non-TI-related net income (Scenario 4) for each refinery. | ||
| + | * Scenario 6: Determine the projected profitability of each refinery for 2012 based on Phillips 2nd Quarter Earnings and the Realized Crack Spread for the Mid-Continent refineries | ||
| + | * Scenario 7: Determine the projected profitability of each refinery for 2012 based on Phillips 3rd Quarter Earnings and the Realized Crack Spread for the Mid-Continent refineries | ||
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| + | ===Profitability of the Ponca City Refinery=== | ||
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| + | ====Scenario 1: Total R&M Earnings Divided by Worldwide Refineries==== | ||
| + | The very simplest formulation for determining the profitability of of the Ponca City Refinery is to simply look at the overall R&M profits for 2011 ($2,664 Million) and divide it by the fourteen Phillips 66 worldwide refineries giving a profit contribution of $178 million for each refinery. | ||
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| + | ====Scenario 2: Total Domestic R&M Earnings Divided by Domestic Refineries==== | ||
| + | Phillips 66 breaks out the profitability of the Refining and Marketing Business Segment by international refineries and by domestic refineries, so we will look at only the domestic refineries in the second scenario. Dividing the R&M profits for domestic refineries for 2011 ($2,365 Million) by the eleven Phillips 66 domestic refineries gives a profit contribution of $215 million for each domestic refinery. | ||
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| + | ====Scenario 3: Portion of the Net Earnings Attributable to TI-Related Crude==== | ||
| + | According to Phillips 66 CEO Greg Garland, each dollar of WTI-Brent differential translates to $90 million in additional net income to Phillips 66. West Texas Intermediate is used in Phillips' mid-Continent refineries.<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript?part=single Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call (Transcript)" April 9, 2012.]</ref> | ||
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| + | In 2011 the average differential for WTI crude was $15 which contributed $1,350 million in net income to Phillips. Breaking out the TI-related advantaged oil that is refined in Phillips 66 mid-continent refineries. | ||
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| + | {| border=1 cellspacing=0 | ||
| + | !scope="col" width="150" | Location | ||
| + | !scope="col" width="75" | Total Capacity (KBD) | ||
| + | !scope="col" width="75" | Normalized Capacity (KBD) | ||
| + | !scope="col" width="75" | % of Total Mid-Continent | ||
| + | !scope="col" width="75" | Net Income from TI-related Crude ( $ millions) | ||
| + | |- | ||
| + | |Ponca City, OK||align="center"|187||align="center"|187||align="center"|35.2%||align="center"|475 | ||
| + | |- | ||
| + | |Roxana, IL||align="center"|306||align="center"|153||align="center"|28.2%||align="center"|389 | ||
| + | |- | ||
| + | |Billings, MT||align="center"|118||align="center"|118||align="center"|22.2%||align="center"|300 | ||
| + | |- | ||
| + | |Borger, TX||align="center"|146||align="center"|73||align="center"|13.7%||align="center"|186 | ||
| + | |- | ||
| + | |Total Mid-Continent||align="center"| ||align="center"|531||align="center"|100.0%||align="center"|1,350 | ||
| + | |} | ||
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| + | * Note that the Wood River refinery is owned by WRB Refining, Phillips 50-50 joint venture with Cenovus Energy Inc. The Borger refinery is operated by Phillips in a 50-50 joint venture with Cenovus Energy Inc. Therefor only half of the throughput of each of these two refineries is will be attributed to Phillips 66 for purposes of calculating the use of TI-related advantaged crude. | ||
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| + | The total throughput of the four mid-continent refineries is 531,000 barrels per day. The Ponca City Refinery, with a throughput of 187,000 bpd, accounts for 35.2% of the TI-related advantaged crude. | ||
| + | |||
| + | =====Incidental Use of Non-TI Related Crude===== | ||
| + | As a footnote, the Ponca City refinery does not refine WTI crude exclusively. One of the reasons that ConocoPhillips resisted reversing its Seaway Pipeline from Cushing to the Gulf for so long was that ConocoPhillips had said it was in the company's best interests to maintain the status quo to help supply its 198,400 bpd refinery in Ponca City to produce "premium coke" at the Ponca City Refinery. However, this has a negligible effect on the Marland Refinery's overall profitability because the proportion of non-TI related crude supplied to Ponca is a small percentage of the total, the profit margin on specialty products is also high, and other Phillips mid-continent refineries are in a similar situation of refining a small proportion of non-advantaged crudes.<ref>[http://oilprice.com/Energy/Oil-Prices/Differences-In-The-Price-Of-Oil-Brent-WTI-Spread.html Oil Price. "Differences in the Price of Oil: Brent-WTI Spread" by James Hamilton. April19, 2011.]</ref><ref>[http://www.reuters.com/article/2011/10/26/conocophillips-seaway-idUSN1E79P1TR20111026 Reuters. "Conoco marketing its Seaway pipeline stake" October 25, 2011.]</ref><ref>[http://www.bloomberg.com/news/2011-12-06/seaway-pipeline-reversal-may-take-longer-conocophillips-says.html Bloomberg. "Seaway Pipeline Reversal May Face Delay, ConocoPhillips Says" by Robert Tuttle and Bradley Olson. December 6, 2011.]</ref><ref>[http://www.4-traders.com/ENBRIDGE-INC-1409882/news/Enbridge-Enterprise-Finish-Seaway-Pipeline-Reversal-14334529/ 4-Traders.com "Enbridge, Enterprise Finish Seaway Pipeline Reversal" May 17, 2012.]</ref> | ||
| + | |||
| + | ====Scenario 4: Portion of the Net Earnings Not Attributable to TI-Related Crude==== | ||
| + | [[Image:Brent wti differential.jpg|thumb|right|500px|Slide 9 from Phillips' April 9, 2012 presentation to investors shows that Phillips 66 expects to Brent-WTI differential to be a significant factor in their profitability for years to come. According to Phillips 66 CEO Greg Garland, each dollar of WTI-Brent differential translates to $90 million in additional net income to Phillips 66. West Texas Intermediate is used in Phillips' mid-Continent refineries.<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript?part=single Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call (Transcript)" April 9, 2012.]</ref> In 2011 the average differential for WTI crude was $15 which equals $1,250 million in net income to Phillips. The Ponca City Refinery, with a throughput of 187,000 bpd, accounts for 35.2% of the TI-related advantaged crude producing $475 million in net profit for Phillips 66 in 2011. Businessweek reports that according to the Barclay's crude price forecasts for 2012, WTI will average $96 a barrel in 2012 and Brent will average $113, according to a report published by analysts Paul Horsnell and Amrita Sen in London - a differential of $17.<ref>[http://www.businessweek.com/news/2012-07-05/barclays-cuts-2012-oil-price-forecasts-for-wti-brent Businessweek. "Barclays Cuts 2012 Oil Price Forecasts for WTI, Brent" July 5, 2012]</ref> Under Scenario 6 for 2012, with a contribution to Phillips 66's net profit of over $600 million the Ponca City refinery will contribute one-third off all the net income for Phillips 66's net profits for all refineries and more than the seven least profitable refineries combined. ]] | ||
| + | [[Image:Marketing adjustment.jpg|thumb|right|300px|Phillips 66 does not break out the marketing earnings separately for the Refining and Marketing Business Segment in their reports. However slide 16 from the April 9, 2012 presentation to investors shows that for the years 2009 to 2011 marketing contributed 24% to Phillips 66 total earnings while Refining contributed 40% to Phillips 66 total cumulative earnings earnings for those years. The total adjusted earnings for the Refining and Marketing Business Segment for 2009, 2010, and 2011 was $ 4,057 million. Marketings contribution to the R&M bottom line would be 37.5% which translates to $1,521 million and on the assumption the marketing profitability was relatively stable across the three year period would be $507 million for each of the three years..]] | ||
| + | Subtracting out for earnings attributable to TI-related advantaged crude gives $1,015 million in net income attributable to normal earnings for refining during this part of the business cycle and attributed to each domestic refinery on the basis of throughput capacity. | ||
| + | |||
| + | Phillips 66 does not break out the marketing earnings separately for the Refining and Marketing Business Segment in their reports. However slide 16 from the April 9, 2012 presentation to investors shows that for the years 2009 to 2011 marketing contributed 24% to Phillips 66 total earnings while Refining contributed 40% to Phillips 66 total cumulative earnings earnings for those years. The total adjusted earnings for the Refining and Marketing Business Segment for 2009, 2010, and 2011 was $ 4,057 million. Marketings contribution to the R&M bottom line would be 37.5% which translates to $1,521 million and on the assumption the marketing profitability was relatively stable across the three year period would be $507 million for each of the three years. | ||
| + | |||
| + | This leaves $543 million in normal non TI-related profitability for 2011 to be divided among the 15 domestic and international refineries, so based on throughput the net income for normal refinery operations attributable to the Ponca City Refinery is 10% of Phillips 1,866,000 bpd in domestic production which translates to an additional $ 54 million in net income attributable to the Ponca City Refinery after the adjustment for marketing has been made. | ||
| + | |||
| + | ====Scenario 5: Total Net Income for Domestic Refineries==== | ||
| + | The total net income for each Phillips domestic refinery is the sum of the TI-related net income and the non-TI related net income as shown in the following table: | ||
| + | |||
| + | {| border=1 cellspacing=0 | ||
| + | !scope="col" width="150" | Location | ||
| + | !scope="col" width="75" | Capacity (KBD) | ||
| + | !scope="col" width="75" | Normalized Capacity (KBD) | ||
| + | !scope="col" width="75" | TI-Related Net Income ($ M)) | ||
| + | !scope="col" width="75" | non TI-Related Net Income ($ M) | ||
| + | !scope="col" width="75" | Total Net Net Income ($ M) | ||
| + | |- | ||
| + | |Ponca City, OK||align="center"|187||align="center"|187||align="center"|475||align="center"|54||align="center"|529 | ||
| + | |- | ||
| + | |Roxana, IL||align="center"|306||align="center"|153||align="center"|389||align="center"|44||align="center"|433 | ||
| + | |- | ||
| + | |Billings, MT||align="center"|118||align="center"|118||align="center"|300||align="center"|34||align="center"|334 | ||
| + | |- | ||
| + | |Borger, TX||align="center"|146||align="center"|73||align="center"|186||align="center"|21||align="center"|207 | ||
| + | |- | ||
| + | |Belle Chasse, LA||align="center"|247||align="center"|247||align="center"| ||align="center"|71||align="center"|71 | ||
| + | |- | ||
| + | |Old Ocean, TX||align="center"|247||align="center"|247||align="center"| ||align="center"|71||align="center"|71 | ||
| + | |- | ||
| + | |Linden, NJ||align="center"|238||align="center"|238||align="center"| ||align="center"|69||align="center"|69 | ||
| + | |- | ||
| + | |Westlake, LA||align="center"|239||align="center"|239||align="center"| ||align="center"|69||align="center"|69 | ||
| + | |- | ||
| + | |Carson, CA/Wilmington, CA||align="center"|139||align="center"|139||align="center"| ||align="center"|40||align="center"|40 | ||
| + | |- | ||
| + | |Rodeo, CA||align="center"|120||align="center"|120||align="center"| ||align="center"|34||align="center"|34 | ||
| + | |- | ||
| + | |Ferndale, WA||align="center"|105||align="center"|105||align="center"| ||align="center"|30||align="center"|30 | ||
| + | |- | ||
| + | |Total||align="center"| ||align="center"|1,866||align="center"| 1,350||align="center"|543||align="center"|1,893 | ||
| + | |} | ||
| + | |||
| + | |||
| + | With a a contribution to Phillips 66's net profit of over $500 million, the Phillips 66 Refinery in Ponca City contributes more than one-quarter of the net income to Phillips Refining bottom line and contributes more than the the total of the seven least profitable Phillips refineries combined. | ||
| + | |||
| + | ====Scenario 6: Estimates for 2012 based on Phillips 2nd Quarter Earnings and Realized Crack Spreads==== | ||
| + | On August 1, 2012 Phillips reported their adjusted earnings for refining operations were $851 million in their 2nd Quarter Earnings Report for 2012. Phillips has taken out R&M earnings attributable to marketing and specialty products($334 million). Phillips also reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $26.34, $9.36, $7.76, and $7.91 respectively. The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery to allocate the total refinery profit to each refinery. | ||
| + | |||
| + | |||
| + | {| border=1 cellspacing=0 | ||
| + | !scope="col" width="150" | Location | ||
| + | !scope="col" width="75" | Capacity (KBD) | ||
| + | !scope="col" width="75" | [A] Normalized Capacity (KBD) | ||
| + | !scope="col" width="75" | [B] Crack Spread ($) | ||
| + | !scope="col" width="75" | [C] Capacity Utilization (%) | ||
| + | !scope="col" width="75" | [A]*[B]*[C] | ||
| + | !scope="col" width="75" | Per Cent Contribution to Total Refining Profits | ||
| + | !scope="col" width="75" | Annualized Yearly Profit ($ Million) | ||
| + | |- | ||
| + | |Ponca City, OK||align="center"|187||align="center"|187||align="center"|26.34||align="center"|95||align="center"|4,995||align="center"|18||align="center"|600 | ||
| + | |- | ||
| + | |Roxana, IL||align="center"|306||align="center"|153||align="center"|26.34||align="center"|95||align="center"|3,829||align="center"|14||align="center"|491 | ||
| + | |- | ||
| + | |Billings, MT||align="center"|118||align="center"|118||align="center"|26.34||align="center"|95||align="center"|2,953||align="center"|11||align="center"|379 | ||
| + | |- | ||
| + | |Borger, TX||align="center"|146||align="center"|73||align="center"|26.34||align="center"|95||align="center"|1,827||align="center"|7||align="center"|234 | ||
| + | |- | ||
| + | |Belle Chasse, LA||align="center"|247||align="center"|247||align="center"|9.36||align="center"|91||align="center"|2,104||align="center"|8||align="center"|270 | ||
| + | |- | ||
| + | |Old Ocean, TX||align="center"|247||align="center"|247||align="center"|9.36||align="center"|91||align="center"|2,104||align="center"|8||align="center"|270 | ||
| + | |- | ||
| + | |Westlake, LA||align="center"|239||align="center"|239||align="center"|9.36||align="center"|91||align="center"|2,036||align="center"|8||align="center"|261 | ||
| + | |- | ||
| + | |Linden, NJ||align="center"|238||align="center"|238||align="center"|7.76||align="center"|95||align="center"|1,755||align="center"|6||align="center"|225 | ||
| + | |- | ||
| + | |Whitegate, England||align="center"|71||align="center"|71||align="center"|7.76||align="center"|95||align="center"|523||align="center"|2||align="center"|67 | ||
| + | |- | ||
| + | |Humber, Germany||align="center"|221||align="center"|221||align="center"|7.76||align="center"|95||align="center"|1,629||align="center"|6||align="center"|209 | ||
| + | |- | ||
| + | |Carson/Wilmington, CA||align="center"|139||align="center"|139||align="center"|7.91||align="center"|89||align="center"|979||align="center"|4||align="center"|126 | ||
| + | |- | ||
| + | |Rodeo, CA||align="center"|120||align="center"|120||align="center"|7.91||align="center"|89||align="center"|845||align="center"|3||align="center"|108 | ||
| + | |- | ||
| + | |Melaka, Malaysia||align="center"|76||align="center"|76||align="center"|7.91||align="center"|89||align="center"|535||align="center"|2||align="center"|69 | ||
| + | |- | ||
| + | |Ferndale, WA||align="center"|105||align="center"|105||align="center"|7.91||align="center"|89||align="center"|739||align="center"|3||align="center"|95 | ||
| + | |- | ||
| + | |Total||align="center"| ||align="center"|2,245||align="center"| ||align="center"| ||align="center"|28,730||align="center"|100||align="center"|3,404 | ||
| + | |} | ||
| + | |||
| + | |||
| + | Using this method for 2012, the Marland Refinery in Ponca City will make a contribution to Phillips 66's net profit of $600 million, by far the largest of any of Phillips' refineries. | ||
| + | |||
| + | ====Scenario 7: Estimates for 2012 based on Phillips 3rd Quarter Earnings and Realized Crack Spreads==== | ||
| + | On October 31, 2012 Phillips reported their adjusted earnings for refining operations were $1,580 million in their 3rd Quarter Earnings Report for 2012. Phillips also reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $31.83, $11.42, $13.02, and $13.30 respectively. The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery to allocate the total refinery profit to each refinery. | ||
| + | |||
| + | |||
| + | {| border=1 cellspacing=0 | ||
| + | !scope="col" width="150" | Location | ||
| + | !scope="col" width="75" | Capacity (KBD) | ||
| + | !scope="col" width="75" | [A] Normalized Capacity (KBD) | ||
| + | !scope="col" width="75" | [B] Crack Spread ($) | ||
| + | !scope="col" width="75" | [C] Capacity Utilization (%) | ||
| + | !scope="col" width="75" | [A]*[B]*[C] | ||
| + | !scope="col" width="75" | Per Cent Contribution to Total Refining Profits | ||
| + | !scope="col" width="75" | Extrapolated Yearly Profit ($ Millions) | ||
| + | |- | ||
| + | |Ponca City, OK||align="center"|187||align="center"|187||align="center"|31.83||align="center"|102||align="center"|6,071||align="center"|16||align="center"|1,032 | ||
| + | |- | ||
| + | |Roxana, IL||align="center"|306||align="center"|153||align="center"|31.83||align="center"|102||align="center"|4,967||align="center"|13||align="center"|844 | ||
| + | |- | ||
| + | |Billings, MT||align="center"|118||align="center"|118||align="center"|31.83||align="center"|102||align="center"|3,831||align="center"|10||align="center"|651 | ||
| + | |- | ||
| + | |Borger, TX||align="center"|146||align="center"|73||align="center"|31.83||align="center"|102||align="center"|2,370||align="center"|6||align="center"|403 | ||
| + | |- | ||
| + | |Belle Chasse, LA||align="center"|247||align="center"|247||align="center"|11.42||align="center"|88||align="center"|2,482||align="center"|7||align="center"|422 | ||
| + | |- | ||
| + | |Old Ocean, TX||align="center"|247||align="center"|247||align="center"|11.42||align="center"|88||align="center"|2,482||align="center"|7||align="center"|422 | ||
| + | |- | ||
| + | |Westlake, LA||align="center"|239||align="center"|239||align="center"|11.42||align="center"|88||align="center"|2,402||align="center"|6||align="center"|408 | ||
| + | |- | ||
| + | |Linden, NJ||align="center"|238||align="center"|238||align="center"|13.02||align="center"|100||align="center"|3,099||align="center"|8||align="center"|527 | ||
| + | |- | ||
| + | |Whitegate, England||align="center"|71||align="center"|71||align="center"|13.02||align="center"|100||align="center"|924||align="center"|2||align="center"|157 | ||
| + | |- | ||
| + | |Humber, Germany||align="center"|221||align="center"|221||align="center"|13.02||align="center"|100||align="center"|2,877||align="center"|8||align="center"|489 | ||
| + | |- | ||
| + | |Carson/Wilmington, CA||align="center"|139||align="center"|139||align="center"|13.30||align="center"|97||align="center"|1,793||align="center"|5||align="center"|305 | ||
| + | |- | ||
| + | |Rodeo, CA||align="center"|120||align="center"|120||align="center"|13.30||align="center"|97||align="center"|1,548||align="center"|4||align="center"|263 | ||
| + | |- | ||
| + | |Melaka, Malaysia||align="center"|76||align="center"|76||align="center"|13.30||align="center"|97||align="center"|980||align="center"|3||align="center"|167 | ||
| + | |- | ||
| + | |Ferndale, WA||align="center"|105||align="center"|105||align="center"|13.30||align="center"|97||align="center"|1,355||align="center"|4||align="center"|230 | ||
| + | |- | ||
| + | |Total||align="center"| ||align="center"|2,245||align="center"| ||align="center"| ||align="center"|28,730||align="center"|100||align="center"|6,320 | ||
| + | |} | ||
| + | |||
| + | |||
| + | Using this method for 2012, '''the Marland Refinery in Ponca City will make a contribution to Phillips 66's net profit of $1,032 million''', by far the largest of any of Phillips' refineries. | ||
| + | |||
| + | ====Variations in the Realized Crack Spread Among Phillips' Four Mid-Continent Refineries==== | ||
| + | One of the factors not accounted for in the methodology used to calculate the earnings attributable to the Marland Refinery in Ponca City is that Phillips 66 does not break out the crack spreads by refinery but only provides the composite realized crack spread for the mid-continent refineries which include the Billings Refinery, Borger Refinery, Marland Refinery in Ponca City, and Wood River Refinery in Roxana, Illinois. | ||
| + | |||
| + | On September 7, 2012 Brent was selling at $112.85 and WTI at $91.40 for a Brent-WTI differential of $21.45. North Dakota Sweet was selling at $74.50 for a Brent-North Dakota Sweet differential of $38.40. The Borger Refinery primarily runs WTI while the Billings and Wood River Refineries run Canadian and Bakken crude respectively. Except for some specialty products, the Marland Refinery in Ponca City runs primarily WTI but has been increasing the amount of Mississipi Lime Shale crude that it has been buying from oil producers in Northern Oklahoma and Southern Kansas like Red Fork Energy who recently signed a contract with Phillips to provide Mississippi crude to Ponca City. Phillips 66 hasnot disclosed the amount of Mississipi Shale crude provided to the Marland Refinery in Ponca City nor the price that Phillips has negotiated for the shale crude. The contribution to the realized crack spread from the Brent differential will be somewhere between the Brent-WTI differential of $21.45 and the Brent-North Dakota Sweet differential of $38.40 depending on the quantity of Mississipian run through the Marland Refinery in Ponca City and the price that has been negotiated for the Mississippi Lime Shale crude.<ref>[http://seekingalpha.com/article/856721-phillips-66-this-refining-stock-is-pumping-out-cash Seeking Alpha. "Phillips 66: This Refining Stock Is Pumping Out Cash" by Richard Davis. September 10, 2012.]</ref> | ||
| + | |||
| + | ====Phillips to Run 60,000 bbl of Shale Crude Through Ponca City==== | ||
| + | Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "Ponca about 60,000 barrels a day."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012]</ref> | ||
| + | |||
| + | The Oil and Gas Journal reported on August 8, 2012 that the Pony Express Pipeline company has received sufficient binding shipper commitments to move forward with its Pony Express Oil Project that will deliver crude oil from receipt points near Guernsey, Wyo., to the Phillips 66 Ponca City Refinery as well as to Cushing, Okla. The 220,000 b/d pipeline will enter service third-quarter 2014. Once the Pony Express Pipeline is in operation, this will make interior continental oil plays like Niobrara in Colorado available to the refinery in Ponca City which have sold for as low as $40 under Brent.<ref>[http://www.ogj.com/articles/2012/08/pony-express-wyoming-to-oklahoma-crude-line-to-proceed.html Oil and Gas Journal. "Pony Express Wyoming-to-Oklahoma crude line to proceed" by Christopher Smith. August 8, 2012.]</ref><ref>[http://seekingalpha.com/article/856721-phillips-66-this-refining-stock-is-pumping-out-cash Seeking Alpha. "Phillips 66: This Refining Stock Is Pumping Out Cash" by Richard Davis. September 10, 2012.]</ref> | ||
| + | |||
| + | Phillips did not disclose how much shale oil is presently being refined at the Marland Refinery in Ponca City at the 2nd Quarter Earnings Report on August 1, 2012 nor what the realized crack spread is for the refinery in Ponca City. But every barrel of shale crude that runs through the Marland Refinery in Ponca City replaces a barrel of TI-related crude and adds an additional $17 of Brent differential so once Phillips gets up to their full 60,000 bbl target this will add another $372 million in profit for Phillips. Until Phillips breaks out the realized crack spread for each refinery, the additional profit will be reflected in an increased crack spread for the mid-continent refineries. | ||
| + | |||
| + | ===How Much Does Phillips 66 Contribute to Ponca City?=== | ||
| + | [[Image:Phillips66contributions8.jpg|thumb|right|700px|The Ponca City News reported on October 21, 2012 that Phillips 66 provides financial and in-kind support to community organizations through corporate and employee based programs. "Our philanthropic contributions in Ponca City and the surrounding area are significant. In 2011, direct contributions to non-profit agencies, matching United Way contributions, and contributions based on employee and retiree hours or monetary contributions were in excess of $1.1 million dollars." The Ponca City Refinery earned profits in excess of $500 million in 2011 for Phillips 66 and based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line. Graphic: Hugh Pickens. Note: The area of each bag of money is proportional to the amount of money. Click on the graphic to enlarge.]] | ||
| + | |||
| + | * For more detailed information see [[Phillips 66's Contributions to Ponca City]] | ||
| + | |||
| + | Phillips 66's Marland Refinery in Ponca City provides benefits to the local community in wages to local employees, property taxes paid to the community, and direct philanthropic contributions to the community. We will evaluate three categories: | ||
| + | * Wages Paid to Local Employees | ||
| + | * Property Taxes Paid the Community | ||
| + | * Direct Philanthropic Contributions to the Community | ||
| + | |||
| + | ====Wages Paid to Ponca City Residents==== | ||
| + | The Ponca City News reported on October 14, 2012 that Refinery Manager Pete Stynes spoke to the Ponca City Lions Club on October 10, 2012 about Phillips 66's Refinery in Ponca City and said that 800 employees work at the refinery with the direct employment of 625 Phillips employees.<ref>[http://www.poncacitynews.com/Noon-Lions-Host-Pete-Stynes Ponca City News. "Stynes Shares Refinery Update With Noon Lions" October 14, 2012.]</ref> | ||
| + | |||
| + | FuelFix reported on January 12, 2012 that according to the United Steelworkers International representing 30,000 refinery and chemical workers at 168 production, refining, marketing, transportation, pipeline and petrochemical facilities nationwide the average wage of US refinery and chemical workers is $33.85 an hour.<ref>[http://fuelfix.com/blog/2012/01/31/refiners-unions-prepare-for-strike-as-contract-deadline-looms/ FuelFix. "Refiners, unions prepare for strike as contract deadline looms" January 30, 2012.]</ref> We estimate that of the 800 workers at the Marland Refinery, 100 of them are in engineering or managerial positions earning an average yearly salary of $110,000. We estimate that the cost of additional employee benefits including social security payments, unemployment benefits, pension benefits, vacation days, sick days, holidays, and medical benefits adds an additional 60% to direct wages paid. This cost is known as the burden rate.<ref>[http://www.investopedia.com/terms/b/burden-rate.asp#axzz2CO9NgTjk Investopedia. "Burden Rate" retrieved on November 11, 2012.]</ref> | ||
| + | |||
| + | {| border=1 cellspacing=0 | ||
| + | !scope="col" width="200" | '''Marland Refinery in Ponca City''' | ||
| + | !scope="col" width="150" | Hourly Employees | ||
| + | !scope="col" width="150" | Salaried Employees | ||
| + | |- | ||
| + | |Hourly Wage||align="center"|$ 33.85|| | ||
| + | |- | ||
| + | |Yearly Salary||align="center"|$ 70,408.00||align="center"|$110,000.00 | ||
| + | |- | ||
| + | |Number of Employees||align="center"|700||align="center"|100 | ||
| + | |- | ||
| + | |Wages||align="center"|$49,285,600.00||align="center"|$11,000,000.00 | ||
| + | |- | ||
| + | |Payroll Taxes (10%)||align="center"|$4,928,560.00||align="center"|$1,100,000.00 | ||
| + | |- | ||
| + | |Wages and Payroll Taxes||align="center"|$54,214,160.00||align="center"|$12,100,000.00 | ||
| + | |- | ||
| + | |Total Wages and Payroll Taxes for Hourly and Salaried Employees||align="center"| ||align="center"|'''$66,314,160.00''' | ||
| + | |||
| + | |} | ||
| + | |||
| + | Under these assumptions the total wages and payroll taxes paid to the 800 employees at the Marland Refinery in Ponca City including both hourly employees and salaried employees is $66,314,160.00 (54,214,160.00 + 12,100,000.00). | ||
| + | |||
| + | =====Comparison with Borger Refinery===== | ||
| + | By way of comparison with the Phillips Refinery in Borger, Texas, the Borger News Herald reported on July 11, 2012 that refinery manager Chris Coon spoke to the Borger Rotary Club on July 10, 2012 about employment and payroll at the Borger Refinery. Coon told members that Phillips pays with an annual payroll of $65 million to 920 full time employees (including 200 routine contractor) at the Borger refinery. Phillips also pays $6 million in payroll taxes and about $12 million in property taxes.<ref>[http://www.borgernewsherald.com/content/phillips-66-seeing-success-borger Borger News Herald. "Phillips 66 seeing success in Borger" by Michelle Berry. July 11, 2012.]</ref> The Borger Refinery is comparable in capacity with the Marland Refinery in Ponca City having a throughput capacity of 146,000 barrels per day compared with Marland's throughput capacity of 187,000 bpd. | ||
| + | |||
| + | {| border=1 cellspacing=0 | ||
| + | !scope="col" width="200" | '''Borger Refinery''' | ||
| + | !scope="col" width="150" | All Employees | ||
| + | |- | ||
| + | |Hourly Wage||align="center"|$ 34.00 | ||
| + | |- | ||
| + | |Average Yearly Salary||align="center"|$ 70,652.00 | ||
| + | |- | ||
| + | |Number of Employees and Routine Subcontractors||align="center"|920 | ||
| + | |- | ||
| + | |Wages||align="center"|$65,000,000.00 | ||
| + | |- | ||
| + | |Payroll Taxes (10%)||align="center"|$6,000,000.00 | ||
| + | |- | ||
| + | |Wages and Payroll Taxes||align="center"|'''$71,000,000.00''' | ||
| + | |||
| + | |} | ||
| + | |||
| + | The figures provided by the refinery manager at Borger are consistent with the calculations made for employees at the Marland Refinery in Ponca City. Using the same average yearly salary of employees at Borger Refinery, the annual wages plus payroll taxes for the Marland Refinery at Ponca City is $61,739,000.00. | ||
| + | |||
| + | ====Phillips 66 Property Tax Paid to Kay County==== | ||
| + | According to property tax records of the Kay County Assesor's Office Phillips 66 has two different types of property that pay tax in Kay County: the refinery itself and real estate around Ponca City including office buildings, warehouses, and residential properties. | ||
| + | |||
| + | =====Tax Assessment of the Refinery===== | ||
| + | The Phillips Refinery is assessed under According to Tax Record 30,446. | ||
| + | |||
| + | {| border=1 cellspacing=0 | ||
| + | !scope="col" width="200" | | ||
| + | !scope="col" width="200" | Amount | ||
| + | |- | ||
| + | |Total Market Value||align="center"|$ 542,889,080 | ||
| + | |- | ||
| + | |Total Assessed Value (14%)||align="center"|$ 76,004,471 | ||
| + | |- | ||
| + | |Total Exemption||align="center"|$ 4,255,329 | ||
| + | |- | ||
| + | |Net Assessed||align="center"|$ 71,749,142 | ||
| + | |- | ||
| + | |Tax Paid||align="center"|$ 6,771,684 | ||
| + | |||
| + | |} | ||
| + | |||
| + | The total annual tax paid by Phillips 66 for the refinery is $ 6,771,684. | ||
| + | |||
| + | =====Tax Assessment for Real Estate===== | ||
| + | On May 21, 2012, ConocoPhillips transferred real estate in Kay County to Phillips 66 for a value of $69,223,000.00. Real property in the Ponca City School District is taxed at a rate of .00948 for an annual tax of $656,234 on this real estate. | ||
| + | |||
| + | ====Phillips 66 Charitable Contributions to Ponca City==== | ||
| + | The Ponca City News reported on October 21, 2012 that Phillips 66 provides financial and in-kind support to community organizations through corporate and employee based programs. "Our philanthropic contributions in Ponca City and the surrounding area are significant. In 2011, direct contributions to non-profit agencies, matching United Way contributions, and contributions based on employee and retiree hours or '''monetary contributions were in excess of $1.1 million dollars'''. When employee and retiree contributions are added to the company contributions, the total is over $1.7 million dollars."<ref>[http://assets.mediaspanonline.com/prod/8749740/pcn-2012-10-21-a-006.pdf Ponca City News. "Phillips 66 Continues to Invest in Community" October 21, 2012.]</ref> | ||
| + | |||
| + | ==News, Issues, and Status at Other Refineries== | ||
| + | '''This section has moved to:''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Refinery_Status#News.2C_Issues.2C_and_Status_at_Other_Refineries Phillips 66 Refinery Status] | ||
| + | |||
| + | ==Chemical Business Segment within Phillips 66== | ||
| + | [[Image:Cpchem.jpg|thumb|right|600px|'''CPChem.''' Phillips 66's Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Now in its 12th year of operations, CPChem is one of the world's top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. The rapid development of natural gas and NGL from shale formations in the United States is driving major growth opportunities for CPChem. At its Cedar Bayou Chemical Complex in Baytown, Texas, CPChem is building the world's largest on-purpose 1-hexene plant capable of producing up to 250,000 metric tons (551,000,000 lbs.) per year. Construction of the 1-hexene plant is expected to begin in the first half of 2012, and the project is anticipated to start up during 2014. CPChem also aims to construct a world-scale ethane cracker at its Cedar Bayou facility in Baytown, Texas, and two polyethylene facilities near its Sweeny facility in Old Ocean, Texas, with anticipated startup in 2017, pending final investment decisions. "Phillips 66 starts out with a clear advantage over many other downstream companies," said Garland. "We have a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce, and a continued commitment to safety and operating excellence. We have an unparalleled foundation for success."<ref>[https://secure.marketwatch.com/story/phillips-66-debuts-as-advantaged-downstream-company-2012-05-01 MarketWatch. "Phillips 66 Debuts as Advantaged Downstream Company" May 1, 2012.]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.]] | ||
| + | [[Image:Rocechemical2012.jpg|thumb|500px|The return on capital for the Chemicals Business Segment at Phillips 66 has been high in recent years. Garland said during his analyst call on April 9, 2012 that the Chemicals segment is primarily conducted through the 50/50 JV with Chevron. CPChem is one of the largest producers of olefins and poly olefins and has spent the last 10 years building one of the best positions in the Middle East, and CPChem has significant assets in the US which are advantaged given the NGLs from the North American shale plays. Garland plans to increase capital invesment in the Chemicals Business Segment. Derivative Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | [[Image:Chevron Phillips Chemical Plant in Pasadena2.jpg|thumb|500px|'''Chevron Phillips Chemical Plant in Pasadena, Texas.''' Photo: Photo: [http://www.glassdoor.com/Photos/Chevron-Phillips-Chemical-Office-Photos-E11902.htm Glass Door] Only original, non-copyrighted images.]] | ||
| + | [[Image:Chevron Phillips Chemical Plant in Cedar Bayou2.jpg|thumb|500px|'''Chevron Phillips Chemical Plant in Cedar Bayou, Texas.''' Photo: Photo: [http://www.glassdoor.com/Photos/Chevron-Phillips-Chemical-Office-Photos-E11902.htm Glass Door] Only original, non-copyrighted images.]] | ||
| + | [[Image:Chevron Phillips Chemical Plant in Sweeny2.jpg|thumb|500px|'''Chevron Phillips Chemical Plant in Sweeny, Texas.''' Photo: Photo: [http://www.glassdoor.com/Photos/Chevron-Phillips-Chemical-Office-Photos-E11902.htm Glass Door] Only original, non-copyrighted images.]] | ||
| + | [[Image:Chevron Phillips Chemical Plant in Port Arthur2.jpg|thumb|500px|'''Chevron Phillips Chemical Plant in Port Arthur, Texas.''' Photo: Photo: [http://www.glassdoor.com/Photos/Chevron-Phillips-Chemical-Office-Photos-E11902.htm Glass Door] Only original, non-copyrighted images.]] | ||
| + | There are two other operating segments in the new company: Chemicals and Midstream. “You never really heard us talk about chemicals; you never heard us talk about midstream, and both of those businesses trade at higher multiples than the refining business," says Garland. Phillips 66 will own half of the ChevronPhillips Chemical Company, a JV with Chevron. “Midstream and chemicals is what differentiates us."<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/?ss=strategies-solutions Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> | ||
| + | |||
| + | Garland said during his analyst call on April 9, 2012 that the Chemicals segment is primarily conducted through our 50/50 JV with Chevron. CPChem is one of the largest producers of olefins and poly olefins and has spent the last 10 years building one of the best positions in the Middle East, and CPChem has significant assets in the US which are advantaged given the NGLs from the North American shale plays.<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
| + | |||
| + | "As we've said, our Chemicals operations are conducted through our CPChem joint venture with Chevron. Our Chemicals businesses delivered superior returns. We think it's an exceptional growth platform. CPChem produces petrochemicals in over 70,000 different commercial and industrial products, holds global market positions in several key products, such as olefins, poly olefins, aromatics and other specialties. It has a large global footprint and we're rapidly expanding outside of the US. We think part of CPChem's success and its foundation is based upon -- is proprietary technology.We believe this ensures lower cost for us, it enhances our competitiveness.These are markets, these are technologies that we understand thoroughly. As you know, advantage feed stocks is critical to profitability and sustained returns in this business. CPChem has a substantial footprint in the Middle East. CPChem also has a large asset base in the US. It's primarily based upon ethane. It's allowing CPChem to recover attractive margins today.We believe after the Middle East, the US-based ethane based ethylene margins are going to be significantly advantaged versus margins in Asia and Europe, which are primarily based on naphtha. CPChem's done a good job over the last few years in terms of their portfolio management. They've been very disciplined on their costs.They have been shifting investments into higher returning opportunities, and the have moved from really last in their peer group to number one in their peer group on economic return."<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
| + | |||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is the only downstream independent company to have a significant ownership in a petrochemicals business. "We conduct our chemicals operation primarily through Chevron Phillips Chemical Company, 50/50 JV with Chevron. This joint venture is 12 years old. It stood the test of time. We have a great relationship with Chevron. We like the management team. We think they're a very talented group of individuals. We think there's good value between Phillips and Chevron as we manage the joint venture. We're completely aligned in terms of the growth profile, significant organic investment opportunity and growth in CPChem over the last ten years and certainly in the next ten years that we see."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ===Chevron Phillips Chemical=== | ||
| + | Chevron Phillips Chemical, a joint venture with Chevron that will be part of Phillips 66, is benefiting from low prices for the natural gas it uses as feedstock to make products such as ethylene and polyethylene plastic. The company has made it clear that Chevron Phillips Chemical is a top priority. It has announced plans to invest in a new $5 billion ethylene cracker at Cedar Bayou.<ref>[http://www.chron.com/business/article/ConocoPhillips-split-becomes-official-as-company-3522914.php Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.]</ref> | ||
| + | |||
| + | Phillips 66's Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Now in its 12th year of operations, CPChem is one of the world's top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. The rapid development of natural gas and NGL from shale formations in the United States is driving major growth opportunities for CPChem. At its Cedar Bayou Chemical Complex in Baytown, Texas, CPChem is building the world's largest on-purpose 1-hexene plant capable of producing up to 250,000 metric tons (551,000,000 lbs.) per year. Construction of the 1-hexene plant is expected to begin in the first half of 2012, and the project is anticipated to start up during 2014. CPChem also aims to construct a world-scale ethane cracker at its Cedar Bayou facility in Baytown, Texas, and two polyethylene facilities near its Sweeny facility in Old Ocean, Texas, with anticipated startup in 2017, pending final investment decisions. "Phillips 66 starts out with a clear advantage over many other downstream companies," said Garland. "We have a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce, and a continued commitment to safety and operating excellence. We have an unparalleled foundation for success."<ref>[https://secure.marketwatch.com/story/phillips-66-debuts-as-advantaged-downstream-company-2012-05-01 MarketWatch. "Phillips 66 Debuts as Advantaged Downstream Company" May 1, 2012.]</ref> | ||
| + | |||
| + | ===Latest News and Views on the Chemical Business Segment=== | ||
| + | |||
| + | ====December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay==== | ||
| + | Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.<ref>[http://www.businesswire.com/news/home/20150105005012/en/Chevron-Phillips-Chemical-Completes-Sale-Ryton%C2%AE-PPS#.VKv2kCvF928 Businesswire. "Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay" December 5, 2015.]</ref> | ||
| + | |||
| + | ====December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville==== | ||
| + | The Tulsa World reported on December 19, 2014 that Chevron Phillips Chemical Co. LP plans to build a polyethylene pilot plant at its research and technology facility in Bartlesville that should be completed in 2017. The new facility will replace the current site, which has been focused on “developing improvements in current resins or new polymer kind of innovations” since the 1970s. “As a global producer of polyethylene, we strive to support our customers with the latest technological advances and process improvements through the efforts of our research and development personnel,” said Don Lycette, vice president of research and technology for Chevron Phillips Chemical, in a written statement. “Chevron Phillips Chemical continues to build on a long history of scientific discoveries, particularly at our facility in Bartlesville, which was originally built in 1950 by Phillips Petroleum Co.” The new pilot plant will incorporate Chevron Phillips Chemical’s proprietary MarTech process for polyethylene production and technology that enables production of bimodal polyethylene resins for advanced applications.<ref>[http://www.tulsaworld.com/communities/bartlesville/chevron-phillips-chemical-to-build-pilot-plant-in-bartlesville/article_90cf6ab6-5dae-5c33-a9d6-85f97b9b3606.html Tulsa World. "Chevron Phillips Chemical to build pilot plant in Bartlesville" December 19, 2014.]</ref> | ||
| + | |||
| + | Philips CEO Greg Garland previously made mention of the expansion at the Research Center when he spoke to the Bartlesville Chamber of Commerce in August 2014.<ref>[http://examiner-enterprise.com/news/local-news/phillips-66-ceo-company-remains-committed-bartlesville Bartlesville Examiner. "Phillips 66 CEO: Company remains committed to Bartlesville" by Nathan Thompson. August 13, 2014.]</ref> | ||
| + | |||
| + | ====December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex==== | ||
| + | Businesswire reported on December 11, 2014 that CP chemical announced completion of an ethylene expansion at its Sweeny complex that was started in 2013. With the addition of a tenth furnace to ethylene unit 33 at the Sweeny complex, the expansion is expected to increase annual production by 200 million pounds giving the Sweeny facility the capability of producing roughly 12 million pounds of ethylene per day, or 4.3 billion pounds annually. This represents the next increment of expansion to our ethylene business. We’re building toward the startup of the U.S. Gulf Coast Petrochemicals Project in 2017 and supporting incremental growth of our olefins derivative businesses,” said Dave Smith, olefins & natural gas liquids vice president for Chevron Phillips Chemical.<ref>[http://www.businesswire.com/news/home/20141211005059/en/Chevron-Phillips-Chemical-Completes-Ethylene-Expansion-Sweeny Businesswire. "Chevron Phillips Chemical Completes Ethylene Expansion at Its Sweeny Complex in Old Ocean, Texas" December 11, 2014.]</ref> | ||
| + | |||
| + | ====December 5, 2014: Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment==== | ||
| + | Phillips 66 announced on December 5, 2014 that in Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in projects aimed at capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2015 capital expenditures is expected to be $1.4 billion. Funding supports advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The expected start-up for these facilities is mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem’s normal alpha olefins production capacity at Cedar Bayou continues, with estimated completion in mid-2015.<ref>[https://secure.marketwatch.com/story/phillips-66-announces-2015-capital-program-2014-12-05 Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Chevron Phillips Considers New Ethylene Cracker==== | ||
| + | Argus reported on October 29, 2014 that Chevron Phillips continues to consider new US construction projects, including whether to build a new ethylene cracker, but those discussions are still early in the process and no decisions have been made. "We still think the US Gulf coast is still the best place to invest, and we wouldn't hesitate to go forward with a second cracker. But the challenge is where do you put it and what are you going to feed it," said chief executive Greg Garland.<ref>[http://www.argusmedia.com/News/Article?id=939255 Argus Media. "CP Chem Port Arthur unit to restart in 4Q" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014==== | ||
| + | Argus reported on October 29, 2014 that Chevron Phillips Chemical's Port Arthur, Texas olefins unit will restart by the end of the year, Phillips 66 executives stated on the company's earnings call today. The Port Arthur plant can produce up to 807,000 t/yr of ethylene.<ref>[http://www.argusmedia.com/News/Article?id=939255 Argus Media. "CP Chem Port Arthur unit to restart in 4Q" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem earnings were strong despit downtime at Port Arthur. " In our Chemicals business, despite downtime at the CPChem Port Arthur facility, earnings were strong, also reflecting favorable market conditions." | ||
| + | |||
| + | "In Chemicals, CPChem's global Olefins and Polyolefins capacity utilization rate for the quarter was 83%. This reflects downtime at the Port Arthur | ||
| + | facility, resulting from the fire the impacted their ethylene furnaces early in the third quarter," added Garland. "In Olefins and Polyolefins, the decrease of $51 million is largely due to the CPChem's Port Arthur ethylene cracker being down. Although Port Arthur represents approximately 11% of CPChem's total O&P production capacity, the impacts from it being off-line were lessened as CPChem was ableto pull down inventory."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips expects the Port Arthur Olefins Units to restart in November. "The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire==== | ||
| + | Tim Taylor told analysts during the third quarter earnings conference call on October 29, 2014 that Port Arthur probably had a five month outage because of the fire. " I think when we look at it, I like to think about it that we've probably got about a five-month outage when we think about Port Arthur. So that's roughly in the range of say 750 million, 800 million pounds of lost production, and then you can put the margin on that."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the fire at Port Arthur will not prevent the Hexene Facility from being able to sell full volumes. "I don't think that Port Arthur is going to impact the run rate on hexene-1. As it ramps up into 2015, Port Arthur is going to be back up and running. And so I don't think Port Arthur is going to enter into the equation in terms of the run rate. In terms of fully ramping the facility, I don't know, Tim,it will probably ramp over 2015 and 2016 would be my guess."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou. "In Chemicals, CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou, which began operations in the second | ||
| + | quarter. The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====September 4, 2014: Chevron Phillips to Sell Performance Polymers Business for $220 Million==== | ||
| + | Bloomberg reported on September 4, 2014 that Chevron Phillips has agreed to sell Ryton polyphenylene sulphide plants, a performance polymers business, to Belgian chemical maker Solvay for $220 million to expand its offering of lightweight plastics for replacing heavier metal parts in cars. “Ryton PPS fits neatly with our unique specialty polymers portfolio and reinforces our unrivalled capabilities to provide solutions to our customers in dynamic innovative end-markets,” said Augusto Di Donfrancesco, president of Solvay Specialty Polymers. Solvay will gain Ryton PPS sites in Texas and Oklahoma, and a plant in Belgium. Solvay plans to invest in a PPS production technology developed by Chevron Phillips that hasn’t “achieved its full potential,” the company said. Completion of the deal is expected in the fourth quarter.<ref>[http://www.bloomberg.com/news/2014-09-04/solvay-buys-chevron-phillips-car-plastics-unit-for-220-million.html Bloomberg. "Solvay Buys Chevron Phillips Car-Plastics Unit for $220 Million" by Andrew Noel. September 4, 2014.]</ref> | ||
| + | |||
| + | ====August 7, 2014: Chevron Phillips to Raise Prices in September==== | ||
| + | Platts reported on August 7, 2014 that Chevron Phillips Chemical joined the growing list of US polyethylene producers planning to raise resin prices in September raising prices for all grades of polyethylene by 3 cents/lb effective September 1. Sources have described the US polyethylene market as tight, pointing in part to a number of feedstock and production-related issues. Feedstock prices have also moved higher, with ethylene contract prices for July fully settled at a 1.75 cents/lb increase, sources said this week.<ref>[http://www.platts.com/latest-news/petrochemicals/houston/chevron-phillips-chemical-increaseing-us-pe-prices-21040544 Platts. "Chevron Phillips Chemical increaseing US polyethylene prices in September: letter" August 7, 2014.]</ref> | ||
| + | |||
| + | ====July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire==== | ||
| + | The Houston Chronicle reported on July 30, 2014 that during the second quarter conference call, company officials at Phillips said that the Chevron Phillips Chemical plant in Port Arthur remains closed after a fire injured several workers on July 7 and that it's too early to know when it might reopen.<ref>[http://www.houstonchronicle.com/business/article/Phillips-66-profit-drops-despite-good-chemistry-5658213.php Houston Chronicle. "Phillips 66 profit drops despite good chemistry" by Ryan Holeywell. July 30, 2014.]</ref> | ||
| + | |||
| + | ====July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur==== | ||
| + | Plastics News reported on July 15, 2014 that Chevron Phillips has declared force majeure production limits on that material after the fire at the Chemical Plant at Port arthur. Phillips Chevron officials said that reviews are underway to determine when the unaffected areas of the plant can be restarted, and that no timetable has been set for restart of the area affected by the incident. The Port Arthur plant has almost 1.8 billion pounds of annual ethylene capacity and 1.1 billion pounds of annual propylene capacity. <ref>[http://www.plasticsnews.com/article/20140715/NEWS/140719952/chevron-phillips-equistar-declare-force-majeure-limits-on-polyethylene Plastics News. "Chevron Phillips, Equistar declare force majeure limits on polyethylene" by Frank Esposito. July 15, 2014.]</ref> | ||
| + | |||
| + | ====July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant==== | ||
| + | Plastics News reported on July 15, 2014 that two workers were injured in a fire in a ethylene/propylene unit at the at a Chevron Phillips Chemical Plant in Port Arthur. No cause for the fire was given in a July 9 statement from Chevron Phillips. The statement added that the injured workers remained hospitalized.<ref>[http://www.plasticsnews.com/article/20140715/NEWS/140719952/chevron-phillips-equistar-declare-force-majeure-limits-on-polyethylene Plastics News. "Chevron Phillips, Equistar declare force majeure limits on polyethylene" by Frank Esposito. July 15, 2014.]</ref> | ||
| + | |||
| + | Mary Meaux reported at The Port Arthur News on July 8, 2014 that an investigation into the cause of the fire at Chevron Phillips Chemical Company that injured two workers is underway less than 24 hours after the incident. “A team of experts from other Chevron Phillips Chemical facilities has been assembled and has begun the investigation to determine the root cause of the incident,” according to a press release from David Hastings, public affairs manager at Chevron Phillips. The localized fire occurred at the Port Arthur facility at about 8 pm on July 7. The chemical company’s fire response team handled the fire while Port Arthur Fire Department remained on standby with equipment and manpower should it be needed, said Port Arthur Police Maj. John Owens. “The fire chief (Larry Richard) and I went in and were part of their emergency operations center to assist them in decision making and operations should they need outside assistance and to ensure the public and community that we had someone inside the EOC to look at it from the community’s side,” Owens said.<ref>[http://www.panews.com/local/x1736703854/Investigation-into-Chevron-Phillips-fire-begins The Port Arthur News. "Investigation into Chevron Phillips fire begins" by Mary Meaux. July 8, 2014.]</ref> | ||
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| + | Independent air monitoring throughout the night to ensure the community was safe. “The continuous monitoring picked up zero readings,” said Owens. “We do this any time there is an incident. It is protocol for the fire department’s hazardous response team to perform independent monitoring.”<ref>[http://www.panews.com/local/x1736703854/Investigation-into-Chevron-Phillips-fire-begins The Port Arthur News. "Investigation into Chevron Phillips fire begins" by Mary Meaux. July 8, 2014.]</ref> | ||
| + | |||
| + | ====April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility==== | ||
| + | Ryan Holeywell reported in FuelFix on April 2, 2014 that Chevron Phillips Chemical broke ground on a a massive new ethane cracker, the first component of a $6 billion expansion and the first new major facility of its type built in the U.S. in a decade. The ethane cracker is a massive piece of equipment with a footprint the size of nearly 50 football fields used to transform ethane, a component of natural gas, into ethylene, a component used to make plastics. "This is a big deal for us — $6 billion is a big project for a company with $10 billion in assets,” said CEO Peter Cella. The investment, which officials say will contribute to the creation of about 400 jobs. Cella said Chevron Phillips is still “a few years away” from developing contracts with customers for the ethylene it will produce, and polyethylene contracts tend to be developed on a year-to-year basis. He expected most of the ethylene produced by the cracker to be used domestically, including by the company itself.<ref>[http://fuelfix.com/blog/2014/04/02/chevron-phillips-chemical-breaks-ground-on-ethane-cracker/ FuelFix. "Chevron Phillips Chemical breaks ground on ethane cracker" by Ryan Holeywell. April 2, 2014.]</ref> “It’s a huge investment for a company like this,” Cella said, all of which is “catalyzed” by the shale boom that is producing lots of ethane that serve as the “competitive feedstock” for the chemical plants. “We see the supply of ethane being pretty substantial going forward,” Cella said in an interview before the Baytown groundbreaking. “It’s important to point out there’s a surge of investments being contemplated or already in progress like ours in the chemical industry."<ref>[http://www.bizjournals.com/houston/morning_call/2014/04/chevron-phillips-kicks-off-6-billion-construction.html?page=all Houston Business Journal. "Chevron Phillips kicks off $6 billion construction campaign" by Jordan Blum. April 2, 2014.]</ref> | ||
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| + | The other component of the endeavor, in nearby Old Ocean, consists of two polyethylene units, which convert ethylene into polyethylene pellets that can be sold, melted and formed into a variety of industrial and household plastics. The entire project is slated to come online in 2017. The two polyethylene units will develop two different products: a biomodal resin he described as durable but soft, and a metallocene resin that is clear and can receive printing and is commonly used for packaging in retail stores.<ref>[http://fuelfix.com/blog/2014/04/02/chevron-phillips-chemical-breaks-ground-on-ethane-cracker/ FuelFix. "Chevron Phillips Chemical breaks ground on ethane cracker" by Ryan Holeywell. April 2, 2014.]</ref> | ||
| + | |||
| + | ====December 6, 2013: Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment==== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | ====October 30, 2013: Garland Says CPChem has Necessary Approvals to begin Construction of Ethane Cracker and Two Polyethylene Facilities==== | ||
| + | Garland told analysts at the third quarter earnings conference on October 30, 2013 that CPChem announced its world-scale Gulf Coast ethane cracker and two new polyethylene facilities earlier this month. "CPChem now has the necessary approvals to begin construction," said Garland. "In addition to the petrochemicals projects CPChem is also completing one hexane unit which is expected to be operational in the first half of 2014 as well at the Sweeny ethylene expansion in 2014. All in CPChem at a 100% basis is expected to spend between $6 million and $8 billion on self-funded capital between now and 2017. They expect to add about $1.5 billion of EBITDA in 2017 once all these growth projects are online."<ref>[http://seekingalpha.com/article/1787822-phillips-66s-ceo-discusses-q3-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.]</ref> | ||
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| + | ====July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds==== | ||
| + | Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that outages at the Sweeny facility during both the first quarter and the second quarter of 2013 resulted in loss production of approximately 540 million pounds. "The decrease in earnings was primarily in olefins and polyolefins driven by unplanned power outages at CPChem’s Sweeny Complex as well as an extended 91 day turnaround at its Port Arthur facility. In May of this year, CPChem was required to declare force majeure on ethylene and certain derivatives, following these outages," said Garland. "These outages as well as the downtime at Port Arthur resulted in higher manufacturing costs and decreased production sales volumes for ethylene, polyethylene, and normal alpha olefins in the second quarter of 2013. While industry ethylene margins remained strong, CPChem realized lower margins because of these unplanned events."<ref>[http://seekingalpha.com/article/1589702-phillips-66s-ceo-discusses-q2-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q2 2013 Results - Earnings Call Transcript" July 31, 2013.]</ref> | ||
| + | |||
| + | ====July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility==== | ||
| + | Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that Phillips chemicals joint venture CPChem completed the NGL fractionator expansion project at the Sweeny facility during the second quarter. The project increased capacity by nearly 20%.<ref>[http://seekingalpha.com/article/1589702-phillips-66s-ceo-discusses-q2-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q2 2013 Results - Earnings Call Transcript" July 31, 2013.]</ref> | ||
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| + | ====July 02, 2013: Phillips to Reduce Polypropylene Deliveries Because of Insufficient Feedstock Supply==== | ||
| + | Platts reported on July 20, 2013 that Phillips has written a letter to customers announcing that it will be reducing deliveries of polymer-grade propylene because of issues with feedstock supply. "While we are currently producing at full rates with our integrated monomer, this disruption of feedstock supply has forced us to restrict present deliveries," said Phillips 66 the letter to customers. Phillips 66 said it was exploring other sources of feedstock, but that given the circumstances it was "compelled to reduce deliveries of product at this time and apportion the material we have available to our customers in a fair and reasonable manner so that we can build inventory to carry us through the turnaround."<ref>[http://www.platts.com/latest-news/petrochemicals/houston/us-phillips-66-to-limit-pp-deliveries-because-21238715 Platts. "US Phillips 66 to limit PP deliveries because of feedstock issues" July 2, 2013.]</ref> | ||
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| + | Phillips had planned to use feedstock PGP from Williams Partners, but was left scrambling after Williams suffered an explosion and fire at its Geismar, Louisiana, olefins plant that resulted in two deaths and the disruption of production for an indefinite time frame. Last week, Garyville, Louisiana-based Pinnacle Polymers issued a force majeure declaration on polypropylene, citing feedstock supply issues that market sources said also resulted from the Williams disruption. "It's getting tough to find material," said a source with a distributor.<ref>[http://www.platts.com/latest-news/petrochemicals/houston/us-phillips-66-to-limit-pp-deliveries-because-21238715 Platts. "US Phillips 66 to limit PP deliveries because of feedstock issues" July 2, 2013.]</ref> | ||
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| + | ====June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex==== | ||
| + | The Oil and Gas Journal reported on June 3, 2013 that Chevron Phillips Chemical Co. LP will add a furnace at its Sweeny petrochemical complex that will expand ethylene production by 200 million lb/year. Construction of the furnace will begin within three months and the start-up is expected in 2014. The new furnace will not add to nameplate capacity of the facility, the company said, explaining, “the increased operating factor should result in net increase of 200 million lb of ethylene availability to provide additional operation flexibility and reliability.”<ref>[http://www.ogj.com/articles/2013/06/chevron-phillips-adding-furnace-at-sweeny.html Oil and Gas Journal. "Chevron Phillips adding furnace at Sweeny" June 3, 2013.]</ref> | ||
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| + | ====April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital==== | ||
| + | The Port Arthur News reported on April 27, 2013 that an early morning fire at Chevron Phillips Chemical Company in Port Arthur sent eight contract workers to two hospitals on April 27, 2013. Company officials confirmed that a localized fire occurred at its Port Arthur facility at approximately 4 a.m. during a turnaround period, which resulted in several contractor employees being transported to the local hospital. The fire was quickly extinguished, and there was no impact to the community, according to a press release from Melanie Samuelson with Chevron Phillips corporate communication. “The safety of our employees is our highest priority,” Margie Conway, plant manager at the Port Arthur facility, said in a press release. “We regret very much that this incident has occurred, and are thankful that most of the contractor employees were treated and released from the hospital.”<ref>[https://web.archive.org/web/20130430044645/http://panews.com/local/x319970859/Fire-at-Chevron-Phillips-sends-eight-to-hospital The Port Arthur News. "Fire at Chevron Phillips sends eight to hospital" by Mary Meaux. April 27, 2013.]</ref> | ||
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| + | ====January 30, 2013: Garland Says Phillips ROCE on Chemical Business Segment Was 31% for 2012==== | ||
| + | Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that 2012 return on capital employed from Phillips Chemicals segment increased to 31%, up form 28% last year and Phillips ended the quarter with $3.6 billion in capital employed. "Overall, CPChem achieved a 90% capacity utilization rate and its O&P segment in the fourth quarter," said Garland. "This was down somewhat from the third quarter due to unplanned downtime at the Saudi Polymers petrochemical facility. If we exclude this downtime in SPCo, CPChem’s utilization rate was near capacity for the quarter."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
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| + | ====December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Chemical Business Segment==== | ||
| + | Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
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| + | ====November 11, 2012: Chevron Phillips Chemical Says the Company is Expanding==== | ||
| + | Fuel Fix reported on November 11, 2012 that Chevron Phllips Chemical, with about 4,700 employees worldwide, is adding new facilities and employees and expects the number of employees to continue growing over time through projects in North America.. “I am confident we can stack up with just about anybody by delivering new products, our marketing capabilities, and our strategy,” said Dan Coombs, the company’s senior vice president of specialties, aromatics and styrenics.<ref>[http://fuelfix.com/blog/2012/11/11/chevron-phillips-chemical-co-is-expanding/ Fuel Fix. "Chevron Phillips Chemical Co. is expanding" by Harry R. Weber. November 11, 2012.]</ref> | ||
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| + | ====September 5, 2012: The Chemicals Business is Pursuing Advantaged Feedstock==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the chemicals business is pursuing advantaged feedstock. "We think the shale plays in the US present a new opportunity for advantaged feedstocks here in the US. Most of our US capacity is ethane based. That's a big advantage that we see going forward."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
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| + | ====September 5, 2012: Chemicals is Increasing Capacity==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
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| + | ====September 2, 2012: Low Natural Gas Prices Are a Plus for Phillips' Chemical Business Segment==== | ||
| + | Emily Pickrell wrote in Fuel Fix on September 2, 2012 that Phillips 66's Midstream Business Segment took a hit in the second quarter along with many companies in the natural gas sector as natural gas prices are at decade lows, reducing the company's second-quarter net profit from $55 million in 2011 to $35 million in 2012 but Phillips 66 uses some of DCP’s natural gas liquids as feedstock for its chemical plants. “For Phillips 66, the low prices are a plus, not a negative. It almost mitigates the negative impacts of NGL prices,” says Fadel Gheit, an analyst with Oppenheimer & Co. “They are one of the largest chemical producers in the country.”<ref>[http://fuelfix.com/blog/2012/09/02/company-ramping-up-infrastructure-for-natural-gas/ Fuel Fix. "Company ramping up infrastructure for natural gas" by Emily Pickrell. September 2, 2012.]</ref> | ||
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| + | ====August 10, 2012: Chevron Phillips CEO Pete Cella Says Company Gets More Attention from Phillips 66==== | ||
| + | The Houston Business Journal reported on August 10, 2012 in a profile of Chevron Phillips CEO Pete Cella that with the ConocoPhillips split of its upstream and downstream business in May, Chevron Phillips makes up a more prominent part of the Phillips 66 business, which is good because the company gets more attention, said Cella. Cella also said that Chevron Phillips is more than a chemical company, it is a manufacturing company. “There is a newfound optimism in manufacturing that goes beyond chemicals,” said Cella, adding that with the recent chemical industry resurgence, there are more opportunities for U.S. companies to manufacture plastic products and chemical-related products that can boost the overall economy.<ref>[http://www.bizjournals.com/houston/print-edition/2012/08/10/day-in-the-life-with-pete-cella.html?page=all Houston Business Journal. "Day in the Life with Pete Cella of Chevron Phillips Chemical Company" August 10, 2012.]</ref> | ||
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| + | ====June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest==== | ||
| + | Emily Pickrell wrote in San Antonio Express on June 13, 2012 that Phillips 66 executives gathered for a ceremonial groundbreaking on June 12, 2012 at Chevron Phillips Chemical's Cedar Bayou complex that will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. “The facility that we are groundbreaking is an outcome of this new natural gas resource base,” said Pete Cella, CEO of Chevron Phillips Chemical. “Five years ago, the expectation was that the U.S. would become a net importer of ethylene. Now we are expecting that we will not only meet U.S. demand domestically, but will become a major exporter.” The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.<ref>[http://www.mysanantonio.com/business/article/New-Chevron-Phillips-plant-boosts-Texas-as-3632415.php San Antonio Express "New Chevron Phillips plant boosts Texas as chemical hub" by Emily Pickrell. June 13, 2012.]</ref> | ||
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| + | Chevron Phillips Chemical also plans to build a new ethane cracker at Cedar Bayou; two new polyethylene units at a site near its Sweeny plant in Old Ocean; and an expansion of its fractionator that separates the individual components out of natural gas liquids at the Sweeny facility.<ref>[http://www.mysanantonio.com/business/article/New-Chevron-Phillips-plant-boosts-Texas-as-3632415.php San Antonio Express "New Chevron Phillips plant boosts Texas as chemical hub" by Emily Pickrell. June 13, 2012.]</ref> | ||
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| + | ====June 12, 2012: In Three Years, Phillips 66 may invest in a Second New Chemical Plant in the U.S. Gulf Region==== | ||
| + | Fox Business reported on June 12, 2012 that reg Garland told the Financial Times that Phillips 66 may invest in a second new chemical plant in the U.S. Gulf region to take advantage of the cheap feedstock in North America that was released by the shale revolution, a decision that could be made in three years' time. "After the Middle East, the U.S. is the next best place to make petrochemicals, because of the advanced feedstock, and we see that continuing for some time," said Garland.<ref>[http://www.foxbusiness.com/news/2012/06/12/phillips-66-may-invest-in-chemical-plant-in-us-gulf-ft/ Fox Business. "Phillips 66 May Invest In Chemical Plant In US Gulf - FT" June 12, 2012.]</ref> Garland said US chemicals manufacturers could buy ethane at about $5 per million British thermal units of energy content, compared to about $18 per mBTU for crude oil and that the US petrochemicals industry, stands at the dawn of a long-term upturn, and Phillips 66 stands to benefit through Chevron Phillips Chemical, its 50/50 joint venture with Chevron. The cheap feedstock persuaded CP Chem to announce last year that it would build a new “cracker” in Baytown, Texas, to convert ethane into ethylene. The Baytown cracker, expected to come into operation in 2017, will employ 10,000 people while under construction, and about 400 when it is running. <ref>[http://www.ft.com/intl/cms/s/0/bf9bb6bc-b3d1-11e1-a3db-00144feabdc0.html#axzz1xjXkwWyt Financial Times. "Phillips 66 looks at chemicals expansion" by Ed Crooks. June 11, 2012.]</ref> | ||
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| + | ====June 4, 2012: Chevron Phillips Chemical Looking into Developing Iraq Plant==== | ||
| + | Olivia Pulsinelli reported in the Houston Business Journal on June 4, 2012 that Chevron Phillips signed a letter of intent with Iraq to examine the feasibility of building a new plant and upgrading an existing petrochemicals facility owned by Iraq. "Data from BP Plc (NYSE: BP) shows Iraq has the fifth-largest crude reserves in the world and the fifth-largest natural gas deposits in the Middle East, Bloomberg reports. While the Iraq wants to diversify into chemicals productions and other industries, the country currently lacks infrastructure to use natural gas as a fuel for electricity plants or feedstock for petrochemicals."<ref>[http://www.bizjournals.com/houston/morning_call/2012/06/chevron-phillips-chemical-looking-into.html Houston Business Journal. "Chevron Phillips Chemical looking into developing Iraq plant" by Olivia Pulsinelli. June 4, 2012.]</ref> | ||
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| + | ====May 17, 2012: Phillips 66 Exec says Glut of Natural Gas will last 4 to 5 Years==== | ||
| + | Peter Cella, Chief Executive of Chevron Phillips Chemical, a joint venture between Phillips 66 and Chevron, said on May 17, 2012 that the oversupply of natural gas liquids (NGLs)that feed its US plants is likely to last for another four or five years. "The supply source has gotten ahead of the demand need. I think we're doing our share to elevate the capacity to consume," Cella told the Reuters Global Energy & Environment Summit in Houston. "You can drill a well in a month or two, and it takes us five years to build a new cracker, so you've got this mismatch in timelines." Chevron Phillips Chemical, which was formed in 2000 and employs about 4,700 people, is the world's fourth-largest producer of high density polyethylene, used to make everything from food containers to plastic furniture. Cella expects that three or four new crackers will be needed over the next ten years to meet US plastic demand, especially packaging but also a variety of products like lipstick and trash bags, since demand grows with the economy. Chevron Phillips Chemical is spending $5 billion on new ethylene facilities in Texas.<ref>[http://www.reuters.com/article/2012/05/17/us-energy-summit-chevronphillipschemical-idUSBRE84G14820120517 Reuters. "U.S. natgas liquids glut to persist -CP Chemical CEO" by Braden Reddall. May 17, 2012.]</ref> | ||
| + | |||
| + | ====May 10, 2012: Simon Moore says Chemical is doing well Because it has Access to Cheap US Natural Gas==== | ||
| + | Simon Moore wrote at Seeking Alpha on May 10, 2012 that the Chemical Business Segment is doing well because it has access to extremely cheap US natural gas, which it uses in the manufacturing process and because the margins on certain chemicals, such as ethylene, are much higher when they are manufactured from NGLs versus naphtha (oil derived). "Ethane derived ethylene has a cash margin of more than $600/ton currently. Naptha derived (oil derived) ethylene has a cash margin of only $100-$200 per ton," writes Moore. "PSX has a great supply of cheap NGLs (ethane among them) in the US."<ref>[http://seekingalpha.com/article/577421-phillips-66-a-lot-of-upside-potential Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.]</ref> | ||
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| + | Andrew Bary wrote in the WSJ on May 12, 2012 that the Chemical Business Segment is so profitable, earning $1.4 billion in 2011, because 80% of its capacity is in the US, where low gas prices hold down input costs. "Phillips' petrochemical business will benefit in a disproportionate way from the growth in the production of natural-gas and natural-gas liquids," says ISI Group analyst Doug Terreson.<ref>[http://online.wsj.com/article/SB10001424052702304070304577396003741455384.html Wall Street Journal. "An Old Name With a New Story" by Andrew Bary. May 12, 2012.]</ref> | ||
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| + | ====May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex==== | ||
| + | The Oil and Gas Journal reported on May 2, 2013 that Chevron Phillips Chemical Co. LP has selected a site near its Sweeny petrochemical complex for two new polyethylene plants with capacities of 1.1 billion lb/year each. Jacobs Engineering Group will design the polyethylene plants which are part of a major Gulf Coast Expansion.<ref>[http://www.ogj.com/articles/2012/05/ocean-city-tex-picked-for-pe-plants.html Oil and Gas Journal. "Old Ocean, Tex., picked for PE plants" May 2, 2012.]</ref> | ||
| + | |||
| + | ====April 9, 2012: According to ConocoPhillips CPChem has a strong history of Successfully Executing Growth Projects==== | ||
| + | According to the ConocoPhillips Investors Presentation on April 9, 2012 "CPChem has a strong history of successfully executing growth projects. They've executed five mega projects in the Middle East over the past 10 years.They continue to work new opportunities in the Middle East region. They're currently building the world's largest 1-hexene plant at Cedar Bayou.They're actively pursuing a new Gulf Coast cracker.We think it will start up in 2017.This will be the first new cracker to start up on the Gulf Coast."<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
| + | |||
| + | ===Latest News and Views from Port Arthur Chemical Plant=== | ||
| + | |||
| + | ====October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014==== | ||
| + | Argus reported on October 29, 2014 that Chevron Phillips Chemical's Port Arthur, Texas olefins unit will restart by the end of the year, Phillips 66 executives stated on the company's earnings call today. The Port Arthur plant can produce up to 807,000 t/yr of ethylene.<ref>[http://www.argusmedia.com/News/Article?id=939255 Argus Media. "CP Chem Port Arthur unit to restart in 4Q" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem earnings were strong despit downtime at Port Arthur. " In our Chemicals business, despite downtime at the CPChem Port Arthur facility, earnings were strong, also reflecting favorable market conditions." | ||
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| + | "In Chemicals, CPChem's global Olefins and Polyolefins capacity utilization rate for the quarter was 83%. This reflects downtime at the Port Arthur | ||
| + | facility, resulting from the fire the impacted their ethylene furnaces early in the third quarter," added Garland. "In Olefins and Polyolefins, the decrease of $51 million is largely due to the CPChem's Port Arthur ethylene cracker being down. Although Port Arthur represents approximately 11% of CPChem's total O&P production capacity, the impacts from it being off-line were lessened as CPChem was ableto pull down inventory."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips expects the Port Arthur Olefins Units to restart in November. "The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire==== | ||
| + | Tim Taylor told analysts during the third quarter earnings conference call on October 29, 2014 that Port Arthur probably had a five month outage because of the fire. " I think when we look at it, I like to think about it that we've probably got about a five-month outage when we think about Port Arthur. So that's roughly in the range of say 750 million, 800 million pounds of lost production, and then you can put the margin on that."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
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| + | ====October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the fire at Port Arthur will not prevent the Hexene Facility from being able to sell full volumes. "I don't think that Port Arthur is going to impact the run rate on hexene-1. As it ramps up into 2015, Port Arthur is going to be back up and running. And so I don't think Port Arthur is going to enter into the equation in terms of the run rate. In terms of fully ramping the facility, I don't know, Tim,it will probably ramp over 2015 and 2016 would be my guess."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
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| + | ====July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire==== | ||
| + | The Houston Chronicle reported on July 30, 2014 that during the second quarter conference call, company officials at Phillips said that the Chevron Phillips Chemical plant in Port Arthur remains closed after a fire injured several workers on July 7 and that it's too early to know when it might reopen. Garland did not elaborate on a recent fire in July at a Chevron Phillips Chemical Company LLC plant in Port Arthur that involved injuries, but he did say the facility should not be shut down for much longer. "There's no reason for that unit to be down for a prolonged period of time," said Garland.<ref>[http://www.houstonchronicle.com/business/article/Phillips-66-profit-drops-despite-good-chemistry-5658213.php Houston Chronicle. "Phillips 66 profit drops despite good chemistry" by Ryan Holeywell. July 30, 2014.]</ref> | ||
| + | |||
| + | ====July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur==== | ||
| + | Plastics News reported on July 15, 2014 that Chevron Phillips has declared force majeure production limits on that material after the fire at the Chemical Plant at Port arthur. Phillips Chevron officials said that reviews are underway to determine when the unaffected areas of the plant can be restarted, and that no timetable has been set for restart of the area affected by the incident. The Port Arthur plant has almost 1.8 billion pounds of annual ethylene capacity and 1.1 billion pounds of annual propylene capacity. <ref>[http://www.plasticsnews.com/article/20140715/NEWS/140719952/chevron-phillips-equistar-declare-force-majeure-limits-on-polyethylene Plastics News. "Chevron Phillips, Equistar declare force majeure limits on polyethylene" by Frank Esposito. July 15, 2014.]</ref> | ||
| + | |||
| + | ====July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant==== | ||
| + | Plastics News reported on July 15, 2014 that two workers were injured in a fire in a ethylene/propylene unit at the at a Chevron Phillips Chemical Plant in Port Arthur. No cause for the fire was given in a July 9 statement from Chevron Phillips. The statement added that the injured workers remained hospitalized.<ref>[http://www.plasticsnews.com/article/20140715/NEWS/140719952/chevron-phillips-equistar-declare-force-majeure-limits-on-polyethylene Plastics News. "Chevron Phillips, Equistar declare force majeure limits on polyethylene" by Frank Esposito. July 15, 2014.]</ref> | ||
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| + | Mary Meaux reported at The Port Arthur News on July 8, 2014 that an investigation into the cause of the fire at Chevron Phillips Chemical Company that injured two workers is underway less than 24 hours after the incident. “A team of experts from other Chevron Phillips Chemical facilities has been assembled and has begun the investigation to determine the root cause of the incident,” according to a press release from David Hastings, public affairs manager at Chevron Phillips. The localized fire occurred at the Port Arthur facility at about 8 pm on July 7. The chemical company’s fire response team handled the fire while Port Arthur Fire Department remained on standby with equipment and manpower should it be needed, said Port Arthur Police Maj. John Owens. “The fire chief (Larry Richard) and I went in and were part of their emergency operations center to assist them in decision making and operations should they need outside assistance and to ensure the public and community that we had someone inside the EOC to look at it from the community’s side,” Owens said.<ref>[http://www.panews.com/local/x1736703854/Investigation-into-Chevron-Phillips-fire-begins The Port Arthur News. "Investigation into Chevron Phillips fire begins" by Mary Meaux. July 8, 2014.]</ref> | ||
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| + | Independent air monitoring throughout the night to ensure the community was safe. “The continuous monitoring picked up zero readings,” said Owens. “We do this any time there is an incident. It is protocol for the fire department’s hazardous response team to perform independent monitoring.”<ref>[http://www.panews.com/local/x1736703854/Investigation-into-Chevron-Phillips-fire-begins The Port Arthur News. "Investigation into Chevron Phillips fire begins" by Mary Meaux. July 8, 2014.]</ref> | ||
| + | |||
| + | ====April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital==== | ||
| + | The Port Arthur News reported on April 27, 2013 that an early morning fire at Chevron Phillips Chemical Company in Port Arthur sent eight contract workers to two hospitals on April 27, 2013. Company officials confirmed that a localized fire occurred at its Port Arthur facility at approximately 4 a.m. during a turnaround period, which resulted in several contractor employees being transported to the local hospital. The fire was quickly extinguished, and there was no impact to the community, according to a press release from Melanie Samuelson with Chevron Phillips corporate communication. “The safety of our employees is our highest priority,” Margie Conway, plant manager at the Port Arthur facility, said in a press release. “We regret very much that this incident has occurred, and are thankful that most of the contractor employees were treated and released from the hospital.”<ref>[https://web.archive.org/web/20130430044645/http://panews.com/local/x319970859/Fire-at-Chevron-Phillips-sends-eight-to-hospital The Port Arthur News. "Fire at Chevron Phillips sends eight to hospital" by Mary Meaux. April 27, 2013.]</ref> | ||
| + | |||
| + | ===Latest News and Views from Cedar Bayou Chemical Plant=== | ||
| + | |||
| + | ====November 6, 2014: Chevron Phillips Considers Further Expansion at Cedar Bayou==== | ||
| + | Seeking Alpha reported on November 5, 2014 that Chevron-Phillips is considering adding another expansion to its Baytown plant, joining a wave of other petrochemical companies scrambling to take advantage of cheap raw materials unleashed by the U.S. shale boom and is studying how to further increase the plant’s capacity. Rather than build a new unit, the JV is studying the possibility of boosting polyalphaolefins capacity by one-fifth to 58K metric tons/year by adding improvements to make the existing plant more efficient; the potential cost of the expansion has not been disclosed. “There’s a pretty strong demand for that and fairly limited supply worldwide,” Mark Lashier, executive vice president of olefins and polyolefins, said in an interview with Fuel Fix. “It’s a specialty product and the feedstocks to produce it are in short supply now.<ref>[http://fuelfix.com/blog/2014/11/06/chevron-phillips-chemical-eyes-another-expansion-in-baytown/ FuelFix. "Chevron Phillips Chemical eyes another expansion in Baytown" by Rhiannon Meyers. November 6, 2014.]</ref><ref>[http://seekingalpha.com/news/2106495-chevron-phillips-jv-eyes-further-baytown-expansion Seeking Alpha "Chevron Phillips JV eyes further Baytown expansion" November 6, 2014.]</ref> | ||
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| + | Construction started in April at the ethane cracker at the Baytown plant, which Chevron Phillips Chemical has said would be the first new major facility of its type built in the U.S. in a decade. Rather than build a new unit, the company is studying the possibility of boosting polyalphaolefins capacity by one-fifth to 58,000 metric tons per year by adding improvements to make the existing plant more efficient, Lashier said. The company did not disclose how much the expansion could cost. A decision is expected late next year. “We’re pretty comfortable with the market demand piece but we really have to understand what the capital cost will be to make this investment in the expansion,” Lashier said. “We don’t want to make an investment that’s not going to provide a favorable return for our shareholders.”<ref>[http://fuelfix.com/blog/2014/11/06/chevron-phillips-chemical-eyes-another-expansion-in-baytown/ FuelFix. "Chevron Phillips Chemical eyes another expansion in Baytown" by Rhiannon Meyers. November 6, 2014.]</ref> | ||
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| + | ====November 5, 2014: 1-Hexene Plant at Cedar Bayou Earns 2014 ABC Houston Chapter Prestigious Excellence in Construction Award==== | ||
| + | Businesswire reported on November 5, 2014 that the 1-Hexene plant at Cedar Bayou received the top Excellence in Construction “ICE” award in the heavy industrial category and first runner up for "Best of Houston" by the Associated Builders and Contractors, Inc. (ABC) of Greater Houston at its annual gala on Oct. 30. The awards recognize outstanding projects that exemplify innovative design, precise craftsmanship and superior safety performance and practices. “It’s an honor to have our 1-Hexene plant be recognized for its excellence in construction,” said Scott Sharp, Chevron Phillips Chemical’s senior vice president, projects. “S & B worked diligently, effectively and safely to successfully build and help us start up this important project.” Chevron Phillips Chemical announced start-up of the 1-Hexene plant at its Cedar Bayou plant in Baytown, Texas, in June, and with nearly 1.7 million work hours completed, there were no Occupational Safety and Health Administration (OSHA) recordable injuries reported during the construction of the project.<ref>[http://www.businesswire.com/news/home/20141105005160/en/CORRECTING-REPLACING-Chevron-Phillips-Chemical%E2%80%99s-1-Hexene-Plant Businesswire. "Chevron Phillips Chemical’s 1-Hexene Plant Built by S & B Engineers and Constructors Earns 2014 ABC Houston Chapter Prestigious Excellence in Construction Award" November 5, 2014.]</ref> | ||
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| + | ====October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou. "In Chemicals, CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou, which began operations in the second | ||
| + | quarter. The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility==== | ||
| + | Ryan Holeywell reported in FuelFix on April 2, 2014 that Chevron Phillips Chemical broke ground on a a massive new ethane cracker, the first component of a $6 billion expansion and the first new major facility of its type built in the U.S. in a decade. The ethane cracker is a massive piece of equipment with a footprint the size of nearly 50 football fields used to transform ethane, a component of natural gas, into ethylene, a component used to make plastics. "This is a big deal for us — $6 billion is a big project for a company with $10 billion in assets,” said CEO Peter Cella. The investment, which officials say will contribute to the creation of about 400 jobs. Cella said Chevron Phillips is still “a few years away” from developing contracts with customers for the ethylene it will produce, and polyethylene contracts tend to be developed on a year-to-year basis. He expected most of the ethylene produced by the cracker to be used domestically, including by the company itself.<ref>[http://fuelfix.com/blog/2014/04/02/chevron-phillips-chemical-breaks-ground-on-ethane-cracker/ FuelFix. "Chevron Phillips Chemical breaks ground on ethane cracker" by Ryan Holeywell. April 2, 2014.]</ref> “It’s a huge investment for a company like this,” Cella said, all of which is “catalyzed” by the shale boom that is producing lots of ethane that serve as the “competitive feedstock” for the chemical plants. “We see the supply of ethane being pretty substantial going forward,” Cella said in an interview before the Baytown groundbreaking. “It’s important to point out there’s a surge of investments being contemplated or already in progress like ours in the chemical industry."<ref>[http://www.bizjournals.com/houston/morning_call/2014/04/chevron-phillips-kicks-off-6-billion-construction.html?page=all Houston Business Journal. "Chevron Phillips kicks off $6 billion construction campaign" by Jordan Blum. April 2, 2014.]</ref> | ||
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| + | The other component of the endeavor, in nearby Old Ocean, consists of two polyethylene units, which convert ethylene into polyethylene pellets that can be sold, melted and formed into a variety of industrial and household plastics. The entire project is slated to come online in 2017. The two polyethylene units will develop two different products: a biomodal resin he described as durable but soft, and a metallocene resin that is clear and can receive printing and is commonly used for packaging in retail stores.<ref>[http://fuelfix.com/blog/2014/04/02/chevron-phillips-chemical-breaks-ground-on-ethane-cracker/ FuelFix. "Chevron Phillips Chemical breaks ground on ethane cracker" by Ryan Holeywell. April 2, 2014.]</ref> | ||
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| + | ====December 6, 2013: Phillips Plans to Start up 1-hexene plant in Baytown in 2014==== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | ====September 5, 2012: Garland Announces $5 Billion Facility at Cedar Bayou==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref>====June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest==== | ||
| + | Emily Pickrell wrote in San Antonio Express on June 13, 2012 that Phillips 66 executives gathered for a ceremonial groundbreaking on June 12, 2012 at Chevron Phillips Chemical's Cedar Bayou complex that will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. “The facility that we are groundbreaking is an outcome of this new natural gas resource base,” said Pete Cella, CEO of Chevron Phillips Chemical. “Five years ago, the expectation was that the U.S. would become a net importer of ethylene. Now we are expecting that we will not only meet U.S. demand domestically, but will become a major exporter.” The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.<ref>[http://www.mysanantonio.com/business/article/New-Chevron-Phillips-plant-boosts-Texas-as-3632415.php San Antonio Express "New Chevron Phillips plant boosts Texas as chemical hub" by Emily Pickrell. June 13, 2012.]</ref> | ||
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| + | Chevron Phillips Chemical also plans to build a new ethane cracker at Cedar Bayou; two new polyethylene units at a site near its Sweeny plant in Old Ocean; and an expansion of its fractionator that separates the individual components out of natural gas liquids at the Sweeny facility.<ref>[http://www.mysanantonio.com/business/article/New-Chevron-Phillips-plant-boosts-Texas-as-3632415.php San Antonio Express "New Chevron Phillips plant boosts Texas as chemical hub" by Emily Pickrell. June 13, 2012.]</ref> | ||
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| + | ====June 12, 2012: Garland Says the Baytown Facility Will Come Into Operation in 2017==== | ||
| + | Fox Business reported on June 12, 2012 that reg Garland told the Financial Times that Phillips 66 may invest in a second new chemical plant in the U.S. Gulf region to take advantage of the cheap feedstock in North America that was released by the shale revolution, a decision that could be made in three years' time. "After the Middle East, the U.S. is the next best place to make petrochemicals, because of the advanced feedstock, and we see that continuing for some time," said Garland.<ref>[http://www.foxbusiness.com/news/2012/06/12/phillips-66-may-invest-in-chemical-plant-in-us-gulf-ft/ Fox Business. "Phillips 66 May Invest In Chemical Plant In US Gulf - FT" June 12, 2012.]</ref> Garland said US chemicals manufacturers could buy ethane at about $5 per million British thermal units of energy content, compared to about $18 per mBTU for crude oil and that the US petrochemicals industry, stands at the dawn of a long-term upturn, and Phillips 66 stands to benefit through Chevron Phillips Chemical, its 50/50 joint venture with Chevron. The cheap feedstock persuaded CP Chem to announce last year that it would build a new “cracker” in Baytown, Texas, to convert ethane into ethylene. The Baytown cracker, expected to come into operation in 2017, will employ 10,000 people while under construction, and about 400 when it is running. <ref>[http://www.ft.com/intl/cms/s/0/bf9bb6bc-b3d1-11e1-a3db-00144feabdc0.html#axzz1xjXkwWyt Financial Times. "Phillips 66 looks at chemicals expansion" by Ed Crooks. June 11, 2012.]</ref> | ||
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| + | ===Latest News and Views from Sweeny Petrochemical Complex=== | ||
| + | |||
| + | ====December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex==== | ||
| + | Businesswire reported on December 11, 2014 that CP chemical announced completion of an ethylene expansion at its Sweeny complex that was started in 2013. With the addition of a tenth furnace to ethylene unit 33 at the Sweeny complex, the expansion is expected to increase annual production by 200 million pounds giving the Sweeny facility the capability of producing roughly 12 million pounds of ethylene per day, or 4.3 billion pounds annually. This represents the next increment of expansion to our ethylene business. We’re building toward the startup of the U.S. Gulf Coast Petrochemicals Project in 2017 and supporting incremental growth of our olefins derivative businesses,” said Dave Smith, olefins & natural gas liquids vice president for Chevron Phillips Chemical.<ref>[http://www.businesswire.com/news/home/20141211005059/en/Chevron-Phillips-Chemical-Completes-Ethylene-Expansion-Sweeny Businesswire. "Chevron Phillips Chemical Completes Ethylene Expansion at Its Sweeny Complex in Old Ocean, Texas" December 11, 2014.]</ref> | ||
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| + | ====November 30, 2014: County Commissioners Approve Tax Abatement to Improve Chances of Landing Phillips 66’s $1.1 billion Sweeny Expansion==== | ||
| + | The Facts reported on November 30, 2014 that County commissioners have approved a tax abatement they believe will help Sweeny’s chances of landing Phillips 66’s $1.1 billion expansion to the company’s fractionator plant at Sweeny.<ref>[http://thefacts.com/news/article_1e3d158f-449e-5a08-b007-d501d91034cc.html The Facts. "Abatement betters county's chances for $1.1 billion Phillips 66 investment" by Brittany Lamas. November 30, 2014.]</ref> | ||
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| + | ====October 30, 2013: Garland Says Sweeny Ethylene Expansion to be Completed in 2014==== | ||
| + | Garland told analysts at the third quarter earnings conference on October 30, 2013 that CPChem announced its world-scale Gulf Coast ethane cracker and two new polyethylene facilities earlier this month. "CPChem now has the necessary approvals to begin construction," said Garland. "In addition to the petrochemicals projects CPChem is also completing one hexane unit which is expected to be operational in the first half of 2014 as well at the Sweeny ethylene expansion in 2014. All in CPChem at a 100% basis is expected to spend between $6 million and $8 billion on self-funded capital between now and 2017. They expect to add about $1.5 billion of EBITDA in 2017 once all these growth projects are online."<ref>[http://seekingalpha.com/article/1787822-phillips-66s-ceo-discusses-q3-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Frac One at Sweeny in Progressing Nicely==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Frac One at Sweeny is progressing nicely. "On the picture in front of you, that's a picture of the Sweeny frac one, it's progressing nicely as is the LPG export facility at Freeport. We look forward to giving you frequent updates on these important projects."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
| + | |||
| + | ====October 29, 2014: Phillips is Evaluating Possibility of Another Frac at Sweeny==== | ||
| + | Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips is evaluating the opportunity for a second frac. "We're also evaluating the opportunity for a second frac, to have the capacity of 110,000 barrels a day. We expect to reach a final investment decision mid-2015. It will be up and operational mid- 2017."<ref>[http://investor.phillips66.com/files/doc_presentations/2014/Earnings/PSX-Transcript-2014-10-29T15_00.pdf Phillips 66. "PSX - Q3 2014 Phillips 66 Earnings Call" October 29, 2014.]</ref> | ||
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| + | ====July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds==== | ||
| + | Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that outages at the Sweeny facility during both the first quarter and the second quarter of 2013 resulted in loss production of approximately 540 million pounds. "The decrease in earnings was primarily in olefins and polyolefins driven by unplanned power outages at CPChem’s Sweeny Complex as well as an extended 91 day turnaround at its Port Arthur facility. In May of this year, CPChem was required to declare force majeure on ethylene and certain derivatives, following these outages," said Garland. "These outages as well as the downtime at Port Arthur resulted in higher manufacturing costs and decreased production sales volumes for ethylene, polyethylene, and normal alpha olefins in the second quarter of 2013. While industry ethylene margins remained strong, CPChem realized lower margins because of these unplanned events."<ref>[http://seekingalpha.com/article/1589702-phillips-66s-ceo-discusses-q2-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q2 2013 Results - Earnings Call Transcript" July 31, 2013.]</ref> | ||
| + | |||
| + | ====July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility==== | ||
| + | Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that Phillips chemicals joint venture CPChem completed the NGL fractionator expansion project at the Sweeny facility during the second quarter. The project increased capacity by nearly 20%.<ref>[http://seekingalpha.com/article/1589702-phillips-66s-ceo-discusses-q2-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q2 2013 Results - Earnings Call Transcript" July 31, 2013.]</ref> | ||
| + | |||
| + | ====June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex==== | ||
| + | The Oil and Gas Journal reported on June 3, 2013 that Chevron Phillips Chemical Co. LP will add a furnace at its Sweeny petrochemical complex that will expand ethylene production by 200 million lb/year. Construction of the furnace will begin within three months and the start-up is expected in 2014. The new furnace will not add to nameplate capacity of the facility, the company said, explaining, “the increased operating factor should result in net increase of 200 million lb of ethylene availability to provide additional operation flexibility and reliability.”<ref>[http://www.ogj.com/articles/2013/06/chevron-phillips-adding-furnace-at-sweeny.html Oil and Gas Journal. "Chevron Phillips adding furnace at Sweeny" June 3, 2013.]</ref> | ||
| + | |||
| + | ====September 5, 2012: CPChem is Increasing Fractionation Capacity at Sweeny==== | ||
| + | Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.]</ref> | ||
| + | |||
| + | ====May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex==== | ||
| + | The Oil and Gas Journal reported on May 2, 2013 that Chevron Phillips Chemical Co. LP has selected a site near its Sweeny petrochemical complex for two new polyethylene plants with capacities of 1.1 billion lb/year each. Jacobs Engineering Group will design the polyethylene plants which are part of a major Gulf Coast Expansion.<ref>[http://www.ogj.com/articles/2012/05/ocean-city-tex-picked-for-pe-plants.html Oil and Gas Journal. "Old Ocean, Tex., picked for PE plants" May 2, 2012.]</ref> | ||
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| + | ==Midstream Business Segment within Phillips 66== | ||
| + | [[Image:Midstream.jpg|thumb|right|500px|'''Midstream Business Segment.''' Phillips 66 primarily conducts its Midstream operations through DCP Midstream, LLC, a 50 percent joint venture with Spectra Energy and one of the largest natural gas gatherers and processors in the United States, as well as the largest producer of NGL in North America. Now in its 13th year of operations, DCP Midstream is a full-service provider of gathering, processing and NGL logistics services with strategically located assets in liquids-rich developments. The gas collected by DCP Midstream is processed at 61 owned or operated plants and treaters. Growth in liquids-rich developments in the United States is driving infrastructure demand and expansion opportunities for our Midstream segment. DCP Midstream has $4 billion in major projects currently in execution, including two major pipeline projects. The Southern Hills Pipeline will run more than 900 miles to Mont Belvieu, Texas, with a target capacity of more than 150,000 barrels per day of NGL. The project is expected to start up in mid-2013. The Sand Hills Pipeline is a 720-mile NGL line that will run through the Permian and Eagle Ford basins to market centers along the U.S. Gulf Coast. Initial capacity will be 200,000 barrels per day, and service may be expanded to 350,000 barrels per day. The Sand Hills Pipeline will be phased into service, with the first phase completed by the third quarter of 2012 and the second phase expected as soon as the third quarter of 2013.<ref>[https://secure.marketwatch.com/story/phillips-66-debuts-as-advantaged-downstream-company-2012-05-01 MarketWatch. "Phillips 66 Debuts as Advantaged Downstream Company" May 1, 2012.]</ref> Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.]] | ||
| + | [[Image:Rocemidstream2012.jpg|thumb|500px|The return on capital for the Midstream Business Segment at Phillips 66 has been high in recent years. Garland said during his analyst call on April 9, 2012 that Phillips 66's Midstream businesses are primarily conducted through our 50/50 JV with Spectra and DCP is one of the largest gatherers and processors of natural gas and NGLs. "When you look at DCP's assets, they overlay some of the best shale opportunities in the world today, places like the Eagle Ford, the Permian, the Anadarko, the Niobrara and others. DCP is just superbly positioned to capture and create value in this area and there remains considerable, additional opportunity in this space." Garland plans to increase capital invesment in the Midstream Business Segment. Derivative Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | Garland said during his analyst call on April 9, 2012 that Phillips 66's Midstream businesses are primarily conducted through our 50/50 JV with Spectra and DCP is one of the largest gatherers and processors of natural gas and NGLs.<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
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| + | "DCP is one of the largest gatherers and processors of natural gas and natural gas liquids. We do hold assets outside of DCP. We have interest in three fractionators with a net capacity of 112,000 barrels a day.We also have a 25% interest in the Rex pipeline. When you look at our Midstream operations and particularly the DCP, they overlay some of the best shale plays in North America and so just superbly positioned to capture significant growth opportunities. DCP, like CPChem, leads its peers in terms of economic return on assets."<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
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| + | ===DCP Midstream=== | ||
| + | DCP Midstream, is a 50-50 joint venture with Spectra that helped counteract poor refining performance last quarter for ConocoPhillips. "The fundamentals of the business could not look better," said Spectra CEO Greg Ebel. "DCP operates in liquids-rich areas. In those areas, we are seeing dramatic volume growth, which is helping overcome low natural gas prices for our consumers."<ref>[http://www.chron.com/business/article/ConocoPhillips-split-becomes-official-as-company-3522914.php Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.]</ref> | ||
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| + | Phillips 66 primarily conducts its Midstream operations through DCP Midstream, LLC, a 50 percent joint venture with Spectra Energy and one of the largest natural gas gatherers and processors in the United States, as well as the largest producer of NGL in North America. Now in its 13th year of operations, DCP Midstream is a full-service provider of gathering, processing and NGL logistics services with strategically located assets in liquids-rich developments. The gas collected by DCP Midstream is processed at 61 owned or operated plants and treaters. Growth in liquids-rich developments in the United States is driving infrastructure demand and expansion opportunities for our Midstream segment. DCP Midstream has $4 billion in major projects currently in execution, including two major pipeline projects. The Southern Hills Pipeline will run more than 900 miles to Mont Belvieu, Texas, with a target capacity of more than 150,000 barrels per day of NGL. The project is expected to start up in mid-2013. The Sand Hills Pipeline is a 720-mile NGL line that will run through the Permian and Eagle Ford basins to market centers along the U.S. Gulf Coast. Initial capacity will be 200,000 barrels per day, and service may be expanded to 350,000 barrels per day. The Sand Hills Pipeline will be phased into service, with the first phase completed by the third quarter of 2012 and the second phase expected as soon as the third quarter of 2013.<ref>[https://secure.marketwatch.com/story/phillips-66-debuts-as-advantaged-downstream-company-2012-05-01 MarketWatch. "Phillips 66 Debuts as Advantaged Downstream Company" May 1, 2012.]</ref> | ||
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| + | ===Growth Strategy in Midstream Segment=== | ||
| + | "We're investing significantly in both NGL pipelines and gathering, processing capability.When we look at the increased shale production, we believe there's about $70 billion to $80 billion worth of industry investment needed in infrastructure. Of that, about $21 billion has already been announced. And roughly $6 billion of the $21 billion is DCP's announced investments. When you look at DCP's assets, they overlay some of the best shale opportunities in the world today, places like the Eagle Ford, the Permian, the Anadarko, the Niobrara and others. DCP is just superbly positioned to capture and create value in this area and there remains considerable, additional opportunity in this space."<ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012]</ref><ref>[http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012]</ref><ref>[http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012]</ref> | ||
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| + | ===Latest News and Views of the Midstream Business Segment=== | ||
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| + | ====October 23, 2015: Phillips 66's Houston Ship Channel Cross-Channel Connector is the 2015 Trenchless Technology Project of the Year for New Installation==== | ||
| + | Trenchless Technology reported on October 23, 2015 that Phillips' Houston Ship Channel Cross-Channel Connector took two years to design, plan and permit, with safety being of primary importance. The project required a ton of planning before the first drill rod was in the ground, including precision, pinpoint knowledge of what was already buried in the channel, as well as a plan to keep full circulation during pullback. project is described as a record-setting HDD installation for an 18-in. steel gas pipeline for energy giant Phillips 66, reaching what was once thought to be an unachievable distance of 12,459 ft. | ||
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| + | “This was all done in a very congested corridor. … Hitting it on the tips was pretty amazing,” says Tim McGuire, vice president at Michels Directional Crossings at Michels Corp. “There’s only a handful of HDD crossings in the world that have ever been attempted greater than 12,000 ft. There were a lot of challenges related to just that aspect alone.” “We hit them right on the ends,” says Michels Directional Crossings operations manager Jeff Mueller. “The pilot holes matched up perfectly. We really didn’t do the intersect operations because it was self-intersecting, if you want to call it that. As a company, Michels has done more than 200 intersects and [attained]tip-to-tip about a half dozen times. It’s pretty rare.” | ||
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| + | McGuire notes that during the pilot hole drilling, Michels implored to Phillips 66 to allow the crews to move to a 24/7 work schedule on its property to ensure the integrity of the hole was intact. This was due to the changing soil and drilling conditions. “The string torque was getting elevated and we needed to work 24/7 to keep [the string]moving,” McGuire says. “Had [Phillips 66] not allowed us to do that, there’s a good possibility we would have had a lot of problems and wouldn’t have been successful.” The Michels team lauded Phillips 66 for success in this project, saying it was an outstanding partner in its response to the team’s needs for additional work space and facilitating its 24-hour pilot hole operations.<ref>[http://trenchlessonline.com/project-year-new-installation/ Trenchless Technology. "Project of The Year- New Installation: HDD & the Houston Ship Channel" by Sharon Bueno. October 23, 2015.]</ref> | ||
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| + | The Oil and Gas Journal reported on January 4, 2014 that Phillips 66 Pipeline LLC, a wholly owned subsidiary of Phillips 66, would build its 180,000-b/d Cross-Channel Connector refined product pipeline project, expanding transportation capacity across the Houston Ship Channel. The Cross-Channel Connector will combine a 20-in. OD reactivated pipeline under the HSC and expansion of a second active 20-in. line in Pasadena. Phillips 66 plans to connect to Magellan Midstream Partners’ refined product pipeline for transportation from HSC’s south side to Magellan and Kinder Morgan Energy Partners systems on the north side of the channel at Galena Park and East Houston.<ref>[http://www.ogj.com/articles/2014/01/phillips-66-to-execute-hsc-cross-channel-connector.html Oil and Gas Journal. "Phillips 66 to execute HSC Cross-Channel Connector" by Christopher E. Smith. January 4, 2014.]</ref> "Transportation at Phillips 66 is part of our growing Midstream business," said Debbie Adams, president, Phillips 66 Transportation. "The Cross-Channel Connector project is a key investment to help us leverage our infrastructure and the opportunities of the North American energy renaissance." The company anticipates the project could be complete as early as the fourth quarter of 2014, subject to the receipt of necessary permits and regulatory approvals. The Cross-Channel Connector is expected to have an initial system capacity of up to 180,000 barrels per day. The Phase 2 expansion could add an additional 50,000 barrels per day of capacity.<ref>[http://online.wsj.com/article/PR-CO-20140123-912437.html Wall Street Journal. "Phillips 66 to Proceed with Cross-Channel Connector Project" January 23, 2014.]</ref> | ||
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| + | ====January 30, 2015: DCP Midstream to Cut Workforce by 20%==== | ||
| + | Natural Gas Intelligence reported on January 30, 2015 that DCP Midstream, a 50-50 joint venture between Phillips 66 and Spectra Energy, has announced it was cutting its workforce by 20% and closing a regional office. The Oklahoma City office is to close, and the workforce is being reduced in the Tulsa office and Midland, TX, office. Functions would be primarily moved to Denver headquarters and the Houston regional office. "With a 90-year history, we are repositioning ourselves for the long term and ensuring we have a sustainable workforce that meets our future needs," said CEO Wouter van Kempen. "While this transition is difficult, we are establishing DCP for continued growth founded upon a culture of operational excellence."<ref>[http://www.naturalgasintel.com/articles/101221-dcp-midstream-cuts-workforce-by-20 Natural Gas Intelligence. "DCP Midstream Cuts Workforce by 20%" January 30, 2015.]</ref> | ||
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| + | ====December 5, 2014: Phillips to Invest $3.750 Billion in 2015 in Midstream Business Segment==== | ||
| + | Phillips 66 announced on December 5, 2014 that in Midstream, excluding DCP, Phillips 66 plans to invest $3.2 billion in its Natural Gas Liquids (NGL) and Transportation business lines. Midstream capital includes approximately $200 million expected to be spent by Phillips 66 Partners to support organic growth projects. In NGL, the company continues construction of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast. In Transportation, the company is investing in pipeline and rail infrastructure projects to move crude oil from the Bakken/Three Forks production area of North Dakota to market centers throughout the U.S. In addition, expansion of the Beaumont Terminal and related infrastructure opportunities are being pursued. | ||
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| + | Additional Midstream investments are planned within DCP, a 50-50 joint venture with Spectra Energy that also includes DCP Midstream Partners. DCP will leverage its infrastructure to launch new gathering, processing, and NGL growth projects, mainly in the Niobrara, Denver-Julesburg, Eagle Ford and Permian basins. DCP also expects to increase natural gas processing capacity in these basins and complete other gathering system expansions during 2015. Phillips 66’s share of DCP’s 2015 planned capital expenditures is $550 million.<ref>[https://secure.marketwatch.com/story/phillips-66-announces-2015-capital-program-2014-12-05 Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.]</ref> | ||
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| + | ====November 21, 2014: Phillips Plans Midstream Infrastructure with 76-Mile Sacagawea Pipeline and Palermo Rail Terminal in North Dakota==== | ||
| + | Phillips Partners LP and Paradigm Energy Partners, LLC announced that they have executed agreements to form two joint ventures to develop midstream logistics infrastructure in North Dakota. Consisting of two previously announced projects, the Sacagawea Pipeline (the “Pipeline JV”) and the Palermo Rail Terminal (the “Rail JV”), the joint ventures are designed to enhance logistical options for crude oil transportation in the Bakken region. Pipeline JV will own and construct a crude oil storage terminal,a central delivery point for various crude gathering systems located in Keene, North Dakota (the “Paradigm CDP”). The Sacagawea Pipeline project is a 76-mile pipeline being developed to deliver crude oil from various points in and around Johnson’s Corner and the Paradigm CDP, located in McKenzie County, to destinations with take away options for both rail and pipeline in Palermo and Stanley, located in Mountrail County. In October, Paradigm recently extended an open season for the pipeline, which is expected to close on December 15. Rail JV will own the Palermo Rail Terminal, a crude oil rail-loading facility, designed to have an initial capacity of 100,000 b/d, with the flexibility to be expanded to 200,000 b/d. The terminal will have direct access to the Sacagawea Pipeline and provide East and West Coast rail access for third-party shippers through the BNSF railway. The transactions are expected to close in the fourth quarter of 2014 and both the pipeline and rail terminal are expected to commence commercial operations in the first quarter of 2016.<ref>[http://www.oe.netl.doe.gov/docs/eads/ead112414.pdf United Steelworkers. US Department of Energy. "Energy Assurance Daily" November 24, 2014]</ref> | ||
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| + | ====September 1, 2014: One Year After Cleanup, DCP Midstream Oil Spill Still Causes Concern==== | ||
| + | Phil Cross reported at Fox25 on September 1, 2014 that more than a year after an oil spill from an abandoned pipeline owned by DCP Midstream, the landowners say they are still fighting to get it cleaned up. Records indicate DCP hired a company to perform the clean-up of the creek and the OCC document says the state ordered work to be completed by July 15, 2013. The people who own the land just downstream from the spill say that cleanup effort failed. “It should be nice clean water to water the cattle and fertilize the hay and the blackberries in the area,” says Spencer city councilwoman Tonni Canaday who told Fox 25 the town was not notified oil was spilled in Spencer Creek. “I couldn't, in good conscious, put cattle on here right now.”<ref>[http://www.okcfox.com/story/26420973/oil-spill-in-oklahoma-creek-causes-concern-more-than-a-year-after-cleanup Fox 25. "Oil spill in Oklahoma creek causes concern more than a year after cleanup" by Phil Cross. September 1, 2014.]</ref> | ||
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| + | The issue, the landowners say, is that any slight movement in the water stirs up a glossy sheen. They claim it is residual oil left from the initial spill. Records from the OCC indicated the pipeline spilled about a barrel of oil, but the company only recovered half a barrel of material. The landowners invited Fox 25 to visit the creek this summer, more than a year after the spill and eight months after the final cleanup was deemed complete. On our visit the landowner stirred the creek and a glossy sheen appeared on the water. A soil sample dug from the bottom of the creek revealed a strong odor of oil and was greasy to the touch. “There is absolutely a problem,” Canaday says, “And to each of those people that we've had come out and say it's not that big of a problem; we haven't seen anybody take a drink or take a bottle of water out of there themselves.” The corporation commission says DCP has been willing to do anything they've been asked and that company has voluntarily helped with the cleanup and containment of other pipeline spills they were not responsible for in the past.<ref>[http://www.okcfox.com/story/26420973/oil-spill-in-oklahoma-creek-causes-concern-more-than-a-year-after-cleanup Fox 25. "Oil spill in Oklahoma creek causes concern more than a year after cleanup" by Phil Cross. September 1, 2014.]</ref> | ||
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| + | ====August 21, 2014: Four Injured in DCP Midstream Pipeline Fire==== | ||
| + | NewOK reported on August 21, 2014 that fourworkers were injured in Garvin County in a fire while a crew was performing maintenance on a natural gas pipeline operated by DCP Midstream. The natural gas line fire was quickly extinguished and the workers were taken to the hospital in Lindsay, where they were treated and released. DCP reported the incident to the proper regulatory authorities and will investigate further on its own to determine what happened.<ref>[http://newsok.com/four-are-injured-in-pipeline-fire-near-lindsay/article/5334363 NewsOK. "Four are injured in pipeline fire near Lindsay" August 21, 2014.]</ref> | ||
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| + | ====August 13, 2014: Phillips Breaks Ground on LPG Export Terminal at Freeport==== | ||
| + | Jordan Blum reported in the Houston Business Journal on August 13, 2014 that Phillips broke ground on its $1 billion liquefied petroleum gas export terminal — its first ever — in Freeport to sell propane, butane and more to international markets. The project, which is expected to be completed in mid-2016, will export 4.4 million barrels of fuel a month to countries in Europe and Asia. The terminal will get the fuel from its Sweeny complex in Old Ocean and its Gulf Coast Fractionators facility in Mont Belvieu. "We are investing, we are building and we are growing," Phillips 66 Chairman and CEO Greg Garland said at the groundbreaking. "The projects we're breaking ground on … total more than $3 billion of investment for our company, … and it's happening right here in our own backyard in the communities of Sweeny and Freeport." Freeport has advantages over operating out of the Houston Ship Channel because Freeport is 3 miles from deep water, compared to 50 miles for the channel says Jim Webster, Phillips 66’s general manager of midstream.<ref>[http://www.bizjournals.com/houston/blog/drilling-down/2014/08/phillips-66-breaks-ground-in-freeport.html?page=all Houston Business Journal. "Phillips 66 breaks ground in Freeport" by Jordan Blum. August 13, 2014.]</ref> | ||
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| + | ====July 26, 2014: Front Range Pipeline Transports NGL Through Colorado==== | ||
| + | The Tribune reported on July 26, 2014 that the 435-mile long Front Range Pipeline, which began operating in February 2014, is expected to become increasingly important as the state’s production of natural gas liquids continues to grow. that runs through eastern El Paso County has positioned Colorado to take advantage of the burgeoning market for natural gas liquids. The pipeline, owned by Texas-based Enterprise Product Partners and Anadarko Petroleum and Denver-based DCP Midstream, transports about 80,000 barrels of NGLs from Weld County, which sits atop the Denver-Julesburg basin, to Skellytown, Texas. There, it connects to the Texas Express pipeline, which carries the liquids to Mont Belvieu, Texas, the largest NGL hub in the country. The liquids are then stored, processed and distributed. The joint venture offers Colorado NGL producers a direct route to Mont Belvieu. Before construction of the Front Range Pipeline, Colorado NGL producers transported their products using the Overland Pass and Mid-America pipelines, both of which pass through the state’s oil and gas basins.<ref>[http://www.greeleytribune.com/news/12366693-113/pipeline-gas-ngl-front the Tribune. "Front Range Pipeline project gives an edge in gas liquids" July 26, 2014.]</ref> | ||
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| + | ====June 5, 2014: Phillips Buys Big Oil Storage Terminal On Gulf Coast==== | ||
| + | Fuelfix reported on June 5, 2014 that Phillips plans to purchase the Beaumont Terminal, capable of carrying 7.1 million barrels of oil equivalent, from Chevron subsidiary UNOCAL. “This acquisition supports our midstream growth strategy,” said Tim Taylor. “Given our expectations for increasing volumes of North American crude oil movements into the Gulf Coast region and growth in refined product exports, the Beaumont Terminal is well positioned to serve this growing market while providing significant expansion potential.”<ref>[http://fuelfix.com/blog/2014/06/05/phillips-66-buys-big-oil-storage-terminal-on-gulf-coast/ FuelFix. "Phillips 66 buys big oil storage terminal on Gulf Coast" June 5, 2014.]</ref> | ||
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| + | ====March 14, 2014: Phillips Enters Long-Term Deal to Sell LPG to China==== | ||
| + | Reuters reported on March 14, 2014 that China's largest state refiner, Sinopec Corp, said it had entered a long-term deal to buy liquefied petroleum gas (LPG) from Phillips 66, showing the U.S. shale drilling boom is having an impact on Asian markets. Sinopec, which plans to use the LPG as a petrochemical feedstock, didn't give any details of the contract, the amounts or when the supply starts. Phillips said last October it would develop a $1 billion LPG export terminal at Freeport, Texas, with a capacity of 4.4 million barrels per month, with start-up planned for the middle of 2016. Analysts say the U.S. LPG export boom will be aided by the expansion of the Panama Canal, allowing the passage of so-called very large gas carriers (VLGC) from 2015 and reducing the cost of freight by cutting the sailing time from the United States to Asia by more than two weeks.<ref>[http://www.reuters.com/article/2014/03/14/sinopec-phillips-66-lpg-idUSL3N0MB3FT20140314 Reuters. "Sinopec buys LPG from Phillips 66 as Chinese tap U.S. shale boom" March 14, 2014.]</ref> | ||
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| + | ====February 14, 2014: Garland Says There Will Be Additional Fracks at Sweeney and on Gulf Coast==== | ||
| + | Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips has named the frack at Sweeny Frack 1 for a reason. "Because there will be Frack 2, Frack 3. We're looking at other fracks not just in Sweeny as we look at the footprint and where we think the capacity is going to be needed for additional frack capacity on the, let's say the U.S. Gulf Coast," said Garland. "We have $4 to $6 billion worth of investments that we see over the next couple years at DCP. You should expect that we will fund the majority of those investments by dropping assets from DCP into DPM. That we'll use DPM as really the vehicle to play out these investments."<ref>[http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2014-02-12-credit-suisse-transcript.pdf Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014]</ref> | ||
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| + | ====February 7, 2014: Phillips Board Okays $3 Billion for Sweeny Fractionator One and Freeport Liquefied Petroleum Gas (LPG) Export Terminal==== | ||
| + | RTT News reported on February 7, 2014 that Phillips Board of Directors gave approval to go ahead on the Sweeny Fractionator One and Freeport Liquefied Petroleum Gas (LPG) Export Terminal representing an investment of more than $3 billion in the company's Midstream Business Segment.<ref>[http://www.rttnews.com/2265922/phillips-66-board-okays-3-bln-projects-to-spur-midstream-growth.aspx?type=bn RTT News. "Phillips 66 Board Okays $3 Bln. Projects To Spur Midstream Growth" February 7, 2014.]</ref> | ||
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| + | The Sweeny Fractionator One will be located in Old Ocean, Texas, close to the company's Sweeny Refinery, and will supply purity natural gas liquids (NGL) products to the petrochemical industry and heating markets. The 100,000 barrel-per-day NGL fractionator is expected to start up in the third quarter of 2015.<ref>[http://www.rttnews.com/2265922/phillips-66-board-okays-3-bln-projects-to-spur-midstream-growth.aspx?type=bn RTT News. "Phillips 66 Board Okays $3 Bln. Projects To Spur Midstream Growth" February 7, 2014.]</ref> | ||
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| + | The Freeport LPG Export Terminal will be located at the site of the company's existing marine terminal in Freeport, Texas, and will have an initial export capacity of 4.4 million barrels per month, the equivalent of eight very large gas carriers, with a ship loading rate of 36,000 barrels per hour. Startup of the export terminal is expected in mid-2016. "Given the anticipated growth in natural gas liquids production, we see substantial advantages in having fractionation and export facilities on the Gulf Coast outside of Mont Belvieu. These projects allow us to maximize our existing infrastructure and will position us for further growth," said Tim Taylor, executive vice president, Phillips 66 Commercial, Marketing, Transportation and Business Development.<ref>[http://www.rttnews.com/2265922/phillips-66-board-okays-3-bln-projects-to-spur-midstream-growth.aspx?type=bn RTT News. "Phillips 66 Board Okays $3 Bln. Projects To Spur Midstream Growth" February 7, 2014.]</ref> | ||
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| + | Molly Ryan reported in the Houston Business Journal on February 11, 2014 that Phillips' decision to move forward with more than $3 billion worth of projects reflects the company’s strategic decision to chase higher-margin markets. "Midstream spending is expected to pick up in 2014 since energy companies are increasingly realizing the profits that can be found in moving the massive amount of oil and gas coming from U.S. shale plays," writes Ryan. "Phillips 66 specifically hopes to cash in on this through its new liquefied petroleum gas terminal, which will store and transport fluids, and its new fractionator facility, which will supply and transport natural gas liquid products to petrochemical companies."<ref>[http://www.bizjournals.com/houston/morning_call/2014/02/phillips-66-s-new-investments-represent-shift-from.html Houston Business Journals. "Phillips 66’s new investments represent shift from refining to promise of high-margin markets" by Molly Ryan. February 11, 2013.]</ref> | ||
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| + | ====January 4, 2014: Phillips to Proceed with Houston Ship Channel Cross-Channel Connector==== | ||
| + | The Oil and Gas Journal reported on January 4, 2014 that Phillips 66 Pipeline LLC, a wholly owned subsidiary of Phillips 66, will build its 180,000-b/d Cross-Channel Connector refined product pipeline project, expanding transportation capacity across the Houston Ship Channel. The Cross-Channel Connector will combine a 20-in. OD reactivated pipeline under the HSC and expansion of a second active 20-in. line in Pasadena. Phillips 66 plans to connect to Magellan Midstream Partners’ refined product pipeline for transportation from HSC’s south side to Magellan and Kinder Morgan Energy Partners systems on the north side of the channel at Galena Park and East Houston.<ref>[http://www.ogj.com/articles/2014/01/phillips-66-to-execute-hsc-cross-channel-connector.html Oil and Gas Journal. "Phillips 66 to execute HSC Cross-Channel Connector" by Christopher E. Smith. January 4, 2014.]</ref> "Transportation at Phillips 66 is part of our growing Midstream business," said Debbie Adams, president, Phillips 66 Transportation. "The Cross-Channel Connector project is a key investment to help us leverage our infrastructure and the opportunities of the North American energy renaissance." The company anticipates the project could be complete as early as the fourth quarter of 2014, subject to the receipt of necessary permits and regulatory approvals. The Cross-Channel Connector is expected to have an initial system capacity of up to 180,000 barrels per day. The Phase 2 expansion could add an additional 50,000 barrels per day of capacity.<ref>[http://online.wsj.com/article/PR-CO-20140123-912437.html Wall Street Journal. "Phillips 66 to Proceed with Cross-Channel Connector Project" January 23, 2014.]</ref> | ||
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| + | ====December 6, 2013: Phillips to Invest $2.167 Billion in 2014 in Midstream Business Segment==== | ||
| + | Phillips reported on December 6, 2013 that they plan to invest $2.167 Billion in 2014 in their Midstream Business Segment including $1.417 in direct investment and $0.750 Billion in investment with affiliate groups. Phillips expects to begin construction of a 100,000 barrel-per-day NGL fractionator and a 4.4 million-barrel-per-month liquefied petroleum gas export terminal on the U.S. Gulf Coast. In addition, several rail offloading facilities and other crude handling projects will increase the company’s access to advantaged refining feedstocks. Phillips 66 Transportation is also developing pipeline expansion and connection projects that will grow capacity and allow for greater refined product exports.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
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| + | Phillips expects to invest $750 Million in DCP, a 50/50 joint venture with Spectra Energy. DCP anticipates leveraging its existing NGL infrastructure to initiate new gathering and processing growth projects, mainly in the North and Permian regions. DCP also expects to increase natural gas processing capacity in the Denver-Julesburg Basin and complete other gathering system expansions during 2014.<ref>[http://www.businesswire.com/news/home/20131206005779/en/Phillips-66-Announces-2014-Capital-Program Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.]</ref> | ||
| + | |||
| + | ====October 30, 2013: Garland Says Phillips May Build 100,000 barrel-per-day NGL Fractionator at Phillips Sweeny Complex==== | ||
| + | Garland told analysts at the third quarter earnings conference on October 30, 2013 that Phillips may build a 100,000 barrel-per-day NGL fractionator at Phillips Sweeny complex along with the associated infrastructure. "We expect that first we’ll incubate the project at Phillips 66 and eventually drop them in to Phillips 66 Partners. Potential candidates for this approach would include the 100,000 barrel-per-day NGL fractionator at our Sweeny complex along with the associated infrastructure," said Garland. "Startup of the frac is expected in 2015 with the export facility following closely to 2016. We’ve seen increasing number of opportunities to participate in the NGL market and we will use our midstream business to supply petrochemical, heating and transportation markets globally. The combination of refining free cash flow and our MLP provides us with a unique position and options to accelerate our growth in the midstream space."<ref>[http://seekingalpha.com/article/1787822-phillips-66s-ceo-discusses-q3-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.]</ref> | ||
| + | |||
| + | ====October 30, 2013: Garland Says Phillips is Developing an LPG Export Terminal at Freeport, Texas==== | ||
| + | Garland told analysts at the third quarter earnings conference on October 30, 2013 that Phillips is "developing an LPG export terminal project at Freeport, Texas. The LPG export facility is expected to enable us to take advantage of the Company's existing midstream transportation and towards infrastructure." Garland added that combining NGL fractionator project and the LPG export terminal project represented two discrete $1 billion investment over the next 2 to 3 years. "Ultimately once we're up and running at full capacity we expect these projects to generate on the order of $400 million to $500 million of EBITDA annually."<ref>[http://seekingalpha.com/article/1787822-phillips-66s-ceo-discusses-q3-2013-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.]</ref> | ||
| + | |||
| + | ====October 28, 2013: Activist Sandell Urges Strategic Action on DCP Midstream==== | ||
| + | 4-traders reported on October 28, 2013 that Activist investor Sandell Asset Management is urging Spectra Energy Corp to swap its interest in DCP Midstream Partners LLC for equity in Phillips 66's master limited partnership in a deal meant to improve the valuation of the companies, according to a letter seen by Reuters. Sandell, which owns less than 1 percent of pipeline company Spectra and 1 percent of refining company Phillips 66, said in a letter dated October 2 it believes DCP's assets are a better fit with Phillips. DCP is jointly owned by Spectra and Phillips 66. The letter marks the second time since June that Sandell has pressed Spectra for changes. Sandell said in the earlier letter that it believes Spectra is undervalued and should trade around $48 per share, 33 percent above its Friday closing price of $35.95.<ref>[http://www.4-traders.com/PHILLIPS-66-PARTNERS-LP-13709360/news/Exclusive-Activist-Sandell-urges-strategic-action-on-DCP-Midstream-17402681/ 4-traders. "Exclusive: Activist Sandell urges strategic action on DCP Midstream" October 28, 2013.]</ref> | ||
| + | |||
| + | ====April 19, 2013: DCP Plans Gas Plant Near Carlsbad, New Mexico==== | ||
| + | Gary Gerew reported in the Albuquerque Business Journal on April 19, 2013 that DPC Midstream plans to build a gas plant on 164 acres in Lea County and a 50-mile pipeline that will run through Eddy County for the collection of natural gas from operators in Eddy and Lea counties. “Right now, we are following regulatory requirements, evaluating the feasibility of the project and understanding our customer’s needs,” said DCP spokewoman Lisa Newkirk. Robert Gomez, BLM realty specialist, said DCP Midstream has requested access to public lands to construct the gas plant and pipeline.<ref>[http://www.bizjournals.com/albuquerque/blog/morning-edition/2013/04/gas-plant-planned-near-carlsbad.html Albuquerque Business Journal "Gas plant planned near Carlsbad" by Gary Gerew. April 19, 2013.]</ref> | ||
| + | |||
| + | ====April 19, 2013: DCP Pipeline Awaits Approval in Colorado==== | ||
| + | Steve Block reported in the Trinidad Times on April 19, 2013 that a proposed 13.75-mile pipeline section planned to go through northeast Las Animas County, Colorado is awaiting approval from the county planning commission and then the county board. As designed, the pipeline has a capacity of 150,000 barrels per day, which could be readily expanded to approximately 230,000 barrels per day and could begin service in the fourth quarter of 2013. Permit land agent Mike Rutherford said the company thought it only needed a special-use permit from the county for the project, which it had in hand before the state gave its final approval. It later turned out that it also needed a 1041 permit under county regulations. “We thought it was just going to be an SUP only and we already had that,” Rutherford said. “I guess if we’d known it was going to be a full-blown 1041, we could have gotten that four or five months ago, and been through this temporary approval process months ago.” The permitting process requires public notice of the application, followed by a 30-day period for comment from interested parties to the county board. Meanwhile, the application must work its way through the planning department approval process. Fourteen days after that, the planning commission and county board can approve the application at the same time, thus speeding up the process. Dixie Newnam, county attorney, said the entire process could take 45 – 60 days from the time the application was submitted.<ref>[http://trinidad-times.com/pipeline-permit-delays-project-company-would-like-to-start-june-p5092-1.htm The Trinidad Times. "Pipeline permit delays project; Company would like to start June 1" by Steve Block. April 19, 2013.]</ref> | ||
| + | |||
| + | ====April 5, 2013: Explosion at DCP Midstream Gas Compressor Station in Langston, Oklahoma==== | ||
| + | Channel 2 News reported on April 5, 2013 that authorities say a worker inside a natural gas compressor station owned by DCP Midstream was able to escape without injury after an explosion near Langston, Oklahoma, about 45 miles north of Oklahoma City. The Guthrie Fire Department, along with Meridian and Coyle fire departments, all responded to the explosion but firefighters let the natural gas in the line burn off before they could safely fight the blaze and the fire was extinguished several hours after the blast. DCP Midstream doesn't know what started the explosion in rural Logan County, but is investigating along with the Department of the Environmental Quality and the Oklahoma Corporation Commission. "It was a tremendous fire ball in the sky and was able to be seen for quite a few miles," said Guthrie Fire Chief Eric Harlow adding that he believes weather may have been a factor in the fire. "We didn't have much wind last night, which would allow the gas to kind of stay in place, instead of dissipating, at that point any spark, whether it be static electricity or even the spark of vehicle ignition could likely set it off." Three homes had to be evacuated and DCP Midstream offered to pay for one other family's hotel if they wanted to evacuate. "We've never had any problems at the compressor station before," said William Savory, who has lived in Wellston for 20 years and decided not to take DCP up on its offer. "And I told my wife, all it's just going to do is burn off, it's going to burn off because it's so wet."<ref>[http://www.kjrh.com/dpp/news/state/no-one-injured-in-langston-oklahoma-dcp-midstream-natural-gas-plant-explosion Channel 2 News "No one injured in Langston, Oklahoma DCP Midstream natural gas plant explosion" April 5, 2013.]</ref><ref>[http://www.newson6.com/story/21895135/witnesses-describe-logan-county-gas-explosion Channel 6 News. "Witnesses Describe Logan County Gas Explosion" by Heather Hope. April 5, 2013.]</ref> | ||
| + | |||
| + | ====April 2, 2013: DCP Midstream Withdraws Plan to Build Megatank in Searsport==== | ||
| + | Abigal Curtis reported in the Bangor Daily News on April 2, 2013 that DCP Midstream is withdrawing thire application to build a controversial liquid propane gas terminal and storage tank project at Mack Point in Searsport. “We really, really wanted to do business in Maine,” said Roz Elliott, spokesperson for Denver-based DCP Midstream, citing the Searsport Planning Board’s initial meetings last week to review the $40 million project before issuing a final decision later this spring. “It’s unfortunate, but with these local circumstances, we don’t forsee doing future capital development in Maine.” The board members found that certain elements of the project did not meet the town’s ordinances. “Very extensive time, resources, passion — we really believed in this,” Elliott said, adding that the company decided to withdraw the application “as a courtesy” to the Searsport Planning Board.<ref>[http://bangordailynews.com/2013/04/02/news/midcoast/developer-withdraws-proposed-searsport-tank-application/ Bangor Daily News. "Developer withdraws proposed Searsport tank application" by Abigail Curtis. April 2, 2013.]</ref> | ||
| + | |||
| + | ====April 2, 2013: DCP Midstream Increases Ownership in Eagle Ford Venture to 80%==== | ||
| + | Mike Thomas reported in the San Antonio Business Journal that DCP Midstream Partners LP has completed its acquisition of an additional 47 percent interest in an Eagle Ford joint venture for $626 million bringing its stake inthe partnership up to 80 percent. The partnership also increased its ownership in a cryogenic processing plant at Goliad with a capacity of 200 million cubic feet per day that is under construction. The new plant is expected to be complete by the first quarter of 2014 and would be one of the largest gathering and processing plants in the Eagle Ford Shale play.<ref>[http://www.bizjournals.com/sanantonio/blog/morning-edition/2013/04/dcp-midstream-partners-increases.htmlSan Antonio Business Journals "DCP Midstream Partners increases ownership in Eagle Ford venture" by Mike Thomas. April 2, 2013.]</ref> | ||
| + | |||
| + | ====April 2, 2013: Phillips to Build 100,000 bpd Fractionator in Old Ocean, Texas to Process Natural Gas==== | ||
| + | 4-traders reported on April 2, 2013 that Phillips is pursuing development of a 100,000 barrel-per-day natural gas liquids (NGL) fractionator to be located in Old Ocean, Texas, close to the company's Sweeny Refinery. NGL feedstock for the Old Ocean fractionator project would be supplied by several nearby pipelines avoiding the Mont Belvieu congestion, and purified products produced by the fractionator would be marketed primarily to petrochemical customers in the region with access to Mont Belvieu. "This project would enable us to take advantage of strong existing midstream transportation and storage infrastructure along with demonstrated operations excellence," said Phillips 66 Chairman and CEO Greg Garland. "We see excellent market-facing opportunities to grow the natural gas liquids business, and the chance to supply purity NGLs and liquefied petroleum gas to the petrochemical industry and heating markets." The project is currently in the engineering design phase, and the company is in the process of filing for all applicable permits.<ref>[http://www.4-traders.com/PHILLIPS-66-10447684/news/Phillips-66-Proposes-Fractionator-in-Old-Ocean-Texas-16600176/ 4-traders. "Phillips 66 : Proposes Fractionator in Old Ocean, Texas" April 2, 2013.]</ref> | ||
| + | |||
| + | ====March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO==== | ||
| + | Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.<ref>[http://www.reuters.com/article/2013/03/27/us-phillips66-mlp-idUSBRE92Q1C120130327 Reuters. "Phillips 66 midstream vehicle registers for $300 million IPO" March 27, 2013.]</ref> | ||
| + | |||
| + | ====March 13, 2013: DCP Midstream Pipeline to Serve Permian Basin==== | ||
| + | Mella McEwen reported in the Midland Reporter-Telegram on March 13, 2013 that DCP Midstream LLC is spending $1 billion on projects, including the new Sand Hills Pipeline, a natural gas liquids pipeline that will carry natural gas liquids from the Permian Basin and Eagle Ford Shale to the Gulf Coast, including the fractionation complex at Mont Belvieu. The Eagle Ford leg of the pipeline came online late last year and the Permian Basin portion will begin coming online this summer, reports Greg Smith, newly named president of the midcontinent and Permian business units. DCP's new Rawhide Plant, a 75 million cubic feet per day natural gas processing plant is also under construction in Glasscock County. DCP currently operates 17 gas processing plants in the Permian Basin with processing capacity of 1.3 billion cubic feet per day, recently adding 150 million cubic feet per day of processing capacity through the expansion and restart of existing facilities.<ref>[http://www.mywesttexas.com/business/oil/article_ad299d3f-f1a1-5685-bc56-19d048aa6868.html Midland Reporter-Telegram. "DCP Midstream pipeline to serve Permian Basin by mid-2013" by Mella McEwan. March 13, 2013.]</ref> | ||
| + | |||
| + | ====January 30, 2013: Garland Says Phillips ROCE for Midstream Business Segment was 22% for 2012==== | ||
| + | Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that although NGL prices were down 36% compared to 2011, return on capital employed for the year was still strong at 22%. Midstream's adjusted earnings for 2012 were $62 million, includes $38 million in earnings associated with Phillipsinterest in DCP Midstream and $24 million for other Midstream businesses. "We ended the quarter with $1.3 billion in capital employed in our Midstream segment," said Garland. "And as I said earlier, during the fourth quarter we closed our investments in the Sand Hills and the Southern Hills pipelines that are being constructed by DCP Midstream, and these pipes are scheduled for startup this year."<ref>[http://seekingalpha.com/article/1143771-phillips-66-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.]</ref> | ||
| + | |||
| + | ====January 5, 2013: Two Hundred Turn Out in Searsport to Protest DCP Midstream's LPG Storage Tank==== | ||
| + | The Republican Journal reported on January 8, 2013 that about 200 people turned up at Mosman Park on January 5, 2013 and formed a circle to show the footprint of a 137-foot-tall liquefied petroleum gas storage tank proposed for Mack Point.<ref>[http://waldo.villagesoup.com/p/nearly-200-turn-out-for-saturday-tank-protest/945566 The Republican Journal. "Nearly 200 turn out for Saturday tank protest" January 8, 2013.]</ref> | ||
| + | |||
| + | ====December 13, 2012: Phillips to Invest $1.461 Billion in 2013 in Midstream Business Segment==== | ||
| + | Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that DCP Midstream plans to invest $2.2 billion primarily for new logistics infrastructure and NGL production during 2013.<ref>[http://www.phillips66.com/EN/newsroom/news_releases/2012NewsReleases/Pages/12-13-2012.aspx Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.]</ref> | ||
| + | |||
| + | ====December 5, 2012: No Injuries After Gas Line Explosion And Fire Near DCP Midstream Plant at Goldsmith==== | ||
| + | Permian Basin reported on December 5, 2012 that two gas lines exploded outside of the DCP Midstream plant near Goldsmith around 6 PM and a large fire also broke out in the area of the explosion. The owner of the ruptured lines -- West Texas Gas -- shut off 4 miles of the line and let the fire burn out while DCP Midstream evacuated all employees from their plant safely after the explosion happened.<ref>[http://permianbasin360.com/fulltext?nxd_id=236292 Permian Basin 360. "No Injuries After Gas Line Explosion And Fire Near Goldsmith" December 5, 2012.]</ref> | ||
| + | |||
| + | ====November 15, 2012: Spectra Acquires one-third Interest in Sand Hills and Southern Hills Pipelines Owned by DCP Midstream==== | ||
| + | The Sacramento Bee reported on November 15, 2012 that Spectra Energy Corp announced it has closed its previously announced acquisition of a one-third interest in the Sand Hills and Southern Hills pipelines, both of which currently are under construction by DCP Midstream, a 50/50 joint venture between Spectra Energy and Phillips 66. Spectra Energy, Phillips 66, and DCP Midstream each own a one-third interest in the two pipelines – and will equally fund the remaining capital expenditures through completion. The aggregate investment by Spectra Energy in the two pipeline projects is expected to be approximately $700-800 million.<ref>[http://www.sacbee.com/2012/11/15/4989567/spectra-energy-corp-acquires-one.html Sacramento Bee. "Spectra Energy Corp Acquires One-Third Interest in Sand Hills and Southern Hills Pipelines" November 15, 2012.]</ref> | ||
| + | |||
| + | ====November 12, 2012: Proposed Consent Decree Reached over Contamination at Cahokia Site==== | ||
| + | The Madison Record reported on November 12, 2012 that the federal government last week sued and reached a proposed settlement with thePhillips 66 Pipeline LLC in St. Clair County seeking to recover some of the money it spent on cleaning up the Rogers Cartage Site in Cahokia after the Environmental Protection Agency (EPA) issued an enforcement action memorandum in 2011 noting the presence of polychlorinated biphenyls (PCBs) at the site and directing Phillips 66 to excavate and remove about 16,575 tons of soil. Rogers Cartage Co. and its corporate parent, Tankstar Inc., were listed as potentially responsible parties to the contamination in a 2009 EPA liability notice. Phillips 66 received the notice as the current owner of the site. In 2011, Phillips 66 sued Rogers Cartage for cost recovery and injunctive relief. Phillips 66 will amend its complaint to pursue a claim for contribution if the proposed decree is approved.<ref>[http://madisonrecord.com/news-1492/249108-proposed-consent-decree-reached-over-contamination-at-cahokia-site Madison Record. "Proposed consent decree reached over contamination at Cahokia site" by Bethany Krajelis. November 12, 2012.]</ref> | ||
| + | |||
| + | ====October 24, 2012: DCP Midstream Announces Opening of First Segment Sand Hills Pipeline==== | ||
| + | DCP Midstream issued a press release on October 24, 2012 announcing that Sand Hills Pipeline has initiated service on the first segment in South Texas online to provide service from the Eagle Ford Shale to Eagle Ford NGLs. Sand Hills will consist of approximately 720 miles of 20-inch pipeline with an initial capacity of more than 200,000 barrels per day, which can grow to 350,000 bbl/d with the installation of additional pump stations. "When finished, Sand Hills Pipeline will be a major link between the liquids-rich Eagle Ford and Permian producing regions and growing Gulf Coast markets," said Tom O'Connor, chairman and chief executive officer of DCP Midstream.<ref>[http://www.marketwatch.com/story/dcp-midstream-announces-opening-of-sand-hills-pipeline-providing-ngl-access-from-the-eagle-ford-shale-2012-10-24 MarketWatch. "DCP Midstream Announces Opening of Sand Hills Pipeline Providing NGL Access from the Eagle Ford Shale" October 24, 2012.]</ref> | ||
| + | |||
| + | ====September 7, 2012: Maine Fuel Board Approves Permit for DCP Midstream's Searsport Megatank==== | ||
| + | The Free Press reported on September 7, 2012 that the Maine Fuel Board has issued a permit to DCP Midstream to build a 22.7 million gallon propane storage tank in Searsport, the final permitting hurdle at the state and federal levels. The next step is for the company to submit the complete site application, including all state and federal permits, to the Searsport planning board for review.<ref>[http://freepressonline.com/main.asp?SectionID=52&SubSectionID=78&ArticleID=21786 The Free Press. "Maine Fuel Board Approves Permit for Searsport Megatank" by Christine Parrish. September 7, 2012.]</ref> | ||
| + | |||
| + | ====September 2, 2012: Low Natural Gas Prices for DCP Midstream Are a Plus for Phillips' Chemical Business Segment==== | ||
| + | Emily Pickrell wrote in Fuel Fix on September 2, 2012 that DCP Midstream took a hit in the second quarter along with many companies in the natural gas sector as natural gas prices are at decade lows, reducing the company's second-quarter net profit fell from $55 million in 2011 to $35 million in 2012 but Phillips 66 uses some of DCP’s natural gas liquids as feedstock for its chemical plants. “For Phillips 66, the low prices are a plus, not a negative. It almost mitigates the negative impacts of NGL prices,” says Fadel Gheit, an analyst with Oppenheimer & Co. “They are one of the largest chemical producers in the country.” Analysts predict that Phillips will continue to benefit as new chemical and processing plants come online in the next two to five years. “I think it’s a great place to be,” says John Stekla, an analyst with IHS. “The petrochemical industry is betting tremendous sums of money that NGLs will stay advantaged as a feedstock for the rest of the world. I have no doubt there will be huge growth in NGLs.” DCP has also set about building infrastructure to pick up gas at the wellhead and transport natural gas liquids to market centers on the Gulf Coast converting two pipelines to transport natural gas liquids to Mont Belvieu, a gas storage and processing center east of Houston. “We decided we probably should be looking harder at owning more natural gas liquids infrastructure and more natural gas liquids pipelines,” says Tom O’Connor, CEO of DCP Midstream, the entity that owns the general partner of DCP Midstream Partners, describing DCP’s strategy to position itself as the premier one-stop services company to get natural gas liquids from the well to customers. “We are on the front end of this energy revolution."<ref>[http://fuelfix.com/blog/2012/09/02/company-ramping-up-infrastructure-for-natural-gas/ Fuel Fix. "Company ramping up infrastructure for natural gas" by Emily Pickrell. September 2, 2012.]</ref> | ||
| + | |||
| + | ====August 24, 2012: DCP Midstream GP appoints Bill Waldheim as New President==== | ||
| + | Equities.com reported on August 24, 2012 that Bill Waldheim has been appointed to the position of president of DCP Midstream General Partner effective September 1, 2012. Bill Waldheim is currently the president of the natural gas liquids, gas, and crude oil logistics business unit for DCP Midstream, LLC, a position he has held since 2011. Prior to that time, Waldheim was president of DCP Midstream, LLC's northern business unit since 2009 and was responsible for executive management of commercial and operations of assets in the Midcontinent, Rocky Mountain, Michigan and Gulf Coast regions as well as being responsible for downstream marketing of gas, NGLs and condensate. "The Board believes that Bill Waldheim has the demonstrated leadership skills and capabilities to ensure the long term growth and stability of DCP Midstream Partners, LP, or the 'Partnership' as we continue to execute on our multi-faceted growth strategy with increased emphasis on co-investment with DCP Midstream, LLC," said Tom O'Connor, the chairman of the board of the General Partner. "Through Bill's leadership DCP has been able to advance numerous high value projects including Sand Hills and Southern Hills pipelines."<ref>[http://www.equities.com/news/headline-story?dt=2012-08-24&val=411966&cat=energy Equities.com "DCP Midstream GP appoints new president" August 24, 2012.]</ref> | ||
| + | |||
| + | ====August 21, 2012: CEO Mark Borer of DCP Midstream General Partner Resigns==== | ||
| + | FuelFix reported on August 21, 2012 that DCP Midstream Partner’s Chief Executive Officer Mark Borer will resign at the end of the 2012. “I have been with the DCP enterprise since 1999 and am honored to have been a key executive during its growth into the largest NGL producer in the United States,” said Borer in a written statement. “With an effectively planned succession and transition, now is the time for me to retire from the Partnership and experience other avenues of personal and professional growth.”<ref>[http://fuelfix.com/blog/2012/08/21/ceo-of-dcp-midstream-general-partner-resigns/ FuelFix. "CEO of DCP Midstream General Partner resigns" August 21, 2012.]</ref> | ||
| + | |||
| + | ====August 8, 2012: DCP Midstream Year-to-Year Adjusted Net Income Down in 2nd Quarter==== | ||
| + | Nasdaq reported on August 8, 2012 that DCP Midstream reported adjusted net income attributable to the company for the quarter was $13.9 million or $0.08 per limited partner unit, compared to the net income of $20.5 million or 0.33 per limited partner unit a year ago.<ref>[http://www.nasdaq.com/article/dcp-midstream-partners-q2-profit-rises-20120807-01847 Nasdaq. "DCP Midstream Partners Q2 Profit Rises" August 8, 2012.]</ref><ref>[http://seekingalpha.com/article/799551-dcp-midstream-partners-ceo-discusses-q2-2012-results-earnings-call-transcript?part=single Seeking Alpha. "DCP Midstream Partners' CEO Discusses Q2 2012 Results - Earnings Call Transcript" August 10, 2012.]</ref> | ||
| + | |||
| + | ====August 6, 2012: DCP Midstream set to Double Processing Capacity in Colorado==== | ||
| + | The Denver Post reported on August 6, 2012 that DCP Midstream plans to double its capacity in the Denver-Julesberg Basin increasing processing capacity to 800 million cubic feet per day for natural gas and 70,000 barrels a day for liquids by 2014. "The Denver-Julesberg Basin continues to reinvent itself, and the introduction of horizontal drilling is uncovering associated natural gas discoveries in the Niobrara Shale and Codell formations," says Wouter van Kempen, president of the company's gathering and processing business unit. DCP Midstream recently broke ground on a plant, west of LaSalle in Weld County, with a capacity of 110 million cubic feet per day, due to be completed in the second half of 2013 and is also constructing two compressor stations near the LaSalle Plant, and an associated gathering system due to be in service by the second half of 2013.<ref>[http://www.denverpost.com/breakingnews/ci_21249272/dcp-midstream-set-double-processing-capacity-colorado Denver Post. "DCP Midstream set to double processing capacity in Colorado" August 8, 2012.]</ref> | ||
| + | |||
| + | ====July 26, 2012: DCP Midstream Increases Quarterly Distribution to Partners==== | ||
| + | Marketwatch reported on July 26, 2012 that the board of directors of DCP Midstream declared a quarterly cash distribution of $0.67 per unit for the quarter ended June 30, 2012, an increase of 1.5 percent over the last quarterly distribution of $0.66 per unit paid May 15, 2012.<ref>[http://www.marketwatch.com/story/dcp-midstream-partners-declares-increase-in-quarterly-distribution-2012-07-26 Marketwatch. "DCP Midstream Partners Declares Increase in Quarterly Distribution" July 26, 2012.]</ref> | ||
| + | |||
| + | ====July 25, 2012: DCP Midstream Fined $631,000 For 11 Air Quality Violations==== | ||
| + | Permian Basin 360 reported on July 25, 2012 that the Texas Commission on Environmental Quality fined DCP Midstream $631,628 for 11 different air quality violations found during an inspection at a DCP Midstream, LP site in Panola County on August 9, 2011.<ref>[http://permianbasin360.com/fulltext?nxd_id=202532 Permian Basin 360. "T.C.E.Q. Fines DCP Midstream For Air Quality Violations" by Dylan Brooks. July 25, 2012.]</ref> | ||
| + | |||
| + | ====July 13, 2012: DCP Midstream Breaks Ground on $270 Million Facility in Colorado==== | ||
| + | Denver Business Journal reported on July 13 that DCP Midstream LLC of Colorado broke ground in June on its $270 million processing plant in Weld County. DCP also recently grew its Mewbourn Plant just south of Greeley, to keep up with demand from clients working in theDenver-Julesburg Basin in northeastern Colorado.<ref>[http://www.bizjournals.com/denver/print-edition/2012/07/13/dcp-midstream-expands-to-meet-natural.html Denver Business Journal. "DCP Midstream expands to meet natural gas demand" by Paula Moore. July 13, 2012.]</ref> | ||
| + | |||
| + | ====July 5, 2012: DCP Midstream Completes Acquisition of Crossroads Processing Plant==== | ||
| + | DCP Partners Midstream issued a press release on July 5, 2012 that the company had completed the acquisition of the Crossroads Processing Plant for $63 million.<ref>[http://www.marketwatch.com/story/dcp-midstream-partners-completes-crossroads-system-acquisition-in-east-texas-2012-07-05 Marketwatch. "DCP Midstream Partners Completes Crossroads System Acquisition in East Exas" July 5, 2012.]</ref> | ||
| + | |||
| + | ====June 18, 2012: DCP Midstream Partners to Acquire Crossroads Processing Plant==== | ||
| + | DCP Midstream Partners, a joint venture between Spectra Energy and Phillips 66, issued a press release on June 18, 2012 announcing that has entered into an agreement with Penn Virginia Resource Partners, L.P. ("PVR") to acquire the Crossroads processing plant and associated gathering system, for approximately $63 million. The Crossroads system, located in the southeastern portion of Harrison county in East Texas, includes approximately 8 miles of gas gathering pipe, an 80 million cubic feet per day cryogenic processing plant, approximately 20 miles of NGL pipeline and a 50% ownership in an approximately 11-mile residue gas pipeline. This system will allow the Partnership to increase critical midstream services to producers that are expanding their liquids rich Haynesville shale and Cotton Valley drilling programs in East Texas. "This immediately accretive acquisition provides us with an opportunity to increase our market position in East Texas and demonstrates our commitment to provide integrated midstream services to our customers," said Mark Borer, president and CEO of the Partnership. "The addition of the Crossroads system is a synergistic bolt-on acquisition to our existing East Texas system and will expand our processing capabilities to support our customers' growth."<ref>[http://www.marketwatch.com/story/dcp-midstream-partners-to-expand-east-texas-natural-gas-processing-business-through-acquisition-of-crossroads-processing-plant-2012-06-18 BusinessWire. "DCP Midstream Partners to Expand East Texas Natural Gas Processing Business Through Acquisition of Crossroads Processing Plant" June 18, 2012.]</ref> | ||
| + | |||
| + | ====June 6, 2012: DCP Midstream's Plans Move Forward on Building Large Propane Tank in Maine as Opposition Grows==== | ||
| + | The Free Press reported on June 6, 2012 that Searsport officials met with representatives of DCP Midstream on June 4, 2012 to review the company's application to build a 23-million-gallon propane storage facility at Mack Point and found the application was missing a gas storage tank permit from the Maine Fuel Board and was also missing some minor but important documentation, including the square footage of each individual building and structure proposed for the development and written documents to town officials and abutting property owners informing them of the development. When the application is deemed complete, the planning board begins reviewing the contents of the application and must schedule a public hearing within 30 days.<ref>[http://freepressonline.com/main.asp?SectionID=52&SubSectionID=78&ArticleID=19751 The Free Press. "Searsport Moving Forward on Building Large Propane Tank, Opposition Grows" by Christine Parrish. June 6, 2012.]</ref> | ||
| + | |||
| + | ====June 1, 2012: Plan for DCP Midstream's Giant Propane Gas Tank in Maine Generates Opposition==== | ||
| + | The Maine Public Broadcasting Company reported on June 1, 2012 that DCP Midstream's plan to build a 137-foot high, 23-million gallon liquid propane gas tank next to the Mack Point industrial area has generated heated opposition in communities along the midcoast as selectmen on the island community of Islesboro added their names to the list of people raising concerns about the tank. "Concerns about the project on the mainland have fallen into several categories," writes Jay Field. "There are those who say the tank is simply an eyesore that dwarfs all other industrial facilities in the area and threatens the sense of place on the midcoast. Others dread the large increase in truck traffic on Route 1 that will come if the project moves forward. Still others worry about the safety hazards of storing so much highly-flammable, liquid petroleum gas in one place." Even if it's approved, the project is all but certain to be challenged in court by opponents for years to come.<ref>[http://www.mpbn.net/Home/tabid/36/ctl/ViewItem/mid/3478/ItemId/22091/Default.aspx Maine Public Broadcasting Company. "Plan for Giant Propane Gas Tank in Searsport Generates Opposition" by Jay Field. June 1, 2012.]</ref> | ||
| + | |||
| + | ====May 26, 2012: Oklahoma Property Owners Fight DCP's Gas Pipeline==== | ||
| + | The Daily Oklahoman reported on June 18, 2012 that DCP Midstream has filed lawsuits in district court that seek eminent domain judgments against 14 property owners in Oklahoma County as landowners have rejected DCP offers to pay for a portion of their land and say they will fight to keep the company off their land. “It’s not a matter of money for most of us, it’s a matter of principle,” says Joe Freund, a retired physician who lives on 40 acres of forestland about a mile east of Arcadia who is concerned that clearing a 75-foot wide strip of forest that runs the length of his property would tarnish the aesthetics that attracted him to this plot in the first place. “They claim that it’s for the public good and perhaps it is, but they won’t even move their pipeline one inch to avoid taking down trees a hundred years old.” DCP Midstream says the pipeline would tie gathering and processing systems across central and western Oklahoma to their existing line and is part of $2 billion in capital investments currently under development by DCP. “It’s about de-bottlenecking for the producers and finally giving them an opportunity to get their product to market," says Roz Elliott, vice president at DCP Midstream, adding that DCP hopes to run 250 million cubic feet of liquid natural gas to coastal markets every day by the middle of 2013.<ref>[http://newsok.com/pipeline-project-is-headed-to-court/article/3678742 NewOK.com "Oklahoma County property owners fight against gas pipeline" by Zeke Campfield. May 26, 2012.]</ref> | ||
| + | |||
| + | ==Conclusions== | ||
| + | [[Image:PhillipsSegments.JPG|thumb|right|400px|The same earnings contribution from the Refining and Marketing Business Segment is proportionally 4.3 times as important to Phillips 66 as it was to ConocoPhillips. R&M's contribution was 13.7% of ConocoPhillips' total earnings while the same contribution will be 59.2% of Phillips 66 total earnings. Chart by Hugh Pickens]] | ||
| + | Note: This section of the report contains our conclusions based on the documented facts that are presented in the rest of the report. All responsibility for the conclusions are ours. If you have any additional information or insights that you would like to see added to this report please contact Hugh Pickens by email at hughpickens AT gmail DOT com. | ||
| + | |||
| + | Our analysis of the information publicly available on Phillips 66 leads us to the following conclusions: | ||
| + | |||
| + | Positives | ||
| + | * The Refining and Marketing Business Segment will be more important to Phillips 66 than it was to ConocoPhillips. | ||
| + | |||
| + | * The Refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips. | ||
| + | |||
| + | Negatives | ||
| + | * The Refining and Marketing Business Segment is the least profitable Business Segment and will be de-emphasized with unprofitable refineries closed or sold off. | ||
| + | |||
| + | * There will be a reduction in Capital Allocation to the Refining and Marketing Business Segment. | ||
| + | |||
| + | * The Refinery in Ponca City is unlikely to be closed or sold In the medium term as margins have been strong in the Mid-Continent Segment and are expected to remain high for the next three to five years. | ||
| + | |||
| + | ===Refinery and Marketing Segment will be More Important to Phillips 66 than it was to ConocoPhillips=== | ||
| + | Based on the earnings contribution of the Refining and Marketing business segment, it is possible to estimate the relative importance of the segment to the overall business of both ConocoPhillips and Phillips 66. For Q1 2012 Exploration and Production (E&P) had $2,548M in earnings, Midstream was $93M, Chemicals was $218M, and finally Refining and Marketing was $452M. The total earnings for ConocoPhillips is $3,310M of which R&M's contribution was 13.7%. Considering only the three business segments that will be moving over to Phillips 66, the total earnings were $763M of which the same R&M's contribution was 59.2%. In other words, relatively speaking the R&M business segment is moving over from a small fish in a big pond (ConocoPhillips) to a big fish in a small pond (Phillips 66). The same earnings contribution from the Refining and Marketing Business Segment is 4.3 times as important to Phillips 66 as it was to ConocoPhillips.<ref>[http://eon.businesswire.com/news/eon/20120423005517/en/Earnings/repositioning BusinessWire. "ConocoPhillips Reports First-Quarter Earnings of $2.9 Billion or $2.27 Per Share" April 23, 2012.]</ref> | ||
| + | |||
| + | ===The Refinery in Ponca City will be More Important to Phillips 66 than it was to ConocoPhillips=== | ||
| + | ConocoPhillips does not break out earnings numbers to each refinery. However it is possible to make an estimate of the contribution of Ponca City's refinery to the overall Refinery and Marketing segment by looking at the production of the refineries. According to Garland's presention to financial analysts on April 9, 2012, although ConocoPhillips has reduced throughput refining capacity about 450,000 barrels a day over the past three years, in 2011 it stood at about 2.2 Million barrels per day. According to ConocoPhillips figures, the Ponca City refinery has a crude oil processing capacity of 187,000 barrels per day.<ref>[http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips. "Refining"]</ref> In terms of throughput capacity, Ponca City provides 8.5 per cent of Phillips 66 production. From a business standpoint, what is important is the earnings contribution. The Ponca City refinery is part of the Mid-Continent segment with about 21% of Phillips 66 capacity and margins have been very strong in this area so the contribution to earnings would exceed the contribution to throughput. We estimate that the Ponca City refinery contributes about 10% of the earnings to the Refining portion of the Refining and Marketing business segment. | ||
| + | |||
| + | A detailed financial analysis found that the Ponca City Refinery earned a net profit of over $500 million in 2011 and is on track to earn in exess of $600 million in 2012, contributing more than one-quarter of the net income to Phillips Refining bottom line and contributing more than the the total of the seven least profitable Phillips refineries combined.<ref>[http://cognitivecomputer.com/index.php?title=How_Much_Money_Does_the_Marland_Refinery_in_Ponca_City_Earn_for_Phillips_66%3F#Scenario_5:_Total_Net_Income_for_Domestic_Refineries Research and Ideas. "How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?" by Hugh Pickens. July 24, 2012.]</ref> | ||
| + | |||
| + | ===R&M Segment is the Least Profitable Business Segment and Will be De-Emphasized=== | ||
| + | The three operating segments of Phillips 66 have very different ROCE's. In 2011 the ROCE of the Refining and Marketing segment was 12%, the ROCE of the Midstream segment was 30%, and the ROCE of the Chemical segment was 28%. Because the ROCE of the Chemical segments and the Midstream segments is so much higher than the ROCE in the R&M segment, Garland plans to plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company. | ||
| + | |||
| + | According to information available on April 17, 2012, Phillips 66 plans to aggressively grow the Chemicals and Midstream segments of the new company and de-emphasize the Refining and Marketing segment of the company. The Refinery and Marketing segment of the company is the lowest profit margin segment of the company and Phillips 66 plans on selling and shutting down unprofitable assets in this segment. | ||
| + | |||
| + | ===There will be a Reduction in Capital Allocation to R&M Segment=== | ||
| + | Phillips 66 plans a major change in this allocation. "Long-term we have a vision that about 50% of our capital employed will be directed towards the R&M segment (down from 84% in 2011). And the other 50% will be directed towards Midstream and Chemicals." This is a 40% reduction in capital allocation from from 84% of capital allocated to the R&M segment in 2011. The conclusion we draw is that there will be less capital investment and improvements in the existing Phillips 66 refineries in general and in the refinery in Ponca City in particular. | ||
| + | |||
| + | ===Refinery in Ponca City Unlikely to be Closed or Sold in the Near Term as Margins Have Been Strong in the Mid-Continent Segment=== | ||
| + | The Ponca City refinery is part of the Mid-Continent segment with about 21% of Phillips 66 capacity and margins have been very strong in this area. The conclusion we draw is that although Phillips 66 plans to sell or close down some of their less profitable refineries, it is unlikely that any of those in the mid-continent region would be closed. | ||
| + | |||
| + | Phillips 66′s most profitable refineries of the past couple years are in the Mid-Continent including the Sweeny refinery, Ponca City, Wood River and Billings. The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries. However, this opportunity is not going to last long term because there will soon be plenty of new options for getting crude out of Cushing and Garland agrees that the price differential will collapse. “Over three to five years those wide differentials that we’re seeing in the Midcon will collapse to the transportation differential,” he told me. “So more like $3 to $5 a barrel. It’s not going to be $20 forever.”<ref>[http://www.forbes.com/sites/christopherhelman/2012/04/30/as-conocophillips-spins-off-refining-assets-should-you-own-the-new-phillips-66/?ss=strategies-solutions Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.]</ref> | ||
| + | |||
| + | ===What Does the Creation of Phillips 66 Mean to Ponca City?=== | ||
| + | [[Image:Poncaparade.jpg|thumb|550px|Parade down Grand Avenue in Ponca City. The refinery in Ponca City can expect more attention at the corporate level. The refinery can expect more visits from Phillips 66 upper management. The refinery can expect that technical and community concerns will be listened to with more attention. However the refinery in Ponca City can expect that there will be relatively little interest at the corporate level at expanding the refinery or making new investments in the refinery. It is unlikely that Phillips 66 will move quickly to sell the refinery in Ponca City because of its complexity and the high profitability of the mid-continent segment which is expected to last another three to five years. Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | The refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips - 4.3 times as important - because the Refining and Marketing business segment will be a larger part of Phillips 66, a smaller company, focused on downstream operations, than it ever was to ConocoPhillips, where the Refining and Marketing business segment was only a small part of the company, dwarfed by the exploration side of the house. Since the refinery in Ponca City is part of the more profitable mid-continent segment (ConocoPhillips does not break out earnings by refinery.) the refinery is more important to the profitability of Phillips 66 than than it was to ConocoPhillips. Because of these two factors the refinery in Ponca City can expect more attention at the corporate level. The refinery can expect more visits from Phillips 66 upper management. The refinery can expect that technical and community concerns will be listened to with more attention. | ||
| + | |||
| + | Although Phillips 66 is already moving to sell two of its least profitable refineries, it is unlikely that Phillips 66 will move quickly to sell the refinery in Ponca City because of its complexity and the high profitability of the mid-continent segment which is expected to last another three to five years. On the downside, although the Refining and Marketing Business segment of Philips 66 makes the largest overall contribution to the company's earnings, in terms of percentage profitability it is the least profitable business segment with only a 10% COBE so Phillips 66 has made a decision to de-emphasize Refining and Marketing and increase the investment in the Chemical and Midstream business segments with higher COBE's which is also where the new CEO, Greg Garland has his background. Because of this factor, the refinery in Ponca City can expect that there will be relatively little interest at the corporate level at expanding the refinery or making new investments in the refinery. | ||
| + | |||
| + | ==External Links== | ||
| + | [[Image:Help.jpg|thumb|350px|If you have additional information, insights, or corrections for this report please contact the author at hughpickens AT gmail DOT com.]] | ||
| + | ===Corporate Links and Presentations=== | ||
| + | * [http://www.phillips66.com/EN/investor/presentations_ccalls/Pages/index.aspx Phillips 66 Presentations & Conference Calls] | ||
| + | * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips66_Barclays_CEO_Energy-Power_Conference_080512_FINAL.pdf "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland] September 5, 2012 | ||
| + | * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/PSX%20Earnings%20Release%202q2012_color.pdf Slide Presentation for Phillips 66 second-quarter earnings call] August 1, 2012 | ||
| + | * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/Phillips%2066%20second-quarter%20earnings%202012.pdf Transcript for Phillips 66 second-quarter earnings call] August 1, 2012 | ||
| + | * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/UBS_PSX_Reasor.pdf Presentation by Clayton Reasor to UBS Conference] May 24, 2012 | ||
| + | * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/April%202012%20PSX%20Investor%20Update.pdf Slide Presentation for Phillips 66 Investor Update] April 9, 2012 | ||
| + | * [http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/COP-Transcript-2012-04-09T15_00.pdf Transcript of Phillips 66 Analyst Update] April 9, 2012 | ||
| + | * [http://seekingalpha.com/article/486131-conocophillips-ceo-hosts-phillips-66-analyst-update-conference-call-transcript Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call"] April 9, 2012 | ||
| + | * [http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/Restructuring%20Analyst%20presentation%207-14-11.pdf ConocoPhillips. "Creating Two Leading Energy Companies"] July 14, 2011 | ||
| + | * [http://www.conocophillips.com/EN/investor/presentations_ccalls/Documents/downstream_spinoff-2011-07-14.pdf ConocoPhillips Analyst Meeting - Color Slides "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies"] July 14, 2011. | ||
| + | * [http://www.conocophillips.com/EN/about/worldwide_ops/rm/us/Pages/Refining.aspx ConocoPhillips Worldwide Refining] | ||
| + | * [https://www.youtube.com/watch?v=l9TJ_CpU_ko We Are Phillips 66] (YouTube Video) | ||
| + | * [http://www.phillips66.com/EN/investor/presentations_ccalls/Documents/2013%20PSX%20Stockholder%20MeetingTranscript.pdf Transcript of Phillips First Stockholder's Meeting] May 8, 2013 | ||
| + | |||
| + | ===Third Party Links and Presentations=== | ||
| + | * [http://honorewmarland.com Honor the Legacy of EW Marland] | ||
| + | * [http://www.usw.org/our_union/oil/news?id=0032 Weekly Lists of Refinery Events compiled by the United Steelworkers] | ||
| + | * [http://www.oe.netl.doe.gov/ead.aspx Department of Energy "Energy Assurance Daily"] | ||
| + | * [http://ghgdata.epa.gov/ghgp/main.do EPA Greenhouse Gas Emissions from Large Facilities] | ||
| + | |||
| + | ==References== | ||
| + | {{reflist|4}} | ||
| + | |||
| + | ==Master Index of Articles about Phillips 66== | ||
| + | [[Image:Poncacity07.jpg|thumb|400px|The North Tower and the South Tower, part of Phillips 66's Refinery Complex in Ponca City, contain [http://respectponcacity.com over 250,000 square feet of Class A office space that is essentially unused]. Research West contains another 230,000 square feet of unused Class A office space. Photo: [http://hughpickens.com Hugh Pickens]]] | ||
| + | [[Image:Poncacity66refinery.jpg|thumb|right|400px|'''Ponca: A Core Asset.''' Phillips CEO Greg Garland told members of the Bartlesville Chamber of Commerce on August 27, 2013 that the refinery at Ponca is a 'core asset' of Phillips 66. '''The refinery in Ponca City "is making very good money for us," Garland told his Bartlesville audience.''' Garland added that he expects gas demands in the U.S. to decline by 20 percent in the next 10 years, but that demand for refined products in South America and Africa will more than offset that decline.]] | ||
| + | by [http://hughpickens.com Hugh Pickens], Ponca City Oklahoma | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy. | ||
| + | |||
| + | '''<span style="color:#0000FF">Major Sections of this report on Phillips 66 include:</span>''' | ||
| + | |||
| + | {|style="border-style: solid; border-width: 1px" | ||
| + | |-style="vertical-align:top;" | ||
| + | |scope="col" width="350px"|'''<span style="color:#0000FF">Safety, Environment, Legal</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Safety_and_Environmental_Issues_at_Phillips_66#Safety_and_Environment Safety and Environment] - [http://cognitivecomputer.com/index.php?title=Deaths_and_Injuries_at_Phillips_Refineries_and_Chemical_Plants#Deaths_and_Injuries_at_Phillips_Refineries_and_Chemical_Plants Deaths and Injuries] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Litigation_and_Legal_Issues_at_Phillips_66#Litigation_and_Legal_Issues_with_Phillips Litigation and Legal Issues with Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Operational_Excellence_at_Phillips_66#Operational_Excellence Operational Excellence] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Technology_Development_at_Phillips_66#Technology_Development Technology Development] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Labor_Relations_at_Phillips_66#Labor_Relations_and_Issues_with_Employees Labor Relations and Human Resources] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Labor_Relations_at_Phillips_66#Employee_Benefits Employee Benefits] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Government_Relations_at_Phillips_66#Government_Relations Government Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Media_Relations_and_Public_Relations_at_Phillips_66#Public_Relations_and_Media_Relations Media Relations and Public Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Philanthropic_and_Community_Benefits_at_Phillips_66#Philanthropic_and_Community_Benefits Philanthropic and Community Benefits] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Corporate</span>''' | ||
| + | *[http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Creation_of_Phillips_66 Creation of Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Governance_of_Phillips_66 Governance of Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Greg_Garland.2C_Chairman.2C_President_and_CEO_of_Phillips_66 CEO Greg Garland] - [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Jim_Mulva.2C_Chairman_and_CEO_of_ConocoPhillips Jim Mulva] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Board_of_Directors Phillips 66 Board of Directors] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Management_and_Governance_Effectiveness_at_Phillips_66 Management Effectiveness] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Strategic and Financial</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Strategic_Vision_for_Phillips_66 Strategic Vision for Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Capital_Programs#Phillips_Capital_Programs Phillips 66 Capital Programs] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Financial_Stability_of_Phillips_66_and_Risk_Management Financial Stability] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Divestiture_of_Non-Core_Assets_at_Phillips_66#Phillips.27_Divestiture_of_Non-Core_Assets_Through_Sale.2C_Exchange.2C_or_Closure Phillips' Divestiture of Non-Core Assets] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Expansion,_Construction,_Acquisitions_and_Purchases#Phillips_Expansion.2C_Construction.2C_Acquisitions_and_Purchases Construction, Acquisitions, and Purchases] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Business Segments</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Refining_Business_Segment_at_Phillips_66#Refining_Business_Segment Refining Business Segment] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Marketing_and_Special_Products_at_Phillips_66#Marketing_and_Special_Products Marketing and Special Products] - [http://cognitivecomputer.com/index.php?title=Marketing_and_Special_Products_at_Phillips_66#Latest_News_and_Views_on_Marketing Latest News] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Chemical_Business_Segment_within_Phillips_66 Chemical Business Segment] - [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_on_the_Chemical_Business_Segment Latest News] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Midstream_Business_Segment_at_Phillips_66#Midstream_Business_Segment_within_Phillips_66 Midstream Business Segment] - [http://cognitivecomputer.com/index.php?title=Midstream_Business_Segment_at_Phillips_66#Latest_News_and_Views_of_the_Midstream_Business_Segment Latest News] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Stock Market</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#The_Stock_Market_and_Investor_Relations The Stock Market and Investor Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Stock_Performance Phillips 66 Stock Performance] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Dividends_and_Stock_Repurchase Phillips 66 Dividends and Stock Repurchases] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Stockholder.27s_Meetings Stockholder's Meetings] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Earnings_Conferences Phillips 66 Earnings Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Investor_Conferences Phillips 66 Investor Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=What_Independent_Financial_Analysts_Say_About_Phillips_66#What_Independent_Financial_Analysts_Say_About_Phillips_66 What Financial Analysts Say About Phillips 66] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Reference</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_Master_Index_List Master Index of Phillips 66 Articles] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Conclusions Conclusions] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#External_Links External Links] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#References References] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#About_the_Author About the Author] | ||
| + | |style="border-style: solid; border-width: 0px 0px 0px 1px" scope="col" width="350px"| | ||
| + | '''<span style="color:#0000FF">Refining Business Segment</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Refining_Business_Segment_at_Phillips_66#Refining_Business_Segment Refining Business Segment] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Refining_Business_Segment_at_Phillips_66#Phillips_66_Worldwide_Refineries Phillips 66 Worldwide Refineries] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increasing_Profitability_in_the_Refining_and_Marketing_Business_Segment Increasing Profitability in Refining Business Segment] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Increasing Profitability in Refining Business Segment</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increase_Profitability_by_Getting_More_Advantaged_Crude_in_Front_of_Refineries Process More Advantaged Crudes] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increase_Profitability_by_Increasing_Exports Expand Export Capability] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increase_Profitability_by_Increasing_Clean_Product_Yields Increase Clean Product Yields] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Divestiture_of_Non-Core_Assets_at_Phillips_66#Phillips.27_Divestiture_of_Non-Core_Assets_Through_Sale.2C_Exchange.2C_or_Closure Optimize Portfolio] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Detailed Look at Ponca City Refinery</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_its_Century-Old_Oil_Refining_History Ponca City and its Century-Old Oil Legacy and History] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#How_Much_Money_Does_the_Ponca_City_Refinery_Earn_for_Phillips_66.3F How Much Money Does Ponca City Earn for Phillips?] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_the_.22Merger_of_Equals.22_with_Phillips_in_2001 Ponca City and the "Merger of Equals" in 2001] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_the_Spinoff_of_Phillips_66_in_2012 Ponca City and the Spinoff of Phillips 66 in 2012] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#News_from_the_Ponca_City_Refinery Latest News from the Refinery in Ponca City] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#August_13.2C_2014:_Phillips_66_CEO_Greg_Garland_Wants_to_Find_a_Company_to_Lease_the_North_and_South_Towers Phillips' Plans for the North and South Towers] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Other Phillips Refineries</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Alliance_Refinery#Alliance_Refinery Alliance Refinery (AL)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Bayway_Refinery#Bayway_Refinery Bayway Refinery (BW)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Billings_Refinery#Billings_Refinery Billings Refinery (BI)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Borger_Refinery#Borger_Refinery Borger Refinery (BG)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ferndale_Refinery#Ferndale_Refinery Ferndale Refinery (FN)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Humber_Refinery#Humber_Refinery Humber Refinery (HU)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Lake_Charles_Refinery#Lake_Charles_Refinery Lake Charles Refinery (Westlake) (LC)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Los_Angeles_Refinery#Los_Angeles_Refinery Los Angeles (Wilmington) Refinery (LA)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Melaka_Refinery#Melaka_Refinery Melaka Refinery in Malaysia (ME)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#News_from_the_Ponca_City_Refinery Ponca City Refinery (PC)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_San_Francisco_Refinery#San_Francisco_Refinery San Francisco Refinery (SF)] [http://cognitivecomputer.com/index.php?title=Phillips_66:_San_Francisco_Refinery#News_and_Views_on_Rodeo_Refinery Rodeo] [http://cognitivecomputer.com/index.php?title=Phillips_66:_San_Francisco_Refinery#News_and_Views_on_Santa_Maria_Refinery Santa Maria (Nipomo)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Sweeny_Refinery#Sweeny_Refinery Sweeny Refinery (SW)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Whitegate_Refinery#Whitegate_Refinery Whitegate Refinery in Ireland (WG)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Wood_River_Refinery#Wood_River_Refinery Wood River Refinery (WR)] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Other Locations</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Houston_Headquarters#New_Phillips_66_Headquarters New Houston Headquarters] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Houston_Chemical_Complex_(HCC)#Phillips_66_Houston_Chemical_Complex_.28HCC.29 Houston Chemical Complex] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Bartlesville_Technology_Hub#Bartlesville_Technology_Hub Bartlesville Technology Hub] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_from_Port_Arthur_Chemical_Plant Port Arthur Chemical Plant] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_from_Cedar_Bayou_Chemical_Plant Cedar Bayou Chemical Plant (Baytown)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_from_Sweeny_Petrochemical_Complex Sweeny Petrochemical Complex] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Trainer_Refinery#Trainer_Refinery Trainer Refinery (sold in 2012)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_Refinery_in_Phillips,_Texas#Phillips_Refinery Phillips Refinery (Closed in 1986)] | ||
| + | |} | ||
| + | |||
| + | ==About the Author== | ||
| + | [[Image:Reservoir Hill.jpg|thumb|right|450px|Hugh Pickens]] | ||
| + | [http://hughpickens.com Hugh Pickens] (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, crossed the [https://en.wikipedia.org/wiki/Rub'_al_Khali empty quarter of Saudi Arabia], and [http://project-tools.com/projects.htm built satellite control stations for Goddard Space Flight Center] all over the world. Retired in 1999, Pickens and his [http://www.thefreelibrary.com/GREEN+SPRING+NAMES+PICKENS+VICE+PRESIDENT+OF+PHYSICIAN+SERVICES-a018294703 wife] moved from Baltimore back to his hometown of Ponca City, Oklahoma in 2005 where he cultivates his square foot garden, mows [https://www.google.com/maps/preview#!q=2301+Donner+Ave%2C+Ponca+City%2C+OK&data=!1m8!1m3!1d3!2d-97.052085!3d36.733001!2m2!1f349.46!2f95.82!4f75!2m7!1e1!2m2!1svvDhInRwrcsKtmDssDlMoQ!2e0!5m2!1svvDhInRwrcsKtmDssDlMoQ!2e0!4m15!2m14!1m13!1s0x87b0f527d270150b%3A0xc6f2815ca3b9fd20!3m8!1m3!1d229448!2d-122.2366068!3d47.6290804!3m2!1i1423!2i1024!4f13.1!4m2!3d36.733934!4d-97.052318&fid=5 nine acres of lawn], [http://poncacityweloveyou.com writes about local history], [http://flickr.com/photos/20881138@N00/sets/ photographs events] at the Poncan Theatre and, with his wife, produce the annual [http://oklahomapride.com Oklahoma Pride] series at [http://thebrokenstatue.com Ponca Playhouse]. | ||
| + | |||
| + | In 1996, Pickens edited and published [http://www.amazon.com/My-Life-Review-Have-Lucky/dp/0965560198 ''My Life In Review: Have I Been Lucky of What?''], the memoirs of Jack Crandall, professor of history at SUNY Brockport. Since 2001 Pickens has edited and published [http://peacecorpsonline.org/frontpage/index.html “Peace Corps Online,”] serving over one million monthly pageviews. Pickens' other writing includes contributing over 2,000 stories to [http://hughpickens.com/slashdot/ “Slashdot: News for Nerds,”] and articles for [http://en.wikipedia.org/wiki/User:Reservoirhill Wikipedia], [http://poncacityweloveyou.com “Ponca City, We Love You”], and [http://peacecorpsworldwide.org/pickens-writes-writes/ Peace Corps Worldwide]. | ||
| + | |||
| + | ===History, Biography, and Politics=== | ||
| + | * [http://cognitivecomputer.com/index.php?title=Jon_Carson Jon Carson -The Man Who Won the Presidential Nomination for Barack Obama] (>300,000 pageviews) | ||
| + | * [http://cognitivecomputer.com/index.php?title=Stanley_Ann_Dunham Barack Obama's Mother Grew Up in Ponca City] February 6, 2009 (>120,000 pageviews) | ||
| + | * [http://cognitivecomputer.com/index.php?title=America%27s_Fresh_Water_Submarines America's Fresh Water Submarines in World War II] (>40,000 pageviews) | ||
| + | *[http://cognitivecomputer.com/index.php?title=Chris_Terrio:_A_Biography_of_the_Director_and_Academy_Award_Winning_Screenwriter&oldid=5921 Academy Award Winning Screenwriter Chris Terrio] (>90,000 pageviews) | ||
| + | * [http://cognitivecomputer.com/index.php?title=What_happened_to_Okies_after_%22The_Grapes_of_Wrath%22 What Happened to Okies after "The Grapes of Wrath"] | ||
| + | |||
| + | ===Science and Technology=== | ||
| + | * [http://cognitivecomputer.com/index.php?title=Hugh_Pickens%27_Stories_on_Slashdot Stories on Slashdot] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Hugh_Pickens%27_Stories_on_Soylent Stories on Soylent News] | ||
| + | * [http://cognitivecomputer.com/index.php?title=NASA%27s_GRO_Remote_Terminal_System_(GRTS) Building NASA's GRO Remote Terminal System (GRTS) in Australia] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Writing_for_Slashdot Why I enjoy Writing for Slashdot] | ||
| + | * [http://peacecorpsonline.typepad.com/poncacityweloveyou/2007/11/writing-for-wik.html Why I enjoy Writing for Wikipedia] | ||
| + | |||
| + | ===Business=== | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Introduction An Independent Evaluation of Phillips 66, its Business Strategy, and Execution] (>380,000 pageviews) | ||
| + | * [http://poncarefinery.com A History of the Ponca Refinery in Ponca City] (>110,000 pageviews) | ||
| + | * [http://tingmodel.com A Financial Model for Tucows and Ting] (>110,000 pageviews) | ||
| + | |||
| + | ===Ponca City, Oklahoma=== | ||
| + | * [http://poncacityweloveyou.com Ponca City, We Love You] | ||
| + | * [http://www.pioneerwomanmodels.com/ The Pioneer Woman Models Should Return to Ponca City] July 13, 2007 | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Pioneer_Woman_Models_Come_Home The Pioneer Woman Models Come Home to Ponca City] February 26, 2010 | ||
| + | * [http://cognitivecomputer.com/index.php?title=Stanley_Ann_Dunham President Barack Obama's Mother Grew Up in Ponca City] February 6, 2009 | ||
| + | * [http://peacecorpsonline.org/standingbear/ Standing Bear Looks to the Future] | ||
| + | * [[What to See in Ponca City]] | ||
| + | * [http://thebrokenstatue.com/ Ponca Playhouse to Present "The Broken Statue"] January 17, 2012 | ||
| + | * [[What Ponca City Owes EW Marland]] June 20, 2012 | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#How_Much_Money_Does_the_Marland_Refinery_in_Ponca_City_Earn_for_Phillips_66.3F How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?] July 23, 2012 | ||
| + | * [http://cognitivecomputer.com/index.php?title=EW_Marland_and_%22The_Ends_of_the_Earth%22 EW Marland and the Movie "The Ends of the Earth"] May 23, 2013 | ||
| + | |||
| + | ===Peace Corps Writing=== | ||
| + | * [http://peacecorpsonline.org Peace Corps Online] | ||
| + | * [http://peacecorpslibrary.org/ Peace Corps Library] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Peace_Corps_Sharp_Incident_in_Kazahkstan The Peace Corps "Sharp Incident" in Kazakhstan] | ||
| + | * [http://peacecorpswriters.org/pages/2001/0111/111hpnogv.html Senate Foreign Relations Committee Hearing on the Nominee for Peace Corps Director] | ||
| + | * [http://peacecorpsonline.org/messages/messages/2629/3212158.html An Interview with Peace Corps Director Ron Tschetter] | ||
| + | * [http://peacecorpsonline.org/messages/messages/2629/2023627.html An Interview with Peace Corps Director Gaddi Vasquez] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Peace_Corps_Director_Aaron_Williams A Profile of Peace Corps Director Aaron Williams] | ||
| + | |||
| + | ===Personal Essays=== | ||
| + | * [http://cognitivecomputer.com/index.php?title=Death_Be_Not_Proud Death Be Not Proud] | ||
| + | * [http://cognitivecomputer.com/index.php?title=My_Favorite_Christmas My Favorite Christmas] | ||
| + | * [http://reservoirhill.org A Victorian Mansion in Baltimore's Reservoir Hill] | ||
| + | *[http://cognitivecomputer.com/index.php?title=Remembering_John_D_MacDonald_and_His_House_on_Siesta_Key Remembering John D MacDonald and His House on Siesta Key] | ||
| + | |||
| + | ===Phillips 66=== | ||
| + | [[Image:Phillips conoco 1.jpg|thumb|right|350px|Conoco and Phillips 66 announced on November 18, 2001 that their boards of directors had unanimously approved a definitive agreement for a "merger of equals". The merged company, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name of a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Photo: [http://hughpickens.com Hugh Pickens] all rights reserved.]] | ||
| + | For nearly 100 years oil refining has provided the bedrock of Ponca City's local economy and shaped the character of our community. Today the Ponca City Refinery is the best run and most profitable of Phillips 66's fifteen worldwide refineries. The purpose of this collection of reports is to provide a comprehensive overview of Phillips 66's business that documents and explains the company's business strategy and execution of that strategy. | ||
| + | {|style="border-style: solid; border-width: 1px" | ||
| + | |-style="vertical-align:top;" | ||
| + | |scope="col" width="350px"|'''<span style="color:#0000FF">Safety, Environment, Legal</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Safety_and_Environmental_Issues_at_Phillips_66#Safety_and_Environment Safety and Environment] - [http://cognitivecomputer.com/index.php?title=Deaths_and_Injuries_at_Phillips_Refineries_and_Chemical_Plants#Deaths_and_Injuries_at_Phillips_Refineries_and_Chemical_Plants Deaths and Injuries] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Litigation_and_Legal_Issues_at_Phillips_66#Litigation_and_Legal_Issues_with_Phillips Litigation and Legal Issues with Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Operational_Excellence_at_Phillips_66#Operational_Excellence Operational Excellence] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Technology_Development_at_Phillips_66#Technology_Development Technology Development] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Labor_Relations_at_Phillips_66#Labor_Relations_and_Issues_with_Employees Labor Relations and Human Resources] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Labor_Relations_at_Phillips_66#Employee_Benefits Employee Benefits] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Government_Relations_at_Phillips_66#Government_Relations Government Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Media_Relations_and_Public_Relations_at_Phillips_66#Public_Relations_and_Media_Relations Media Relations and Public Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Philanthropic_and_Community_Benefits_at_Phillips_66#Philanthropic_and_Community_Benefits Philanthropic and Community Benefits] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Corporate</span>''' | ||
| + | *[http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Creation_of_Phillips_66 Creation of Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Governance_of_Phillips_66 Governance of Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Greg_Garland.2C_Chairman.2C_President_and_CEO_of_Phillips_66 CEO Greg Garland] - [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Jim_Mulva.2C_Chairman_and_CEO_of_ConocoPhillips Jim Mulva] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Board_of_Directors Phillips 66 Board of Directors] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Management_and_Governance_Effectiveness_at_Phillips_66 Management Effectiveness] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Strategic and Financial</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Strategic_Vision_for_Phillips_66 Strategic Vision for Phillips 66] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Capital_Programs#Phillips_Capital_Programs Phillips 66 Capital Programs] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Financial_Stability_of_Phillips_66_and_Risk_Management Financial Stability] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Divestiture_of_Non-Core_Assets_at_Phillips_66#Phillips.27_Divestiture_of_Non-Core_Assets_Through_Sale.2C_Exchange.2C_or_Closure Phillips' Divestiture of Non-Core Assets] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Expansion,_Construction,_Acquisitions_and_Purchases#Phillips_Expansion.2C_Construction.2C_Acquisitions_and_Purchases Construction, Acquisitions, and Purchases] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Business Segments</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Refining_Business_Segment_at_Phillips_66#Refining_Business_Segment Refining Business Segment] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Marketing_and_Special_Products_at_Phillips_66#Marketing_and_Special_Products Marketing and Special Products] - [http://cognitivecomputer.com/index.php?title=Marketing_and_Special_Products_at_Phillips_66#Latest_News_and_Views_on_Marketing Latest News] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Chemical_Business_Segment_within_Phillips_66 Chemical Business Segment] - [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_on_the_Chemical_Business_Segment Latest News] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Midstream_Business_Segment_at_Phillips_66#Midstream_Business_Segment_within_Phillips_66 Midstream Business Segment] - [http://cognitivecomputer.com/index.php?title=Midstream_Business_Segment_at_Phillips_66#Latest_News_and_Views_of_the_Midstream_Business_Segment Latest News] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Stock Market</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#The_Stock_Market_and_Investor_Relations The Stock Market and Investor Relations] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Stock_Performance Phillips 66 Stock Performance] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Dividends_and_Stock_Repurchase Phillips 66 Dividends and Stock Repurchases] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Stockholder.27s_Meetings Stockholder's Meetings] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Earnings_Conferences Phillips 66 Earnings Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=The_Stock_Market_and_Phillips_66#Investor_Conferences Phillips 66 Investor Conferences] | ||
| + | * [http://cognitivecomputer.com/index.php?title=What_Independent_Financial_Analysts_Say_About_Phillips_66#What_Independent_Financial_Analysts_Say_About_Phillips_66 What Financial Analysts Say About Phillips 66] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Reference</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_Master_Index_List Master Index of Phillips 66 Articles] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#Conclusions Conclusions] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#External_Links External Links] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#References References] | ||
| + | * [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution#About_the_Author About the Author] | ||
| + | |style="border-style: solid; border-width: 0px 0px 0px 1px" scope="col" width="350px"| | ||
| + | '''<span style="color:#0000FF">Refining Business Segment</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Refining_Business_Segment_at_Phillips_66#Refining_Business_Segment Refining Business Segment] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Refining_Business_Segment_at_Phillips_66#Phillips_66_Worldwide_Refineries Phillips 66 Worldwide Refineries] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increasing_Profitability_in_the_Refining_and_Marketing_Business_Segment Increasing Profitability in Refining Business Segment] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Increasing Profitability in Refining Business Segment</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increase_Profitability_by_Getting_More_Advantaged_Crude_in_Front_of_Refineries Process More Advantaged Crudes] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increase_Profitability_by_Increasing_Exports Expand Export Capability] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Increasing_Profitability_in_the_Refining_Business_Segment_at_Phillips_66#Increase_Profitability_by_Increasing_Clean_Product_Yields Increase Clean Product Yields] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Divestiture_of_Non-Core_Assets_at_Phillips_66#Phillips.27_Divestiture_of_Non-Core_Assets_Through_Sale.2C_Exchange.2C_or_Closure Optimize Portfolio] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Detailed Look at Ponca City Refinery</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_its_Century-Old_Oil_Refining_History Ponca City and its Century-Old Oil Legacy and History] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#How_Much_Money_Does_the_Ponca_City_Refinery_Earn_for_Phillips_66.3F How Much Money Does Ponca City Earn for Phillips?] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_the_.22Merger_of_Equals.22_with_Phillips_in_2001 Ponca City and the "Merger of Equals" in 2001] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#Ponca_City_and_the_Spinoff_of_Phillips_66_in_2012 Ponca City and the Spinoff of Phillips 66 in 2012] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#News_from_the_Ponca_City_Refinery Latest News from the Refinery in Ponca City] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#August_13.2C_2014:_Phillips_66_CEO_Greg_Garland_Wants_to_Find_a_Company_to_Lease_the_North_and_South_Towers Phillips' Plans for the North and South Towers] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Other Phillips Refineries</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66_Alliance_Refinery#Alliance_Refinery Alliance Refinery (AL)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Bayway_Refinery#Bayway_Refinery Bayway Refinery (BW)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Billings_Refinery#Billings_Refinery Billings Refinery (BI)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Borger_Refinery#Borger_Refinery Borger Refinery (BG)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ferndale_Refinery#Ferndale_Refinery Ferndale Refinery (FN)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Humber_Refinery#Humber_Refinery Humber Refinery (HU)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Lake_Charles_Refinery#Lake_Charles_Refinery Lake Charles Refinery (Westlake) (LC)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Los_Angeles_Refinery#Los_Angeles_Refinery Los Angeles (Wilmington) Refinery (LA)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Melaka_Refinery#Melaka_Refinery Melaka Refinery in Malaysia (ME)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Ponca_City_Refinery#News_from_the_Ponca_City_Refinery Ponca City Refinery (PC)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_San_Francisco_Refinery#San_Francisco_Refinery San Francisco Refinery (SF)] [http://cognitivecomputer.com/index.php?title=Phillips_66:_San_Francisco_Refinery#News_and_Views_on_Rodeo_Refinery Rodeo] [http://cognitivecomputer.com/index.php?title=Phillips_66:_San_Francisco_Refinery#News_and_Views_on_Santa_Maria_Refinery Santa Maria (Nipomo)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Sweeny_Refinery#Sweeny_Refinery Sweeny Refinery (SW)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Whitegate_Refinery#Whitegate_Refinery Whitegate Refinery in Ireland (WG)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Wood_River_Refinery#Wood_River_Refinery Wood River Refinery (WR)] | ||
| + | |||
| + | <html><HR></html> | ||
| + | |||
| + | '''<span style="color:#0000FF">Other Locations</span>''' | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Houston_Headquarters#New_Phillips_66_Headquarters New Houston Headquarters] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Houston_Chemical_Complex_(HCC)#Phillips_66_Houston_Chemical_Complex_.28HCC.29 Houston Chemical Complex] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Bartlesville_Technology_Hub#Bartlesville_Technology_Hub Bartlesville Technology Hub] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_from_Port_Arthur_Chemical_Plant Port Arthur Chemical Plant] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_from_Cedar_Bayou_Chemical_Plant Cedar Bayou Chemical Plant (Baytown)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Chemical_Business_Segment_at_Phillips_66#Latest_News_and_Views_from_Sweeny_Petrochemical_Complex Sweeny Petrochemical Complex] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_66:_Trainer_Refinery#Trainer_Refinery Trainer Refinery (sold in 2012)] | ||
| + | * [http://cognitivecomputer.com/index.php?title=Phillips_Refinery_in_Phillips,_Texas#Phillips_Refinery Phillips Refinery (Closed in 1986)] | ||
| + | |} | ||
| + | |||
| + | ===Full Disclosure=== | ||
| + | I am an [http://www.linkedin.com/pub/hugh-pickens/b/82/b93 independent investor] who is a stockholder in Phillips 66 and the purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies and to analyze the company's business strategy particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the Marland Refinery in Ponca City, Oklahoma. I began building my position in PSX when Phillips 66 went public on May 1, 2012 and am long PSX. I will disclose publicly if I close my position on PSX or go short. Unless stated otherwise, there is a citation for every statement in this article. The only exception is the [http://cognitivecomputer.com/index.php?title=Phillips_66_and_Ponca_City%2C_Oklahoma#Conclusions "Conclusions Section"] in this report which includes my own judgments and findings. I am an advocate that that it would be beneficial for both Phillips 66 and the community of Ponca City for Phillips 66 [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66%2C_its_Business_Strategy%2C_and_Execution#Renaming_of_Refinery_in_Ponca_City rename its Ponca City refinery the "Marland Refinery in Ponca City"] to honor an oil pioneer who together with Frank Phillips brought prosperity and advancement to Northern Oklahoma. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Phillips 66 (PSX). | ||
| + | |||
| + | ===Updates to the Web Site=== | ||
| + | This web page is [http://cognitivecomputer.com/index.php?title=An_Independent_Evaluation_of_Phillips_66,_its_Business_Strategy,_and_Execution&offset=&limit=1000&action=history frequently updated] so check back periodically to see the latest information added to '''"An Independent Evaluation of Phillips 66, its Business Strategy, and Execution"''' or subscribe to the rss feed for this article. If you have any information or insights that you would like to see added to this report on Phillips 66 please contact Hugh Pickens by email at hughpickens AT gmail DOT com. | ||
| + | |||
| + | ===Copyright=== | ||
| + | The material in this article is licensed under under the Creative Commons under an [http://creativecommons.org/licenses/by-nc-sa/2.0/deed.en| Attribution-Noncommercial-Share Alike 2.0 Generic] license. Except for short, fair use excerpts, the material on this article cannot be used for commercial purposes without permission of Hugh Pickens. Attribution for use of any material from this article must be provided to Hugh Pickens and if used on the web a link must be provided to http://hughpickens.com. | ||
Latest revision as of 16:02, 19 September 2017
by Hugh Pickens, Ponca City Oklahoma
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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.
Major Sections of this report on Phillips 66 include:
Contents
- 1 Master Index of Articles about Phillips 66
- 2 Introduction
- 3 Creation of Phillips 66
- 4 Strategic Vision for Phillips 66
- 5 Phillips Capital Programs
- 5.1 December 5, 2014: Phillips Capital Progam for 2015
- 5.1.1 Phillips to Invest $1.1 Billion in 2015 in Refining and Marketing Business Segment
- 5.1.2 Phillips to Invest $3.750 Billion in 2015 in Midstream Business Segment
- 5.1.3 Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment
- 5.1.4 Phillips to Invest $170 Million in 2014 in Marketing and Specialties
- 5.1.5 Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities
- 5.2 December 6, 2014: Phillips Capital Program for 2014
- 5.2.1 Phillips to Invest $1.0 Billion in 2014 in Refining and Marketing Business Segment
- 5.2.2 Phillips to Invest $2.167 Billion in 2014 in Midstream Business Segment
- 5.2.3 Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment
- 5.2.4 Phillips to Invest $140 Million in 2014 in Marketing and Specialties
- 5.2.5 July 10, 2014: Phillips to Increase 2014 Budget for $1.2 Billion
- 5.3 Phillips Capital Program for 2013
- 5.3.1 Phillips to Invest $1.149 Billion in 2013 in Refining and Marketing Business Segment
- 5.3.2 Phillips to Invest $2.2 Billion in 2013 in Midstream Business Segment
- 5.3.3 Phillips to Invest $1.1 Billion in 2013 in Chemical Business Segment
- 5.3.4 Phillips to Transfer Transportation Assets To A Master Limited Partnership
- 5.1 December 5, 2014: Phillips Capital Progam for 2015
- 6 Governance of Phillips 66
- 6.1 Jim Mulva, Chairman and CEO of ConocoPhillips
- 6.1.1 Mulva Received $156 Million Severance Package in 2012
- 6.1.2 Mulva's Post-ConocoPhillips Activities
- 6.1.2.1 December 14, 2016: Jim Mulva Donates $75 million to University of Texas for Medical Research
- 6.1.2.2 April 28, 2016: Jim Mulva Donates $13 million to St. Norbert College for Expansion of the Schuldes Sports Center
- 6.1.2.3 February 10, 2016: ValueWalk Analyzes the Relation Between ConocoPhillips' Stock Buybacks and the Dividend Cut
- 6.1.2.4 October 27, 2015: Jim Mulva in Talks to Help Build Proposed Cultural Center for De Pere
- 6.1.2.5 March 28, 2013: Jim Mulva Got $260 Million from Golden Parachute On His Way Out The Door
- 6.1.2.6 April 26, 2012: Mulva Joins Board of Directors of General Motors
- 6.1.2.7 January 24, 2014: Mulva Family Donates $60 Million to Business and Engineering Schools
- 6.2 Greg Garland, Chairman, President and CEO of Phillips 66
- 6.2.1 Greg Garland, Chairman, President and CEO of Phillips 66
- 6.2.2 Garland's Education and Background
- 6.2.3 How Garland Was Selected for CEO of Phillips
- 6.2.4 Latest News About Greg Garland
- 6.2.4.1 March 22, 2017: Greg Garland's Salary Increases from $22.9 million in 2015 to $25.1 million in 2016
- 6.2.4.2 November 14, 2016: Garland Sells $6.4 Million in Phillips 66 Stock
- 6.2.4.3 June 6, 2016: Garland Sells 62,500 Shares of Phillips Stock
- 6.2.4.4 November 9, 2015: Garland Elected Chair of the Finance Committee at American Petroleum Institute
- 6.2.4.5 July 25, 2015: Oil is Down but Garland's Pay is Up
- 6.2.4.6 June 29, 2015: Greg Garland is No 1 Houstonian to Know in 2015 Despite Phillips Decrease in Revenue and Stock Price
- 6.2.4.7 March 9, 2015: Board of Directors Cuts Garland's Bonus By 35 percent after Phillips 2014 Share Decline
- 6.2.4.8 March 2, 2015: Garland Sees Brent-WTI Spread Widening to $6-10/bl
- 6.2.4.9 September 25, 2014: Garland Places Ethics and Safety at the Top of His List
- 6.2.4.10 August 13, 2014: Garland Wants to Find a Company to Lease the North and South Towers in Ponca City
- 6.2.4.11 October 16, 2013: Garland Appointed to Board of Directors of Amgen
- 6.2.4.12 August 27, 2013: Garland Recognizes Contribution of E. W. Marland
- 6.2.4.13 September 11, 2012: Bartlesville a Special Place for Garland
- 6.2.4.14 September 11, 2012: Conoco the Only Company That Didn't Offer Garland a Job
- 6.2.5 Garland's Compensation as CEO of Phillips
- 6.3 John Lowe, Member of the Phillips 66 Board of Directors
- 6.4 Board of Directors
- 6.5 Management and Governance Effectiveness at Phillips 66
- 6.6 Financial Stability of Phillips 66 and Risk Management
- 6.6.1 September 7, 2015: Phillips 66 Receives 'A' Credit Rating from Morningstar
- 6.6.2 April 27, 2015: Phillips 66 Receives 'A' Credit Rating from Morningstar
- 6.6.3 August 26, 2014: Moody's Upgrades Phillip from Baa1 to A3
- 6.6.4 June 6, 2013: A.M. Best Affirms Excellent Rating for Phillips' Captive Insurer
- 6.6.5 December 3, 2012: Standard and Poor Assigns BBB/Stable/A-2 Corporate Credit Rating, Judges Financial Risk Profile as 'Intermediate'
- 6.7 Government Relations
- 6.7.1 October 20, 2014: Candidates for US Congress Discuss Wood River Refinery
- 6.7.2 February 20, 2013: Phillips Retains Van Ness Feldman as New DC Lobbyists
- 6.7.3 February 20, 2013: Phillips Spent $1.5 million Lobbying Federal Government in 2012
- 6.7.4 November 14, 2012: Greg Garland Expects More Government Regulations During Second Obama Term
- 6.7.5 July 30, 2012: Phil Brady Named Top Lobbyist for Phillips 66
- 6.1 Jim Mulva, Chairman and CEO of ConocoPhillips
- 7 Public Relations and Media Relations
- 7.1 March 6, 2015: Phillips 66 Us Marketing Wins The American Marketing Association Houston Chapter 2014 Marketer Of The Year Award
- 7.2 December 31, 2014: The Shredder Writes: "There’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community"
- 7.3 December 23, 2014: Judge Rules That Phillips 66 Policy Prohibiting Santa Maria Refinery Employees from Talking to the Media Violates the Law
- 7.4 January 2, 2013: Gregg Laskoski at US News and World Report is Critical of Lack of Tranparency at Phillips 66
- 7.5 November 5, 2012: Motor Trend Journalist Takes Money To Be Spokesperson For Phillip 66
- 7.6 September 6, 2012: Motor Trend's Jessi Lang says Drivers Can Clean Their Engines with Top Tier Gas Like Phillips 66
- 8 New Phillips 66 Headquarters
- 8.1 December 17, 2014: Phillips Places Final Beam in New Headquarters
- 8.2 October 31, 2014: Phillips Switches Building Contractors on New Houston Headquarters
- 8.3 November 22, 2013: Phillips Breaks Ground on New Headquarters Building
- 8.4 July 23, 2013: Phillips Shares Conceptual Rendering of New HQ
- 8.5 September 12, 2012: Phillips Selects Site for New Global Headquarters
- 8.6 July 9, 2012: Interim Headquarters Selected
- 8.7 March 20, 2012: Phillips 66 Headquarters to be Located in Houston
- 9 Bartlesville Technology Hub
- 9.1 January 24, 2015: Phillips Is Looking at Controllable Expenses Not Personnel Cuts
- 9.2 January 23. 2015: Phillips 66's Commitment to Bartlesville Will Remain Strong
- 9.3 December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay including Pilot Plant and PPS Assets in Bartlesville
- 9.4 December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville
- 9.5 December 5, 2014: Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities
- 9.6 November 19, 2014: Phillips Donates $50,000 to Restore Goff Tower in Bartlesville
- 9.7 August 13, 2014: Phillips Has No Plans to Close Any Bartlesville Facilities
- 9.8 August 13, 2014: Phillips Pledges $1,700,000 to Support STEM Education in Bartlesville
- 9.9 September 1, 2013: Garland Praises Bartlesville
- 9.10 October 27, 2012: Bartlesville Research Center Dodges a Bullet
- 9.11 September 12, 2012: Bartlesville a Special Place for Garland
- 9.12 May 1, 2012: Phillips Has 'Deep Roots' in Bartlesville
- 9.13 April 29, 2012: Jim Mulva is a "True Friend of Bartlesville
- 10 The Stock Market and Investor Relations
- 10.1 Stock Performance
- 10.2 Dividends and Stock Repurchase
- 10.2.1 February 4, 2015: Phillips Declares Quarterly dividend of 50 Cents
- 10.2.2 October 1, 2014: Phillips Declares Quarterly dividend of 50 Cents
- 10.2.3 July 10, 2014: Phillips Declares Quarterly dividend of 50 Cents
- 10.2.4 May 7, 2014: Phillips Declares Quarterly Dividend of 50 Cents
- 10.2.5 February 14, 2014: Garland Says Phillips Believes in Bulletproof Dividends
- 10.2.6 February 7, 2014: Phillips Declares Quarterly Dividend of 39 cents
- 10.2.7 December 6, 2013: Phillips Announces New $2 Billion Share Repurchase Program
- 10.2.8 October 2, 2013: Phillips Increases Quarterly Dividend to 39 cents
- 10.2.9 July 10, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
- 10.2.10 May 8, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
- 10.2.11 February 11, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
- 10.2.12 December 7, 2012: Phillips Increases Quarterly Dividend from 25 cents to 31.25 cents
- 10.2.13 October 3, 2012: Phillips Increases Quarterly Dividend from 20 cents to 25 cents
- 10.2.14 July 12, 2012: Phillips 66 Initiates $0.20 Quarterly Dividend
- 10.3 Stockholder's Meetings
- 10.4 Earnings Conferences
- 10.4.1 2014 Q3: October 29, 2014: Phillips Earnings Beat Q3 Estimates on Higher Margins
- 10.4.2 2014 Q2: July 30, 2014: Phillips Falls Short with 10% Drop in Earnings
- 10.4.3 2014 Q1: April 30, 2014: Phillips Meet Expectations with First-Quarter Earnings of $1.6 Billion
- 10.4.4 2013 Year: January 29, 2014: Phillips 2013 Earnings Beat Expectations But Fall Short Of The Prior Year
- 10.4.5 2013 Q4: January 29, 2014: Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year
- 10.4.6 2013 Q3: October 30, 2013:Phillips Profits are Down in Third Quarter Due to Refining Losses
- 10.4.7 2013 Q2: July 31, 2013: Phillips Earnings Disappoint with 19% Drop in Earnings for 2nd Quarter
- 10.4.8 2013 Q1: May 1, 2013: Phillips' Profit in 1st Quarter Doubles from Previous Year to $2.23 per Share
- 10.4.9 2012 Q4: January 31, 2013: Phillips 66 Adjusted Profit Beats 4th Quarter Estimates But Gross Profits Down 65% When Including Impairment Charge
- 10.4.10 2012 Q3: October 31, 2012: Phillips 66 Beats Analyst Expectations with 3rd Quarter Profits of $1.6 billion or $2.51 per share
- 10.4.11 2012 Q2: August 1, 2012: Phillips announces Profits up 14% in Second-Quarter Earnings Call
- 10.5 Investor Conferences
- 10.5.1 September 4, 2014: Phillips Presents at Barclay CEO Energy-Power Conference
- 10.5.2 May 21, 2014: Phillips 66 presents at UBS Global Oil & Gas Conference
- 10.5.3 April 10, 2014: Phillips Presents at Phillips 66 Analyst Meeting
- 10.5.4 March 6, 2014: Phillips 66 presents at Bank of America Merrill Lynch 2014 Refining Conference
- 10.5.5 February 12, 2014: Phillips presents at Credit Suisse Energy Summit
- 10.5.6 August 29, 2013: Phillips presents at Barclays CEO Energy-Power Conference
- 10.5.7 May 21, 2013: Phillips Presents at UBS Global Oil & Gas Conference
- 10.5.8 May 15, 2013: Phillips Presents at the Citi Global Energy and Utilities Conference
- 10.5.9 March 18, 2013: Phillips Presents at the Howard Weil 41st Annual Energy Conference
- 10.5.10 February 28, 2013: Phillips to Present at Bank of America Merrill Lynch 2013 Refining Conference on March 7
- 10.5.11 February 5, 2013: Taylor Tells Credit Suisse Energy Summit That Canadian Crude is Being Transported to California Refineries
- 10.5.12 January 22, 2013: Phillips 66 to Present at Credit Suisse Energy Summit on February 5, 2013
- 10.5.13 December 13, 2012: Phillips Announces 2013 Capital Program at Inaugural Analyst Meeting
- 10.5.14 November 27, 2012: Greg Garland to Host Inaugural Analyst Meeting on December 13
- 10.5.15 November 13, 2012: Tim Taylor Presents at Bank of America Merrill Lynch 2012 Global Energy Conference
- 10.5.16 September 5, 2012: Garland Speaks at Barclays CEO Energy-Power Conference
- 10.5.17 August 22, 2012: Garland to Speak at Barclays CEO Energy-Power Conference on September 5
- 10.5.18 June 5, 2012: Garland Presents Phillips Strategy for Growth to the Citi Global Energy Conference
- 10.5.19 June 5, 2012: Garland Presents to Investors at Citi Global Energy Conference
- 10.5.20 May 24, 2012: Clayton Reasor Presents to UBS Global Oil and Gas Conference
- 10.6 Other Investor News
- 10.6.1 July 23, 2013: Phillips 66 Partners raises $377.8 million in IPO
- 10.6.2 July 15, 2013: Phillips 66 Partners Plans $315 million IPO
- 10.6.3 March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO
- 10.6.4 July 3, 2012: Phillips Recommends Stockholders Reject TRC Mini-Tender Offer
- 10.6.5 June 7, 2012: Garland says Phillips Deserves a Higher P/E
- 10.6.6 May 2, 2012: Phillips Rings Wall Street's Opening Bell
- 10.6.7 April 23, 2012: Phillips to Join S&P 500
- 10.6.8 April 17, 2012: Howard Thill says Phillips Will Have Increased Flexibility
- 10.6.9 April 4, 2012: ConocoPhillips Board of Directors Votes to Create Two New Companies
- 11 Operational Excellence
- 12 Labor Relations and Human Resources
- 12.1 Labor Relations and Issues with Employees
- 12.1.1 March 12, 2015: Union Says Tentative Agreement Reached to End US Refinery Strike
- 12.1.2 March 11, 2015: Union Signals Possible Proposal Coming That Will End US Refinery Strike
- 12.1.3 February 23, 2015: USW Workers on Strike at Twelve Refineries Nationwide
- 12.1.4 February 21, 2015: Strike Expands to Additional Refineries Including the Nations Largest Refinery at Port Arthur, Texas
- 12.1.5 February 16, 2015: US Refinery Strike Could Spread Over Safe Staffing
- 12.1.6 February 15, 2015: Managers Bunk Down at US Refineries Amid Safety Concerns as Strike Enters Third Week
- 12.1.7 February 8, 2015: Workers Expand Strike to Two More Refineries
- 12.1.8 February 7, 2015: Phillips 66 Refinery Workers Stage Informational Picket in Billings to Highlight Understaffing, Safety, and Fatigue
- 12.1.9 February 6, 2015: Refinery Workers Strike to Extend to Next Week
- 12.1.10 February 4, 2015: Workers at Santa Maria Refinery Concerned About Fatigue Policy, Show Solidarity with Union Strikers
- 12.1.11 February 3, 2015: Tesoro's Martinez Refinery Shuts Down as Oil Workers Strike Goes Into Second Day
- 12.1.12 February 1, 2015: Refinery Workers Go On Strike at Nine Refineries
- 12.1.13 January 30, 2015: Union Workers Reject Oil Company's Offer as Contract Set to Expire
- 12.1.14 January 30, 2015: DCP Midstream to Cut Workforce by 20%
- 12.1.15 January 26, 2015: Refinery Workers May Have to Strike
- 12.1.16 January 25, 2015: With One Week of Bargaining Left, Refinery Workers Union Says Talks Are Going Slow
- 12.1.17 December 23, 2014: Judge Rules That Phillips 66 Policy Prohibiting Santa Maria Refinery Employees from Talking to the Media Violates the Law
- 12.1.18 November 13, 2014: Phillips 66 Workers Return to Work at Humber Refinery After Three Day Wildcat Strike Over Safety Issues
- 12.1.19 November 12, 2014: Humber Refinery Workers Walk Out for Third Day Over Safety Issues
- 12.1.20 November 11, 2014: Hundreds of Humber Refinery Workers Walk Out for Second Day Over Safety Issues
- 12.1.21 November 10, 2014: 450 Contract Employees Walk Out at Humber Refinery Over Safety Concerns
- 12.1.22 November 1, 2014: US Refinery Union Workers Seek Substantial Raises
- 12.1.23 April 16, 2014: Health and Safety Specialists at Santa Maria Refinery Claim They Were Punished for Unionizing
- 12.1.24 September 30, 2013: Contractors at Humber Refinery Protest Against Cuts to Breaks
- 12.1.25 December 13, 2012: Safety Changes At Santa Maria Refinery Pit Workers Against Management
- 12.1.26 September 10, 2012: Union Contract Ratified with 52 percent of Bayway Refinery Workers Voting in Favor
- 12.1.27 September 7, 2012: Bayway Refinery Workers Vote on New Union Contract
- 12.1.28 August 30, 2012: Refinery Operators Expected to Decline by 14% by 2020
- 12.1.29 May 30, 2012: Phillips Fires 21 Union Workers, 3 Supervisors at Billing Refinery for Stealing Hours
- 12.2 Employee Benefits
- 12.1 Labor Relations and Issues with Employees
- 13 Philanthropic and Community Benefits
- 13.1 February 26, 2015: Phillips Donates $20,000 to Southern Illinois University Edwardsville School of Engineering
- 13.2 February 13, 2015: Phillips Donates $25,000 to Rolling Hills Elementary School in Amarillo
- 13.3 January 30, 2015: Phillips Donates $15,000 to West Texas A&M
- 13.4 January 30, 2015: Attucks Community Alliance in Ponca City Receives $20,000 from Phillips for CPR Equipment
- 13.5 January 29, 2015: Phillips Bayway Refinery Donates $29,000 for Paramedic Radios in New Jersey
- 13.6 January 22, 2015: Phillips Makes $75,000 Grant for Playground Equipment in Ponca City
- 13.7 January 21, 2015: Phillips Donates $15,000 to Louisiana Tech University
- 13.8 December 31, 2014: The Shredder Writes: "There’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community"
- 13.9 December 30, 2014: Phillips Donates $100,000 to Belle Chasse YMCA
- 13.10 December 23, 2014: Phillips Donates $30,000 to Santa Maria Museum
- 13.11 December 20, 2014: Phillips Gives $155,000 to Westlake Fire Department and Police
- 13.12 December 10, 2015: Phillips Makes $40,000 Grant to Billings Firefighters
- 13.13 December 9, 2014: Phillips Contributes Over $200,000 to Southwest Illinois Division of United Way
- 13.14 December 8, 2014: Phillips Donates $100,000 to Build Bike Trail in Bethalto
- 13.15 December 5, 2014: Phillips 66 Donates $50,000 for ZooMontana Wolverine Habitat
- 13.16 November 20, 2013: Village of Roxana Will Not Have to Repay Million of Dollars to Philips 66 in Tax Assessment Case
- 13.17 November 19, 2014: Phillips Donates $50,000 to Restore Goff Tower in Bartlesville
- 13.18 November 18, 2014: Phillips Donates $250,000 to Upgrade Storm Warning Systems Around Wood River Refinery
- 13.19 October 30, 2014: Phillips Donates $1 Million to Texas A&M new Engineering Education Complex (EEC)
- 13.20 October 28, 2014: Phillips Donates $100,000 to Lagrange High School in Lake Charles
- 13.21 October 7, 2014: Phillips Makes $40,000 Grant to 'Pheasants Forever'
- 13.22 September 9, 2014: Phillips Donates $500,000 to Oklahoma State University
- 13.23 September 3, 2014: Ponca City Refinery Donates Two Used Firetrucks to Volunteers
- 13.24 September 2, 2014: Phillips Gives $750,000 to Louisiana State University to Fund Interactive Classroom
- 13.25 August 15, 2014: Phillips and Chevron Pledge $1,6000,000 to Fund Petrochemical Academy in Sweeny
- 13.26 August 13, 2014: Phillips Pledges $1,700,000 to Support STEM Education in Bartlesville
- 13.27 July 9, 2014: Phillips Pledges $750,000 to Support STEM Education in Billings
- 13.28 June 27, 2014: Phillips Awards Nine Scholarships to Students Whose Parents Work at Wood River Refinery
- 13.29 June 10, 2014: Phillips Honored with Philanthropy Award at Bayway Refinery
- 13.30 April 22, 104: Phillips Donates $500,000 to University of Texas
- 13.31 November 15, 2013: Phillips Honored for Outstanding Philanthropy at Ferndale Refinery by Association of Fundraising Professionals – Washington Chapter
- 14 Refineries and Marketing Business Segment
- 14.1 Annual Capital Plan for Refining Business Segment
- 14.2 Geographic Diversity of Refineries
- 14.3 Cyclical Nature of Refining
- 14.4 Refining and Marketing Earnings
- 14.4.1 January 30, 2013: Garland Says Phillips Expects 15% ROCE in R&M Business Segment Going Forward
- 14.4.2 January 30, 2013: Garland Announces 22% ROCE in R&M Business Segment for 2012
- 14.4.3 August 1, 2012: Phillips announces Annualized R&M Adjusted Net Profit of 17% for Second-Quarter, 2012
- 14.4.4 May 24, 2012: Phillips 66 Expects Global Refining Margins to Drop in 2012 and 2013
- 14.4.5 April 23, 2012: ConocoPhillips Reports 2012 Q1 Earnings
- 15 Increasing Profitability in the Refining and Marketing Business Segment
- 15.1 Increase Profitability by Getting More Advantaged Crude in Front of Refineries
- 15.1.1 March 23, 2015: Operations at Ponca City Refinery Have Improved with Crude from Nearby Mississippian Lime Shale
- 15.1.2 March 2, 2015: Garland Sees Brent-WTI spread Widening to t $6-10/bl
- 15.1.3 January 5, 2015: Wood River Refinery Spokeswoman Says Falling Oil Prices Have Not Impacted Phillips' Business
- 15.1.4 November 21, 2014: Ferndale Unloads First Train of Bakken Produced Crude
- 15.1.5 October 29, 2014: Phillips Increased Advantaged Crude to 95% in Third Quarter
- 15.1.6 October 29, 2014: Phillips Began Operations of 75,000 bpd Rail Facility at Bayway Refinery in August
- 15.1.7 October 28, 2014: Phillips Partners with Energy Transfer to Build Bakken Crude Oil Pipelines
- 15.1.8 September 3, 2014: Phillips to Add Another Jones Act Vessel to its Fleet
- 15.1.9 September 3, 2014: Phillips to Build North Dakota Origination Rail Terminal for Bakken Crude
- 15.1.10 September 3, 2014: Phillips to Buy 500 More Railcars To Move Crude to Coastal Refineries
- 15.1.11 September 3, 2014: Garland Disappointed with Lengthy Permit Process for Rail Offloading at Santa Maria Refinery
- 15.1.12 September 3, 2014: Phillips Receives First Crude-Only Train at Bayway Refinery
- 15.1.13 September 3, 2014: Rail Off-loading System On Track for 4th Quarter Start at Ferndale Refinery
- 15.1.14 July 30, 2014: Narrowing Crude Differentials Negatively Impacted Phillips Realized Margins in 2014 Second Quarter
- 15.1.15 March 12, 2014: Brent-WTI Spread Narrows While Heavy and Sour Canadian Crude Oil Maintain High Margins
- 15.1.16 February 12, 2014: Garland Says Phillips Will Get More Advantaged Crude in Front of Refineries
- 15.1.17 January 30, 2014: in the Fourth Quarter, 94% of Phillips Crude Slate Was Advantaged
- 15.1.18 October 30, 2013: Phillips May Buy More Railcars to Move Advantaged Crude to US Refineries
- 15.1.19 July 31, 2013: Narrowing of WTI-Brent Gap Contributes to Disappointing Earnings for Phillips' 2nd Quarter
- 15.1.20 July 31, 2013: Phillips Has Taken Delivery of 650 Rail Cars Out of 2,000
- 15.1.21 July 21, 2013: Brent-WTI Spread Disappears For Now
- 15.1.22 May 21, 2013: Phillips Plans to Increase Advantaged Crude Processing to 100% Within the Next Few Years
- 15.1.23 May 1, 2013: Phillips Increases Share of Advantaged Crude to 68%
- 15.1.24 March 20, 2013: Phillips Signs Deals to Boost Deliveries of Cheap Crude by Pipeline and Rail
- 15.1.25 January 30, 2013: Garland Says Phillips is Running More Advantaged Crude
- 15.1.26 January 30, 2013: Garland Says Feedstock Advantage Increased Earnings for $300 Million for 2012
- 15.1.27 January 8, 2013: Global Partners to Deliver 50,000 bpd of Bakken Crude to Bayway Refinery
- 15.1.28 December 13, 2012: Phillips Announces Marine Charter Agreements to Supply Alliance and Bayway Refineries
- 15.1.29 September 19, 2012: Greg Garland Says Structural Change in Crude Prices Provide an Opportunity for US Refiners
- 15.1.30 September 5, 2012: All Three Business Segments Are Well Positioned to Take Advantage of the Prolific Shale Plays and the Canadian Heavy
- 15.1.31 August 15, 2012: Crack Spread is $29.05 a barrel for Texas and Midwest Refiners
- 15.1.32 August 1, 2012: The Spread between Brent and Bakken Crude is still around $19/barrel
- 15.1.33 August 1, 2012: Phillips to Buy 2,000 Rail Cars to Move Bakken Crude to Bayway and Ferndale Refineries
- 15.1.34 June 5, 2012: Phillips May Add Several Thousand Railroad Cars in an Effort to Expand Capacity
- 15.1.35 June 5, 2012: Garland Wants to Get More Advantaged Crude to the Front End of Refineries
- 15.1.36 June 5, 2012: Greg Garland Wants a Pipeline on Wheels to Get the Barrels in Front of the Facilities
- 15.1.37 May 24, 2012: Clayton Reasor Says Price Spread between West Texas Intermediate Crude and Brent Crude futures Likely to Narrow Sharply in 2013
- 15.1.38 May 22, 2012: New Pipelines to Bring Bakken Crude to Ponca City Refinery and Cushing
- 15.1.39 May 15, 2012: Gregory J. Millman Says Mid-Continent Refineries Have Access to Cheap, High Quality Crudes
- 15.1.40 May 10, 2012: Simon Moore Says New Pipelines Will Bring Bakken Oil to Mid-Continent Refineries
- 15.1.41 May 1, 2012: Phillips 66 Plans to Run More Shale Oil
- 15.1.42 May 1, 2012: Investments in refining will enhance its export abilities and connections to lower-cost crude
- 15.1.43 April 30, 2012: Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent
- 15.2 Increase Profitability by Increasing Exports
- 15.2.1 August 13, 2014: Phillips Evaluates Export of Super-Light Crude Oil
- 15.2.2 May 7, 2014: Garland Softens Position - Doesn't Oppose Crude Oil Exports
- 15.2.3 April 11, 2014: Phillips Exports Oil to Canada
- 15.2.4 April 11, 2014: Phillips to Build Splitter at Sweeny Refinery to Process Condensates into Fuel Components that Can Be Exported
- 15.2.5 March 5, 2014: BP Skirts US Crude Export Ban with Mini-Refineries: Phillips May Follow Suit
- 15.2.6 February 19, 2014: Christopher Helman Says the US Oil Boom is Not So Bad for Refinery Owners
- 15.2.7 February 14, 2014: Garland Says Phillips is Well Placed to Compete in the Export Market to South America
- 15.2.8 January 29, 2014: Garland Reiterates Support of Crude Exports
- 15.2.9 January 29, 2014: Phillips Hits New Record Exporting 200,000 BPD, Ultimate Target is 500,000 BPD
- 15.2.10 May 21, 2013: Phillips is Increasing Export Capabilities
- 15.2.11 January 10, 2013: Michael Fitzsimmons Writes that Garland's Support of Crude Exports is Grounded in Confidence in the Future and in Relations with ConocoPhillips
- 15.2.12 December 13, 2012: Garland Supports Exports of Crude Oil
- 15.2.13 September 19, 2012: Phillips Plans to Increase Exports to 220,000 bbl by End of 2013
- 15.3 Increase Profitability by Increasing Clean Product Yields
- 15.3.1 February 12, 2014: Garland Says Phillips is Pushing Our Clean Yields
- 15.3.2 January 29, 2014: Phillips Benefited from Clean Product Differentials
- 15.3.3 May 21, 2013: Phillips Plans to Increase Product Yields
- 15.3.4 April 9, 2012: Garland Wants to Increase Clean Product Yields
- 15.3.5 June 5, 2012: Garland Wants to Increase Clean Product Yields
- 15.4 Increase Profitability by Decreasing Costs
- 15.5 Increase Profitability by Optimizing Portfolio
- 15.1 Increase Profitability by Getting More Advantaged Crude in Front of Refineries
- 16 Phillips' Divestiture of Non-Core Assets Through Sale, Exchange, or Closure
- 16.1 February 16, 2015: Phillips 66 Sells Interests in Three Pipeline Systems to Phillips 66 Partners
- 16.2 February 9, 2015: Phillips Completes Sale of Bantry Bay Oil Terminal in West Cork, Ireland
- 16.3 February 9, 2015: Forbes Says Delta Made a Mistake Buying the Trainer Refinery from Phillips 66
- 16.4 December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay
- 16.5 November 12, 2014: Phillips to Sell Maleka Refinery for $635 Million
- 16.6 October 29, 2014: Sale of Maleka Refinery is an Ongoing Process
- 16.7 October 29, 2014: Sale of Whitegate Refinery is a Failed Process
- 16.8 September 4, 2014: Chevron Phillips to Sell Performance Polymers Business for $220 Million
- 16.9 August 28, 2014: Phillips Sells Whiddy Oil Terminal
- 16.10 April 3, 2014: Phillips Gives Up Trying to Sell Whitegate Refinery
- 16.11 February 14, 2014: Garland Says Phillips Has Gotten Good at Selling the Good Things
- 16.12 February 14, 2014: Garland Says Phillips Expects to Sell Melaka and Whitegate in 2014
- 16.13 February 14, 2014: Phillips to Sell Gold Product Pipeline System to Phillips 66 Partners for $700 million
- 16.14 January 30, 2014: Garland Says the West Coast is a Challenged Environment
- 16.15 December 30, 2013: Phillips Sells Specialty Products Unit to Warren Buffett's Berkshire Hathaway for $1.4 Billion
- 16.16 October 30, 2013: Garland Says East Coast and West Coasts Refineries are in Challenged Markets
- 16.17 October 30, 2013: Garland Says Phillips Still Looking to Sell Whitegate Refinery and Its Interest in Melaka Refinery
- 16.18 September 12, 2013: Phillips 66 says It Has Buyers Interested in Whitegate Refinery
- 16.19 July 15, 2013: Phillips Creates Phillips 66 Partners LP, a Master Limited Partnership with Pipline Assets
- 16.20 June 10, 2013: Phillips Wants to Sell Whitegate Refinery
- 16.21 May 11, 2013: Phillips Sells Power Plant at Humber Refinery
- 16.22 March 7, 2013: Phillips May Sell Refineries in Europe and Asia if the Price is Right
- 16.23 January 30, 2013: Garland Does Not Rule Out a Sale of Los Angeles Refinery and San Francisco Refinery
- 16.24 December 13, 2012: Phillips Likely to Sell Whitegate Refinery in Ireland and its stake in Melaka Refinery in Malaysia
- 16.25 December 13, 2012: Phillips to Transfer Transportation Assets to a Master Limited Partnership
- 16.26 December 3, 2012: Standard and Poor Says Some Phillips Facilities Are Candidates for Divestiture or Closure
- 16.27 October 31, 2012: California Refineries are in Lower Performing Part of Refinery Portfolio and Must Improve
- 16.28 October 17, 2012: Phillips Decides Not to Build Research and Training Campus in Louisville, Colorado
- 16.29 October 9. 2012: Phillips Sells Riverhead, NY Marine Petroleum Terminal
- 16.30 September 19, 2012: Greg Garland Says There's No Need to Expand Refining Capacity
- 16.31 September 19, 2012: Greg Garland Says Underperforming Refineries Could be Sold
- 16.32 September 5, 2012: Garland says Phillips Will Always Work the Tail of its Portfolio
- 16.33 August 1, 2012: Phillips Does Not Have Plans to Acquire Additional Refineries
- 16.34 August 1, 2012: Phillips Won't Sell Alliance Refinery
- 16.35 June 13, 2012: Delta Airlines Set to Close its Landmark Deal on June 22 to buy Phillips Trainer Refinery
- 16.36 June 7, 2012: Greg Garland says Phillips has no plans to Buy or Expand its Portfolio of 11 Domestic Refineries
- 16.37 June 5, 2012: Garland Says It Takes a Lot of Money to Close Down a Refinery
- 16.38 June 5, 2012: Phillips 66 Reconsiders Sale of Alliance Refinery
- 16.39 June 5, 2012: Fox News reports Sunoco and BP Have Refineries on the Selling Block
- 16.40 May 23, 2012: Morningstar Analyst Recommends Sale of Underperforming Refining Assets
- 16.41 May 1, 2012: Phillips Sells Trainer Refinery to Delta Airlines
- 16.42 May 1, 2012: Phillips 66 is Trying to Sell Alliance Refinery
- 16.43 July 14, 2011: Greg Garland says “There’s enough refineries in the world today"
- 17 Phillips Expansion, Construction, Acquisitions and Purchases
- 17.1 November 6, 2014: Phillips May Be Interested in Purchasing Citgo's Lemont Refinery
- 17.2 October 29, 2014: Chevron Phillips Considers New Ethylene Cracker
- 17.3 October 28, 2014: Phillips Partners with Energy Transfer to Build Bakken Crude Oil Pipelines
- 17.4 September 3, 2014: Truck Loading Facility at Ponca City Refinery to Have 100,000 b/d Capability by mid-2015
- 17.5 September 3, 2014: Phillips Acquires 100% of Cogen Facility at Sweeny to Prevent a Recurrence of 2013 Outages
- 17.6 September 3, 2014: Phillips to Build North Dakota Origination Rail Terminal for Bakken Crude
- 17.7 August 13, 2014: Phillips Breaks Ground on LPG Export Terminal at Freeport
- 17.8 August 7, 2014: Phillips Not Interested in Purchasing Citgo Refineries
- 17.9 June 23, 2014: Phillips to Acquire Lubricant Manufacturer Spectrum Corp
- 17.10 June 5, 2014: Phillips Buys Big Oil Storage Terminal On Gulf Coast
- 17.11 September 29, 2013: Coker Reactors Moved into Place at Ponca City Refinery
- 18 Marketing and Special Products
- 18.1 Marketing
- 18.1.1 December 5, 2014: Phillips to Invest $170 Million in 2014 in Marketing and Specialties
- 18.1.2 December 6, 2013: Phillips to Invest $140 Million in 2014 in Marketing and Specialties
- 18.1.3 September 26, 2013: Former Phillips 66 Marketer Shuns Big Oil for E15
- 18.1.4 June 10, 2013: Phillips Forces Gas Station Owners to Either Label or Stop Selling Gasoline Blended with 15 percent Ethanol
- 18.1.5 May 14, 2013: Phillips to Celebrate New Company During Marketing Conference
- 18.1.6 January 2, 2013: California Sues Phillips for Environmental Violations at Gas Stations
- 18.2 Specialty Coke
- 18.3 Specialty Lubricants
- 18.1 Marketing
- 19 Technology Development
- 20 Index of Sections
- 21 How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?
- 21.1 Background
- 21.2 Methodology for Determining the Profitability of the Ponca City Refinery
- 21.3 Profitability of the Ponca City Refinery
- 21.3.1 Scenario 1: Total R&M Earnings Divided by Worldwide Refineries
- 21.3.2 Scenario 2: Total Domestic R&M Earnings Divided by Domestic Refineries
- 21.3.3 Scenario 3: Portion of the Net Earnings Attributable to TI-Related Crude
- 21.3.4 Scenario 4: Portion of the Net Earnings Not Attributable to TI-Related Crude
- 21.3.5 Scenario 5: Total Net Income for Domestic Refineries
- 21.3.6 Scenario 6: Estimates for 2012 based on Phillips 2nd Quarter Earnings and Realized Crack Spreads
- 21.3.7 Scenario 7: Estimates for 2012 based on Phillips 3rd Quarter Earnings and Realized Crack Spreads
- 21.3.8 Variations in the Realized Crack Spread Among Phillips' Four Mid-Continent Refineries
- 21.3.9 Phillips to Run 60,000 bbl of Shale Crude Through Ponca City
- 21.4 How Much Does Phillips 66 Contribute to Ponca City?
- 22 News, Issues, and Status at Other Refineries
- 23 Chemical Business Segment within Phillips 66
- 23.1 Chevron Phillips Chemical
- 23.2 Latest News and Views on the Chemical Business Segment
- 23.2.1 December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay
- 23.2.2 December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville
- 23.2.3 December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex
- 23.2.4 December 5, 2014: Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment
- 23.2.5 October 29, 2014: Chevron Phillips Considers New Ethylene Cracker
- 23.2.6 October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014
- 23.2.7 October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur
- 23.2.8 October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November
- 23.2.9 October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire
- 23.2.10 October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility
- 23.2.11 October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou
- 23.2.12 September 4, 2014: Chevron Phillips to Sell Performance Polymers Business for $220 Million
- 23.2.13 August 7, 2014: Chevron Phillips to Raise Prices in September
- 23.2.14 July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire
- 23.2.15 July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur
- 23.2.16 July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant
- 23.2.17 April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility
- 23.2.18 December 6, 2013: Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment
- 23.2.19 October 30, 2013: Garland Says CPChem has Necessary Approvals to begin Construction of Ethane Cracker and Two Polyethylene Facilities
- 23.2.20 July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds
- 23.2.21 July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility
- 23.2.22 July 02, 2013: Phillips to Reduce Polypropylene Deliveries Because of Insufficient Feedstock Supply
- 23.2.23 June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex
- 23.2.24 April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital
- 23.2.25 January 30, 2013: Garland Says Phillips ROCE on Chemical Business Segment Was 31% for 2012
- 23.2.26 December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Chemical Business Segment
- 23.2.27 November 11, 2012: Chevron Phillips Chemical Says the Company is Expanding
- 23.2.28 September 5, 2012: The Chemicals Business is Pursuing Advantaged Feedstock
- 23.2.29 September 5, 2012: Chemicals is Increasing Capacity
- 23.2.30 September 2, 2012: Low Natural Gas Prices Are a Plus for Phillips' Chemical Business Segment
- 23.2.31 August 10, 2012: Chevron Phillips CEO Pete Cella Says Company Gets More Attention from Phillips 66
- 23.2.32 June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest
- 23.2.33 June 12, 2012: In Three Years, Phillips 66 may invest in a Second New Chemical Plant in the U.S. Gulf Region
- 23.2.34 June 4, 2012: Chevron Phillips Chemical Looking into Developing Iraq Plant
- 23.2.35 May 17, 2012: Phillips 66 Exec says Glut of Natural Gas will last 4 to 5 Years
- 23.2.36 May 10, 2012: Simon Moore says Chemical is doing well Because it has Access to Cheap US Natural Gas
- 23.2.37 May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex
- 23.2.38 April 9, 2012: According to ConocoPhillips CPChem has a strong history of Successfully Executing Growth Projects
- 23.3 Latest News and Views from Port Arthur Chemical Plant
- 23.3.1 October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014
- 23.3.2 October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur
- 23.3.3 October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November
- 23.3.4 October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire
- 23.3.5 October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility
- 23.3.6 July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire
- 23.3.7 July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur
- 23.3.8 July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant
- 23.3.9 April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital
- 23.4 Latest News and Views from Cedar Bayou Chemical Plant
- 23.4.1 November 6, 2014: Chevron Phillips Considers Further Expansion at Cedar Bayou
- 23.4.2 November 5, 2014: 1-Hexene Plant at Cedar Bayou Earns 2014 ABC Houston Chapter Prestigious Excellence in Construction Award
- 23.4.3 October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou
- 23.4.4 April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility
- 23.4.5 December 6, 2013: Phillips Plans to Start up 1-hexene plant in Baytown in 2014
- 23.4.6 September 5, 2012: Garland Announces $5 Billion Facility at Cedar Bayou
- 23.4.7 June 12, 2012: Garland Says the Baytown Facility Will Come Into Operation in 2017
- 23.5 Latest News and Views from Sweeny Petrochemical Complex
- 23.5.1 December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex
- 23.5.2 November 30, 2014: County Commissioners Approve Tax Abatement to Improve Chances of Landing Phillips 66’s $1.1 billion Sweeny Expansion
- 23.5.3 October 30, 2013: Garland Says Sweeny Ethylene Expansion to be Completed in 2014
- 23.5.4 October 29, 2014: Frac One at Sweeny in Progressing Nicely
- 23.5.5 October 29, 2014: Phillips is Evaluating Possibility of Another Frac at Sweeny
- 23.5.6 July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds
- 23.5.7 July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility
- 23.5.8 June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex
- 23.5.9 September 5, 2012: CPChem is Increasing Fractionation Capacity at Sweeny
- 23.5.10 May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex
- 24 Midstream Business Segment within Phillips 66
- 24.1 DCP Midstream
- 24.2 Growth Strategy in Midstream Segment
- 24.3 Latest News and Views of the Midstream Business Segment
- 24.3.1 October 23, 2015: Phillips 66's Houston Ship Channel Cross-Channel Connector is the 2015 Trenchless Technology Project of the Year for New Installation
- 24.3.2 January 30, 2015: DCP Midstream to Cut Workforce by 20%
- 24.3.3 December 5, 2014: Phillips to Invest $3.750 Billion in 2015 in Midstream Business Segment
- 24.3.4 November 21, 2014: Phillips Plans Midstream Infrastructure with 76-Mile Sacagawea Pipeline and Palermo Rail Terminal in North Dakota
- 24.3.5 September 1, 2014: One Year After Cleanup, DCP Midstream Oil Spill Still Causes Concern
- 24.3.6 August 21, 2014: Four Injured in DCP Midstream Pipeline Fire
- 24.3.7 August 13, 2014: Phillips Breaks Ground on LPG Export Terminal at Freeport
- 24.3.8 July 26, 2014: Front Range Pipeline Transports NGL Through Colorado
- 24.3.9 June 5, 2014: Phillips Buys Big Oil Storage Terminal On Gulf Coast
- 24.3.10 March 14, 2014: Phillips Enters Long-Term Deal to Sell LPG to China
- 24.3.11 February 14, 2014: Garland Says There Will Be Additional Fracks at Sweeney and on Gulf Coast
- 24.3.12 February 7, 2014: Phillips Board Okays $3 Billion for Sweeny Fractionator One and Freeport Liquefied Petroleum Gas (LPG) Export Terminal
- 24.3.13 January 4, 2014: Phillips to Proceed with Houston Ship Channel Cross-Channel Connector
- 24.3.14 December 6, 2013: Phillips to Invest $2.167 Billion in 2014 in Midstream Business Segment
- 24.3.15 October 30, 2013: Garland Says Phillips May Build 100,000 barrel-per-day NGL Fractionator at Phillips Sweeny Complex
- 24.3.16 October 30, 2013: Garland Says Phillips is Developing an LPG Export Terminal at Freeport, Texas
- 24.3.17 October 28, 2013: Activist Sandell Urges Strategic Action on DCP Midstream
- 24.3.18 April 19, 2013: DCP Plans Gas Plant Near Carlsbad, New Mexico
- 24.3.19 April 19, 2013: DCP Pipeline Awaits Approval in Colorado
- 24.3.20 April 5, 2013: Explosion at DCP Midstream Gas Compressor Station in Langston, Oklahoma
- 24.3.21 April 2, 2013: DCP Midstream Withdraws Plan to Build Megatank in Searsport
- 24.3.22 April 2, 2013: DCP Midstream Increases Ownership in Eagle Ford Venture to 80%
- 24.3.23 April 2, 2013: Phillips to Build 100,000 bpd Fractionator in Old Ocean, Texas to Process Natural Gas
- 24.3.24 March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO
- 24.3.25 March 13, 2013: DCP Midstream Pipeline to Serve Permian Basin
- 24.3.26 January 30, 2013: Garland Says Phillips ROCE for Midstream Business Segment was 22% for 2012
- 24.3.27 January 5, 2013: Two Hundred Turn Out in Searsport to Protest DCP Midstream's LPG Storage Tank
- 24.3.28 December 13, 2012: Phillips to Invest $1.461 Billion in 2013 in Midstream Business Segment
- 24.3.29 December 5, 2012: No Injuries After Gas Line Explosion And Fire Near DCP Midstream Plant at Goldsmith
- 24.3.30 November 15, 2012: Spectra Acquires one-third Interest in Sand Hills and Southern Hills Pipelines Owned by DCP Midstream
- 24.3.31 November 12, 2012: Proposed Consent Decree Reached over Contamination at Cahokia Site
- 24.3.32 October 24, 2012: DCP Midstream Announces Opening of First Segment Sand Hills Pipeline
- 24.3.33 September 7, 2012: Maine Fuel Board Approves Permit for DCP Midstream's Searsport Megatank
- 24.3.34 September 2, 2012: Low Natural Gas Prices for DCP Midstream Are a Plus for Phillips' Chemical Business Segment
- 24.3.35 August 24, 2012: DCP Midstream GP appoints Bill Waldheim as New President
- 24.3.36 August 21, 2012: CEO Mark Borer of DCP Midstream General Partner Resigns
- 24.3.37 August 8, 2012: DCP Midstream Year-to-Year Adjusted Net Income Down in 2nd Quarter
- 24.3.38 August 6, 2012: DCP Midstream set to Double Processing Capacity in Colorado
- 24.3.39 July 26, 2012: DCP Midstream Increases Quarterly Distribution to Partners
- 24.3.40 July 25, 2012: DCP Midstream Fined $631,000 For 11 Air Quality Violations
- 24.3.41 July 13, 2012: DCP Midstream Breaks Ground on $270 Million Facility in Colorado
- 24.3.42 July 5, 2012: DCP Midstream Completes Acquisition of Crossroads Processing Plant
- 24.3.43 June 18, 2012: DCP Midstream Partners to Acquire Crossroads Processing Plant
- 24.3.44 June 6, 2012: DCP Midstream's Plans Move Forward on Building Large Propane Tank in Maine as Opposition Grows
- 24.3.45 June 1, 2012: Plan for DCP Midstream's Giant Propane Gas Tank in Maine Generates Opposition
- 24.3.46 May 26, 2012: Oklahoma Property Owners Fight DCP's Gas Pipeline
- 25 Conclusions
- 25.1 Refinery and Marketing Segment will be More Important to Phillips 66 than it was to ConocoPhillips
- 25.2 The Refinery in Ponca City will be More Important to Phillips 66 than it was to ConocoPhillips
- 25.3 R&M Segment is the Least Profitable Business Segment and Will be De-Emphasized
- 25.4 There will be a Reduction in Capital Allocation to R&M Segment
- 25.5 Refinery in Ponca City Unlikely to be Closed or Sold in the Near Term as Margins Have Been Strong in the Mid-Continent Segment
- 25.6 What Does the Creation of Phillips 66 Mean to Ponca City?
- 26 External Links
- 27 References
- 28 Master Index of Articles about Phillips 66
- 29 About the Author
Master Index of Articles about Phillips 66
by Hugh Pickens, Ponca City Oklahoma
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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.
Major Sections of this report on Phillips 66 include:
Introduction
by Hugh Pickens, Ponca City Oklahoma On May 1, 2012 ConocoPhillips split into two separate publicly-traded companies: an upstream company that will retain the name ConocoPhillips and concentrate on exploration and production, and a downstream company, to be named Phillips 66, that will include refining and marketing (R&M), chemicals, and midstream business segments. The refinery in Ponca City, with over 700 employees the single largest employer in Ponca City, is part of the R&M segment and will go into Phillips 66. Phillips 66 will be a publicly traded company (PSX) and a number of independent financial analysts will be following the company.
The purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the refinery in Ponca City, Oklahoma. Some of the conclusions I have reached after analysis of publicly available information on Phillips 66 include the following:
- The Refining and Marketing Business Segment will be more important to Phillips 66 than it was to ConocoPhillips.
- The refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips.
- The Refining and Marketing Business Segment is the least profitable Business Segment and will be de-emphasized with unprofitable refineries closed or sold off.
- There will be a reduction in the capital allocated to the Refining and Marketing Segment.
- Although Phillips 66 sold the Trainer refinery on May 1, 2012 and has tried to sell the Alliance refinery, the refinery in Ponca City is unlikely to be closed or sold for at least three to five years as margins have been strong in the Mid-Continent Segment and are expected to remain high for the medium term.
- Profits are presently very high for the Mid-Continent refineries of which the refinery at Ponca City forms a part. The Ponca City Refinery earned profits in excess of $500 million in 2011 and based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line. But these profits are due to the glut of crude oil pouring into the region from newly tapped shale oil like North Dakota’s Bakken and the high Brent to West Texas Intermediate differential and these high profits are not expected to persist for more than three to five years.
- Phillips 66 plans and strategy to increase profitability by moving away from the low COBE and cyclical Refining and Marketing Business Segment and making massive investments in the high COBE Chemical Business Segment and Midstream Business Segment appear sound. The question for Phillips 66 now becomes now becomes one of executing the plan.[1][2]
Creation of Phillips 66
Rationale for the ConocoPhillips Split
There are two ways to look at the decision to split off the downstream segment from ConocoPhillips with the creation of Phillips 66. According to Christopher Helman writing in Forbes magazine the ConocoPhillips’ split can be seen as the upstream guys seizing an opportunity to jettison their lower-returning downstream assets all at once rather than piecemeal, as they’ve been doing. On the other hand, the split "liberates downstream to pursue its own growth opportunities," according to incoming Philips 66 CEO Greg Garland. "As an integrated oil company we were pushing a lot of our capital to the Exploration and Production (E&P) space, which was the right thing to do as an integrated oil company."[4]
"If Phillips 66 has been left with the wrong end of the deal, then Greg Garland is putting in a spirited effort to persuade investors otherwise. He says the creation of Phillips 66 represents an opportunity to ensure that his company is in a strong position to make the best of the uncertain conditions in the downstream sector," writes Shaun Polczer in "The Petroleum Economist on May 25, 2012. "The company hopes that ...Phillips 66 will be better able to capitalise on its options to maintain a steady income stream from mid and downstream operations. "[5]
Simone Sebastian and Emily Pickrell writes in the Houston Chronicle that Mulva abandoned the super-major model that its retiring leader helped engineer a decade ago leaving behind "a more modest oil exploration and production company, streamlined by the aggressive asset sell-off that has defined his final years at the helm." Mulva is the last of a group of oil executives who orchestrated the model of building companies that delivered fuel from the ground to gas tanks through their own international networks of exploration, refining and distribution assets. "He appreciated the changing paradigm in the industry a decade ago when all the oil companies were combining," said Doug Terreson, head of energy research for ISI. "The oil industry is shifting toward a new competitive paradigm now and separation makes a great deal of logic."[6]
Rod Walker writes in the Tulsa World on April 28, 2012 that "the separation of ConocoPhillips and Phillips 66 is the final achievement of CEO Jim Mulva's eight-year reign atop the integrated company" although questions abound regarding the rationale behind the split one decade after the merger that created ConocoPhillips. "Why was it better to get bigger 10 years ago and not now?" asks Bruce DeShazo, assistant vice president and investment adviser at American Heritage Bank of Sapulpa. "I would think the reason they'd do something like this is to divest those losing assets. They're just having a hard time making money in refining." Outgoing ConocoPhillips CEO Jim Mulva wants to reduce the company's exposure to refining by spinning off Phillips 66. "We said sell non-core assets, position for growth. Essentially, 90 percent of our capital spending is directed towards exploration and production, and reduce our exposure to refining."[7]
According to Mulva in his presentation to financial analysts on July 14, 2011, the question is why would you spin out the downstream versus to stay integrated. "We believe more value is created in the formation of two very clear, standalone companies versus accomplishing our objectives of rationalizing our downstream within the integrated oil structure. There is generally greater external transparency of the business performance when the marketplace looks at the pure plays versus being accomplished in the integrateds. And we also believe there is more focus and attention and greater probability of success by the management team by having pure-play separate upstream and downstream companies. Our investors, we believe, have the better ability to adjust to overweight or underweight their views of investing in these segments of integration, upstream and downstream. And as I just said, there is greater management focus to customize strategies, both upstream and downstream. And we also believe with this, it really allows us to attract, retain and compensate the talent we need to create the highest probability of success upstream and downstream."[8][9]
"I think that world and that marketplace has pretty well changed. So if we look out the medium- and the long-term, we face this challenge, whether we are viewed as independent or viewed as an integrated company, the issue of competitive growth is the same, whether it is a company bigger than ourselves or it is an independent smaller than ourselves. So it doesn't change with the accomplishment of doing this transaction and spinning out the downstream. We are faced with the same challenge. Some also could argue that the larger you are, the more difficult it is, given the access issues, and in many places in the world, an emphasis of trying to move IOCs or independents more towards service contracts than it is taking equity interest. So all we are saying is whether we are classified as independent or classified as an integrated, or however we are classified and what we are structured, we still have the issue of how do we take our current reserve position and our production, how do we grow it and do it with competitive finding and development cost. So we have got the same challenge. Now, if we do that well, whether we are integrated or we are viewed as independent pure plays, if we do that well, it will be recognized in the marketplace. And that is really where we are coming from. We are not doing something cleverly just to get a higher PE multiple, but we do think the pure plays are better understood in the marketplace, and it is going to put a lot more focus on our management and our leadership to accomplish the objective, which is to convert the resources that we have. We like to always get more resource, but convert those resources to reserves, and do that really well with competitive finding and development cost, we will grow our production and we will do it in a value-creating way."[10][11]
"The other thing is we look at our Company in the marketplace, we have a number of investors that would say you are making the investment decision for us. You are putting us in both the upstream and downstream business, where we would like to make that investment decision ourselves. So by being separated, you can take your choice. You want to invest in the downstream, you want to invest in the upstream. So if you look at the integrated company, you can say, well, I think the downstream part of the company is holding back on the value creation and recognition of your E&P business. And then on the other hand, those people who are interested in the downstream would say, you are not getting recognition for the quality or the contribution of the downstream. And then there is another issue that we have seen, unfortunately. But from an enterprise risk management point of view, having two separate companies is -- we think is something that makes a lot of sense. And so it is for these different reasons and putting more focus both upstream and downstream at attention, and clear peer plays, not so much that the market can look and make the decision where they want to invest, but the leadership of the company knows clearly what business they are in and they dedicate their attention to doing it in a value-creating way."[12][13]
See also
- ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.[14]
- ConocoPhillips Analyst Meeting - Color Slides "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.[15]
Implementation of the ConocoPhillips Split
On May 1, 2012 Phillips 66 issued a press release announcing that Phillips 66 had emerged as an independent downstream energy company with industry-leading businesses in refining and marketing, midstream, and chemicals. Created through a spin-off of these assets from ConocoPhillips, Phillips 66 begins regular trading on the New York Stock Exchange this morning under the ticker symbol PSX. "Our strategic approach combines one of the world's most competitive refining and marketing operations with rapidly growing midstream and chemicals businesses," said CEO Greg Garland. "Phillips 66 will be clearly differentiated from pure-play refining companies with specific plans for enhancing returns and growing shareholder distributions. We have an exciting future ahead of us."[16]
On November 11, 2011 the Tulsa World reported that Phillips 66 would be the name for the new independent oil and gasoline refining and marketing firm, created as ConocoPhillips splits into two companies. ConocoPhillips will keep the current name of the company and will concentrate on the exploration and production side while Phillips 66 will include refining and marketing portions of the company. Each company will be run independently and will have different tocker names in the stock market. The refinery in Ponca City employs about 700 people while Bartlesville will be the global center for the Phillips 66 technology organization as well as the transaction services organizations for both companies.[17] ConocoPhillips CEO Jim Mulva will resign once the split is complete and Greg Garland will be the new CEO of Phillips 66.[18] The decision to name the new entity for Phillips 66 is because of name recognition and branding. "Phillips 66 has strong brand recognition and value, and it provides a link between our rich history and our exciting future," Garland said Thursday in a news release. "Our name reflects an independent spirit and drive."[19]
On April 4, 2012 ConocoPhillips' board of directors gave its final approval for the spin-off of its downstream businesses into Phillips 66.[20] ConocoPhillips executive vice president and CFO Jeffrey Sheets announced on April 23, 2012 that ConocoPhillips is putting its final touches on its spinoff of Phillips 66 this week, and the transaction will take place as scheduled on May 1, 2012.[21]
Garland Says the Spin-off of Phillips 66 Was Executed Flawlessly
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that spin-off of Phillips 66 was executed flawlessly. "I think it's a real tribute to the dedication and the capability of the Phillips 66 employees. They did a great job of getting our feet underneath this. The Company has stood up. We're ready to go. The systems are operating well. We've been running well and capturing good opportunities in the market.[22]
Decision to Name the Downstream Company Phillips 66
ConocoPhillips announced on November 11, 2011 that the new independent downstream company created through its previously announced strategic repositioning will be named Phillips 66. "With a history that goes all the way back to petroleum industry "birthplace," in Bartlesville, Oklahoma in 1917, the company will be a leading independent company with refining, marketing, midstream and chemicals businesses operating across the globe. "Phillips 66 has strong brand recognition and value and it provides a link between our rich history and our exciting future," said Greg Garland, designated chairman and chief executive officer of Phillips 66. "Our name reflects an independent spirit and drive--two attributes of our future company."[23] According to the ConocoPhillips web site "the name Phillips 66 was chosen [for the new downstream company] because it has strong brand recognition and value, which allows us to link our rich history and our exciting future. The name represents the independent spirit and drive that will be part of the culture of Phillips 66."[24] The new company's name capitalizes on the public awareness and gives tribute to history, Garland added.[25]
The company launched a new Phillips 66 website: www.phillips66.com, that provides some history of the brand:
Frank and L.E. Phillips were two of the original experts in gas. They started prospecting for oil in 1903 and founded Phillips Petroleum Company in 1917. Since then, the company has grown considerably and has expanded its product offerings through its commitment to innovation and meeting customer needs. That’s fancy talk for "we keep making it better." Phillips 66® also has a history with US Highway 66. In 1927, on the "Mother Road" during a test drive of a newly developed high-octane gasoline, the vehicle reached a cruising speed of 66 mph. The new fuel was named Phillips 66. Even the logo was inspired by the road signs that dot the length of the historic highway. And the rest is history. And gas. Very High quality gas.[26]
The Houston Chronicle reported on November 10, 2011 that according to ConocoPhillips spokesman John Roper, while Phillips 66 products will retain the traditional logo, executives haven't decided whether to make it the corporate logo as well.[27]
The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that "the downstream energy company — named Phillips 66 in a tip of the cap to its product lineage begun right here in Bartlesville — will be a leading independent refining, marketing, midstream and chemicals business."[28]
Strategic Vision for Phillips 66
On April 9, 2012, Greg Garland, the designated CEO of Phillips 66, presented an overview of the new company and his plans for Phillips 66. There are three leading operating segments in the new company: Chemicals, Midstream, and Refining and Marketing.[30][31][32]
The basic Phillips 66 strategy to increase profitability is to focus on the business segments that have the highest return on capital invested which are the Chemical Business Segment and the Midstream Business Segment. This means that the Refining and Marketing Business Segment which has the lowest profitability will be de-emphasized. Capital allocations for the business segments with the highest profitability will be increased. Capital allocation for the R&M business segment will be reduced. Unprofitable refineries in the R&M Business Segment will be sold or closed. Ponca City falls into the Refining and Marketing business segment of Phillips 66.
See also:
- Slide Presentation for Phillips 66 Investor Update
- Transcript of Phillips 66 Analyst Update
- Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
Benefits of Being an Independent Company
Garland talked about the benefits of Phillips 66 being an independent company. "As I think about the spin and really the strategy and the rationale behind the spin, it creates opportunity for Phillips 66 to create value that we just couldn't pursue as part of the integrated ConocoPhillips. Our existing R&M business, our Chemicals and Midstream business, all provide good, solid cash flow and we can use this cash flow to fund strategic growth. We can use it to improve returns, and also for distributions to shareholders. I think another benefit of the spin is you will see greater granularity regarding asset performance and the financial results in all three segments."[33][34][35]
Simon Moore wrote at Seeking Alpha on May 10, 2012 that ConocoPhillips was a slower, more lumbering entity but with Phillips 66 newly reduced size, its growth should accelerate.[36]
The Houston Business Journal reported on August 10, 2012 in a profile of Chevron Phillips CEO Pete Cella that with the ConocoPhillips split of its upstream and downstream business in May, Chevron Phillips makes up a more prominent part of the Phillips 66 business, which is good because the company gets more attention, said Cella.[37]
Laurie Winslow reported in the Tulsa World on October 3, 2012 that with Phillips 66 up 40.3 percent in the five months since its divestiture on May 1, 2012, the market has applauded the move by ConocoPhillips to split its exploration and production company from its refining business, creating Phillips 66. "In past years, refiners have been the dogs of the energy sector, and in 2012 they find themselves the darling of the energy sector. Phillips 66 really has spread its wings since the spinoff from ConocoPhillips, and it's gotten quite a bit of international attention," says Jake Dollarhide, CEO of Longbow Asset Management Co. "A lot of people felt that ConocoPhillips with all of the businesses together wasn't getting the market valuation it deserved."[38]
Differentiated Portfolio Creates Value Through Lower Risk, Lower Cost of Capital, and Ability to See Across Entire Value Chain
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the three pieces of Phillips 66 business, the Refining and Marketing; the Midstream business, and the Chemicals business are more valuable together and that value is created through lower risk, lower cost of capital, the ability to see across the entire value chain. "We think we have a clear strategy in terms of capturing growth opportunities, margin enhancement opportunities, and driving return improvement in our business. I would also say that we are very purposeful and thoughtful. We're very purposeful and thoughtful about the assets that we've put in to Phillips 66 as we started the Company. We think that the three pieces of our business, the Refining and Marketing, Specialties, Transportation; the Midstream business, and the Chemicals business are more valuable together. We think value is created through lower risk, lower cost of capital, the ability to see across the entire value chain. We think it makes us better allocators of capital ultimately. We think you'll see the benefits of our management of these three businesses as we go forward."[39]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that a differentiated portfolio is a competitive advantage for Phillips. "I would just say over the last 3.5 years, about 40% of our adjusted earnings came out of R&M or specifically refining. Then you can see 60% came out of marketing specialties and other businesses, our Chemicals business and Midstream business. The point here, we have a differentiated portfolio. We like this portfolio. We think it's a competitive advantage for us."[40]
Enhance the Return on Capital Employed (ROCE)
ROCE (Return on Capital Employed) is a ratio used in finance, valuation, and accounting that compares earnings with capital invested in the company is used to prove the value the business gains from its assets and liabilities.[41] The three operating segments of Phillips 66 have very different ROCE's. In 2011 the ROCE of the Refining and Marketing segment was 12%, the ROCE of the Midstream segment was 30%, and the ROCE of the Chemical segment was 28%. Because the ROCE of the Chemical segments and the Midstream segments is so much higher than the ROCE in the R&M segment, Garland plans to plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company.
"Here's how we plan to enhance returns on capital," says Garland in the April9, 2012 financial analysts meeting. "I think you will see continued portfolio optimization, margin improvement from us. We will drive our capital employed to higher returning businesses. You can see on the chart on the right in 2012 we plan to high grade, to move more investment to Chemicals and Midstream. And by the way, these are our equity share of the investments in Chemicals and Midstream. While we're pursuing aggressive growth at both the DCP Midstream and the Chemicals Midstream, our view is that they're going to be self funding and at the same time they will dividend cash back to Phillips 66."
Allocation of Capital to More Profitable Business Segments
Garland says that long-term Phillips 66 has "a vision that about 50% of our capital employed will be directed towards the R&M segment. And the other 50% will be directed towards Midstream and Chemicals.We'll preferentially invest in the higher return businesses and we will be very selective in how we invest in the lower return businesses."
Garland told financial analysts at an investors conference on June 5, 2012 that Phillips 66 would keep investments in its refining assets to a minimum, instead focusing on expanding its chemical-and-logistics business and that Phillips 66 will spend $2 billion on capital projects in its midstream-logistics segment, including natural-gas-liquids processing and exports infrastructure.[42]
Molly Ryan reported in the Houston Business Journal on February 11, 2014 that Phillips' decision to move forward with more than $3 billion worth of projects reflects the company’s strategic decision to chase higher-margin markets. "Midstream spending is expected to pick up in 2014 since energy companies are increasingly realizing the profits that can be found in moving the massive amount of oil and gas coming from U.S. shale plays," writes Ryan. "Phillips 66 specifically hopes to cash in on this through its new liquefied petroleum gas terminal, which will store and transport fluids, and its new fractionator facility, which will supply and transport natural gas liquid products to petrochemical companies."[43]
Plan to Aggressively Grow Chemicals and Midstream segments of Phillips 66
Garland plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company. "Over the past three years we've reduced refining capacity about 450,000 barrels a day. In our Chemicals segment we've been growing primarily through investments in the Middle East. In our Midstream segment, growth has come from expansions around the shale liquids and gas producing areas."[44][45][46] "The refining business is currently a difficult business and one where the outlook doesn't change a lot going forward," said Mark Gilman, an independent oil and gas analyst. "Phillips 66's asset quality in the refining space is, at best, kind of average."[47] The best performing divisions for Phillips 66 are expected to be its midstream joint venture and a petrochemicals company.[48]
Simon Moore wrote on Seeking Alpha on May 10, 2012 that now that Phillips 66 is no longer part of ConocoPhillips, management is planning a clear cut move to greater emphasis on Midstream and Chemicals Business Segments. "New management's long term plan is to move to 50% Refining and Marketing, 25% Chemicals, and 25% Midstream. These latter two businesses have a much higher ROCE (return on capital employed) for PSX."[49]
Phillips Capital Programs
December 5, 2014: Phillips Capital Progam for 2015
Phillips 66 announced on December 5, 2014 that Phillips plans a 2015 capital budget of $4.6 billion. “The 2015 capital program reflects our commitment to grow our higher-value businesses while enhancing returns in Refining,” said chairman and CEO Greg Garland. “We are executing a portfolio of major Midstream and Chemicals projects while evaluating a significant backlog of investment opportunities. We remain committed to returning capital to shareholders through dividend growth and our share repurchase program. During the year we increased our dividend 28 percent, and through Sept. 30, 2014, we returned $3.9 billion of capital to shareholders through dividends, share repurchases and the PSPI exchange. We expect double-digit increases in dividends for the next two years, and $2.6 billion remained available at the end of the third quarter under our share repurchase authorization. Our capital structure and financial flexibility allow us to fund shareholder distributions while investing in the growth of our businesses, even in this lower commodity price environment. Sources of capital include our strong balance sheet, debt and equity issuances by our MLP, and operating cash flows from a high-returning portfolio of businesses."[53]
Phillips to Invest $1.1 Billion in 2015 in Refining and Marketing Business Segment
Phillips 66 plans $1.1 billion of capital expenditures in Refining, approximately 75 percent of which will be sustaining capital. These investments are related to reliability and maintenance, safety and environmental projects, including compliance with the new EPA Tier 3 gasoline specifications. Discretionary Refining capital investments will be directed toward small, high-return, quick pay-out projects, primarily to enhance use of advantaged crudes and improve product yields.
Phillips to Invest $3.750 Billion in 2015 in Midstream Business Segment
In Midstream, excluding DCP, Phillips 66 plans to invest $3.2 billion in its Natural Gas Liquids (NGL) and Transportation business lines. Midstream capital includes approximately $200 million expected to be spent by Phillips 66 Partners to support organic growth projects. In NGL, the company continues construction of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast. In Transportation, the company is investing in pipeline and rail infrastructure projects to move crude oil from the Bakken/Three Forks production area of North Dakota to market centers throughout the U.S. In addition, expansion of the Beaumont Terminal and related infrastructure opportunities are being pursued.
Additional Midstream investments are planned within DCP, a 50-50 joint venture with Spectra Energy that also includes DCP Midstream Partners. DCP will leverage its infrastructure to launch new gathering, processing, and NGL growth projects, mainly in the Niobrara, Denver-Julesburg, Eagle Ford and Permian basins. DCP also expects to increase natural gas processing capacity in these basins and complete other gathering system expansions during 2015. Phillips 66’s share of DCP’s 2015 planned capital expenditures is $550 million.
Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment
In Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in projects aimed at capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2015 capital expenditures is expected to be $1.4 billion. Funding supports advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The expected start-up for these facilities is mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem’s normal alpha olefins production capacity at Cedar Bayou continues, with estimated completion in mid-2015.
Phillips to Invest $170 Million in 2014 in Marketing and Specialties
In Marketing and Specialties, the company plans to invest $170 million for growth and sustaining capital. The growth investment reflects Phillips 66’s continued plans to expand and enhance its fuel marketing business.
Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities
In Corporate and Other, Phillips 66 plans to fund $155 million in projects primarily related to information technology and facilities.
December 6, 2014: Phillips Capital Program for 2014
On December 6, 2013 Phillips announced their plans for capital expenditures in 2014 at a level of $2.7 billion, approximately 40 percent higher than its 2013 capital target. Phillips total 2014 capital program including investments in joint ventures with DCP Midstream (DCP), Chevron Phillips Chemical Company (CPChem) and WRB Refining is expected to be $4.6 billion. “The 2014 capital program is consistent with our plans to significantly grow our Midstream and Chemicals segments,” said Chairman and CEO Greg Garland. “These are businesses that can directly capitalize on North America’s energy renaissance. Our disciplined approach to capital allocation balances reinvestment in higher-valued businesses along with growing shareholder distributions. We continue to focus on funding the most attractive growth opportunities across our portfolio.”[54]
Phillips to Invest $1.0 Billion in 2014 in Refining and Marketing Business Segment
Phillips reported on December 6, 2013 that they plan to invest $1.0 Billion in 2014 in their Refining and Marketing Business Segment down from $1.149 in 2013. Approximately 70 percent of the investment will be for sustaining capital related to reliability and maintenance, safety and environmental projects, including those to comply with Tier 3 emission standards. Other Refining capital investments will be directed toward relatively small, high-return projects, primarily to enhance use of advantaged crudes, as well as to improve product yields, increase energy efficiency and expand export capability.[55]
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips wants to try to hold sustaining capital in the Refining Business Segment to depreciation or less, or about $700 million a year. "We've got about a $1 billion program in 2014. So we've got about $300 million of high return, quick hit, fast payout projects that we're going to do. These are 40% type return projects. So these are the, what I would call, is a value accretive project that we're going to do in refining. Around export facilities, increasing yields, it's around incremental investments to process more light sweet crude. It's around capturing more LPG streams and upgrading the value of LPG streams."[56]
Phillips to Invest $2.167 Billion in 2014 in Midstream Business Segment
Phillips reported on December 6, 2013 that they plan to invest $2.167 Billion in 2014 in their Midstream Business Segment including $1.417 in direct investment and $0.750 Billion in investment with affiliate groups. Phillips expects to begin construction of a 100,000 barrel-per-day NGL fractionator and a 4.4 million-barrel-per-month liquefied petroleum gas export terminal on the U.S. Gulf Coast. In addition, several rail offloading facilities and other crude handling projects will increase the company’s access to advantaged refining feedstocks. Phillips 66 Transportation is also developing pipeline expansion and connection projects that will grow capacity and allow for greater refined product exports.[57]
Phillips expects to invest $750 Million in DCP, a 50/50 joint venture with Spectra Energy. DCP anticipates leveraging its existing NGL infrastructure to initiate new gathering and processing growth projects, mainly in the North and Permian regions. DCP also expects to increase natural gas processing capacity in the Denver-Julesburg Basin and complete other gathering system expansions during 2014.[58]
Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment
Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.[59]
Phillips to Invest $140 Million in 2014 in Marketing and Specialties
Phillips reported on December 6, 2013 that they plan to invest $140 Million in 2014 in Marketing and Specialties growth and sustaining capital. The growth investment reflects Phillips 66’s intent to expand its international fuel marketing business. The company plans to add approximately 200 new retail sites in Europe over the next five years.[60]
July 10, 2014: Phillips to Increase 2014 Budget for $1.2 Billion
FueldFix reported on July 10, 2014 that Phillips will increase its 2014 capital budget by $1.2 billion for 2014 in order to fund its liquefied petroleum gas project as well as a recent acquisition. The increase will allow the company to put more cash towards the development of a new fractionator at its Sweeny refinery and a liquid petroleum gas export terminal in Freeport, among other projects. The fractionator is expected to come online in the third quarter of 2015, and the export terminal is expected to be operational in mid-2016. The fracionator will separate natural gas liquids into components including ethane, propane and butane. Some of those products will then be exported as liquefied petroleum gas from Freeport. The entire project is slated to cost $3 billion.[61]
Phillips Capital Program for 2013
Phillips reported on December 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.[62]
Phillips to Invest $1.149 Billion in 2013 in Refining and Marketing Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they intend to invest $1.149 Billion in 2013 in their Refining and Marketing Business Segment to improve capital efficiency. The company has identified sources of additional advantaged crudes and is taking steps to move these lower cost feedstocks to its refineries and expects to replace 500,000 BPD of higher cost feedstocks with new or advantaged crudes over the next few years.[63]
Other initiatives to improve margins in the R&M Business Segment include increasing clean product yields in refining and controlling costs, targeting cost reductions and value capture in excess of $200 million before-tax by the end of 2013. “Our ability to capture advantaged feedstocks, coupled with the growing international demand for refined products, enables us to maintain high utilization rates and reduce costs per unit,” said Garland. “We will continue to primarily serve domestic markets and will explore opportunities to meet growing demand overseas. Export markets support a more positive balance of trade and promote economic benefits, and jobs, here in the United States.”[64]
Phillips to Invest $2.2 Billion in 2013 in Midstream Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that DCP Midstream plans to invest $2.2 billion primarily for new logistics infrastructure and NGL production during 2013.[65]
Phillips to Invest $1.1 Billion in 2013 in Chemical Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.[66]
Phillips to Transfer Transportation Assets To A Master Limited Partnership
Marketwatch reported on Decemeber 13, 2012 that Phillips will transfer transportation assets to a master limited partnership that will debut in the stock market in 2013. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL, analysts at Simmons said in a note.[67] “We expect to use the master limited partnership as an efficient vehicle to fund growth investments in the transportation and midstream sectors,” said Phillips 66 Chairman and CEO Greg Garland. “We believe the proposed MLP will enable us to enhance value for our shareholders and increase the transparency of our business.”[68]
Governance of Phillips 66
Jim Mulva, Chairman and CEO of ConocoPhillips
Although Jim Mulva will not be a corporate officer of Phillips 66, Mulva was the chairman and chief executive officer of ConocoPhillips who conceived and executed the idea of splitting up ConocoPhillips which resulted in the creation of Phillips 66. Mulva retired on May 1, 2012 when the split was accomplished.
Mulva served as president and chief executive officer of ConocoPhillips from 2002 to 2004. Prior to that, he served as chairman and chief executive officer of Phillips Petroleum Company from 1999 to 2002. Mulva served as Phillips’ president and chief operating officer beginning in May 1994 and executive vice president since January 1994. Mulva had been senior vice president in 1993 and chief financial officer since 1990, at which time he joined the company's management committee. Mulva began his career with Phillips in 1973.
Mulva graduated from the University of Texas in 1968 with a bachelor's degree and a master's degree in business administration finance in 1969.[71]
The Houston Chronicle reported on April 23, 2012 that Jim Mulva retired May 1, 2012 when ConocoPhillips' refining, pipelines and chemicals units spun off to form an independent, publicly traded company called Phillips 66.[72]
Rod Walton writes in the Tulsa World on April 28, 2012 that ConocoPhillips decided that bigger was better when Phillips Petroleum Co. and Conoco Inc. merged in 2002, but now has turned 180 degrees around in 10 short years now believing that smaller is what investors want. ConocoPhillips, the nation’s third-largest integrated energy firm, will now become known as a “pure play” independent when the refining and chemical side is spun off into a new company called Phillips 66. "Mulva helped oversee the 2002 merger as head of Phillips Petroleum and now walks offstage into retirement as the one company becomes two," writes Walton.[73] "Outgoing Chairman and CEO Jim Mulva, who has expertly led the company for a decade — and several years prior to that as Chairman and CEO of Bartlesville-based Phillips Petroleum Co. — steps into retirement having proven to be a true friend to the City of Bartlesville," editorialized the Bartlesville Examiner-Enterprise.[74]
Mulva Received $156 Million Severance Package in 2012
The New York Times reported on June 29, 2013 that Jim Mulva received the biggest package of any CEO in 2012 when he stepped down as CEO of ConocoPhillips. Mulva's total severance package was about $156 million and his exit sum is on top of salary, bonus and other compensation received while working for the company. "We calculated severance pay as the total of any amounts given in connection with end of service as C.E.O.,” said Aaron Boyd, director of governance research at Equilar. In Mulva’s case, much of the payout came from the market value of stock gains he received. But he also received payouts from a cash severance, a bonus and additional retirement distributions. ConocoPhillips said that the pay packages were fully disclosed to shareholders and that they were “the same pension and benefits programs as described in the proxy statement as any other retiring executive.” “The vast majority of Mulva’s compensation that he earned during his long and successful career as an executive remained in the form of company stock at his time of retirement,” Aftab Ahmed, a spokesman for ConocoPhillips, said in an e-mail.[75]
Mulva's Post-ConocoPhillips Activities
December 14, 2016: Jim Mulva Donates $75 million to University of Texas for Medical Research
The Austin Business Journal reported on December 14, 2016 that Jim and Miriam Mulva and the Mulva Family Foundation are giving $75 million to a pair of University of Texas institutions to further medical research. The donation will include $50 million to create the Mulva Clinic for the Neurosciences, to be located at the Dell Medical School at UT Austin and $25 million for cancer research at the University of Texas MD Anderson Cancer Center in Houston. “We are pleased to establish a new and innovative neurology clinic combining UT Austin’s state-of-the-art research with advanced clinical operations for these widespread and difficult diseases that impact so many people and families,” Jim and Miriam Mulva said in the announcement. “Furthermore, we have a passion and commitment to help MD Anderson — the premier cancer center in the world — treat and ultimately eradicate cancer.” The $25 million grant supports MD Anderson’s efforts in melanoma and prostate cancer research under the direction of Dr. Patrick Hwu, chairman of the Melanoma Medical Oncology Department; and Dr. Christopher Logothetis, chairman of the Genitourinary Medical Oncology Department. “I deeply appreciate the Mulva family’s continual support of the university and especially this transformational gift for the advancement of neurosciences across many disciplines at UT Austin,” Gregory Fenves, president of UT Austin, said in the announcement.[76]
April 28, 2016: Jim Mulva Donates $13 million to St. Norbert College for Expansion of the Schuldes Sports Center
Fox 11 reported on April 28, 2016 that James J. and Miriam B. Mulva of De Pere are giving $13 million toward the renovation and expansion of the Schuldes Sports Center at St. Norbert College. In recognition of the donation, the college plans to call the expanded facility the Mulva Family Fitness and Sports Center. The fitness and sports center will be the third building on the St. Norbert campus to be named for the Mulvas. The couple has previously given donations toward the Mulva Library and the Gehl-Mulva Science Center. Both James and Miriam Mulva are from De Pere. A former naval officer, James Mulva recently retired as chairman and CEO of ConocoPhillips. He also serves on the boards of General Electric, General Motors, Green Bay Packaging and the University of Texas M.D. Anderson Cancer Center, among others. Miriam Mulva is a member of St. Norbert's board of trustees.[77]
Mulva received "an astonishing $260 million from his former employer" when he left ConocoPhillips in June, 2013 and $141 million in combined compensation and stock options in 2011.[78]
February 10, 2016: ValueWalk Analyzes the Relation Between ConocoPhillips' Stock Buybacks and the Dividend Cut
ConocoPhillips recent dividend cut from $0.74 to $0.25 per share was a jolt to many investors. 720 Global published an analysis piece on February 10, 2016 about the hidden damage buybacks impose on shareholders and the economy as well as the questionable motives driving most of these decisions and using ConocoPhillips as an example, writes that "buybacks promote higher short-term stock prices that serve largely only to benefit [management's] own compensation. The costs of these actions are felt later as the future growth for the respective companies, employees and entire economy are robbed."
COP consistently paid a dividend since 1990 and during that 25 year period the dividend was increased 19 times. COP had never decreased their dividend until now. Even during the financial crisis of 2008/09, COP raised its dividend despite the price of crude oil dropping $100 per barrel. But since 2011, COP repurchased 251.316 million shares representing roughly 20% of their shares outstanding, at an approximate cost of $14.168 billion. According to 720 Global had ConocoPhillips' management and the board of directors not engaged in repurchases, COP would still have the $14.168 billion spent on buybacks since 2011, which could be used to support the $0.74 per share dividend for almost 5 years. "More importantly, the company could be in the envious position of employing the capital to buy assets that are being liquidated by other companies at cents on the dollar. Shareholders are suffering in many ways from the abuses of management in years past and will continue to do so for years to come."
"Fortunately for James Mulva, COP’s CEO during the 2011/2012 stock buyback era, his overly generous compensation is beyond COP’s ability to reclaim. Mr. Mulva retired in June of 2012 after repurchasing approximately 20% of the company’s outstanding shares. Upon retirement he received a $260 million golden parachute from the company. That was on top of $141 million in total compensation he received in 2011. The board of directors and shareholders must have been enamored with Mulva’s performance despite poor earnings trends in his final 2 years. From 2011 to 2012 the company earnings per share fell 25% from $8.97/share to $6.72/share. Had the board factored in the effect of buybacks on earnings per share when determining Mr. Mulva’s compensation, they would have realized that earnings per share were actually 40% lower at $5.37 per share."[79]
720 Global writes that this isn’t the first time Mulva put himself before the interests of others. "In January [2009], CEO James J. Mulva cut 4% of the Houston oil giant’s workforce," wrote Jena McGregor and Nanette Byrnes in Bloomberg Businessweek. "Two months later the company announced that Mulva had earned $29 million in 2008, on top of nearly $100 million he had made in the two prior years. In Bartlesville, Okla., where a chunk of the layoffs hit, many are still looking for work. The fact that Mulva took a $10 million stock grant in 2008 instead of the $38 million he got the year before hasn’t been much comfort to former employees there, some of whom lost their homes."[80]
October 27, 2015: Jim Mulva in Talks to Help Build Proposed Cultural Center for De Pere
We Are Green Bay reported on October 27, 2015 that the De Pere City Council has given their approval to the preliminary concept, allowing planning to move forward on the $7- $9 million facility to be built by Jim and Miriam Mulva. Mulva and his wife donated $7 million towards construction of a new library at St. Norbert College dedicated six years ago. For the past year they have been in discussions with Walsh on the construction of a cultural facility. "I don't think you could have any better two people to bring this forward than the Mulva family," said De Pere Mayor Mike Walsh. The two, or three story building will offer performance spaces for both musical and theatrical groups, an atrium, meeting spaces and a Veterans Memorial. It will also have a gallery hosting two to three nationally renowned exhibits per year. De Pere will donate the building site to the Mulva's project. Walsh says the hope is to open the facility in 2017. The design team, Haley Sharpe Design, is still working on renderings of the facility. They are expected in the coming months.[81]
March 28, 2013: Jim Mulva Got $260 Million from Golden Parachute On His Way Out The Door
The Huffington Post reported on March 28, 2013 that ConocoPhillips CEO James Mulva received "an astonishing $260 million from his former employer" when he left ConocoPhillips in June, 2013 USA Today reports. Apparently, the $141 million in combined compensation and stock options he received in 2011 wasn't enough to ensure a smooth exit from the company. Unfunnily enough, Mulva's expansive severance package, or golden parachute as it's also known, is almost as large as the $266 million compensation package ConocoPhillips agreed to pay China in April after polluting 6,200 square kilometers of water off the northern coast of the country."[82]
April 26, 2012: Mulva Joins Board of Directors of General Motors
The Detroit News reported on April 26, 2012 that Mulva has been asked to join the board of directors of General Motors. "Jim's extensive experience and expertise in the energy industry and in-depth background in finance will be invaluable to GM," said General Motors Co. CEO and Chairman Dan Akerson. Mulva already serves on the board for GE, which has a partnership with GM to accelerate deploying electric vehicle charging stations in China.[83] Your Houston News reported on September 4, 2012 that Mulva will be headlining the Adult Learning Program’s Fall Session at St. John Vianney Church in Houston by speaking on the oil industry and its future in Texas on September 25, 2012.[84]
January 24, 2014: Mulva Family Donates $60 Million to Business and Engineering Schools
The University of Texas reported on January 24, 2014 that the Mulva Family Foundation has made a $60 million multiyear pledge to The University of Texas at Austin to support the McCombs School of Business and the Cockrell School of Engineering, once again demonstrating a deep commitment to the university’s future and to a continued vision of excellence in teaching and research.
- Of the gift, $20 million will go toward the construction of the EERC, which will include the James J. and Miriam B. Mulva Conference Center and Auditorium when it is completed in 2017.
- Another $40 million will be used to renovate the Graduate School of Business and College of Business Administration buildings, upon consideration and approval of the University of Texas System Board of Regents. The buildings will collectively be renamed the James J. and Miriam B. Mulva Hall.
"Jim Mulva's career has exemplified innovation. I am so pleased that his name and Miriam’s name will be seen by thousands of students every week in the premier facility in the U.S. for engineering innovation — and that so many students will directly benefit from the Mulvas’ gift," said Provost Gregory L. Fenves, who is a former dean of the Cockrell School of Engineering.[85]
Greg Garland, Chairman, President and CEO of Phillips 66
Greg Garland, Chairman, President and CEO of Phillips 66
On October 7, 2011, Greg Garland was designated the Chairman and CEO of Phillips 66, the new Downstream company created with the split-up of ConcoPhillips on May 1, 2012. Greg Garland was senior vice president, Exploration and Production, Americas for ConocoPhillips at the time of the split. Garland was previously president and chief executive officer of Chevron Phillips, a joint venture between ConocoPhillips and Chevron, with approximately 5,000 employees that is one of the world's top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics.[86][87]
According to George Pilko, founder of Pilko & Associates, a Houston- based company that advises chemical and energy companies on risk, Garland understands strategy, is a good leader and has a demeanor that makes him well liked by people who work for him. "He's got a very effective, relaxed manner," says Pilko. "Many CEOs are so hyper and wound tight, and Greg is always relaxed and in control."[88]
Garland's Education and Background
Garland was the first in his family to go to college.[89] Garland received a Bachelor of Science degree in chemical engineering from Texas A&M University in 1980. Texas A&M reported on October 30, 2014 that Garland presented a check for $1 million on behalf of Phillips 66 to the Texas A&M Foundation that will support the university’s new Engineering Education Complex (EEC). “Phillips 66 is committed to investing in education,” said Greg C. Garland, chairman and CEO of Phillips 66, and a Texas A&M chemical engineering graduate. “We need leaders from schools such as Texas A&M who will challenge the status quo and create solutions to meet rising energy needs in the decades ahead.” The company’s contribution will be used to create the “Phillips 66 Experiential Learning Laboratory” within the EEC. The new lab will help better prepare engineering students to meet the evolving needs of the engineering marketplace.[90][91]
Garland has more than 30 years of industry experience in technical and executive leadership positions with ConocoPhillips, its predecessor Phillips Petroleum Company, and Chevron Phillips Chemical Company. Garland has been with Phillips for his entire 32-year career. Garland was previously president and chief executive officer of Chevron Phillips, a joint venture between ConocoPhillips and Chevron. Before his election to that position, Garland served Chevron Phillips as senior vice president, Planning & Specialty Chemicals.[92][93]
Garland served as general manager of Qatar/Middle East for Phillips, a position he assumed in 1997.[94] Garland said that taking the job in Qatar in 1997 to manage one of the first oil operations in the Middle East for Phillips was a turning point in his career. Garland says that although he didn't want to take the job initially, he learned to view the company with a broad perspective.[95]
From 1995 to 1997, he served as general manager of natural gas liquids after serving as manager of planning and development in planning and technology. From 1992 to 1994, he was manager of the K-Resin® business unit. Garland began his career with Phillips in 1980 as a project engineer for the Plastics Technical Center. He later worked as a sales engineer for Phillips' plastics resins, business service manager for advanced materials, business development director, and olefins manager for chemicals.[96]
How Garland Was Selected for CEO of Phillips
By October 2010, CEO James Mulva was expected to retire within two years and wanted to establish a cabinet of possible successors. On October 7, 2010, ConocoPhillips announced a sweeping overhaul of its executive suite. The executive changes included the departure of the president and chief operating officer, John Carrig, and the chief financial officer, Sigmund Cornelius, as well as two senior level vice presidents. ConocoPhillips spokeswoman Cathy Cram said the changes are part of a plan to provide for a smooth transition in anticipation of Mulva's retirement. "You can assume the next leader will come from this team," Cram said. "They've been taking a lot of steps to position the company as well as they can for Mulva's successor," said Phil Weiss, an energy analyst with Argus Research who said he was pleased the company had lined up management with strong operations experience. "One of the biggest issues that many people believe Conoco faces is a somewhat lackluster production portfolio, as compared to other large integrated companies," he said. "I was of the opinion that to have someone with an operating background would be better than somebody that doesn't."[97]
Tom Fowler reported in FuelFix on October 7, 2010 that the management team reporting to Mulva at the end of the shakeup consisted of:
- Alan Hirshberg, senior vice president, planning & strategy; formerly vice president, worldwide deep-water and Africa projects, for Exxon Mobil;
- Greg Garland, senior vice president, exploration and production-Americas; formerly president and CEO of Chevron Phillips Chemical Co;
- Jeff Sheets, senior vice president, finance and chief financial officer; formerly senior vice president, commercial and planning and strategy;
- Willie C.W. Chiang, senior vice president, refining, marketing & transportation, adding responsibility for the company's commercial business activities;
- Ryan Lance, senior vice president, exploration and production, international, and
- Larry Archibald, senior vice president, exploration and business development, continuing in those roles.[98]
Tom Fowler reported in FuelFix on October 7, 2010 that since 2006 about a dozen executive-vice-president-level staff members moved on from ConocoPhillips, for a wide range of reasons and that a number of observers note there's been an oversized churn of talented executives from ConocoPhillips who one might have expected to stick around longer. According to Fowler some observers think the turnover may have more to do with the command-and-control management style of Chairman and CEO Jim Mulva than the day-to-day stress of working at an oil major. "It sounds like the head coach firing all the assistant coaches for a bad season, when it's really the head coach who's the problem," said one analyst. A former ConocoPhillips executive puts it another way: The company is seen by many as a major international corporation with an Oklahoma mentality (he's referring to the Bartlesville, Okla. roots of Phillips Petroleum, where Mulva worked when the firm merged with Conoco in 2002). "The latest round of departures is to clear the way for a likely successor to Mulva, who is expected to leave in a couple of years," writes Fowler. "It appears outgoing COO John Carrig didn't have the operations background the company wanted to fill that role."[99]
Brian Youngberg, an analyst with Edward Jones, says Garland's selection as CEO of Phillips was likely due to Garland's experience as chief executive officer of Chevron Phillips because he brings a wider view to Phillips including chemicals, the likely growth engine for the downstream company. Youngberg said Phillips will continue to de-emphasize refining over time, so "having someone with a broader background like Garland makes sense." ConocoPhillips brought in Garland in 2010 to oversee exploration and production in a management shake-up that included the retirement of former Chief Operating Officer John Carrig, who had been seen as Mulva's successor.[100]
Garland, who formerly headed Chevron Phillips Chemical, was selected to head the new company over Willy Chiang, senior vice president of ConocoPhillips' refining division.[101] Oxy reported on May 23, 2012 that Chiang left Phillips 66 and went to work as Executive Vice President, Operations at Occidental Petroleum Corporation with responsibility for oversight of Occidental's Midstream businesses.[102] Kristen Hays wrote at Reuters on October 7, 2011 that according to Deutsche Bank analyst Paul Sankey "we believe that Chiang sees himself as a future CEO, and he would have to find that role in a different company."[103]
Latest News About Greg Garland
March 22, 2017: Greg Garland's Salary Increases from $22.9 million in 2015 to $25.1 million in 2016
Reuters reported on March 22, 2017 that according to SEC filings Phillips 66 CEO Greg Garland's salary increased from $22.9 million in 2015 to $25.1 million in 2016.[104]
November 14, 2016: Garland Sells $6.4 Million in Phillips 66 Stock
Gurufocus reported on November 14, 2016 that Phillips 66 CEO Greg C. Garland sold 76,165 shares of Phillips on November 10, 2016 at an average price of $83.48 a share for a total sale of $6.4 million.[105]
The Bibey Post reported on June 6, 2016 that the Chairman and CEO of Phillips 66 and company’s insider Greg Garland sold 62,500 shares of Phillips stock at $80.0 of a share. The transaction’s shares had a value of around $4,996,881 U.S. Dollars. Garland now owns 122,930 shares of Phillips stock.[106]
November 9, 2015: Garland Elected Chair of the Finance Committee at American Petroleum Institute
The American Petroleum Institute announced on November 9, 2015 that Phillips CEO Greg Garland has been elected cchair of the Finance Committee at the American Petroleum Institute. “Greg Garland’s long record of leadership and unique insight as well as operational knowledge of the industry’s financial landscape will maximize value for our members and provide guidance for API’s strategy. API is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. API’s more than 625 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 25 million Americans.[107]
July 25, 2015: Oil is Down but Garland's Pay is Up
The Houston Chronicle reported on July 25, 2015 that despite domestic oil's long and lingering swoon that began last summer, Phillips CEO Greg Garland's pay is up for 2014. Garland ranked No 2 in pay for CEO's of publicaly traded companies just behind Ryan Lance of ConocoPhillips.[109] Phillips 66's Board of Directors cut Chief Executive Greg Garland's bonus pay by 35 percent in 2014, citing market conditions and stock performance. While the company performed well against financial and operational targets, the filing states, "market conditions and stock performance at the end of 2014 did not, in the Compensation Committee's view, justify a full payout" of the incentive pay that Garland and other top executives were eligible to receive.[110]
June 29, 2015: Greg Garland is No 1 Houstonian to Know in 2015 Despite Phillips Decrease in Revenue and Stock Price
B. Candace Beeke wrote in Houston Business Journal on June 29, 2015 that Greg Garland, CEO and chairman of Phillips 66 — is still holding tight to the No. 1 spot of the "Top 100 Public Companies" based in Houston. Phillips 66 "saw one of the largest decreases in revenue, stock price and assets on The List, year over year," writes Beeke. "Despite that, it’s still No. 1 in revenue and high on the list of total assets in fiscal year 2014."[111]
Reuters reported on March 9, 2015 that Phillips 66's Board of Directors cut Chief Executive Greg Garland's bonus pay by 35 percent in 2014, citing market conditions and stock performance. While the company performed well against financial and operational targets, the filing states, "market conditions and stock performance at the end of 2014 did not, in the Compensation Committee's view, justify a full payout" of the incentive pay that Garland and other top executives were eligible to receive.
Garland received a total of $24.5 million for the year, up from $19.8 million in 2013, driven largely by a higher value calculated for future pension payments. Garland's base salary rose to $1.51 million in 2014 from $1.44 million in 2013. But the value of incentive payments to Garland fell to $2.66 million in 2014 from $4.11 million in 2013. [112]
March 2, 2015: Garland Sees Brent-WTI Spread Widening to $6-10/bl
Argus Media reported on March 2, 2015 that Phillips CEO Greg Garland sees the Brent-WTI differential widening to $6-10/bl. Inventories of crude storage at Cushing have gained for 12 consecutive weeks at an average pace of 2mn bl per week. Inventories climbed during the week ending 20 February by 2.4mn bl to 48.7mn bl, the highest level since June 2013. Stock levels have doubled since the end of October, growing at a pace unmatched in more than 10 years of records kept by the Energy Information Administration (EIA). "I believe that Cushing is going to fill or close to fill to the operating level, and that will carry over through a decent portion of the year in terms of impacting inland versus coastal crude differentials," says HollyFrontier chief executive Mike Jennings.[113]
September 25, 2014: Garland Places Ethics and Safety at the Top of His List
The Daily Cougar reported on September 25, 2014 that Phillips CEO Greg Garland spoke to students at the Bauer College of Business at the University of Houston on September 23, 2014 about the importance of ethical responsibility in the business world and the place of responsible, socially conscious decisions in modern commercial enterprise as part of the school's ongoing "Distinguished Leaders Program." "You've got to have high standards if you're going to be ethical. It has to start at the very top," Garland said. "(I) fundamentally disagree with people who say that energy companies can't be good corporate citizens … I think that good ethics makes for good business." Garland stressed that aside from being the responsible and morally correct decision, good ethical business and environmental safety is also profitable long-term. "We have people who invest literally billions of dollars in our company, and I want them to know they're investing in safety," Garland said. "One major accident can absolutely devastate shareholder value." Garland also offered some words of encouragement to UH students entering the energy industry. "Your education is actually just the launching pad for a lifetime and career of learning in this industry," Garland said. "And if you're at the top of your class, I want to talk to you after the show."[114]
August 13, 2014: Garland Wants to Find a Company to Lease the North and South Towers in Ponca City
Phillips 66 CEO Greg Garland spoke to over 250 community leaders at the Bartlesville Chamber of Commerce on August 13, 2014 about initiatives Phillips is taking to benefit communities in the state of Oklahoma including Phillips 66's new initiative to expand the Research Center in Bartlesville and Phillips 66's gift of $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects.[131][132]
With regard to Ponca City, Garland announced at the forum that Phillips 66 has been working hard with state and local officials to figure out what to do with the North and South Towers and if Phillips and Ponca City can find a company or companies that would like to use those buildings, "I think we would like to go down that route." Garland praised the buildings and their condition effusively. "I did a refinery review in Ponca City the week before last. We actually had our review in the Marland Board Room. It is a beautiful building, a great facility," said Garland. "There is no question that these are great buildings that are part of the rich heritage of Ponca City."[133]
Garland's public statement about the North and South Towers came in response to a question from the audience from Ponca City resident Hugh Pickens. "Phillips 66 has two beautiful, nine-story office buildings in Ponca City, the North and South Towers, that together contain over 250,000 square feet of Class A office space suitable for several hundred employees that have been essentially vacant for several years," said Pickens. "Could you talk about what options you are considering for these two empty office towers? Specifically, what are the chances that you are going to continue to leave the buildings vacant, tear the two buildings down, or sell or lease them to a company or companies that could utilize them to benefit the community of Ponca City and could you share your rationale for your decision."[134]
The reason there is so much unused office space at the refinery complex is that on February 17, 2009 ConocoPhillips announced they had decided to relocate all of its 750 non-refinery positions out of Ponca City within two years and that the first 250 jobs would be moved in 2009 with 180 jobs going to Houston and 70 jobs to Bartlesville. The positions moving first included jobs in technical services, research and development, engineering and support, human resources and Internet technology, among others. Management met with hundreds of Ponca City employees to tell them the news. "It's a difficult time in general for all ConocoPhillips employees," said ConocoPhillips spokesman Tracy Harlow. "We made the strategic decision to consolidate locations for the most effective corporate operations." The decision to consolidate operations in Bartlesville and Houston was made by ConocoPhillips CEO Jim Mulva, formerly President and CEO of Phillips 66 before the merger with Conoco.[135]
"What can citizens of Ponca City do to support and encourage Greg Garland's initiative? First, if you are an employee of Phillips 66, thank Refinery Manager Tim Seidel for Garland's initiative and for Phillips 66's willingness to work with our community. Tell Mr. Seidel how important this is for Ponca City and offer your support for Phillips' decision to work with local Ponca City officials at the Ponca City Development Authority (PCDA) to find companies that will come to Ponca City to occupy space in the North Tower, South Tower, and Research West," says Pickens. "It is also extremely important that retirees of Conoco, ConocoPhillips, and Phillips 66 make their voices heard. Retirees are very influential because they know first hand the world-class resources at the refinery complex and how they have gone unused for so many years. For example, when you meet with Phillips managers and executives at retiree meetings, tell them that you do not want to see the North and South Towers torn down, that these facilities still have many years of good service left in them, and tell Phillips managers and executives that you know that Phillips 66, working together with the community of Ponca City, can use these buildings to benefit both Phillips and Ponca City."
Garland told community leaders at the Bartlesville Regional Chamber of Commerce forum that the company's commitment to Bartlesville continues and that there are no plans to close any of the Bartlesville facilities or move any of Phillips' 2,000 employees out of Bartlesville. "Bartlesville is a special and unique place," said Garland. "It has a rich part of our heritage and our legacy. It is important today. It will be important in the future of Phillips 66… A big part of the day-to-day operations and the successes of Phillips 66 are born by the people here in Bartlesville." Even with expansion at the Houston headquarters, Garland said that the space there is already at capacity and the Bartlesville facilities will continue to be full as well. Garland talked about an expansion that is currently underway at the Research Center in Bartlesville to continue the development of polyethylene technologies.[136]
During his talk to the Bartlesville Chamber, Garland also announced that Phillips will be giving $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. "We want to create a place where our students will come and be excited, be challenged and hopefully be encouraged to follow a career at a place like Phillips 66," Garland said. "We want to put the right kind of tools in the hands of students in Bartlesville so they can be more successful."[137] An application by the Ponca City School System for a STEM grant under the Signature Community Initiative was turned down by Phillips 66.[138]
The funds came through a Phillips 66 Signature Community Initiative grant application submitted to the company under an effort spearheaded by Scott Bilger, a Bartlesville school board member and Phillips 66 employee, and Granger Meador, a physics teacher who heads up Bartlesville High's science department. The new laboratories and major new course offerings will be at the high school, along with Madison and Central Middle Schools. "We are just really, really excited about the opportunity this is going to provide our students," Superintendent Gary Quinn said. "It cannot be overstated what this is going to mean to our students."[139]
October 16, 2013: Garland Appointed to Board of Directors of Amgen
On October 16, 2013 Amgen Inc. announced the appointment of Garland to the Company's Board of Directors. Garland will serve on the Governance and Nominating Committee and the Audit Committee of the Board. "We are pleased to welcome Greg Garland to the Amgen Board," said Robert A. Bradway, Chairman and CEO of Amgen. "In addition to his leadership experiences as a chief executive officer, Greg brings more than 30 years of international experience in a highly regulated industry. At a time when Amgen is expanding its global presence to serve more patients, we look forward to Greg's contributions to the Board."[140]
August 27, 2013: Garland Recognizes Contribution of E. W. Marland
ConocoPhillips announced on November 11, 2011 that the new independent downstream company created through its previously announced strategic repositioning would be named Phillips 66. When Phillips went public on May 1, 2012, Garland recognized the contribution of Frank and L.E. Phillips and the company's "birthplace" in Bartlesville, Oklahoma in 1917. "With a history that goes all the way back to petroleum industry "birthplace," in Bartlesville, Oklahoma in 1917, the company will be a leading independent company with refining, marketing, midstream and chemicals businesses operating across the globe. "Phillips 66 has strong brand recognition and value and it provides a link between our rich history and our exciting future," said Greg Garland, designated chairman and chief executive officer of Phillips 66. "Our name reflects an independent spirit and drive--two attributes of our future company."[141] According to the ConocoPhillips web site "the name Phillips 66 was chosen [for the new downstream company] because it has strong brand recognition and value, which allows us to link our rich history and our exciting future. The name represents the independent spirit and drive that will be part of the culture of Phillips 66."[142] The new company's name capitalizes on the public awareness and gives tribute to history, Garland added.[25]
On August 27, 2013 Garland spoke to the Bartlesville Chamber of Commerce and said that the reputation and success of Phillips were built from the "giants" who first created the company and recognized E. W. Marland's contribution for the first time. "We are standing on the shoulders of giants," said Garland. "People like E. W. Marland, who started Marland Oil in 1911, and Frank and L. E. Phillips that started Phillips Petroleum in 1917. I could go on and on and list the giants that have come before us that have so well positioned this company for the success that we enjoy today."[143]
September 11, 2012: Bartlesville a Special Place for Garland
The Tulsa World reported on September 12, 2012 that Garland spoke on September 11, 2012 at a packed Bartlesville Area Chamber of Commerce Forum at the city's community center downtown carrying on a tradition started several years ago by his predecessor, ConocoPhillips CEO Jim Mulva. Garland was adamant that Bartlesville's value as a global web center, combined with its heritage as home city of the original Phillips Petroleum Co. always make it important to the company's future plans. "We have deep roots here," Garland said adding that he visits the company's local operations several times a year. "It's a cost-efficient place for us to do business. I think we made the right decision." Garland noted that office space is almost maxed out locally, so he does not see more than "modest growth" adding to the 2,000 jobs Phillips 66 already has in Bartlesville. Garland was recruited out of Texas A&M by Phillips and lived many years in Bartlesville with his wife and four children.[144]
The Bartlesville Examiner-Enterprise reported on September 12, 2012 that Garland went to work for Phillips 66 as his first job out of college because of Bartlesville. "I picked this company because of Bartlesville. Four times over the course of 32 years I've lived here. We have good memories of Bartlesville, Oklahoma, and it's always going to be a very special place to me personally," said Garland. "As we were approaching the repositioning and spinning Phillips 66 out of ConocoPhillips, there was never any question that Bartlesville would continue to be a strategic and important part of our company, in the support of our company operations, for a very long time."[145]
September 11, 2012: Conoco the Only Company That Didn't Offer Garland a Job
In an anecdote that reveals Garland's humorous side and long memory, Garland told members of the Bartlesville Chamber of Commerce during his speech in September 2012 that when Garland was looking for his first job as a chemical engineer after graduating with honors from Texas A&M in 1980, Garland interviewed with 17 companies but only received job offers from 16 of the companies. More than thirty years later, Garland was still able to quote from memory to his Bartlesville audience the contents of the rejection letter he received from the only company that did not offer him a job. According to Jessica Miller writing in the Bartlesville Examiner-Enterprise, when Garland disclosed the name of the one company that did not offer him a job, "his revelation of the company - Conoco - garnered laughter from the audience."[146]
Garland's Compensation as CEO of Phillips
Businessweek reports that as of the fiscal year 2012 Garland's Total Annual Calculated Compensation is $14,423,038 including his salary and stock options.[147]
John Lowe, Member of the Phillips 66 Board of Directors
Apart from Greg Garland, J.E. (John) Lowe is the only present or former employee of ConocoPhillips serving as a member of the Board of Directors of Phillips 66. Lower was executive vice president, planning, strategy and corporate affairs, of ConocoPhillips with responsibility for emerging businesses, as well as government affairs and communications. Lowe previously served as senior vice president, corporate strategy and development and was responsible for the forward strategy, development opportunities and public relations functions of Phillips Petroleum Company. Lowe was named to this position in 2001 after serving as senior vice president of planning and strategic transactions in 2000 and vice president of planning and strategic transactions in 1999. Lowe currently serves on the board of directors for Chevron Phillips Chemical Company, Duke Energy Field Services and the Houston Museum of Natural Science.
Lowe was born in 1959 in Oskaloosa, Iowa. Lowe received a bachelor of science degree in finance and accounting from Pittsburg State University in Pittsburg, Kansas, in 1981. Lowe is a certified public accountant.[148]
Board of Directors
On April 16, 2012 Phillips 66 announced the names of the seven members of its future board of directors. Greg Garland will serve as Phillips 66' chairman, president and CEO. He most recently served as senior vice president, Exploration and Production -- Americas for ConocoPhillips. The other members of the board will be:
- Greg Garland, Phillips 66 chairman, president and CEO
- John Lowe, who has served as assistant to the CEO of ConocoPhillips. Lower currently serves as assistant to the CEO of ConocoPhillips, a position he has held since 2008. He previously held a series of executive positions with ConocoPhillips, including executive vice president, Exploration & Production, from 2007 to 2008 and executive vice president, Commercial, from 2006 to 2007. He currently serves on the board of Agrium Inc.
- J. Brian Ferguson, retired chairman and CEO of Eastman Chemical Co. Ferguson served as chairman of Eastman Chemical Company (Eastman) in 2010 until his retirement and as CEO of Eastman in 2009. He became the chairman and CEO of Eastman in 2002. He currently serves on the boards of Owens Corning and NextEra Energy Inc.
- William Loomis Jr., an independent advisor who formerly served as CEO of Lazard LLC . Loomis has been an independent financial advisor since 2009. He was a general partner and managing director of Lazard Freres & Co. from 1984 to 2002, the CEO of Lazard LLC from 2000 to 2001 and a limited managing director of Lazard LLC from 2002 to 2004. He currently serves on the boards of Pacific Capital Bancorp and Limited Brands Inc., and is also a senior advisor to Lazard LLC and China International Capital Corporation.
- Harold McGraw III, current chairman, president and CEO of The McGraw Hill Companies. McGraw currently serves as chairman, president and CEO of The McGraw-Hill Companies. Prior to his service as chairman, he served as president and CEO from 1998 to 2000 and president and chief operating officer from 1993 to 1998. He currently serves on the boards of The McGraw-Hill Companies, ConocoPhillips and United Technologies Corporation.
- Glen Tilton, chairman of the Midwest and was formerly chairman and CEO of United Airlines. Tilton currently serves as chairman of the Midwest of JPMorgan Chase & Co. He was chairman and CEO of United Airlines Inc. from 2002 to 2010, having previously spent more than 30 years in increasingly senior roles with Texaco Inc. including chairman and CEO in 2001. He currently serves on the boards of United Continental Holdings Inc. (as non-executive chairman), Abbot Laboratories and Corning Inc.
- Victoria Tschinkel, chairwoman of 1000 Friends of Florida. Tschinkel served as state director of the Florida Nature Conservancy from 2003 to 2006, was senior environmental consultant to Landers & Parsons, a Tallahassee, Florida law firm, from 1987 to 2002, and was the secretary of the Florida Department of Environmental Regulation from 1981 to 1987. She currently serves on the board of ConocoPhillips.
- Dr. Marna C. Whittington, chief executive officer of Allianz Global Investors Capital, a diversified global investment firm, from 2002 until her retirement in January 2012. Whittington was chief operating officer of Allianz Global Investors, the parent company of Allianz Global Investors Capital, from 2001 to 2011. Prior to that, she was managing director and chief operating officer of Morgan Stanley Asset Management. Whittington started in the investment management industry in 1992, joining Philadelphia-based Miller Anderson & Sherrerd. The election of Dr. Whittington on May 9, 2012 increases the total number of Phillips 66 directors to eight.[149]
"We have assembled a strong board of directors, consisting of individuals with appropriate skills and experiences to meet their governance responsibilities and contribute effectively to our company," said Garland. "Our board reflects a range of talents, diversity and expertise, particularly in the areas of accounting and finance, domestic and international markets, government and regulatory affairs, management and leadership and petroleum-related industries, sufficient to provide sound and prudent guidance with respect to our operations and interests."[150][151]
October 7, 2016: Phillips 66 Board Elects New Directors
Businesswire reported on October 7, 2016 that board of directors of Phillips 66 elected Denise L. Ramos and Gary K. Adams to serve as independent directors. The election on October 6, 2016, increases the total number of Phillips 66 directors to 10.
Ramos will serve on the Audit and Finance Committee, the Nominating and Governance Committee and the Public Policy Committee. Adams will serve on the Human Resources and Compensation Committee and the Public Policy Committee.
Ramos, 60, was appointed chief executive officer, president and a director of ITT Inc. (formerly ITT Corporation) in October 2011. She previously served as senior vice president and chief financial officer of ITT. Prior to joining ITT, Ms. Ramos served as chief financial officer for Furniture Brands International from 2005 to 2007. From 2000 to 2005, Ms. Ramos served as senior vice president and corporate treasurer at Yum! Brands, Inc. and chief financial officer for the U.S. division of KFC Corporation. Ms. Ramos began her career in 1979 at Atlantic Richfield Company (ARCO), where she spent more than 20 years serving in a number of finance positions including corporate general auditor and assistant treasurer. Ms. Ramos served on the board of Praxair, Inc. from April 2014 to September 2016. She serves on the board of trustees for the Manufacturers Alliance for Productivity and Innovation, and is also a member of the Business Roundtable and the Business Council.
Adams, 65, is currently the chief advisor of chemicals for IHS Inc. He started his chemical industry career with Union Carbide. After 15 years serving in a number of positions at Union Carbide, Mr. Adams joined Chemical Market Associates Inc. (CMAI). He served as president, CEO and chairman of the board of CMAI from 1997 until its acquisition by IHS in 2011. Mr. Adams is a director of Trecora Resources and previously served on the boards of Westlake Chemical Partners LP from July 2014 to October 2016, and Phillips 66 Partners LP from September 2013 to August 2016.[152]
Management and Governance Effectiveness at Phillips 66
December 3, 2012: Standard and Poor Judges Management and Governance to be 'Fair' at Phillips 66
Standard and Poor reported on December 3, 2012 that they judged Phillips 66 Co.'s management and governance to be 'fair' based on a consolidated approach to the Phillips 66 entities. "While the best positioned of Phillips 66 Co.'s refineries are highly competitive, the overall quality of its operations is mixed, with some facilities being, in our view, candidates for divestiture or closure over the next few years."[153]
Financial Stability of Phillips 66 and Risk Management
September 7, 2015: Phillips 66 Receives 'A' Credit Rating from Morningstar
WatchList News reported on September 7, 2015 that Phillips 66 has earned an “A” credit rating from analysts at Morningstar. The firm’s “A” rating suggests that the company is a low default risk. They also gave their stock a three star rating.[154]
April 27, 2015: Phillips 66 Receives 'A' Credit Rating from Morningstar
Mideast Times reported on April 27, 2015 that Phillips 66 has received an “A” credit rating from analysts at Morningstar. The research firm’s “A” rating indicates that the company is a low default risk.[155]
August 26, 2014: Moody's Upgrades Phillip from Baa1 to A3
Moody's reported on August 26, 2014 that they have upgraded Phillips from Baa1 to A3. The rating outlook is stable. "The upgrade of Phillips 66's senior unsecured ratings to A3 reflects the company's clearly delineated strategic focus and capital structure since its spinoff from ConocoPhillips (A1 stable) in May 2012," said Terry Marshall, Moody's Senior Vice President. "The company's significant equity investments in Chevron Phillips Chemical Company LLC (CPChem, A3 positive) and DCP Midstream LLC (Baa2 stable) add a material credit enhancement to Phillips 66's large and diversified refining assets." According to Moody's "Phillip 66's A3 senior unsecured rating is driven by the scope and diversity of its refining business, which represents about half of its proportionate EBITDA, coupled with the further diversity provided by ownership of fast-growing chemicals and midstream businesses and moderate financial leverage. The equity investments add business diversification and are two of the three principal growth vehicles for Phillips 66 along with its in-house midstream and transportation businesses. The rating is further supported by excellent liquidity, and management's commitment to balancing shareholder returns with a strong balance sheet."[156]
June 6, 2013: A.M. Best Affirms Excellent Rating for Phillips' Captive Insurer
The Fort Mills Times reported on June 6, 2013 that A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Spirit Insurance Company of Burlington, VT, the captive insurer for its ultimate parent, Phillips 66. "Business written by Spirit has a history of strong underwriting results and operating returns. The company’s loss experience has remained favorable due in part to its strong loss control program at the parent. Phillips 66 will conduct periodic reviews of Spirit’s potential loss exposures through a specialist in industrial risks," reads the report.[157]
However the report also observes that a single occurrence could result in a large loss that approaches Spirit’s limits, that partially offsetting A.M. Best's positive rating factors are Spirit’s exposure to large losses due to the limits offered on its policies as well as its significant dependence on reinsurance protection and that although the majority of Spirit’s capital is loaned to its parent, there is limited counterparty risk due to the affiliation of the two companies.[158]
December 3, 2012: Standard and Poor Assigns BBB/Stable/A-2 Corporate Credit Rating, Judges Financial Risk Profile as 'Intermediate'
Standard and Poor reported on December 3, 2012 that they had assigned a BBB/Stable/A-2 corporate credit rating to Phillips 66 Co. based on a consolidated approach to the Phillips 66 entities. "The rating on Phillips 66 Co. reflects Standard & Poor's assessment of the company's business risk profile as 'satisfactory' and financial risk profile as 'intermediate' (as our criteria define these terms)," says the report prepared by Primary Credit Analyst Mark Habib. "We view the refining sector as having significantly higher-than-average industry risk, given its exceptional degree of volatility and fixed- and working-capital intensity. Notwithstanding the relatively favorable market conditions at times over the past year, we view long-range industry fundamentals as difficult given persisting excess production capacity globally and a secular decline in demand for some key transportation fuel products in developed markets."[159]
Government Relations
October 20, 2014: Candidates for US Congress Discuss Wood River Refinery
The Telegraph reported on October 20, 2014 that Republican challenger for the Illinois Congressional District 12, Mike Bost, was joined by fellow Republican, John Shimkus (R- IL Dist. 15) at the Phillips 66 refinery in Wood River to discuss energy issues that affect Illinois residents. Shimkus is on the Congressional Energy Subcommittee, and was at the refinery to support Bost as well as future legislation regarding the controversial Keystone Pipeline XL. Shimkus said that the general public was not aware of how many pipelines there were in everyday use. “It is the safest, cheapest, and most environmentally sound way to move liquid product,” said Shimkus and added that Democrats in Congress were “dragging their feet” on the matter and he said that it was “ridiculous.” The two were discussing the expansion of the Keystone Pipeline with Phillips 66 in the background to display how many jobs American energy creates. According to representatives from Phillips 66, the refinery employs as many as 850 people directly and 400 indirectly through contract work. Many jobs were created when the refinery spent $4 billion to prepare for the incoming Canadian crude oil according to Shimkus. “They gave us jobs in a time when there wasn’t a lot of jobs in the area,” said Shimkus. After their short statements at the Phillips 66 refinery in Wood River, Shimkus and Bost went to Percy, Ill. to tour the Nighthawk Coal Mine.[161]
February 20, 2013: Phillips Retains Van Ness Feldman as New DC Lobbyists
Legal Times reported on February 20, 2013 that Phillips has retained Van Ness Feldman as their first outside firm to lobby in Washington to advocate for it on oil and gas industry matters, tax reform and the looming $85 billion in spending cuts known as the sequester, according to lobbying registration paperwork filed with Congress.[162]
February 20, 2013: Phillips Spent $1.5 million Lobbying Federal Government in 2012
Legal Times reported on February 20, 2013 that according to congressional records, Phillips has spent $1.5 million on federal government advocacy since it submitted lobbying registration paperwork to Congress in June 2012 and deployed three of its employees to lobby for it. In 2012 Phillips lobbied on U.S. Environmental Protection Agency issues concerning the oil and gas industry, the EPA's renewable fuel standard program and refinery rulemaking.[163]
November 14, 2012: Greg Garland Expects More Government Regulations During Second Obama Term
Fuel Fix reported on November 14, 2012 that Greg Garland expects President Barack Obama’s second term to bring a wave of regulations on their industry that portends another four years of policies that will reduce demand for their refineries’ petroleum-based fuels. “With the election now decided, I see a very active regulatory environment for the next four years,” says Garland. "There’s no question, between renewables and CAFE standards, over the next 10 to 20 years, you’re looking at a 10 to 20 percent reduction in gasoline demand. That’s something that concerns us.” Garland and Marathon Petroleum CEO Gary Heminger said new and expanded federal regulations, including the Renewable Fuel Standard and the Corporate Average Fuel Economy (CAFE) standards, have cost their companies billions over the years while cutting use of their products.[164]
July 30, 2012: Phil Brady Named Top Lobbyist for Phillips 66
The Detroit News reported on July 30, 2012 that Phil Brady, the president of National Automobile Dealers Association, has been named senior vice president of government affairs for Phillips 66. Brady, who will be based in Washington, will be responsible for the company's federal, state and international policy and governmental affairs efforts. Brady has previously served in senior White House positions for President Ronald Reagan and President George H.W. Bush and also served as general counsel at the U.S Transportation Department, and in senior positions with the U.S. Justice Department and Congress.[165] “It is important that our key constituents understand the economic value that energy companies like Phillips 66 bring to our country as a U.S. manufacturer, and Phil will help us to effectively share that story,” says Phillips 66 CEO Greg Garland. “Over just the past few months as an independent company, Phillips 66 has already put together an exceptional management team and strategy to grow in meeting the energy needs of this country,” says Brady. “I look forward to joining the team to help re-introduce this iconic energy company to our government leaders.”[166]
Public Relations and Media Relations
March 6, 2015: Phillips 66 Us Marketing Wins The American Marketing Association Houston Chapter 2014 Marketer Of The Year Award
TESTING Virtual Strategy reported on March 6, 2015 that the Houston Chapter of the American Marketing Association award Phillips 66 the Marketer Of The Year Award for 2014. To address the challenge of B2B customers bypassing their US Fuels sales representatives during initial stages of the buying process, the Phillips 66 US Marketing launched an online business-to-business digital marketing program to assist sales in acquiring new customers and retaining existing customers that included a campaign geared to cross-sell/up-sell Convenience Store Alliance (CSA) to existing customers plus other tactical programs. The campaign increased the number of customers adopting programs from an average of 16 customers per month to 103 and achieved an overall 246% increase in existing customers participating in the CSA program.[167]
December 31, 2014: The Shredder Writes: "There’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community"
Anonymous columnist "The Shredder" wrote in the New Times on December 31, 2014 that there's "here’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community, how much Phillips 66 cares about us all, and how very much it would hurt Phillips 66’s feelings if we denied the company its rail spur project. The problem is, Phillips 66 has greased the verbal wheels by giving these people a lot of money, and then turned around and given even more money to a local PR firm to tell the rest of the community just how great Phillips 66 really is. Call me a cynic, but as soon as I know someone’s been paid to say something, they lose credibility in my eyes, and I’m speaking as someone who has never been paid. Maybe they really mean it. But if that were the case, why wouldn’t they say it without being paid?"
The reality is that Phillips 66’s “good neighbor” moments tend to be choreographed, right down to photographs of a smiling spokesperson handing over an enormous check. And that’s OK. That’s what for-profit corporations do. It is not, however, what good neighbors do. I know, because my neighbor is still miffed about the time I offered to pay up front so my dog can freely pop squats in his yard. In fact, a company is not a neighbor at all, regardless of how many times a PR company repeats the term. A corporation is not a human being with human concerns; corporations are motivated by one thing: profit.
While I don’t fault Phillips 66 for behaving like a corporation any more than I fault a wild animal for behaving like a wild animal, I don’t much appreciate the fact that they’re trotting out platitudes about being there for the community in lieu of substantive discussion about the impacts of what they’re proposing. Hiring a company to attempt to wrangle and limit the media while feeding the public a heavily manipulated image of an oil company as Mr. Rogers—if Mr. Rogers was in the habit of doling out enormous checks—is a fairly oily thing to do.[168]
December 23, 2014: Judge Rules That Phillips 66 Policy Prohibiting Santa Maria Refinery Employees from Talking to the Media Violates the Law
David Minsky reports at the Santa Maria Sun that on November 25, 2014 a National Labor Relations Board administrative law judge found that Phillips policy of prohibiting Phillips employees at the Santa Maria Refinery from speaking to reporters violated the law. According to case documents, attorneys representing Phillips 66 argued in court that the policy was meant to prohibit employees from speaking on the company’s behalf about any confidential operations. But the judge rejected this argument, saying the policy was ambiguous and violates the law because employees could “reasonably construe” that it would prohibit them from discussing, among other things, labor disputes or conditions of work. Reached by email last week, Phillips 66 spokesperson Dennis H. Nuss said the company is aware of the recent decision, but didn’t make specific comments about the case. However Nuss did write: “Our company’s top priority is the safety of everyone who works at our sites and lives in our neighboring communities. In 2012, Phillips 66 redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria Refinery, and there were no staff reductions. These changes have helped maintain and improve the refinery’s high standards for safety performance.”[169]
January 2, 2013: Gregg Laskoski at US News and World Report is Critical of Lack of Tranparency at Phillips 66
Gregg Laskoski wrote at US News and World Report on January 2, 2013 that after Reuters reported that some 7,700 gallons of fuel spilled from Phillips 66's Bayway refinery in Linden, N.J., after Hurricane Sandy in November, 2012, New Jersey environmental protection officials said they were not made aware of a major spill at the Bayway plant, and the refinery failed to respond to inquiries from Reuters reporters. "Too many times, history has shown us, the Phillips 66 response or lack thereof characterizes the standard practice of the oil industry. Refineries often fail or are slow to communicate problems that create significant disruptions to fuel supplies and spikes in retail gasoline prices. More often than not, scant information is provided reluctantly, if at all," writes Laskoski. "When such things occur is silence from refineries acceptable? Or does our government and the electorate who put them there have a right to know what's really going on? "[170]
November 5, 2012: Motor Trend Journalist Takes Money To Be Spokesperson For Phillip 66
Matt Hardigree reported on Jalopnik on November 5, 2012 that Motor Trend's Jessi Lang is being paid to represent oil company Phillips 66 as a spokesperson who is trying to help influence young people to buy their gas, "something Motor Trend doesn't appear to be telling its readers." Last month a PR firm hired by Phillips 66 reached out to reporters with the results of a survey designed to evaluate the buying habits of "millenials" and offered a quote from Lang, who they identified as a spokesperson and host of Motor Trend's weekly automotive news roundup "Wide Open Throttle" on YouTube. "Taking payment from a potential newsmaker is a generally frowned upon practice, but Lang, and the PR firm representing Phillips 66, say Motor Trend approves of her simultaneously representing an automotive publication and a company that's part of the automotive industry," writes Hardigree who asked Lang if it was proper for her to take money from Phillips 66 and work as a journalist for Motor Trend at the same time. "I get paid by Motor Trend to be a journalist and to help educate others and that doesn't at all call into question my integrity as a writer," said Lang adding that "anyone within a capitalist society" should be compensated for their work. Motor Trend's Editor-in-Chief Ed Loh declined to comment if there is a conflict of interest. "In the case of Lang, Motor Trend, and Phillips 66 it seems they've skipped ahead from trying to woo car writers with free trips to paying them outright," writes Hardigree.[171]
September 6, 2012: Motor Trend's Jessi Lang says Drivers Can Clean Their Engines with Top Tier Gas Like Phillips 66
PR Newswire reported on September 6, 2012 that Jessi Lang, host of Motor Trend's "Wide Open Throttle" and Phillips 66 spokesperson, says that "millennials think they're saving money by seeking out cheaper gas, but what they don't realize is that the unbranded gasoline they're buying actually can cost them money in the long run by compromising their fuel economy and causing build-up in their engine. "By using branded TOP TIER gas like Phillips 66, 76 and Conoco, these drivers can clean up their engines and accrue significant savings over time -- especially now that these brands have had the detergent additive treat rate increased by more than 25 percent in all fuel grades."[172]
New Phillips 66 Headquarters
December 17, 2014: Phillips Places Final Beam in New Headquarters
The Houston Business Journal reported on December 17, 2014 that the final beam was cautiously placed at the highest level of Phillips' new headquarters building with a ceremonial 22-foot tree placed on top. The topping off construction milestone for the headquarters will soon "bring everybody home" from a geographically fractured family of seven Phillips 66 buildings in the Houston area, said Mike Wirkowski, Phillips 66 general manager for projects. "It's a great symbol of the commitment our company has to our employees," added Debbie Adams Phillips 66 senior vice president of HSE, projects and procurement, as well as a symbol of an old company being new again. The headquarters project is running on time for Phillips 66 even though the company switched contractors from Houston-based W.S. Bellows Construction to Rhode Island-based Gilbane Building Co. in November for undisclosed reasons.[173]
October 31, 2014: Phillips Switches Building Contractors on New Houston Headquarters
Jordan Blum reported at the Houston Business Journal on October 31, 2014 that Phillips is switching contractors for its big corporate headquarters under construction in the Westchase District terminating its deal with Houston-based W.S. Bellows Construction and has contracted with Rhode Island-based Gilbane Building Co. Dennis Nuss, Phillips 66 media relations director, did not disclose the reason for the change calling it a private contractual matter. but says that the scope, cost and timeline of the project will not be impacted, although he would not elaborate on the reason for the change. "The construction of the new Phillips 66 campus remains on schedule and is expected to be completed by mid-2016." The Phillips 66 campus is designed to house the downstream company that spun off from Houston oil major ConocoPhillips (NYSE: COP) two years ago, and will include a soccer field, café, fitness center, credit union, covered parking and training and development center. The company has leased 210,745 square feet of space for its interim headquarters at Pinnacle Westchase.[174]
November 22, 2013: Phillips Breaks Ground on New Headquarters Building
The Houston Business Journal reported on November 22, 2013 that Phillips broke ground on November 22, 2013 on its new 1.1 million-square-foot corporate campus in the Westchase District that will house all of the company’s 1,800 Houston-area employees once construction is finished in about three years.[175]
The Houston Chronicle reported on July 23, 2013 that Phillips' new headquarters, still in "conceptual design phase,” will include about 1.1 million square-feet of space in multiple buildings, along with a cafeteria, fitness center, coffee shop and conference center. The new facility, located on about 14 acres, will provide office space for the 1,800 employees that work for the company in Houston. Construction is expected to start by the end of the year. We are excited about our new state-of-the art Phillips 66 headquarters facility, which when built, will provide a location for all of our Houston employees to work together at one location, and it will provide our global employees with a place to meet, train and grow,” said spokeswoman Janet Grothe.[176]
September 12, 2012: Phillips Selects Site for New Global Headquarters
Phillips reported on September 9, 2012 that the company will build its new global headquarters at a 14-acre site located off Beltway 8 West, between Westheimer Road and Briar Forest Drive. “We searched for several months for the right site to build a headquarters campus where our employees and future employees can come together to work, and develop their skills and talents,” said Greg C. Garland, chairman and chief executive officer of Phillips 66. “This property is conveniently located in the Westchase District and a location that aligns with our commitment to making our company a great place to work.” Once ground is broken at the new site, construction is expected to take between 24-36 months.[177]
July 9, 2012: Interim Headquarters Selected
CSPNet reported on July 9, 2012 that Janet Grothe, senior adviser for health, safety and the environment at Phillips 66, confirmed that Phillips 66 has settled on a temporary headquarters in the Pinnacle Westchase building near ConocoPhillips' home office in the Houston "Energy Corridor." ConocoPhillips' headquarters is about eight miles away. In March, 2012 it sent an email to employees that said the new headquarters would be constructed near Interstate 10, within 10 miles of ConocoPhillips' current headquarters. The Pinnacle Westchase building fits that general description.[178]
March 20, 2012: Phillips 66 Headquarters to be Located in Houston
Houston Business Journals reported on March 20, 2012 that according to an email sent to employees, the new headquarters of refining and marketing spin-off company Phillips 66 will be near Interstate 10 and Beltway 8, within 10 miles of ConocoPhillips' current headquarters at 600 N. Dairy Ashford Road. The decision to locate in Houston was made because the company’s oil and gas infrastructure is already present. During the two- to three-year construction period on the new facility, Phillips 66 employees will be located in temporary locations in the company’s current space.[179]
Bartlesville Technology Hub
January 24, 2015: Phillips Is Looking at Controllable Expenses Not Personnel Cuts
Bartlesville Radio KWON reported on January 23, 2015 that Phillips 66 is looking at controllable costs including travel, supplies, hiring, the use of consultants, memberships and projects or resources that aren’t critical to the business. Company spokesman Summer Austin says Phillips 66 is asking all of its employees to identify areas where expenses can be cut or controlled because of lower oil prices and other economic factors. Although rumors are circulating that Phillips is looking at personnel costs and possible personnel cuts, Austin says she has not been told of any specific job cuts and when it comes to the possibility of layoffs, Phillips 66 executive leadership views layoffs as a last resort — never as a prime strategy.[180]
January 23. 2015: Phillips 66's Commitment to Bartlesville Will Remain Strong
The Bartlesville Examiner-Enterprise reported on January 24, 2015 that Merl Lindstrom, vice president of technology for Phillips 66, told Bartlesville’s Daybreak Rotary Club on January 23, 2015 that the company’s commitment to the local area will remain strong. “This is a time of upheaval in the energy industry,” Lindstrom said. “Things are changing pretty quickly, and so as we move through the next few months we will certainly have some changes (in the industry), but we will do our best… We’ve been here (in Bartlesville) many, many years. We’ve been around refining since the early 1900s and continue to be there.”
Lindstrom said that approximately 1,750 Phillips 66 employees work out of the company’s offices in downtown Bartlesville and another 450 are based at the Research Center in west Bartlesville. “This is one of the largest sites anywhere in the world for the concentration of Phillips 66 employees,” Lindstrom said. “Currently, I can’t see anything changing. Our Bartlesville operations and the Research Center is a great place to be. There’s none like it. This is a great place, and we have no problems attracting people to Bartlesville.”
Lindstrom said that approximately 75 percent of the work done at the Research Center is dedicated to refining, and as the technology in producing the elements in oil and gas products evolves, Phillips 66 will be able to evolve with it. Lindstrom said the Bartlesville facility — with its partnerships with ConocoPhillips, ChevronPhillips and other companies — will be at the forefront to develop new methods and technologies.[181]
December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay including Pilot Plant and PPS Assets in Bartlesville
Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.[182]
December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville
The Tulsa World reported on December 19, 2014 that Chevron Phillips Chemical Co. LP plans to build a polyethylene pilot plant at its research and technology facility in Bartlesville that should be completed in 2017. The new facility will replace the current site, which has been focused on “developing improvements in current resins or new polymer kind of innovations” since the 1970s. “As a global producer of polyethylene, we strive to support our customers with the latest technological advances and process improvements through the efforts of our research and development personnel,” said Don Lycette, vice president of research and technology for Chevron Phillips Chemical, in a written statement. “Chevron Phillips Chemical continues to build on a long history of scientific discoveries, particularly at our facility in Bartlesville, which was originally built in 1950 by Phillips Petroleum Co.” The new pilot plant will incorporate Chevron Phillips Chemical’s proprietary MarTech process for polyethylene production and technology that enables production of bimodal polyethylene resins for advanced applications.[183]
Philips CEO Greg Garland previously made mention of the expansion at the Research Center when he spoke to the Bartlesville Chamber of Commerce in August 2014.[184]
December 5, 2014: Phillips to Invest $155 Million at Corporate Level Primarily in IT and Facilities
Phillips 66 announced on December 5, 2014 that in Corporate and Other, Phillips 66 plans to fund $155 million in projects primarily related to information technology and facilities.[185]
November 19, 2014: Phillips Donates $50,000 to Restore Goff Tower in Bartlesville
KWON reported on November 19, 2014 that Phillips 66 donated $50,000 and the Lyons Foundation donated $20,875 to help restore Goff Tower, designed by famed architect Bruce Goff and presented in 1964 as a gift from Mrs. H.C. Price to the children of Bartlesville. Citizens are invited for the re-opening ceremony of the Sooner Park Play Tower scheduled for Wednesday, November 26th at 2 pm.[186]
August 13, 2014: Phillips Has No Plans to Close Any Bartlesville Facilities
Nathan Thompson reported in the Bartlesville Examiner-Enterprise on August 13, 2014 that Greg Garland told a group of community leaders at the Bartlesville Regional Chamber of Commerce forum on August 12, 2014 that the company’s commitment to Bartlesville continues and that there are no plans to close any of the Bartlesville facilities. “Bartlesville is a special and unique place,” said Garland. “It has a rich part of our heritage and our legacy. It is important today. It will be important in the future of Phillips 66… A big part of the day-to-day operations and the successes of Phillips 66 are born by the people here in Bartlesville.” Garland mentioned an expansion that is currently underway at the Research Center to continue the development of polyethylene technologies. We also have a world-class research facility here in Bartlesville,” Garland said. “That differentiates us from a Valero (Energy Corporation), or a Marathon (Oil Corporation). It is very unique to our space (in the market).” Even with expansion at the Houston headquarters, Garland said the the space is already at capacity — and the Bartlesville facilities continue to be full as well.[187]
August 13, 2014: Phillips Pledges $1,700,000 to Support STEM Education in Bartlesville
The Tulsa World reported on August 13, 2014 that Phillips will be giving $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. “We want to create a place where our students will come and be excited, be challenged and hopefully be encouraged to follow a career at a place like Phillips 66,” he said. “We want to put the right kind of tools in the hands of students in Bartlesville so they can be more successful.”[188]
The funds came through a Phillips 66 Signature Community Initiative grant application submitted to the company under an effort spearheaded by Scott Bilger, a Bartlesville school board member and Phillips 66 employee, and Granger Meador, a physics teacher who heads up Bartlesville High’s science department. The new laboratories and major new course offerings will be at the high school, along with Madison and Central Middle Schools. “We are just really, really excited about the opportunity this is going to provide our students,” Superintendent Gary Quinn said. “It cannot be overstated what this is going to mean to our students.” Phillips 66 has about 2,000 workers in Bartlesville.[189]
September 1, 2013: Garland Praises Bartlesville
The Bartlesville Examiner-Enterprise reported on September 1, 2013 that Garland praised the Bartlesville and state of Oklahoma for its “rich heritage” and as a source of employee talent it provides to the company. “Oklahoma is a special place to Phillips 66,” Chairman/CEO Greg Garland told a crowd at the first forum in a series hosted by the Bartlesville Regional Chamber of Commerce held Tuesday afternoon. “This is where it all started for us. It became a rich heritage.” Of the company’s 13,500 employees worldwide, Garland said Bartlesville and Houston are the two largest population centers for employees. The headquarters in Houston employs approximately 1,800. “We have nearly three thousand employees in Oklahoma today — two thousand right here in Bartlesville,” he said. “… It’s where our global services are headquartered out of, and really the service is a machine that runs Phillips 66 each and every day, so it is a very important place.” Garland also said the reputation and success of the company were built from the “giants” who first created it, and that success continues because of those giants. “We are standing on the shoulders of giants,” said Garland. “People like E. W. Marland, who started Marland Oil in 1911, and Frank and L. E. Phillips that started Phillips Petroleum in 1917. I could go on and on and list the giants that have come before us that have so well positioned this company for the success that we envoy today.”[190]
October 27, 2012: Bartlesville Research Center Dodges a Bullet
Rod Walton reported in the Tulsa World on October 27, 2012 that with Phillips decision not to build a long-planned major research and training center in Colorado, Bartlesville employees are breathing a sigh of relief because many feared that their piece of the company might be headed to the Rocky Mountains. "Any time a major employer in the community makes a sizable investment in another location, it generates concerns," said David Wood, president of Bartlesville Development Corp. "The formal announcement that Phillips 66 will be selling the Louisville property puts this issue to rest." The Bartlesville research center has a long history. Phillips Petroleum Co. had its headquarters in the city from the early 20th century until the merger with Conoco Inc. in 2002. Now it looks like the research center is safe and sound for some years to come. "Without being complacent, indications are that the research center will continue to be a large, high-wage employer in Bartlesville for the foreseeable future," Wood said. "We couldn't be more pleased with that outcome."[191]
September 12, 2012: Bartlesville a Special Place for Garland
The Tulsa World reported on September 12, 2012 that Garland spoke on September 11, 2012 at a packed Bartlesville Area Chamber of Commerce Forum at the city's community center downtown carrying on a tradition started several years ago by his predecessor, ConocoPhillips CEO Jim Mulva. Garland was adamant that Bartlesville's value as a global web center, combined with its heritage as home city of the original Phillips Petroleum Co. always make it important to the company's future plans. "We have deep roots here," Garland said adding that he visits the company's local operations several times a year. "It's a cost-efficient place for us to do business. I think we made the right decision." Garland noted that office space is almost maxed out locally, so he does not see more than "modest growth" adding to the 2,000 jobs Phillips 66 already has in Bartlesville. Garland was recruited out of Texas A&M by Phillips and lived many years in Bartlesville with his wife and four children.[192]
The Bartlesville Examiner-Enterprise reported on September 12, 2012 that Garland went to work for Phillips 66 as his first job out of college because of Bartlesville. “I picked this company because of Bartlesville. Four times over the course of 32 years I’ve lived here. We have good memories of Bartlesville, Oklahoma, and it’s always going to be a very special place to me personally," said Garland. “As we were approaching the repositioning and spinning Phillips 66 out of ConocoPhillips, there was never any question that Bartlesville would continue to be a strategic and important part of our company, in the support of our company operations, for a very long time."[193]
May 1, 2012: Phillips Has 'Deep Roots' in Bartlesville
ConocoPhillips CEO Ryan Lance and Phillips 66 CEO Greg Garland reassured its employees in Oklahoma in an op-ed they wrote for the Bartlesville Examiner-Enterprise titled "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" that "ConocoPhillips and Phillips 66 together employ nearly 4,500 people in Oklahoma, an increase in recent years. Going forward, we will both maintain Global Services Centers in Bartlesville providing essential finance, information technology and other vital support to our personnel around the world. Elsewhere, Phillips 66 will continue operating the Ponca City Refinery, by far Oklahoma’s largest, and will remain the leading gasoline marketer. ConocoPhillips will continue producing oil and natural gas from the Anadarko Basin and the Panhandle area." Lance and Garland added that "we continue encouraging both current and incoming employees to maintain our proud tradition of community service. Bartlesville is a special place to work, live and raise a family, and we want to help keep it that way. This is an exciting time for ConocoPhillips and Phillips 66. All of our Oklahoma communities are great homes to our people and businesses, and we both look forward to long and bright futures here."[194]
April 29, 2012: Jim Mulva is a "True Friend of Bartlesville
The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that Jim Mulva has "proven to be a true friend to the City of Bartlesville."[195] According to Rod Walton, Bartlesville was a big beneficiary of the ConocoPhillips merger and seems to have lived a charmed life economically over the past ten years. Although the home of Frank Phillips doesn't employ 9,000 company workers as it did in the early days, the 1,000 employees added since 2002 have kept downtown buildings such as Plaza and Adams full of mid-level computer, credit and other support personnel. But now Bartlesville operations are in flux and there is much uncertainty about the future. "All employees are being moved to one of the two companies, with co-workers who once sat side to side now literally shifted to separate buildings," writes Walton. ConocoPhillips will employ about 1,700 people in the downtown Plaza and Frank Phillips Tower Center buildings and in the Adams warehouse. Phillips 66's Bartlesville workforce will number 1,900 people, housed in the main Adams and Phillips buildings and the Research and Development Center on the west edge of the city.[196] The Bartlesville Examiner-Enterprise reported on April 29, 2012 that the "split or 'repositioning' as it has been called by company officials, has required many existing local employees to shift jobs and even physically move from one building to another within the extensive downtown Bartlesville office complex" adding that "while no one can predict the future with perfect clarity, Bartlesville appears no worse for the wear during this complex process."[197]
The Stock Market and Investor Relations
Stock Market
- The Stock Market and Investor Relations
- Phillips 66's Stock Performance
- Phillips 66's Dividends and Stock Repurchases
- Earnings Conferences
- Investor Conferences
- What Financial Analysts Say About Phillips 66
Stock Performance
January 1, 2014: Phillips Stock Appreciates 45.6% in 2013
Phillips 66 (PSX) finished 2013 with its stock price at 77.34 up 24.24 points from its closing price of 53.10 on December 31, 2012 for an appreciation of 57.4% over its closing price for 2013.[200]
January 1, 2013: Phillips Stock Appreciates 53.10% in 2012
Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.[201]
Dividends and Stock Repurchase
February 4, 2015: Phillips Declares Quarterly dividend of 50 Cents
Phillips 66 reported on February 4, 2015 that the board of directors of Phillips 66 has declared a quarterly dividend of 50 cents per share on Phillips 66 common stock. The dividend is payable on March 2, 2015, to shareholders of record as of the close of business on Feb. 17, 2015.[202]
October 1, 2014: Phillips Declares Quarterly dividend of 50 Cents
The Herald Online reported on October 1, 2014 that the board of directors of Phillips 66 declared a quarterly dividend of 50 cents per share on Phillips 66 common stock payable on Dec. 1, 2014 to shareholders of record as of the close of business on Nov. 14, 2014.[203]
July 10, 2014: Phillips Declares Quarterly dividend of 50 Cents
Watchlist News reported on July 10, 2014 that Phillips announced that investors of record on August 15th will be paid a dividend of 0.50 per share on September 2nd.[204]
May 7, 2014: Phillips Declares Quarterly Dividend of 50 Cents
Reuters reported on May 7, 2014 that Phillips declared a dividend of 50 cents payable on June 2 to common shareholders of record by May 19 raising its quarterly dividend by 28 percent.[205]
February 14, 2014: Garland Says Phillips Believes in Bulletproof Dividends
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips believes in bulletproof dividends. "We think that growing shareholder distributions is key to growing total shareholder return. We believe in bullet proof dividends. We believe in not only secure but growing dividends and competitive dividends. We nearly doubled the dividends since the spin."[206]
February 7, 2014: Phillips Declares Quarterly Dividend of 39 cents
Marketwatch reported on February 7, 2014 that the board of directors of Phillips has declared a quarterly dividend of 39 cents per share on Phillips 66 common stock payable on March 3, 2014, to shareholders of record at the close of business on Feb. 18, 2014.[207]
Businesswire reported on December 6, 2013 that Phillips' board of directors has approved a new $2 billion share repurchase program, consistent with the company's strategy to grow shareholder distributions. “Returning capital to our shareholders is fundamental to creating value and delivering superior total shareholder returns,” said Phillips 66 Chairman and CEO Greg Garland. “Our disciplined capital allocation process complements these distributions with capital spending and reinvestment in our higher-valued businesses.” The shares will be repurchased from time to time in the open market at the company's discretion, subject to market conditions and other factors, and in accordance with applicable regulatory requirements.[208]
October 2, 2013: Phillips Increases Quarterly Dividend to 39 cents
Seeking Alpha reported on October 2, 2013 that the board of directors of Phillips declared a quarterly dividend of 39 cents per share on Phillips 66 common stock, representing an increase of approximately 25 percent from the prior quarter. The dividend is payable on Dec. 2, 2013, to shareholders of record at the close of business on Nov. 14, 2013. "Our objective is to consistently increase shareholder distributions, while also capturing attractive opportunities to reinvest in our businesses and grow future returns," said Phillips 66 Chairman and CEO Greg Garland. Returning capital to our shareholders remains a priority for Phillips 66, and we are pleased to deliver another increase in our quarterly dividend."[209]
July 10, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
istockanalyst reported on July 10, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on September 3, 2013, to shareholders of record at the close of business on August 16, 2013.[210]
May 8, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
The Wall Street Journal reported on May 8, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on June 3, 2013, to shareholders of record at the close of business on May 20, 2013.[211]
February 11, 2013: Phillips Declares Quarterly Dividend of 31.25 cents
Investors Business Daily reported on February 11, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on March 1, 2013, to shareholders of record at the close of business on Feb. 18, 2013.[212]
December 7, 2012: Phillips Increases Quarterly Dividend from 25 cents to 31.25 cents
Bloomberg reported on December 7, 2012 that Phillips has announced that the company is raising its quarterly dividend to 31.25 cents per share from 25 cents. The new dividend will be paid in the first quarter of 2013. Phillips 66 also said it approved the repurchase of another $1 billion in company stock. It approved the repurchase of $1 billion shares during the third quarter as well.[213]
October 3, 2012: Phillips Increases Quarterly Dividend from 20 cents to 25 cents
Businesswire reported on October 3, 2012 that Phillips has declared a quarterly dividend of 25 cents per share on Phillips 66 common stock, representing a 25 percent increase from the prior quarter. “This 25 percent increase reinforces our objective to provide competitive and growing dividends,” said Phillips 66 Chairman and CEO Greg Garland. “Allocating capital to dividends and repurchases while continuing to invest in the growth of our business is fundamental to our philosophy of delivering shareholder value.”[214]
July 12, 2012: Phillips 66 Initiates $0.20 Quarterly Dividend
Michael Aneiro reported on Barrons on July 11, 2012 that Phillips 66 announced a quarterly common stock dividend of 20 cents per share, payable Sept. 4 to stockholders as of July 23. “Phillips 66 has a clear strategy to improve returns and to deliver a strong, competitive dividend program to our investors,” said compay chairman and CEO Greg C. Garland. “We are convinced that returns, growth and distributions create value.”[215]
Stockholder's Meetings
May 8, 2013: Phillips Holds First Stockholder's Meeting in Houston
Greg Garland told Phillips stockholders at the first meeting that Phillips had executed the spin-off from ConocoPhillips flawlessly. "When you think about the Company, we had a strong operating performance. We ran well," said Garland. "We stood up the Company in a very favorable margin environment, so all those things came together for really strong year of financial performance for our Company. We delivered $5.4 billion of [adjusted] net income in 2012. Our return on capital employed was 22%. We're so proud of our employees and what they accomplished in standing up the Company, but also for their commitment and their dedication in creating and capturing value for our shareholders."[216]
Garland received questions from stockholders John Pajak who works at the Bayway Refinery and commended Phillips for its repsonse to Hurricane Sandy. Stockholder Jimmie Dunn commended Phillips on its first year performance and asked why Phillips bought back stock rather than increasing the dividends. Stockholder Governor Clements said he was very pleased with Phillips' performance. Stockholder Jim White said he was a suppler to Phillips and commended Phillips for the response post superstorm Sandy and for Phillips ongoing commitment to family values and safety. Stockholder Michael Mulvany, the business manager for a local steamfitters union headquartered out of North New Jersey, thanked Phillips for their commitment to safety. "My union's relationship with that refinery goes back 103 years when Mr. John D. Rockefeller opened up Standard Oil," said Mulvany. "We've been there when it was Exxon, Tosco, ConocoPhillips and now Phillips 66. And we're hoping to be there another 103 years with all you fellows, and your good team of leadership." Stockholder Caroline Hockley asked about Phillips controlled pipelines and Garland responded that Phillips has "a state-of-the-art controlled facility, one of the newest and, I think, best in the industry in Bartlesville, Oklahoma." Stockholder Jimmie Dunn asked how he could get a tide in ConocoPhillips "beautiful hot air balloon."[217]
April 17, 2013: Phillips Announces First Annual Stockholder's Meeting
The Herald Online reported on April 17, 2013 that will host its First Annual Meeting of Stockholders on Wednesday, May 8, 2013 at 9:00 a.m. CDT at the Marriott Houston Westchase at 2900 Briarpark Drive, Houston 77042. Stockholders must present an admission ticket or proof of ownership of Phillips 66 stock, as well as valid picture identification, to enter the meeting. Phillips also encourages company employees to attend the meeting.[218]
Earnings Conferences
2014 Q3: October 29, 2014: Phillips Earnings Beat Q3 Estimates on Higher Margins
Nasdaq reported on October 29, 2014 that Phillips posted adjusted third-quarter 2014 earnings of $2.02 per share, beating the Zacks Consensus Estimate of $1.69. Substantial improvement in the company's refining segment and higher marketing margins led to the outperformance.[219]
The Refining segment generated adjusted earnings of $558 million compared with a loss of $30 million in the prior-year quarter. Substantial improvement in refining margins drove the impressive results. During the quarter, the company's refining utilization was 94% and clean product yield was 84%.[220] Phillips said its realized refining margin was $10.89 a barrel and that a record 95 percent of its crude slate came from so-called advantaged U.S. crudes. "Our operations ran well during the third quarter, capturing strong margins in our refining and marketing businesses," said Garland.[221]
The Midstream segment generated adjusted quarterly earnings of $115 million compared with $147 million in the year-ago comparable quarter. The Chemicals segment generated adjusted earnings of $299 million compared with $262 million in the year-ago quarter. Earnings in the Marketing and Specialties (M&S) segment were $259 million, up from $255 million in the prior-year comparable quarter. Reduced production costs led to higher global margins which aided the results.[222]
2014 Q2: July 30, 2014: Phillips Falls Short with 10% Drop in Earnings
The Houston Business Journal reported on July 30, 2014 that Phillips fell short of estimates with a nearly 10 percent drop in second-quarter earnings from the same period in 2013 with $863 million in earnings compared to $958 million for the the second quarter of 2013. The company was boosted by its growth in the chemical sector, but its refining revenues dipped noticeably decreasing 14 percent to $390 million partly to weaker refining margins . "Chemicals earnings were driven by strong olefin and polyolefin chain margins," said Garland. "Refining benefited from higher utilization; however, our market capture rate declined."[223][224]
Garland did not elaborate on a recent fire in July at a Chevron Phillips Chemical Company LLC plant in Port Arthur that involved injuries, but he did say the facility should not be shut down for much longer. "There's no reason for that unit to be down for a prolonged period of time," he said.[225]
Phillips also reported growth in its midstream segment growing earnings from $90 million in the April-June quarter of 2013 to $108 million this year. But Jeff Dietert, an analyst with Simmons & Company International, said the results fell short of his projection that the midstream segment would report $150 million in second-quarter profit.[226]
2014 Q1: April 30, 2014: Phillips Meet Expectations with First-Quarter Earnings of $1.6 Billion
The Wall Street Journal reported on April 30, 2014 that Phillips announced first-quarter earnings of $1.6 billion and adjusted earnings of $866 million excluding $706 million primarily related to the realized gain on the Phillips Specialty Products Inc. (PSPI) exchange. This compares with fourth-quarter 2013 earnings of $826 million and adjusted earnings of $808 million. "We delivered a strong quarter, with solid performance and improved margins in our Midstream and Chemicals businesses," said Greg Garland, chairman and CEO of Phillips 66. "Our Refining results were impacted by planned downtime at several of our Gulf Coast and Central Corridor refineries and tightening crude spreads."[227]
Midstream recorded $188 million of earnings during the first quarter of 2014, $67 million higher than the prior quarter. The Chemicals segment reflecting Phillips's equity investment in Chevron Phillips Chemical Company LLC (CPChem) reported first-quarter 2014 Chemicals earnings of$316 million, an increase of $55 million from the prior quarter. Refining earnings were $306 million during the first quarter of 2014, compared with earnings of $418 million during the previous quarter. The decrease was primarily attributed to lower volumes due to planned turnaround and maintenance activities, as well as weaker realized refining margins. Despite higher worldwide market crack spreads, realized margins decreased mostly due to tightening crude spreads, lower clean product realizations and negative inventory impacts.[228]
2013 Year: January 29, 2014: Phillips 2013 Earnings Beat Expectations But Fall Short Of The Prior Year
The Houston Business Journal reported on January 29, 2014 that Phillips reported full-year 2013 earnings of $3.7 billion, or $6.02 per share, and adjusted earnings of $3.6 billion, or $5.89 per share. Analysts had expected full-year earnings of $5.64 per share. In 2012, Phillips 66 had earnings of $4.1 billion, or $6.48 per share, and adjusted earnings of $5.3 billion, or $8.38 per share.[229]
The Refining Business Segment TBD
The Chemical Business Segment TBD
The Midstream Business Segment TBD
2013 Q4: January 29, 2014: Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year
The Houston Business Journal reported on January 29, 2014 that Phillips fourth-quarter earnings beat analysts’ expectations with earnings of $826 million, or $1.37 per share, and adjusted earnings of $808 million, or $1.34 per share. Analysts polled by Thomson Reuters had estimated earnings of $1.10 per share. In the fourth quarter of 2012, Phillips 66 had earnings of $708 million, or $1.11 per share, and adjusted earnings of $1.3 billion, or $2.04 per share.[230]
The Refining Business Segment earnings were up 24 percent to $450 million, but that’s also down 53 percent from adjusted earnings of $960 million in the fourth quarter of 2012. Phillips attributed the drop to lower margins in all regions except the Gulf Coast. "Margins were negatively impacted by weaker worldwide market crack spreads; however, this was partially offset by improved market capture compared with the same period last year," the company said. Marketing and specialties earnings were also down 35 percent to $73 million, due to the sale of its U.K. power generation business and lower marketing margins attributable to rising product prices in the U.S.[231]
The Chemicial Business Segment generated adjusted earnings of $261 million compared with $246 million in the comparable quarter last year. Higher polyethylene margins, equity earnings and ethylene volumes led to the increase. This was partially offset by higher costs and lower benzene margins.[232]
The Midstream Business Segment generated adjusted earnings of $450 million compared with earnings of $960 million in the year-ago quarter. The dismal results can be traced to lower realized refining margins, owing to decline in the average worldwide market crack spread. During the quarter, Phillips 66's refining utilization was at 92% and clean product yield was 84%.[233]
Segmental earnings for Marketing and Specialities were $73 million, down from $113 million from the comparable quarter last year. The decrease was primarily due to the sale of the U.K. power generation business in Jul 2013, and lower marketing margins. This was partially offset by reduced costs and higher volumes.[234]
In the reported quarter, Phillips 66 generated $865 million of cash from operations. It also returned $876 million of capital to shareholders. Of this, $232 million was disbursed as dividends while $644 million was used to repurchase 9.9 million shares of common stock.[235]
2013 Q3: October 30, 2013:Phillips Profits are Down in Third Quarter Due to Refining Losses
Olivia Pulsinelli reported in the Houston Business Journal that Phillips' earnings for the third quarter were $535 million, or 87 cents per share, compared to $1.6 billion, or $2.51 per share, a year earlier. Analysts polled by Thomson Reuters had expected a profit of 94 cents per share. Although the company’s midstream, chemicals, and marketing and specialties businesses were up compared to last year, the refining business posted a $2 million loss. "We ran well during the quarter," said Garland. "Weaker refining margins had a significant impact on our earnings. Chemicals posted strong earnings as a result of solid utilization rates and good margins."[236]
2013 Q2: July 31, 2013: Phillips Earnings Disappoint with 19% Drop in Earnings for 2nd Quarter
FuelFix reported on July 131, 2013 that Phillips underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. “We should have run better and our earnings results reflect this,” said Garland. Phillips 66′s adjusted earnings per share of about $1.50 was well below analyst expectations of about $1. 81 for that figure.[237]
Garland cited two reasons for the disappointing earnings. First, Phillips' extended downtime at its facilities, including a refinery and a chemical plant, contributed to $175 million in lost profit. One of the outages, an extended maintenance period at a chemical plant in Port Arthur, lasted for 91 days, the duration of an entire quarter of the year. Second, higher domestic oil prices pushed down profits as the gap between the price of West Texas Intermediate, a benchmark for domestic crude, and Brent, a measure of international oil prices, narrowed substantially during the second quarter. That trend is expected to continue through the remainder of the year, with Brent currently around $107 and WTI at about $105. U.S. refiners had previously enjoyed a huge advantage over their foreign competitors because WTI prices were as much as $20 lower than Brent prices , with some U.S. crudes priced far lower because there was limited access to foreign markets.[238]
Bloomberg reported on May 1, 2013 that Phillips net income for the 1st quarter rose to $1.41 billion, or $2.23 a share, from $636 million, or $1, a year earlier as the margin between oil costs and fuel prices widened and its chemical business improved. Greg Garland has said he’s focused on chemicals, pipelines and natural gas processing to reduce the volatility that comes with refining earnings. “This company is a different animal because the growth opportunities are not on the refining side of the business,” said Fadel Gheit, an analyst at Oppenheimer & Co. Refining profits rose as the margin between the cost of West Texas Intermediate oil and the price at which refiners sell fuel rose 20 percent to an average of $32.689 a barrel in the January-to-March period, according to data compiled by Bloomberg.[239]
Phillips 66 has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.[240]
2012 Q4: January 31, 2013: Phillips 66 Adjusted Profit Beats 4th Quarter Estimates But Gross Profits Down 65% When Including Impairment Charge
Bloomberg reported on January 31, 2013 that Phillips beat fourth-quarter profit estimates by 37 cents more than the $1.69 average of 16 analysts' estimates compiled by Bloomberg. Adjusted earnings for the quarter were $1.31 billion or $2.06 per share, compared to adjusted earnings of $379 million or $0.60 per share in the same period last year. However these adjusted profit figures exclude a writedown of the value of the company's interest in a plant in Malaysia of $2.06 a share. If the writedown is included, then the company reported a 65 percent decline in profit for the fourth quarter from last year as an impairment charge more than offset higher refining and chemical margins.[241][242]
The company has rallied along with other U.S. refiners by boosting access to a growing supply of domestic crude that has become cheaper than overseas oil. U.S. refiners in some regions paid an average of $17.48 less for every barrel they processed compared to the global benchmark oil price, according to data compiled by Bloomberg. "They're taking advantage of the God-given gift of very wide crude discounts and cheap natural gas," Fadel Gheit, a New York-based analyst with Oppenheimer & Co., said in a telephone interview. "They are putting the money to good use, and it's reflected in the stock price."[243]
Reuters reported on October 31, 2012 that Phillips announced 3rd quarters profits of $1.6 billion or $2.51 per share, compared with $1 billion or $1.65 per share a year earlier. Analysts on average had expected a profit of $2.35 per share, according to Thomson Reuters I/B/E/S.[244]
Increased access to cheaper crude oil from the United States and Canada boosted Phillips 66's quarterly profits above analyst expectations with more than half of the company's refining capacity in the central corridor of the U.S. with access to cheaper crudes in North Dakota, Texas, Kansas and other states, executives told analysts during Phillips 66's third-quarter earnings conference call. "Our U.S. advantaged crudes increased from 52 percent last year to 61 percent to date in 2012," Chief Financial Officer Greg Maxwell said.[245]
October 10, 2012: Phillips 66 to Announce Third-Quarter Financial Results on October 31
Phillips announced on October 10, 2012 that the company will release its third-quarter financial results on October 31, 2012 and host a conference call to discuss the company’s third-quarter performance and provide an update on strategic initiatives.[246]
2012 Q2: August 1, 2012: Phillips announces Profits up 14% in Second-Quarter Earnings Call
Reuters reported on August 2, 2012 that Phillips 66 posted a 14 percent jump in second-quarter profit with a net income of $1.18 billion, or $1.86 per share, up from $1.04 billion, or $1.64 per share, a year earlier. Chief Financial Officer Greg Maxwell told analysts the company's capital expenditures for 2012 would range between $1 billion and $1.5 billion. Phillips 66 said it would retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there. Garland said Phillips 66 "really likes" its Midwest and Gulf Coast refineries, which have easier access to cheaper Canadian and inland U.S. crudes. "The East and West Coast refineries are challenged refineries, and we think there are opportunities to improve them," Garland told Reuters in a post-call interview. Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude. Garland said the Bayway Refinery and Ferndale Refinery were "absolutely" more likely to stay in the company's portfolio if Phillips 66 can increase the amount of Bakken crude they run, backing out other more expensive crudes. Bayway can run up to 100,000 bpd of light crude, while Ferndale can run 50,000 and Phillips plans to rail Bakken crude to both plants. Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems. Garland says that the company is not planning potential acquisitions -- refineries or other assets -- at this time. "There's nothing really interesting to us at this time," says Garland.[247]
Plan to Get Advantaged Crudes to Every Refinery
Garland said that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day. "We are trying to get those crudes to every refinery we can. But clearly to Ferndale on the West Coast to Bayway on the East Coast, we think Ferndale can probably run 50,000 barrels a day of Bakken crude. Wood River, we can run up to 90,000 to 120,000 barrels a day of shale type crudes there. Ponca about 60,000 barrels a day. Bayway, 100,000 barrels a day of shale type crudes that we can advantage, that we can move into Bayway. Smaller Rodeo we can get at 30,000 barrels a day and Sweeny about 40,000 barrels a day. And then Alliance, we are running today Eagle Ford crude and some Bakken crude in Alliance, but ultimately 50,000 to 90,000 barrels a day. So we have a plan to get advantaged crude into most of our refineries."[248]
June 28, 2012: Phillips 66 to Hold First Earnings Call on August 1
Phillips 66 issued a press release on June 28, 2012 announcing that Phillips will issue its second-quarter earnings report on August 1 and Greg Garland and Executive Vice President and Chief Financial Officer Greg G. Maxwell will host a webcast to discuss the company’s second-quarter performance and provide an update on how the company is delivering on its strategy.[249]
Investor Conferences
September 4, 2014: Phillips Presents at Barclay CEO Energy-Power Conference
Greg Garland made a presentation to analysts at the Barclay CEO Energy-Power Conference on September 3, 2014. "So here is our strategy, growth, returns, distributions. We have an unyielding commitment to operational excellence, which for us is personal safety, process safety, environmental excellence reliability, cost management and a commitment to have a high performing organization. So right people, at the right place, at the right time to execute the plan, and having people that know how to win and are committed to differentiating shareholder value. So that's kind of the strategy."[250]
"As we look at our refining business, it's run well, it's optimized, it's minimized capital investments. We won't invest in advantaged crude at the front end, exports on the backend, yield capture, energy efficiency, but really very disciplined capital investment in our refining business. Midstream business, aggressive growth and we'll go through that today as we move into the presentation. Chemicals, aggressive growth; selective growth in our marketing and specialties businesses. We're executing well. We've identified lot of growth opportunities in the company, we'll talk about today. A lot of them around midstream and logistics, ultimately destined for our master limited partnership. We've raised the dividend 28% in May and June. The board approved additional $2 billion share repurchase, so we're at $7 billion total authorization on share repurchases."[251]
May 21, 2014: Phillips 66 presents at UBS Global Oil & Gas Conference
TBD
April 10, 2014: Phillips Presents at Phillips 66 Analyst Meeting
Phillips reported that Greg Garland, Clayton Reasor, Tim Taylor, and Greg Maxwell presented at an Analyst Meeting on April 10, 2014. "Part of our vision is to double the enterprise value of our Company based upon its historical implied value, said Garland. "We were thoughtful, we are very purposeful in how we structured Phillips 66 from the very beginning and the assets that went into the Company. We believe that our four main business segments are more valuable together than they would be separated, and we do test that continually. We think that we access lower cost of capital. We think that, looking across the value chain, that we can optimize. We can direct capital to its highest and most best use. And then finally, we can grow quicker."[252]
March 6, 2014: Phillips 66 presents at Bank of America Merrill Lynch 2014 Refining Conference
Phillips reported that Clayton Reasor and Greg Maxwell presented at Bank of America Merrill Lynch 2014 Refining Conference on March 6, 2014. "We’ve got two very good refineries on the West Coast – one in San Francisco, one in L.A. – about 230,000 barrels a day of total capacity, 110,000 barrels a day of coking capacity. They are positive cash flow, they are positive net income," said Reasor. "Capital requirements aren’t that significant. So those refineries are well positioned, but they’re generating single-digit returns and struggle as far as attracting capital. We’ve talked about how to improve performance in California, and for us, it’s around increasing the amount of advantaged crude, so how do we find ways of getting Canadian crude into California? We’re in the comment period right now at Santa Maria, a 30,000 or 35,000-barrel-a-day unit train rail unloading facility, and hopefully that will be permitted. We’re also looking at other things in California to improve the performances of those businesses. But for us, we believe California will struggle being competitive in the export market, given the costs there and the lack of advantaged crudes, and longer term, we look at California and wonder if it’s something that we need to continue to own in order to grow our chemicals industry business."[253]
February 12, 2014: Phillips presents at Credit Suisse Energy Summit
Phillips reported that Greg Garland Clayton Reasor presented at the Credit Suisse Energy Summit on February 12, 2014. Garland told security analysts that the Refining Business Segment is always is going to be a very volatile business for Phillips. "We don't see that changing in the future. I think small changes in operating rates in infrastructure are going to create dislocations. I think having a large system like we have, having a very sophisticated and large commercial organization like we have, we're going to be able to take advantage of those opportunities that come our way."[254]
August 29, 2013: Phillips presents at Barclays CEO Energy-Power Conference
Phillips reported that Greg Garland presented at Barclays CEO Energy-Power Conference on August 29, 2013. "It's going to be an energy century as you think about it; it's going to be a century of opportunity," said Garland. "We're very optimistic about the growth in U.S. manufacturing as people see $3.50 natural gas; they're looking at 8% unemployment. They see the investment that the industry is making in infrastructure and petrochemical facilities and etc. And we think at Phillips 66 we're extremely well-positioned to play our part in this changing American energy landscape and that we can be one of the premier companies in this space in terms of creating jobs, capturing value, providing energy and improving lives."[255]
May 21, 2013: Phillips Presents at UBS Global Oil & Gas Conference
Phillips reported that Greg Maxwell presented at the UBS Global Oil & Gas Conference on May 21, 2013. "We can run some lights in San Francisco. As far as working towards getting advantaged crudes into that, we're looking at options to take down via pipeline -- I mean via rail cars, and then also going over to the waterfront and barging down into those refineries," said Maxwell. "With regard to San Francisco and LA, land is expensive and short to come by. We have to do some permitting. And then also, bringing it in via tankers, we have to get some permitting as well. So all that's underway."[256]
May 15, 2013: Phillips Presents at the Citi Global Energy and Utilities Conference
Phillips reported that Tim Taylor and Greg Maxwell presented at the Citi Global Energy and Utilities Conference on May 15, 2013. "Rail for us is a relatively minor percentage of our total movement, and so we look at rail as a mobile pipeline," said Taylor at the conference. "And clearly today some of the northern plays are more oriented toward rail versus the access that you have by pipe in the southern part of the U.S. So I see rail as playing a role, but we still like pipelines. It’s more economical. But there is a lot of flexibility in rail, so I think rail continues to be a piece, but it’s not going to become the dominant mode or the primary focus."[257]
March 18, 2013: Phillips Presents at the Howard Weil 41st Annual Energy Conference
Phillips reported that they presented at the Howard Weil 41st Annual Energy Conference on March 18, 2013.[258]
February 28, 2013: Phillips to Present at Bank of America Merrill Lynch 2013 Refining Conference on March 7
The Fort Mills Times reports that Larry Ziemba, executive vice president, Refining, Project Development and Procurement of Phillips 66 will speak at the Bank of America Merrill Lynch 2013 Refining Conference in New York on Thursday, March 7 to discuss the company’s plans to enhance refining returns, as well as its overall strategy for growth and value creation.[259]
February 5, 2013: Taylor Tells Credit Suisse Energy Summit That Canadian Crude is Being Transported to California Refineries
Reuters reported on February 5, 201 that Tim Taylor, Phillips executive vice president for commercial, marketing, transportation and business development, told the Credit Suisse energy conference that Phillips has begun moving cut-price Canadian crude to its California refineries at Los Angeles and San Francisco via rail. "We're beginning to deliver Canadian crude to our California refineries by rail," said Taylor. Garland told Reuters on January 30, 2013 that Phillips was looking at coiled tube cars that are suited to bitumen in Canada's heavy oil deposits that must be heated in order to flow.[260]
January 22, 2013: Phillips 66 to Present at Credit Suisse Energy Summit on February 5, 2013
Daily Finance reported on January 22, 2013 that Tim Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 will speak to investors and securities analysts at the Credit Suisse Energy Summit in Vail, Colo. on February 5, 2013 to discuss the company's strategy to enhance refining returns, grow midstream infrastructure and chemicals capacity, and increase distributions to shareholders.[261]
December 13, 2012: Phillips Announces 2013 Capital Program at Inaugural Analyst Meeting
Phillips reported on Decmeber 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.[262]
November 27, 2012: Greg Garland to Host Inaugural Analyst Meeting on December 13
Marketwatch reported on November 27, 2012 that Greg Garland and other executives at Phillip 66 will discuss the company's strategic objectives, including its plans to enhance returns, grow profitably and increase shareholder distributions at an Inaugural Analyst Meeting in New York on December 13, 2012.
November 13, 2012: Tim Taylor Presents at Bank of America Merrill Lynch 2012 Global Energy Conference
4-traders reported on November 5, 2013 that Tim G. Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 spoke to investors and securities analysts at the Bank of America Merrill Lynch 2012 Global Energy Conference in Miami, Fla. on November 13, 2012 with an overview of the company and its strategic initiatives.[263]
September 5, 2012: Garland Speaks at Barclays CEO Energy-Power Conference
Phillips 66 reported that Phillips CEO Greg C. Garland spoke to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[264]
August 22, 2012: Garland to Speak at Barclays CEO Energy-Power Conference on September 5
Marketwatch reported on August 22, 2012 that Phillips CEO Greg C. Garland will speak to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 20120 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[265]
June 5, 2012: Garland Presents Phillips Strategy for Growth to the Citi Global Energy Conference
On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.[266]
Refining and Marketing Strategy
Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."[267]
There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."[268]
Phillips also wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.[269]
When asked a question about rationalizing refining capacity by closing down plants Garland said it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."[270]
Midstream Strategy
Garland said there are s large opportunities in terms of midstream investment in gas gathering and processing, NGL fractionation, and distribution and that Phillips has a a very aggressive investment profile in the midstream space. "We have about $7 billion of projects identified, underway in this space and so you think at the DCP JV level spending kind of $500 million a year, historical capex, we’re moving that up to about $2 billion a year," said Garland. "We also have our own embedded midstream business within Phillips 66. It’s primarily pipelines and ownership in fractionators at Conway, Borger, and Belvieu. Good business generates good returns for us in a growth area for us and we would consider growth in this area around fractionation, around LPG exports."[271]
Chemical Strategy
Garland says the NGLs that are coming on over the next 10 years are going to be feedstocks for the petrochemicals business and that the Joint Venture with Chevron is well positioned for that.[272]
June 5, 2012: Garland Presents to Investors at Citi Global Energy Conference
On May 29, 2012 Phillips 66 announced that CEO Greg Garland will speak to investors and securities analysts on June 5, 2012 at the 2012 Citi Global Energy Conference partipating n a roundtable discussion, providing a brief company overview and engaging in Q&A with investors.[273]
May 24, 2012: Clayton Reasor Presents to UBS Global Oil and Gas Conference
On May 17, 2012 Phillips 66 announced that Clayton Reasor, Phillips 66 senior vice president for Investor Relations, Strategy and Corporate Affairs, will speak to investors and securities analysts on May 24, 2012 at the UBS Global Oil and Gas Conference in Austin, Texas about Phillips 66's strategic priorities, including plans for growth and returns enhancement.[274]
Other Investor News
July 23, 2013: Phillips 66 Partners raises $377.8 million in IPO
Businessweek reported on July 23, 2013 that Phillips 66 Partners LP raised $377.8 million from its initial public offering of stock. 16.4 million shares sold at at $23 up from 15 million shares the partnership had expected to sell for $19 to $21 each. The banks managing the deal may buy another 2.5 million shares if there's demand for them and if they do, the public will own about 26 percent of Phillips 66 Partners. Phillips 66 will own the rest of it. The shares are expected to start trading on the New York Stock Exchange Tuesday under the "PSXP" ticker symbol.[275]
July 15, 2013: Phillips 66 Partners Plans $315 million IPO
Fox Business reported on July 15, 2013 that Phillips 66 Partners plans an initial public offering will likely total as much as $315 million that will include certain pipeline, terminal and storage systems—used for crude oil and refined petroleum product—in the Central and Gulf Coast regions. The IPO of approximately 15 million shares is expected to price in a range of $19 to $21 a share, according to a filing with the Securities and Exchange Commission.[276]
March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO
Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.[277]
July 3, 2012: Phillips Recommends Stockholders Reject TRC Mini-Tender Offer
CSP Net reported on July 3, 2012 that Phillips 66 Co. has recommended that shareholders not tender their shares in response to an unsolicited mini-tender offer that TRC Capital Corp. TRC is offering to purchase up to three million shares, or less than 0.48% of Phillips 66's outstanding common stock at an offer price of $31.30 per share represents a 4.78% discount to the Phillips 66 closing share price on June 25, 2012, the day prior to the commencement of TRC's mini-tender offer. "Phillips 66 strongly recommends investors obtain current market quotes for their shares of common stock and consult with their financial advisors with respect to TRC's offer," the company said. "The company does not endorse and is not associated with TRC's unsolicited mini-tender offer."[278]
June 7, 2012: Garland says Phillips Deserves a Higher P/E
On June 7, 2012 Barrons reported that Greg Garland said that Phillips is a lot more than just an oil refiner and deserves a higher price/earnings multiple than the paltry P/E ratio that refiners now garner. "We don't want the Street to just give us a refining multiple," Garland said in an interview in New York. Philips shares, at around 32, trade for less than seven times projected-2012 profits of $4.90 a share and yield 2.5% based on the company's targeted quarterly dividend of 20 cents that is set to begin in the third quarter. Garland says that Phillips has gotten about 60% of its profits on average over the past three years from higher-return businesses, principally chemicals and so-called midstream assets, including pipelines and processing facilities that handle natural-gas liquids. The chemical and midstream operations generate 20%-plus returns on capital and offer significant reinvestment opportunities.[279]
May 2, 2012: Phillips Rings Wall Street's Opening Bell
On May 2, 2012, executives and employees from Phillips 66 celebrated the company's first week of regular trading on the New York Stock Exchange by ringing the opening bell. Chairman and Chief Executive Officer Greg C. Garland led the delegation, which included employees from its Houston Headquarters and Bayway Refinery in Linden, N.J.[280]
April 23, 2012: Phillips to Join S&P 500
It was announced on April 23, 2010 that Phillips 66 will join the the S&P 500.[281]
April 17, 2012: Howard Thill says Phillips Will Have Increased Flexibility
On April 17, 2012 Howard Thill, Marathon Oil’s vice president of investor relations and public affairs, spoke about the ConocPhillips split at Oklahoma State University’s energy conference in Oklahoma City. “It’s about enhanced flexibility — the ability to focus on an individual asset or set of assets,” Thill said. “When you have a very large conglomerate, it’s very difficult to be able to generate enough information at a low enough level to give investors that transparency into the business,” Thill said. “Independent refiners and independent exploration and production companies disclose much more information about their companies than a major integrated because from a major integrated standpoint, the scale is so large that it just doesn’t make a difference in that respect.”[282]
April 4, 2012: ConocoPhillips Board of Directors Votes to Create Two New Companies
On April 4, 2012 ConocoPhillips' board of directors announced that two new companies will be separated through the distribution of shares of Phillips 66 to holders of ConocoPhillips common stock. This distribution is expected to occur after market close on April 30, 2012. ConocoPhillips shareholders will receive one share of Phillips 66 common stock for every two shares of ConocoPhillips common stock held at the close of business on the record date of April 16, 2012.[283]
Operational Excellence
Greg Garland told financial analysts on April 9, 2012 that operational excellence would be a focus at Phillips 66 and part of his strategy to grow the company. "We'll always focus on operational excellence. We'll focus on building a great organization to execute our plans."[285][286][287]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips 66 has a long legacy of being good operators and of operational excellence. "I have a real passion for this. It's the foundation that provides the opportunity to create sustainable value growth. I'm proud of our progress here. We have more work to do."[288]
In mid 2012, Phillips 66 rolled out its five-point strategy to its employees and Tim Taylor and other senior leaders of the company have hosted dozens of town-hall meetings to convey the strategy to workers across all levels of the organization. "Taylor approaches each town-hall gathering in three steps," wrote Morey Stettner in Investor's Business Daily on June 21, 2013. "If it's held at a refinery, he begins by huddling with the site managers to review operating metrics such as safety performance. He applies 'operational excellence' principles that encourage continuous improvement. Second, he visits control rooms to get an overview of the operation. Chatting with employees, he learns about different aspects of their job and the challenges they face. Finally, he hosts town halls. Between 100 and 200 employees usually attend. After Taylor's opening remarks, he engages in a lively Q&A." Taylor and other top executives at Phillips 66 use cross-functional teams to generate ideas. For example, an internal group of 10 to 15 crude oil buyers, logistics experts, refinery technicians, salespeople and others proposed that the company use railcars to transport oil. Thanks to the team's analysis, the company announced in June 2012 that it would buy up to 2,000 railroad tank cars to ship oil from inland shale fields to coastal refineries. One year later, the use of rail is already proving a winner in helping Phillips 66 boost results. "We were an early mover in rail and I'm proud (our team) came up with that," Taylor said. "Without them, we would not have made progress as rapidly as we have."[289]
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Operational Excellence is job one for Phillips. "We have to get this done right. We believe that we protect and enhance shareholder value when we do this well. When we send every employee home safely every day without getting hurt, when we operate the processes in control, when we operate them reliably, when we reduce our environmental footprint and we manage our costs well, we create value for the owners of our Company."[290]
Components of Operational Excellence
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that operational excellence is holistic in our view and includes personal safety, process safety, environmental excellence, reliability, and cost management. "It's all those elements wrapped together."[291]
Personal Safety, Process Safety, and Environment
Reliability
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that reliability has improved over the past couple of years. "We operate above industry average rates."[292]
Cost Management
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that part of Phillips' heritage is stringent, prudent, detailed cost management. "We have all grown up in commodity businesses. We understand the importance of cost, cost structure, and managing those costs every day."[293]
August 1, 2012: Plan to Reduce Controllable Cost by 5% with Optimize 66 Program
Phillips was asked by Paul Sankey of Deutsche Bank during their second-quarters earnings report on August 1, 2012 about the $4 billion of controllable costs and if Phillips had set a target for a 5% reduction in controllable costs for around $200 million of savings. "Yes. Controllable cost, we put a number out there $200 million. We think it is a good number," said Garland. "I frankly think we will do better than that. We tend to always exceed. We have got a program we call Optimize 66 that we are working across this budgeting process, which we are in the middle of now. And people are looking at all avenues to improve efficiency and reduce costs. And, frankly, [the boys] have come up with some great ideas from their early work that I have seen. So I think that the $200 million is a good number for a target."[294]
Labor Relations and Human Resources
Labor Relations and Issues with Employees
March 12, 2015: Union Says Tentative Agreement Reached to End US Refinery Strike
Reuters reported on March 12, 2015 that the United Steelworkers union and oil companies have reached a tentative deal to end the largest U.S. refinery strike in 35 years, say people familiar with the negotiations. The tentative contract contains language that addresses worker fatigue, which is tied to accidents, and the use of contractors versus unionized labor. It also safeguards gains made in previous contracts, the union and sources said. They added that annual wage increases would be 2.5 percent in the first year, 3 percent each in years two and three, and 3.5 percent in the fourth year. The deal, which still needs to be ratified, may not end strikes right away at all refineries that have suffered walkouts as local union chapters could still need to work out pending issues. "We salute the solidarity exhibited by our membership," said USW International President Leo Gerard. "There was no way we would have won vast improvements in safety and staffing without it."[295]
March 11, 2015: Union Signals Possible Proposal Coming That Will End US Refinery Strike
Reuters reported on March 11, 2015 that the United Steelworkers union (USW) signaled that lead refinery owner representative Shell Oil Co may offer a possible settlement in the coming days that could end the largest refinery strike in 35 years. In a message issued on Wednesday night, the union said it was assembling its policy committee, which represents the rank and file, to review proposals from industry during contract talks. The national agreement being negotiated by the USW and Shell Oil will set the floor on pay and benefits as well as set standards on some safety issues. That agreement must be combined with agreements on local issues at each refinery and chemical plant and then voted on by the membership of the local union for the contract to take effect at each site. At the striking plants, it would likely take about two weeks for approval of a contract and the return of workers to their jobs.[296]
February 23, 2015: USW Workers on Strike at Twelve Refineries Nationwide
Reuters reported on February 23, 2015 that as of February 23, 2015 USW workers are on strike at the following twelve refineries and petrochemical facilities involving 6,000 workers. Motiva issued a statement saying that its labor contract with the union at the Port Arthur facility expired at midnight on Friday and that contracts for its facilities in Norco and Convent, Louisiana expired on Saturday. Strike organizers said that workers remained in place at the two other Motiva refineries in Louisiana as of Monday morning. The refineries affected nationwide include[297]
- Motive Port Arthur refinery in Port Arthur, Texas
- LyondellBasell in Houston, Texas;
- Marathon Galveston Bay Refinery in Texas City, Texas;
- Marathon Houston Green Cogeneration facility, Texas City, Texas;
- Marathon Refinery, Catlettsburg, Ky.;
- Shell Deer Park Refinery, Deer Park, Texas;
- Shell Deer Park Chemical Plant, Deer Park, Texas;
- Tesoro Anacortes Refinery, Anacortes, Wash.;
- Tesoro Martinez Refinery, Martinez, Calif.; and
- Tesoro Carson Refinery, Carson, Calif.
- BP Refinery, Witing, Ind.
- BP Refinery, Toledo Ohio
February 21, 2015: Strike Expands to Additional Refineries Including the Nations Largest Refinery at Port Arthur, Texas
Reuters reported on February 21, 2015 that US refinery strike widened as workers walked off their jobs at the nation's largest refinery, Motiva's 600,250 barrel per day (bpd) refinery in Port Arthur, Texas. The strike may complicate operations at the Port Arthur refinery, which failed to restore its second largest crude distillation unit (CDU) to full production after restarting on Friday following a three-day shutdown to fix leaking piping, sources told Reuters. The refinery's largest CDU, which has a rated capacity of 325,000 bpd is running at about 200,000 bpd, the sources said, because a 60,000 bpd hydrocracking unit is shut due to a malfunction. The hydrocracker produces motor fuel, primarily diesel, which has become a lucrative export for U.S. refiners. Motiva is also overhauling the 92,000 bpd gasoline-producing fluidic catalytic cracking unit at the refinery. It is scheduled to restart in the first half of March. It was shut in early January.
The USW also gave notices on Friday of strikes to begin in 24 hours at Motiva's 235,000 bpd Convent, Louisiana and 238,000 bpd Norco, Louisiana refineries and the Shell Oil Co chemical plant in Norco, the union said. "The industry’s refusal to meaningfully address safety issues through good faith bargaining gave us no other option but to expand our work stoppage," USW International President Leo Gerard said in a statement. A Shell spokesman said the company was disappointed by the Port Arthur walkout and strike notices to the Louisiana plants. "We believe this move sets the wrong tone for both parties to move forward and reach an agreement," said Shell spokesman Ray Fisher. "We remain committed to continued safe operations and productive negotiations."[298]
February 16, 2015: US Refinery Strike Could Spread Over Safe Staffing
Reuters reported on February 16, 2015 that with bout 5,200 workers from nine refineries walking picket lines, a strike by US refinery workers that entered its 16th day could spread if there is no progress in talks this week with plant owners on safe staffing levels, said the lead negotiator for the United Steelworkers union (USW). "The longer that this strike rolls on, the more people that will be affected," said Gary Beevers, USW international vice president. For the union, the use of non-union contractors and lack of an industry-wide policy on preventing worker fatigue are key obstacles to safe staffing. "We're going to talk about safe staffing one way or the other," Beevers said.[299]
February 15, 2015: Managers Bunk Down at US Refineries Amid Safety Concerns as Strike Enters Third Week
Reuters reported on February 15, 2015 that US oil refinery managers are going to the mats, sleeping on recently purchased mattresses inside rental trailers inside the refineries, during the biggest fight with union workers in 35 years, as the strike enters its third week and experts and some employees say raises concerns over safety and operations. John Ostberg, a non-union control engineer who works in the main computerized control center at Toledo, quit his job on Monday weeks before he was scheduled to retire. For months, Ostberg has been warning his bosses in emails about their plans to rely on replacement workers and supervisors if a strike occurred. He feared they were not properly trained, or too far removed from the frontlines, to respond to unit upsets and other problems that can escalate quickly without experienced intervention. “Management says it’s safe. I disagree,” said Ostberg a 56-year-old engineer who worked at Toledo since 1980 and helped run the refinery operating center, known locally as the ROC, the heart of the plant. Behind a blast-proof wall, Ostberg and others monitor the dozens of units that populate the refinery to ensure things are running properly and alert USW workers manning the units when they are not. “I sit behind a blast-proof wall, so I’m not worried about my safety," says Ostberg. "But I fear for everyone else.”
In dozens of interviews with local USW workers, craftsman and experts, a portrait of the day-to-day role they play emerges: monitoring large electronic boards that detect problems, turning valves, checking the quality of refined products and overseeing work permits. But their biggest contribution, the people say, is serving as the refinery’s frontline defense when things go wrong. At least three of the nine U.S. oil refineries targeted by a nationwide strike of USW members have reported upsets and unplanned repairs since their workers walked out on Feb 1. There is no indication of what caused the upsets, none of which resulted in any harm or serious damage to equipment.[300]
February 8, 2015: Workers Expand Strike to Two More Refineries
AP reported on February 8, 2015 that members of the United Steelworkers union walked off their jobs at refineries in Whiting, Indiana, and Toledo, Ohio, joining a walkout that began this week at nine other refineries. BP’s Whiting refinery employs about 1,860 employees, more than 1,000 of whom are represented by the steelworkers. The Toledo refinery, which it owns 50-50 with Canada’s Husky Energy, has about 600 workers, including more than 300 steelworkers. Union spokeswoman Lynne Hancock said the workers are seeking better health care benefits and limits on the use of contractors to replace union members in maintenance jobs. She said wages are not an issue. The Whiting and Toledo plants will be staffed by replacements including retirees and former front-line workers who now hold salaried jobs, said BP spokesman Scott Dean.[301]
February 7, 2015: Phillips 66 Refinery Workers Stage Informational Picket in Billings to Highlight Understaffing, Safety, and Fatigue
KXLH reported on February 7, 2015 that about 70 union workers and their families held an informational picket for solidarity holding signs reading "Solidarity is Strength" and "Understaffing does not equal Safe Refineries." Billings is home to a Phillips 66 refinery.
President of the local group for Phillips 66 with United Steel Workers Wade Johnson said its also a display of community. Johnson added that "a safe community is important to the guys who work at this plant, it always has been. We take that very seriously," Johnson said. "And understaffing is a serious threat to community and the safety of the community." When asked why understaffing was a threat, Johnson said workers get fatigued. "On paper, these facilities tell us that they're giving us enough staffing. But then they'll pull 10 to 15 percent of the people out on any given week to do other projects. Other people have to cover that with overtime," Johnson said. "I just think we want folks to know that we're part of this community," he said. "All of these actions across the country are community actions. We're trying to get local folks hired at these facilities and we're trying to get enough of us hired so we're not always tired."[302]
February 6, 2015: Refinery Workers Strike to Extend to Next Week
The Hill reported on February 6, 2015 that workers at nine oil refineries will carry on their strike until next week after their union rejected the sixth contract offer from Royal Dutch Shell. “The parties have recessed and have agreed to resume talks,” said Shell spokesman Ray Fisher. The union wants more rules to reduce worker fatigue, a 6 percent pay bump and measures to prioritize union members for work over contract workers. The 50 percent drop in oil prices is making negotiating tougher for the union than in previous negotiating attempts a giving Shell a major bargaining chip, Reuters said.[303]
On February 4, 2015, two refineries affected by the strike - Tesoro Corp's Los Angeles-area refinery in Carson, California, and Marathon Petroleum Corp's Galveston Bay Refinery in Texas City, Texas - reported leaks to regulators. Strikes could complicate the ability of the companies to carry out maintenance work after the upsets, analysts say.[304]
February 4, 2015: Workers at Santa Maria Refinery Concerned About Fatigue Policy, Show Solidarity with Union Strikers
The New Times reports that since January 28, 2015 a rotating group of members the United Steelworkers (USW) Local 534 chapter have been picketing at the gates of the Phillips 66 Santa Maria Refinery in Nipomo to show solidarity with the work stoppage involving roughly 3,800 workers at nine refineries that started on February 1, 2015. “We are just picketing and not on strike yet, but it’s important for us to express ourselves and show solidarity with the USW,” said Juan Zepeda, the financial secretary/treasurer of the local USW chapter and a sulfur plant operator at the Santa Maria Refinery. “The picketing shows [Phillips 66] that they haven’t torn us apart yet.” “At this time, there hasn’t yet been a decision to expand the work stoppage,” said Nashville-based USW spokeswoman Lynne Hancock. “More refineries could soon join the strike if necessary, but that decision would be made at the national level.”
Outside the Santa Maria Refinery, Zepeda said 10 to 15 workers have been picketing every day for about a week, adding that—other than showing solidarity—the local USW chapter’s biggest issue is installing a new “fatigue policy” to give overworked employees some relief. “I can work anywhere from 110 to 148 hours in a two-week period, and that’s typical—it’s almost impossible for refinery workers to have family time,” Zepeda said. “You can only squeeze a nickel so hard before it starts to hurt the other side. “It’s also a ticking time bomb, it’s a refinery where a lot can go up in flames,” he added. “You’ve got to have people that are alert and have their wits about them—you can’t live with some zombie at the controls.”
“Once national bargaining is completed, Phillips 66 will be negotiating a new bargaining contract with the local USW unions that represent each of our refineries covered by expiring contracts,” says Phillips 66 spokesman Dennis Nuss. “We are committed to reaching a new agreement that is good for our employees and protects the future of some of the best jobs in American industry. “We are hopeful that we can achieve this goal without any interruption to our operations,” he added. “In addition to competitive wages and benefits, we expect the next contract to support our local efforts to improve safety and productivity.”[305]
February 3, 2015: Tesoro's Martinez Refinery Shuts Down as Oil Workers Strike Goes Into Second Day
Bloomberg reported on February 3, 2015 that Tesoro Corp. is shutting half of its 166,000-barrel-a-day Martinez plant in California that wasn’t already idled for maintenance. The facility already had about half its processing capacity offline for maintenance. The company has “successfully transitioned and are operating” the Anacortes and Carson refineries, said Tesoro spokeswoman Tina Barbee.
Management has taken control of operations at six other refineries after union workers walked out of the plants in the biggest strike since 1980. At Marathon’s 451,000-barrel-a-day Galveston Bay refinery, as many as 45 union workers were taking turns picketing in four-hour shifts. David Jones, a 56-year-old pipefitter who has worked at the refinery for almost half his life, said many of the refinery’s supervisors have never worked its processors and other complex machinery before, or at least in many years. “I wouldn’t be surprised if the place isn’t running in a couple weeks,” Jones said. “It’s a very complicated facility. It’s not like getting in a car and driving away.” More refineries are standing by to join the sites on strike, according to two people familiar with the plan who asked not to be identified because the information isn’t public. Refiners may cut operating rates “a little” during the strike, says John Auers. “They won’t push the units as hard. The key will be to run them reliably and safely.”[306]
February 1, 2015: Refinery Workers Go On Strike at Nine Refineries
Reuters reported on February 2, 2015 that union workers were on strike for a second day on Monday at nine U.S. refineries and chemical plants as they sought a new national contract with oil companies covering laborers at 63 plants. Shell activated a strike contingency plan at its joint venture refinery and chemical plant in Deer Park, Texas, to keep operating normally. Tesoro said management was operating its refinery in Carson, California, and that managers would take over from union workers at its plant in Anacortes, Washington, in the next 24-48 hours. Besides Shell and Tesoro, the USW said strikes were called at three plants belonging to Marathon Petroleum Corp (MPC.N) in Texas and Kentucky, and LyondellBasell Industries NV's (LYB.N) plant near Houston. At least two of the plants on the list have a history of deadly accidents. The United Steelworkers said all other refineries it represents would operate under rolling 24-hour contract extensions. The union is seeking annual pay raises double the size of those in the last agreement. It also wants work that has been given in the past to non-union contractors to start going to USW members, a tighter policy to prevent workplace fatigue, and reductions in members' out-of-pocket payments for healthcare.[307]
January 30, 2015: Union Workers Reject Oil Company's Offer as Contract Set to Expire
Reuters reported on January 30, 2015 that union negotiators said the latest proposal from oil companies for a new three-year contract for U.S. refinery workers was rejected on Friday because it failed meet to members' objectives. The announcement came 28 hours before the current contract covering hourly workers at 63 refineries accounting for two-thirds of U.S. refinery capacity is set to expire. "Industry's latest offer fails to address issues that matter to USW members," said the text message to union members, which was also sent to the media. "All units instructed to reject." This is third offer from lead industry negotiator Royal Dutch Shell Plc that USW negotiators have rejected since talks began on Jan. 21. The USW is seeking annual pay raises double those of the last agreement negotiated in 2012. It also wants work that has been given in the past to non-union contractors to start going to USW members along with a tighter policy to prevent workplace fatigue and reductions in members' out-of-pocket payments for healthcare. The union and refineries have both prepared for a possible strike, which the union signaled on Monday may be needed to win concessions from the oil companies.[308]
January 30, 2015: DCP Midstream to Cut Workforce by 20%
Natural Gas Intelligence reported on January 30, 2015 that DCP Midstream, a 50-50 joint venture between Phillips 66 and Spectra Energy, has announced it was cutting its workforce by 20% and closing a regional office. The Oklahoma City office is to close, and the workforce is being reduced in the Tulsa office and Midland, TX, office. Functions would be primarily moved to Denver headquarters and the Houston regional office. "With a 90-year history, we are repositioning ourselves for the long term and ensuring we have a sustainable workforce that meets our future needs," said CEO Wouter van Kempen. "While this transition is difficult, we are establishing DCP for continued growth founded upon a culture of operational excellence."[309]
January 26, 2015: Refinery Workers May Have to Strike
Reuters reported on January 26, 2015 that the United Steelworkers union (USW) signaled on January 26, 2015 a strike by U.S. refinery workers may be necessary to win what it calls a fair contract from oil companies. "Challenging bargaining continues," the USW said in a text message to members on Monday night. "Industry still isn't getting serious. Local unions are preparing to do whatever it takes to win fair contracts." Union and oil company negotiators met for a sixth day of negotiations on Monday ahead of the current contract expiring at 12:01 a.m. on Sunday in the time zone where each refinery is located. Refineries have been preparing for a possible strike by training temporary replacement workers and by placing trailers on refinery grounds as quarters for the replacement workers.[310]
January 25, 2015: With One Week of Bargaining Left, Refinery Workers Union Says Talks Are Going Slow
Reuters reported on January 25, 2015 that wiith just a week of bargaining left until the national contract for U.S. refinery workers expires, the United Steelworkers union (USW) said talks with oil company representatives for a new pact were going slow, according to a Twitter message sent to members. "It's time for the industry to get serious about addressing issues that matter to USW members," the message said. "Be ready to stand up and fight back!" The USW rejected the first industry proposal on January 23, 2015, calling it "inadequate and offensive," according to a message sent to members. The Steelworkers are seeking annual pay raises double those of the last agreement. The union also wants work given to non-union contractors to go to USW members, a tighter policy to prevent fatigue and reductions in members' out-of-pocket payments for health care. The union and refiners have made preparations for a possible strike in February. The last nationwide refinery workers' strike was in 1980 and lasted for three months.[311]
December 23, 2014: Judge Rules That Phillips 66 Policy Prohibiting Santa Maria Refinery Employees from Talking to the Media Violates the Law
David Minsky reports at the Santa Maria Sun that on November 25, 2014 a National Labor Relations Board administrative law judge found that Phillips policy of prohibiting Phillips employees at the Santa Maria Refinery from speaking to reporters violated the law. According to case documents, attorneys representing Phillips 66 argued in court that the policy was meant to prohibit employees from speaking on the company’s behalf about any confidential operations. But the judge rejected this argument, saying the policy was ambiguous and violates the law because employees could “reasonably construe” that it would prohibit them from discussing, among other things, labor disputes or conditions of work. Reached by email last week, Phillips 66 spokesperson Dennis H. Nuss said the company is aware of the recent decision, but didn’t make specific comments about the case. However Nuss did write: “Our company’s top priority is the safety of everyone who works at our sites and lives in our neighboring communities. In 2012, Phillips 66 redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria Refinery, and there were no staff reductions. These changes have helped maintain and improve the refinery’s high standards for safety performance.”[312]
November 13, 2014: Phillips 66 Workers Return to Work at Humber Refinery After Three Day Wildcat Strike Over Safety Issues
BBC and Harrogate reported on November 13, 2014 that striking workers have returned to work at Phillips 66's Humber Refinery after three days of industrial action claiming safety concerns following a gas leak last week in which two people were taken to the hospital. Engineering construction employees at the Humber Refinery decided at a mass meeting to return to work after spending three days on strike. The GMB union, which said it was aware of a health and safety issue on the site, said a meeting was being held between shop stewards and managers to finalise details of a return to work. Phillips said it would hold meetings with staff and the managers of contract companies and would "engage in open and honest dialogue to address any concerns outstanding and will work to reach a satisfactory conclusion". "Safety is the Humber Refinery's number one priority," it added.[313][314]
The Grimsby Telegraph reported on November 13, 2014 that that contractors voted to go back to work today, following days of walkouts amid safety concerns. "This morning, contractors have returned to work," said spokeswoman Nina Stobart. "Phillips 66 will engage in open and honest dialogue to address any concerns outstanding and will work to reach a satisfactory conclusion. Safety is the Humber Refinery’s number one priority."[315]
Despite the vote for 'yes', one disgruntled worker said: "They've asked for a show of hands and the group is clearly split; they're not going to do anything until someone is killed." Contract workers initially walked out on Monday after claiming that refinery bosses had reneged on an agreement to meet them in person following a gas leak at the site last Wednesday, which left two people requiring hospital treatment. “The employer has climbed down a bit but Phillips 66 do not want us in the meetings with contractors as they seem to be anti-Union but they are creating a recipe for disaster," Shaune Clarkson, regional organiser for GMB.[316]
November 12, 2014: Humber Refinery Workers Walk Out for Third Day Over Safety Issues
BBC reported on November 12, 2014 that 450 contract employees have stopped working at the Humber Refinery in South Killingholme for the thirdday claiming concerns over "safety issues". GMB union officer Shaune Clarkson said his members wanted "reassurance" from management that the plant was safe. A spokeswoman for Phillips 66 said: "This morning, despite the repeated offers by the refinery management to meet face to face with each company and their staff, the contractors voted to stay off work for a third day in unofficial action." The company said the refinery was "not being impacted by this action".[317]
The GMB union national officer Phil Whitehurst said: "Following a major stoppage of work we have been advised that there is a major health and safety issue on the site. GMB has been refused access to the site in order to resolve what has been described to us as a major hazard. We urge the company to allow the union on to the site to try to resolve the issue as quickly as possible for the safety of workers and the public."[318]
November 11, 2014: Hundreds of Humber Refinery Workers Walk Out for Second Day Over Safety Issues
BBC reported on November 11, 2014 that hundreds of contract workers have downed tools for a second day at Phillips 66's Humber Refinery over "safety concerns" after two workers were injured by a steam leak on October 30, 2014. Phillips employs 1,000 contractors and 750 staff. Mechanical engineers, scaffolders, welders and pipe-fitters are among the workers who have walked out. GMB union officer Shaune Clarkson said his members wanted a meeting with management to discuss safety at the plant. "The most important thing when you walk through those gates in the morning is you get home safely to your families at night," said Clarkson. "All we want, and all the men want, is a reassurance that is going to happen." A company spokeswoman said Philips 66 had been holding an "ongoing dialogue with contractor management over the last week to discuss their issues, many of which relate to onsite communications".[319]
November 10, 2014: 450 Contract Employees Walk Out at Humber Refinery Over Safety Concerns
BBC reported on November 10, 2014 that 450 contract workers walked out at Phillips 66's Humber Refinery on November 10, 2014. The "unofficial" action is over communication issues at the site. However the GMB union says it's over safety concerns after a gas leak at the site last week in which two men were injured. Phillips 66 confirmed there had been "a small gas release on a unit during some routine maintenance work at the Humber Refinery" last Wednesday. "All we want is a reassurance that the site is safe [and] some safety issues addressed. Unfortunately, the employer has failed to do that and because of that then men have reacted," said GMB union officer Shaune Clarkson. "This is the straw that's broke the camel's back." A company spokeswoman said: "We can confirm that earlier today, at approximately midday, a number of contract workers left site in unofficial action. "We have been in ongoing dialogue with contractor management over the last week to discuss their issues, many of which relate to onsite communications, and will continue to work with them to reach a satisfactory conclusion."[320]
BBC reported on October 30, 2014 that two workers were injured by a steam leak at the Humber Refinery at 09:30 GMT. Phillips said the pair had been taken to Pinderfields Hospital in Wakefield by air ambulance. The company has given no more information on the employees' injuries and said it was offering support and assistance to their families.[321]
November 1, 2014: US Refinery Union Workers Seek Substantial Raises
Hydrocarbon Processing reported on November 3, 2014 that United Steelworkers, which represents about two-thirds of workers at US refineries, said its members want a “substantial” increase in wages, stronger rules to prevent fatigue and measures to keep union workers rather than contract employees on the job, said Gary Beevers, the USW international vice president who manages the union’s oil sector. Beevers said the union is ready for the biggest fight in his time as leader. For the first time in at least 20 years, members decided to set aside funds for workers should they have to strike. “The last two cycles of bargaining happened when the economy was rough, and we tried to find some reasonable solutions and we did,” Beevers said. “Today, the oil industry is making good money. The price of oil is down. It’s time that we get serious about some things we’ve seen erode over the last several years.” Phillips 66, the largest US refining company by market value, more than doubled profits in the third quarter as crude costs fell. Tesoro and Marathon quadrupled their net income. Beevers said he senses that refiners are “looking for a fight” in this cycle of contract talks. “I’m expecting the most difficult negotiations that I’ve seen in the three terms as vice president of the oil sector,” he said. “We have an industry that has very, very good profits telling us we don’t deserve a good piece of the pie, and we disagree.”[322]
April 16, 2014: Health and Safety Specialists at Santa Maria Refinery Claim They Were Punished for Unionizing
Colin Rigley reported at the New Times on April 16, 2014 that health and safety specialists at Phillips' Santa Maria Refinery allege Phillips officials warned them in January, 2012 that if they joined the United Steelworkers Union they would lose hours, be stripped of managerial powers, and as many as three of them could lose their jobs. “The insinuation here was that, ‘We may not need all of you,’” one of the specialists said in a written statement submitted to the labor board.[323]
When the newly unionized group went to the bargaining table in December, 2012, the specialists say in a complaint filed with the National Labor Relations Board that Phillips management carried out its threats. Phillips' proposed contract on December 10, 2012 allegedly included the threatened reductions of hours and responsibilities. The refinery’s health and safety specialists serve as organizers of the plant’s emergency response crew. Though none of the health and safety specialists was fired, three of them were transferred from their primary roles into regular plant operations, according to the complaint. The union is seeking to recover lost wages for the health and safety specialists, and to have their original job functions restored. Those lost wages totaled as much as $17,000 per year for some employees. In its complaint, the union further alleges that Phillips 66 bargained in bad faith when it imposed the 2012 contract.[324]
Phillips 66, in its responses to the union’s complaint, said the company reduced the five health and safety specialists to two as part of regular staffing changes, and the job functions were distributed across other personnel. “There is no value more important in our company than ensuring the safety of everyone who works at our sites as well as the safety of our neighboring communities,” Phillips spokesman Dennis Nuss said in a written statement to New Times. “In 2012, Phillips 66 redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria Refinery, and there were no staff reductions. These changes have helped maintain and improve the refinery’s high standards for safety performance.”[325]
In addition to the reduced contract for health and safety specialists, the union alleges that the company violated federal labor laws when it implemented “news media guidelines” in October 2012. Those guidelines instructed employees not to speak to news media and, “It is against company policy for anyone but an authorized company spokespersons [sic] to speak to the news media.” The company defends its policy as a routine business practice that violated no labor laws.[326]
September 30, 2013: Contractors at Humber Refinery Protest Against Cuts to Breaks
The Grimsby Telegraph reported on September 30, 2013 that more than 100 contractors at the Humber Refinery in Killingholme held on early morning protest on their own time outside the gates of the refinery to protest Phillips' plan to cut the 20 minute mid-morning refreshment break that goes into force January 1. "Everyone knows the importance of a break, especially in this kind of workplace." said one contractor who declined to be identified. "We need the tea break to refresh, to cool off and rehydrate."[327] The Grimsby Telegraph reported on October 1, 2013 that over 100 contractors met with union representatives and held a indicative vote through a show of hands to bring about the process of a legal vote for strike action over Phillips' plan to remove their 20 minute morning break starting January 2014. "When we are up there working in the freezing cold we need that tea break to warm up, when we are out there in the blistering heat we need that tea break to cool down," said an unidentified contrator. "They tell us safety first and tell us to follow guidelines but taking this break away means we are not following safety guidelines. When they are sat in ivory towers they can have their tea breaks still."[328]
December 13, 2012: Safety Changes At Santa Maria Refinery Pit Workers Against Management
Matt Fountain reported in the New Times on December 13, 2012 that before December 10, 2012, Phillips 66 employed five health and safety shift specialists at the Santa Maria refinery, who worked onsite in 12-hour shifts but that after the specialists became members of USW Local 534, relations between management and the team have grown shakier. Last month, word came down: The five were being split up. Two would work the regular daylight shift as “safety coordinators” and the other three would be reassigned to the operations emergency response team, essentially the lowest position in terms of safety. According to Fountain, along with the reassignments came severe pay cuts—some to the tune of $12 an hour less, according to knowledgeable sources. The changes were finalized December 10, 2012. In their place, management delegated their responsibilities to plant employees, though at a far lower degree than what the health and safety shift specialists did, according to USW staff representative Ron Espinoza. Instead of having an all-encompassing EMT and search and rescue-certified expert on site, now the only EMT on site will be the front gate security guard, according to union reps and plant employees. The problem with the guard assuming response duties, they said, is that guards aren’t equipped or authorized to access many of the higher-risk areas of the facility. “We do believe it’s retaliation,” USW staff representative Espinoza told New Times. “They’re coming after them, and doing a fairly good job at it.”[329]
In January 2012, members of the USW Local 534 took to the picket lines outside the plant’s gates to protest the management’s hard-line on their then-ongoing labor negotiations. One of the issues of contention: a “fatigue policy” for work schedules. And another: safety equipment improvements.[330]
In response to a long list of questions regarding the specialist team and safety conditions at the plant, Phillips 66 Spokesman Rich Johnson provided the following statement in an e-mail to New Times: “There is no value more important in our company than ensuring the safety of everyone who works at our sites as well as the safety of our neighboring communities. Over the past year, we have redistributed certain safety-related functions and responsibilities among personnel at the Santa Maria refinery, and there have been no staff reductions. We expect these changes will help maintain and improve the refinery’s high standards for safety and performance.”[331]
According to Fountain, plant operators seem to be upset over the reorganizing of the safety department, as well, as they’ll now be seeing additional job duties and training requirements on top of an already-full workload. “I love this company, I obviously have no problem with Big Oil, [Phillips is] good to the environment—it’s just the way their mentality is,” one employee told New Times. “These [HSS specialists] make [the company] look better if an emergency happens, but there’s a calculated risk, and if they can get away with something, they will. “It’s going to take somebody high in the chain to say stop. That’s the way these people think,” he added.[332]
September 10, 2012: Union Contract Ratified with 52 percent of Bayway Refinery Workers Voting in Favor
Reuters reported on September 10, 2012 that union members at Phillips 66 Bayway refinery ratified a three-year contract with 52 percent of the 288 members of the Teamsters union at the refinery voting in favor of the contract which takes effect on October 1, 2012. Union leadership recommended the contract be accepted but several members of the union expressed displeasure with some of the work rights and quality of life changes in the new contract.[333]
September 7, 2012: Bayway Refinery Workers Vote on New Union Contract
Reuters reported on September 7, 2012 that members of the Teamsters Union at Bayway refinery vote on September 7, 2012 on whether to ratify their latest labor contract. The existing union contract ends on October 1, 2012 but if the contract is voted down there will not be an immediate strike but rather a return to negotiations. Contract negotiations began in June which provided a longer window for the talks. Although The contract was recommended by the union's executive board, according to a source familiar with the situation, some union members plan to vote against the contract which includes issues concerning work rules, overtime pay, and scheduling changes. Rich Johnson, a spokesman for Phillips 66, said the company would prefer to wait until after the ratification vote before offering any comment.[334]
August 30, 2012: Refinery Operators Expected to Decline by 14% by 2020
Fox News reported on August 30, 2012 that over the next decade, the number of Petroleum Pump System Operators, Refinery Operators and Gaugers is expected to decline by 14% from 44,200 in 2010 to 38,000 by 2020.[335]
May 30, 2012: Phillips Fires 21 Union Workers, 3 Supervisors at Billing Refinery for Stealing Hours
The Billings Gazette reported on May 30, 2012 that according to Wade Johnson, president of the United Steelworkers International union in Billing that twenty-one pipefitters, welders and insulators and three supervisors were fired from the Phillips 66 refinery on May 30, 2012. “They were certainly not given an option of keeping their jobs,” said Johnson. “So, I would call that being fired.” Rich Johnson, a Phillips 66 spokesman based in Houston, said the company took some individual personnel actions. “I can tell you we took personnel actions against employees today,” said Johnson said. “But it is our company policy not to comment on personnel matters.” According to KTVQ TX the workers were fired for for knowingly violating policy in regard to hours worked at the refinery. "There are no mass layoffs taking place at the refinery," said Johnson.[336][337]
KTVQ reported on May 31, 2012 that the United Steelworkers International union says it plans to fight the dismissal of 21 union employees at the Billings Phillips 66 refinery. Union president, Wade Johnson, with the United Steelworkers International in Billings, says the union believes the employees were wrongfully discharged.[338] According to a comment to the story by Kathy Reinhardt the fired workers were called in to work extra hours so that turnaround could be completed at the refinery. According to a comment by Jonathon Sapp the supervisor who called the men in to work should have been held responsible.[339]
Employee Benefits
August 20, 2014: Phillips Has One of the Top Rated 401k Plans in Houston
Olivia Pulsinelli reported at the Houston Business Journal on August 20, 2014 that Phillips 66 has one of the 25 top-ranked 401(k) plans in Houston, according to a new list from BrightScope Inc., an independent financial information and investment research company. Phillips plan has 87% employee participation and is rated No 7 in Houston.[340]
April 1, 2014: Phillips Headquarters Employees Have On-Site Dentist
The Houston Business Journal reported on April 1, 2014 that Phillips has added an in-house dentist at its campus converting a 660-square-foot conference room on the company’s first floor at its interim headquarters at Pinnacle Westchase. The on-site dentists will also be included at Philips 66's new building in the Westchase District. “It opened in mid-February and they have already seen 211 patient at the Phillips 66 Dental Office,” said Charles Lusk, CEO of Onsite Solutions. “It’s the wave of the future. Some groups offer mobile clinics that set up in the parking lot, but who would want to use that?" Having a dental office on site for employees and their families to use is convenient for staff and lucrative for employers. “The reality of the matter is an employee can spend four hours of his or her day for one dental appointment, when you factor in drive-time. It’s not conducive to a good work day,” said Lusk. “By having an office on site, you’re increasing productivity as well as the likelihood that someone will even go to the dentist, which makes for a healthier person.” “Some corporations are just more innovative than others. They are doing it because they know their competitors are going to do it,” Lusk said. “Phillips 66 is very forward-thinking and wanted to get up in front of the trend.”[341]
Philanthropic and Community Benefits
February 26, 2015: Phillips Donates $20,000 to Southern Illinois University Edwardsville School of Engineering
The Riverbender reported on February 26, 2015 that the Phillips 66 Wood River Refinery donated $20,000 to the Southern Illinois University Edwardsville School of Engineering on February 24, 2015 to provide support for equipment, activities and 10 scholarships to students at SIUE’s Engineering Summer Camp who demonstrate financial need. “The Phillips 66 Wood River Refinery has an emphasis on outreach, particularly in education that betters our community,” said Melissa Erker, director of government and community affairs for Phillips 66. “With this partnership, we have the ability to enhance the community by supporting science, technology, engineering and math (STEM) at SIUE.[342]
February 13, 2015: Phillips Donates $25,000 to Rolling Hills Elementary School in Amarillo
My High Plains reported on February 13, 2015 that Phillips 66 donated $25,000 to Rolling Hills Elementary School to pay for smart boards in the classroom and to help the STEM (Science, Technology, Engineering and Math) program. Rolling Hills Principal Richard Kelly said, "Give kids those extra resources that they need to be more successfull in the classrooms and give teachers the extra resources to kind of get those kids using those types of technology down here, so that when they get into middle school or high school it's just like using their cell phone."[343]
January 30, 2015: Phillips Donates $15,000 to West Texas A&M
My High Plains reported on January 30, 2015 that Phillips donated $15,000 to West Texas A&M University. Support for the University will come in many forms such as a named classroom and funding for summer engineering camps along with assistance for student organizations, career expos and other career-related areas.[344]
January 30, 2015: Attucks Community Alliance in Ponca City Receives $20,000 from Phillips for CPR Equipment
The Ponca City News reported on January 30, 2015 that Phillips donated $20,000 to the Attucks Community Center to provide CPR and AED training for organizations on the west and south side of Ponca City. Dave Klanica, manager Health and Safety, Phillips 66 Ponca City Refinery stated “We are pleased to work with Attucks Community Alliance and selected organizations on this project. There are organizations that serve high volumes of people such as The Mission, The Senior Center, The Salvation Army, Friendship Feast, Attucks Community Center, and others. If, through this small investment of time and money we can save one life we are more than glad that we can make an important difference.”[345]
January 29, 2015: Phillips Bayway Refinery Donates $29,000 for Paramedic Radios in New Jersey
New Jersey reported on January 29, 2015 that Phillips 66 has donated $29,000 to purchase replacement mobile and portable paramedic radios that communicate with all the local towns to enhance communication during responses to the community.[346]
January 22, 2015: Phillips Makes $75,000 Grant for Playground Equipment in Ponca City
The Ponca City News reported on January 22, 2015 that Phillips 66 made a grant of $75,000 to the City of Ponca City to install new playground equipment at McGraw Park. “The City of Ponca City and the Parks and Recreation Department are happy to have received this grant. This opportunity will allow us to install playground equipment that we had not planned to do in the near future,” says Jim Sindelar, Parks and Recreation Director, who applied for a one-time special grant offered by Phillips 66 for Environmental and Safety related project. “Phillips 66 is glad that we could be a part of this project. This is just one way that we, Phillips 66, show our investment in the community," says Sara King, Environmental Manager at Phillips' Ponca City Refinery. "Playground parks, like the future one at McGraw Park, provide a place for our families to exercise, socialize, and enjoy the outdoors. Phillips 66 is committed to making a positive difference in the communities where we live and do business.”[347]
The Ponca City Refinery is Phillips 66's most profitable refinery earning $83,000,000 in profit for Phillips in the third quarter of 2014 for an annualized profit of $331,000,000.[348][349] In August, 2014 Phillips made a $1,700,000 grant to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. Ponca City's grant application for a similar program was turned down by Phillips 66.[350]
January 21, 2015: Phillips Donates $15,000 to Louisiana Tech University
Louisiana Tech University reported on January 21, 2015 that Phillips has donated $15,000 to the College of Engineering and Science to help the College continue to provide students with innovative, hands-on education to prepare future industry leaders for companies like Phillips 66. The gift from Phillips 66 will provide funding for field trips, visiting speakers, equipment upgrades and scholarships to enhance student experiences in classrooms and laboratories. “We are extremely grateful for Phillips 66 support of the College and our programs,” said Dr. Hisham Hegab, dean of the College of Engineering and Science at Louisiana Tech. “Industry support such as this is key to providing our students with an enhanced academic experience that is relevant to the careers they will pursue when they graduate.”[351]
December 31, 2014: The Shredder Writes: "There’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community"
Anonymous columnist "The Shredder" wrote in the New Times on December 31, 2014 that there's "here’s a plethora of people eager to tell you all about how Phillips 66 has done so much for the community, how much Phillips 66 cares about us all, and how very much it would hurt Phillips 66’s feelings if we denied the company its rail spur project. The problem is, Phillips 66 has greased the verbal wheels by giving these people a lot of money, and then turned around and given even more money to a local PR firm to tell the rest of the community just how great Phillips 66 really is. Call me a cynic, but as soon as I know someone’s been paid to say something, they lose credibility in my eyes, and I’m speaking as someone who has never been paid. Maybe they really mean it. But if that were the case, why wouldn’t they say it without being paid?"
The reality is that Phillips 66’s “good neighbor” moments tend to be choreographed, right down to photographs of a smiling spokesperson handing over an enormous check. And that’s OK. That’s what for-profit corporations do. It is not, however, what good neighbors do. I know, because my neighbor is still miffed about the time I offered to pay up front so my dog can freely pop squats in his yard. In fact, a company is not a neighbor at all, regardless of how many times a PR company repeats the term. A corporation is not a human being with human concerns; corporations are motivated by one thing: profit.
While I don’t fault Phillips 66 for behaving like a corporation any more than I fault a wild animal for behaving like a wild animal, I don’t much appreciate the fact that they’re trotting out platitudes about being there for the community in lieu of substantive discussion about the impacts of what they’re proposing. Hiring a company to attempt to wrangle and limit the media while feeding the public a heavily manipulated image of an oil company as Mr. Rogers—if Mr. Rogers was in the habit of doling out enormous checks—is a fairly oily thing to do.[352]
December 30, 2014: Phillips Donates $100,000 to Belle Chasse YMCA
The Plaquemines Gazette reported on December 30, 2014 that Phillips presented a $100,000 grant to the YMCA of Greater New Orleans on December 22, 2014 that will allow the YMCA in Belle Chasse to build an outdoor walking and jogging track around their facility. “Phillips 66’s Alliance Refinery recently recognized a need for a safe place, free from traffic, for walkers and joggers to exercise outside. Without even being asked to do so, they have now provided a means to our YMCA Belle Chasse facility to meet this community need. Thank you Phillips 66 for your generosity,” said YMCA of Greater New Orleans’ President and Chief Executive Officer Gordon Wadge.[353]
December 23, 2014: Phillips Donates $30,000 to Santa Maria Museum
The Paso Roble Daily News reported on December 23, 2014 that volunteers from the San Luis Obispo Railroad Museum received a $30,000 contribution from Phillips earmarked to help complete the museum’s ambitious model railroad room, a scale model depiction of the rail industry in SLO as it looked in the early part of the 20th century. According to Museum volunteer Arnold Jonas, the group hosted a tour of its facility for Phillips 66 officials in late fall and received a positive reaction. “Several of the people touring our museum were from out of state and were frankly amazed at what our group of volunteers has accomplished,” said Jonas. “And not only was the group impressed by the museum, they were intrigued by our emphasis on education and our interest in telling the story of the railroad in our county. Apparently that paved the way for our grant approval,” he said. “All of us involved in the oil industry are aware of the role the local railroad played – and continues to play – in keeping our product moving,” said Bill Schroll, manager of the Phillips 66 Santa Maria Refinery located on the Nipomo Mesa. “We are delighted to help educate residents and areas visitors about the rich history of the railroads and their role on the Central Coast, including the dynamic partnership that continues between our industries,” he said.[354]
December 20, 2014: Phillips Gives $155,000 to Westlake Fire Department and Police
American Press reported on December 20, 2014 that Phillips 66 has given the Westlake police and fire departments $115,000 under the company’s Community Signature Initiative, which aids communities with emergency preparedness and safety efforts. “We had this in the works since September before the election,” said Steve Geiger, plant manager of Phillips 66’s Westlake refinery. “So we reached out to the police and fire departments and told them we had the opportunity to get a grant. So we basically collected the needs of the community and went back to our corporate office and said this is what we see as a benefit to the community.” Mayor Bob Hardey said the money will be split between the two departments. The Fire Department will get $60,000; the Police Department will get $55,000.[355]
December 10, 2015: Phillips Makes $40,000 Grant to Billings Firefighters
The Billings Gazette reported on December 10, 2014 that Phillips has made a $40,000 grant to help protect Billings residents from potentially slower fire and other emergency response times by allowing for videoconference training for firefighters. Fire Chief Paul Dextras and City Administrator Tina Volek announced the grant Friday in an email to Billings City Council members. Volek wrote that she wants to invite Phillips 66 officials to an upcoming City Council meeting “to recognize their contributions to this important piece of the training program that Chief Dextras has helped lead during his time with the department.” The videoconference system will be used widely, Dextras said. “Probably 70-80 percent of our training sessions can be broadcast,” he said. “Embracing this technology will allow us to do so much more. It’s huge for the Fire Department in a lot of ways, and it shows the neat things that Phillips 66 does by contributing to the community.”[356]
December 9, 2014: Phillips Contributes Over $200,000 to Southwest Illinois Division of United Way
The Telegraph reported on December 9, 2014 that Phillips 66 Wood River Refinery was the second highest contributor to the Southwest Illinois Division of United Way contributing more than $200,000 of the $1,700,000 total.[357]
December 8, 2014: Phillips Donates $100,000 to Build Bike Trail in Bethalto
The Alton Daily News reported on December 8, 2014 that Phillips has given a grant of $100,000 to to create a bike trail in the Village of Bethalto to compliment its park system.[358]
December 5, 2014: Phillips 66 Donates $50,000 for ZooMontana Wolverine Habitat
The Billings Gazette reported on December 5, 2014 that Phillips 66 has donated $50,000 to ZooMontana to build a new wolverine habitat and exhibit. “Phillips 66 is committed to both community and environmental education, so we felt this was a great mix of the two,” said Shea Dawson, the Billings refinery’s manager of finance and public affairs, in a news release. “We look forward to the process of helping ZooMontana construct this exciting exhibit.” The new habitat will be located near the junction in the zoo’s central area that leads to either the wolf or tiger habitats. Designs are underway, and zoo officials hope to put it out for bid soon. Construction likely will begin in the summer of 2015.[359]
November 20, 2013: Village of Roxana Will Not Have to Repay Million of Dollars to Philips 66 in Tax Assessment Case
The Alton Daily News reported on November 20, 2014 that the local school district of the village of Roxana will not have to repay millions of dollars that the Madison County State’s Attorney says it overtaxed Phillips 66 for the Wood River Refinery. An agreement between numerous taxing bodies and the owners of the Phillips 66 Wood River Refinery has been reached that would eliminate repayment for taxes collected in 2011 and 2012, and lower the refinery’s 2013 assessed value by about $100-million. Phillips filed an objection earlier this year over the amount of taxes levied by the Village of Roxana, the Roxana Park District, Roxana Library District and the Roxana School District. Parties still have to sign off on the agreement.[360]
November 19, 2014: Phillips Donates $50,000 to Restore Goff Tower in Bartlesville
KWON reported on November 19, 2014 that Phillips 66 donated $50,000 and the Lyons Foundation donated $20,875 to help restore Goff Tower, designed by famed architect Bruce Goff and presented in 1964 as a gift from Mrs. H.C. Price to the children of Bartlesville. Citizens are invited for the re-opening ceremony of the Sooner Park Play Tower scheduled for Wednesday, November 26th at 2 pm.[361]
November 18, 2014: Phillips Donates $250,000 to Upgrade Storm Warning Systems Around Wood River Refinery
KSDK reported on November 28, 2014 that Phillips 66 Wood River Refinery is donaring $250,000 to three local communities to upgrade their storm warning systems by installing new sirens. Phillips has also put money aside for educational programming, including severe weather preparedness programs that will be taught in schools and at municipal fire departments and will fund a National Weather Service spotters training course.[362] Wood River Fire Chief Steve Alexander says much of the credit for this agreement goes to Phillips 66.[363]
October 30, 2014: Phillips Donates $1 Million to Texas A&M new Engineering Education Complex (EEC)
Texas A&M reported on October 30, 2014 that Phillips made a $1 million donation to the Texas A&M Foundation that will support the university’s new Engineering Education Complex (EEC). “Phillips 66 is committed to investing in education,” said Greg C. Garland, chairman and CEO of Phillips 66, and a Texas A&M chemical engineering graduate. “We need leaders from schools such as Texas A&M who will challenge the status quo and create solutions to meet rising energy needs in the decades ahead.” The company’s contribution will be used to create the “Phillips 66 Experiential Learning Laboratory” within the EEC. The new lab will help better prepare engineering students to meet the evolving needs of the engineering marketplace.[364]
Philips CEO Greg Garland is a 1980 graduate of Texas A&M.[365]
October 28, 2014: Phillips Donates $100,000 to Lagrange High School in Lake Charles
KPLC TV reported on October 28, 2014 that Phillips donated $100,000 to LaGrange High to update the school's science labs. "It's very exciting to be in a lab here today," said Calcasieu Parish Superintendent Karl Bruchhaus. "Phillips 66 has been a great partner and has provided an opportunity for LaGrange High School to have a few things that no other high school that I'm familiar with has the benefit of."[366]
October 7, 2014: Phillips Makes $40,000 Grant to 'Pheasants Forever'
The Billings Gazette reported on October 7, 2014 that Phillips awarded a $40,000 grant to 'Pheasants Forever' to help upland birds, other wildlife and bird hunters in Eastern Montana. The conservation group announced this week that the money would go to hiring a seasonal habitat technician, the purchase of a truck and trailer and to accelerate upland habitat work on public lands in Yellowstone, Big Horn and Treasure counties by the Montana Habitat Partnership. “The partnership’s work provides community members the opportunity to spend half a day hunting or running their dog in great habitat close to Billings,” said Dan Bailey, Pheasants Forever’s regional representative for Montana. “As private land becomes increasingly difficult to access, especially around metropolitan areas like Billings, improving the existing habitat to create high-quality public land is more important than ever.”[367]
September 9, 2014: Phillips Donates $500,000 to Oklahoma State University
The Stillwater News Press reported on September 9, 2014 that Phillips has donated $500,000 to open the Phillips 66 Student Plaza as part of the college’s new Student Excellence Center. The center will provide a nexus of social, career and academic opportunities for the college’s more than 4,300 engineering, architecture and engineering technology students and allow students to enjoy the outdoors while studying in groups, working on laptops or enjoying lunch with friends. Engineering, architecture and engineering technology students will help design large natural-gas barbeques, a tailgate kitchen, and other features enhancing the plaza. “We are so grateful for Phillips 66’s generosity and vision,” says Paul Tikalsky, dean of the College of Engineering, Architecture and Technology. “Through the Phillips 66 Student Plaza, students across the various college disciplines will have a central location to collaborate and develop our community of scholars. Their interactions, and the programs and exhibitions this beautiful outdoor area hosts, will excite students about the future and the grand challenges they will help solve.”[368]
This contribution is in addition to Phillips 66’s annual support for the Phillips 66 SHIELD (Students Heightening Involvement in Education, Learning and Development) Scholars Program as well as support for the Multicultural Engineering Program, scholarships, equipment, and student retention programs in CEAT and other colleges at OSU. “Phillips 66 continues to provide wonderful careers for many of our graduates and make generous contributions across the university,” Tikalsky says. “But their true gift is creating the next generation of intellectual capital for our nation.”[369]
September 3, 2014: Ponca City Refinery Donates Two Used Firetrucks to Volunteers
The Ponca City News reported on September 3, 2014 that Phillips 66 Ponca City has donated a 1990 Ford Fire Engine to the Fairfax Volunteer Fire Department and a 1989 Ford Fire Engine to the Osage Cove Volunteer Fire Department. “We are happy that others can use this equipment. Other options were to sell or scrap them, but we think gifting to area volunteer fire departments is a good use for the communities they serve," said Dave Klanica, the Ponca City Refinery Safety Manager.[370]
September 2, 2014: Phillips Gives $750,000 to Louisiana State University to Fund Interactive Classroom
The New Orleans Times-Picayune reported on September 2, 2014 that Phillips 66 is giving LSU $750,000 to fund an interactive education classroom in the newly renovated College of Engineering. "This new learning community will accelerate our efforts to prepare graduates to meet the environmental, social, economic, scientific, creative and educational challenges that confront the nation and world in the 21st century," Rsaid ick Koubek, dean and Bert S. Turner Chair in the College of Engineering.[371]
August 15, 2014: Phillips and Chevron Pledge $1,6000,000 to Fund Petrochemical Academy in Sweeny
Hydrocarbon Proecssing reported on August 15, 2014 that Phillips 66 and Chevron Phillips Chemical are making an initial combined contribution of $1.6 million to help fund the creation of a petrochemical academy with the Sweeny Independent School District as part of their continued commitment to education and workforce development initiatives in the communities where they operate. The $1.6 million combined contribution by Phillips 66 and Chevron Phillips Chemical will support the purchase of equipment, building renovations, and scholarships for juniors and seniors enrolled in Sweeny ISD and surrounding school systems. Subsequent contributions will be made in coming years to help cover ongoing maintenance and operation costs and additional equipment. We have significant growth plans for our operations in this region, so it’s exciting to know that students who enroll in classes at the academy will gain college-level skills before they even graduate high school,” said Willie Tempton, Refinery Manager at Phillips Sweeny Refinery. “That means a well-trained workforce for industry in our area and good paying jobs for young Texans looking for a career right here at home.”[372]
August 13, 2014: Phillips Pledges $1,700,000 to Support STEM Education in Bartlesville
The Tulsa World reported on August 13, 2014 that Phillips will be giving $1.7 million to Bartlesville Public Schools to create new innovative laboratories on three school campuses to support science, technology, engineering and math classes and research projects. “We want to create a place where our students will come and be excited, be challenged and hopefully be encouraged to follow a career at a place like Phillips 66,” he said. “We want to put the right kind of tools in the hands of students in Bartlesville so they can be more successful.”[373]
The funds came through a Phillips 66 Signature Community Initiative grant application submitted to the company under an effort spearheaded by Scott Bilger, a Bartlesville school board member and Phillips 66 employee, and Granger Meador, a physics teacher who heads up Bartlesville High’s science department. The new laboratories and major new course offerings will be at the high school, along with Madison and Central Middle Schools. “We are just really, really excited about the opportunity this is going to provide our students,” Superintendent Gary Quinn said. “It cannot be overstated what this is going to mean to our students.” Phillips 66 has about 2,000 workers in Bartlesville.[374]
July 9, 2014: Phillips Pledges $750,000 to Support STEM Education in Billings
The Billings Gazette reported on July 9, 2014 that has pledged to donate $750,000 over three years to support enhanced science, technology, engineering and math (STEM) education in Billings School District 2 elementary and middle schools. Ray Rigdon, the refinery's manager, said that the donation comes from Phillips 66's Signature Community Initiative, in which it partners with local groups and nonprofits to address targeted, defined issues within the community. "It makes a meaningful investment ... to solve specific community problems with meaningful results," said Rigdon. The money will also fund a technology training center for teachers, students and community members that is expected to open in the fall at Orchard.[375]
June 27, 2014: Phillips Awards Nine Scholarships to Students Whose Parents Work at Wood River Refinery
The Edwardsville Intelligencer reported on June 27, 2014 that Phillips has awarded nine college scholarships of $16,000 to local high school seniors whose parents work for Phillips at the Wood River Refinery. The awards are based on academic excellence, community service and financial need. “This scholarship program reflects Phillips 66’s commitment to the communities where we live and operate and builds on our corporate vision of improving lives,” said Melissa Erker. “We congratulate these students on their achievements inside and outside the classroom and wish them every success in college." The Phillips 66 Dependent Scholarship Program will annually award as many as 66 four-year scholarships of $16,000 each for higher education at any accredited institution. Scholarship Management Services, a neutral, third-party administrator of educational assistance programs, selects the recipients and manages the program for Phillips 66.[376]
June 10, 2014: Phillips Honored with Philanthropy Award at Bayway Refinery
New Jersey reported on June 10, 2014 that Trinitas Health Foundation honored Phillips with a Philanthropy Award at the Trinitas Health Foundation’s “Passion for Our Patients” Gala. Gary Horan, FACHE, President and Chief Executive Officer noted, "Phillips 66 Bayway Refinery exemplifies how philanthropy connects a community. Throughout our partnership, they have helped financially including generous assistance to acquire a digital endoscopy scanner, breast health imaging equipment, C.O.R.E. (Center of Regional Education) Building Project, Outpatient Electronic Medical Records Project, Emergency Department Patient Cardiac Monitors Upgrade Project, and with in-kind donations of office furniture for the Women's Clinic. They've also answered patients' direct needs with donations of clothing and toys. We are thrilled to honor Phillips 66 at the Gala."[377][378]
"Our relationship with Trinitas began more than two decades ago, and we are pleased to be honored tonight," said Mary Phillips, Community Relations Coordinator. "Many of our employees and neighbors call Trinitas their community hospital, and assisting our neighbors in the communities where we operate our business is consistent with our values of safety, honor, and commitment. We are looking forward to being honored and receiving the Trinitas Celebrating Philanthropy Award." [379][380]
April 22, 104: Phillips Donates $500,000 to University of Texas
Adam Hamze reported at the Daily Texas on April 22, 2014 that Phillips donated $500,000 to the University of Texas to support programs within the Cockrell School of Engineering, McCombs School of Business and College of Natural Sciences. A large portion of the gift, which will be split between the three schools, will help fund the Phillips 66 SHIELD Scholar program, which provides a number of resources, including scholarships, professional development and community service opportunities, for students pursuing careers in the energy industry. “It’s very symbiotic — these relationships with these companies are definitely two-way streets,” said Donnell Roy, corporate and foundation relations director at McCombs. “They also support programs such as information management that is strategic to building a talented pipeline of students that can be potentially recruited into Phillips 66.”[381]
Rex Bennett, Phillips 66 president of specialties and business development, said the company is constantly looking for new, young employees. “Phillips 66 is always looking for new voices with unique thoughts and different perspectives to help our company succeed,” Bennett said. “We’ve built a strong pipeline at the University of Texas that will enable us to recruit those who will help us all prosper — both now and in the future.”[382]
November 15, 2013: Phillips Honored for Outstanding Philanthropy at Ferndale Refinery by Association of Fundraising Professionals – Washington Chapter
Mauri Ingram reported at the Whatcom Community Foundation on November 15, 2013 that the Association of Fundraising Professionals – Washington Chapter honored Phillips 66 Ferndale Refinery for Outstanding Philanthropic Corporation. For nearly 60 years the Ferndale Refinery has provided millions of dollars and thousands of volunteer hours to support communities throughout Whatcom County. With a focus on education, the environment and health and safety, Phillips 66 supports a variety of nonprofit organizations with direct donations and generous employee volunteer and matching gift programs.[383]
Among the organizations benefiting from the company’s contributions are the United Way of Whatcom County, Whatcom Land Trust, Northwest Straits Marine Conservation Initiative, Bellingham Technical College, the Ferndale School District, Ferndale Chamber of Commerce, and Ferndale Boys & Girls Club. Phillips 66 also supports nonprofits in other Washington cities where it does business, such as Tacoma and Spokane. “Phillips 66 is an outstanding philanthropic leader that takes great pride in being a good neighbor and in helping make this a wonderful place to live and work,” wrote Mauri Ingram, president and Chief Executive of the Whatcom Community Foundation in nominating Phillips 66 for this honor.[384]
Refineries and Marketing Business Segment
Garland said during his analyst call on April 9, 2012 that the refining and marketing segment has one of the broadest geographic bases of our peers. Phillips 66 has 15 refineries and 2.2 million barrels a day of capacity and is the sixth largest non-governmental controlled refiner in the world, the second largest US refiner. Phillips 66 is the only independent downstream to have significant ownership and interest in gas gathering and processing in the global petrochemicals business.[387][388][389]
Annual Capital Plan for Refining Business Segment
December 5, 2014: Phillips to Invest $1.1 Billion in 2015 in Refining and Marketing Business Segment
Phillips 66 announced on December 5, 2014 that Phillips 66 plans $1.1 billion of capital expenditures in Refining, approximately 75 percent of which will be sustaining capital. These investments are related to reliability and maintenance, safety and environmental projects, including compliance with the new EPA Tier 3 gasoline specifications. Discretionary Refining capital investments will be directed toward small, high-return, quick pay-out projects, primarily to enhance use of advantaged crudes and improve product yields.[390]
Geographic Diversity of Refineries
September 5, 2012: Philips Geographic Footprint is a Very Competitive Advantage
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips has the broadest geographic segment within our peer group. "We think this geographic footprint gives us a very competitive advantage. It's a great platform for capturing advantaged feedstock and optimizing the product placement that comes out of the refineries. You can see 15 refineries, 11 in the US. We have substantial infrastructure that supports the refineries in terms of 15,000 miles of pipe, 50 some odd terminals, barges, railcars, etc."[391]
Cyclical Nature of Refining
February 14, 2014: Garland Says Refining is Always Going to be a Volatile Business for Phillips
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that the Refining Business Segment is always is going to be a very volatile business for Phillips. "We don't see that changing in the future. I think small changes in operating rates in infrastructure are going to create dislocations. I think having a large system like we have, having a very sophisticated and large commercial organization like we have, we're going to be able to take advantage of those opportunities that come our way."[392]
Refining and Marketing Earnings
January 30, 2013: Garland Says Phillips Expects 15% ROCE in R&M Business Segment Going Forward
In answer to a question from Blake Fernandez of Howard Weil Incorporated, Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that he expects a 15% ROCE in the R&M Business Segment going forward. "My view is that, refining historically has been kind of a 10% to 12% business," said Garland. "We think we have plans in place to advantage crude capture, yields, cost reduction, that we can move it 400 basis points. So it’s a 15% business going forward for us versus a 30% return business in Chemicals. And probably Midstream business 15% to 17% returns is kind of what we’re looking in fact. So, to the extent that we have 30% and 40% return projects in refining, we’re going to do those. I think, I mean we do get challenged by people all the time or we under investing in refining. At this point, we don’t think so. I don’t think there’s any opportunities out there, we feel that we’ve missed in terms of an investment opportunity in the refining space. Our focus is going to be very disciplined. We’re going to restrict capital in this space. We’re going to improve returns in this space. And so we don’t see a change required in our strategy at this point in time."[394]
January 30, 2013: Garland Announces 22% ROCE in R&M Business Segment for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips return on capital employed for the R&M segment, which includes over $3 billion in goodwill improved to 22% for 2012, up from a 12% return for 2011. "The earnings of all four of our refining regions increased primarily due to improved refining margins," said Garland. "The improvements in refining margins, reflects not only higher market crack spreads, but also an improved feedstock advantage especially in the Gulf Coast, in the Central Corridor regions. The improvements in feedstock advantage increased earnings in the Gulf Coast by over $200 million and by over $100 million in the Central Corridor. Finally, other refining was up this quarter compared to last year, primarily due to movements of Canadian crude supply to several of our refineries."[395]
August 1, 2012: Phillips announces Annualized R&M Adjusted Net Profit of 17% for Second-Quarter, 2012
Reuters reported on August 2, 2012 that Phillips 66 posted an annualized 17 percent adjusted profit for the R&M Business Segment for the 2nd quarter of 2012. "The adjusted net profit for 2011 was 12%. Refining and Marketing generated $1.2 billion in adjusted earnings," said Phillips Chief Financial Officer Greg Maxwell. "The $437 million improvement was primarily driven by much stronger refining margins particularly in the US Midcontinent and Europe."[396][397]
May 24, 2012: Phillips 66 Expects Global Refining Margins to Drop in 2012 and 2013
- See also Presentation by Clayton Reasor to UBS Conference May 24, 2012
NASDAQ reported on May 24, 2012 that Clayton Reasor, Phillips 66's senior vice president of strategy and corporate affairs, said that Phillips 66 expects global refining margins to drop in 2012 and 2013 and that US gasoline demand growth in the U.S. and Europe is expected to continue to fall, while demand for distillate fuels, such as heating oil and diesel, is expected to jump, driven by growth in developing countries. "What we need to do as a refining company is ship out our yield away from gasoline to distillate to the extent we can," said Reasor. "As gasoline demand continues to fall in the U.S. we need to find markets for our products." Part of Phillips 66's strategy to become more profitable is boosting its fuels exports to more than 200,000 barrels per day by the middle of the decade, up from 100,000 barrels a day last year.[398]
April 23, 2012: ConocoPhillips Reports 2012 Q1 Earnings
ConocoPhillips announced on April 23, 2012 that for Q1 2012, R&M’s worldwide crude oil capacity utilization rate was 91 percent, reflecting minimal unplanned downtime. The U.S. refining capacity utilization rate was 89 percent and the international rate was 97 percent. In addition, the worldwide clean product yield remained at 84 percent. R&M earnings were $452 million, compared with $482 million a year ago. The slight decrease was primarily due to lower refining margins, partially offset by higher marketing margins. Refining margins decreased as the impact of less favorable crude differentials more than offset improved market crack spreads. Pre-tax turnaround expenses for the quarter were $176 million, in line with expectations.[399]
Increasing Profitability in the Refining and Marketing Business Segment
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that there are five things Phillips is doing to in refining and marketing in to enhance returns and capital efficiency."We think we have 400 basis points of improvement in ROCE in this business and there's five things that we're doing to drive that."[401]
- Process More Advantaged Crudes
- Expand Export Capability
- Increase Clean Product Yields
- Decrease Costs
- Optimize Portfolio
Garland told analysts at Barclays CEO Energy-Power Conference on September 3, 2014 that the refining business is run well, optimized business. "Operating excellence is key. Putting advantaged crude to the front of refineries, working our yields, improving our yields at our refineries and working on our cost structure is the key of what we're trying to accomplish here. $13 billion of capital employed in this business, it's a huge base. And when you think about 400 basis points of improvement in a business of this scale, that's huge. It's about $600 million of net income improvement. $400 million of that comes from advantaged crude capture, $200 million is around yields and cost reduction. So significant improvement in our base refining business. We view this as moving from a 10% to a 14% return on capital employed business."[402]
Increase Profitability by Getting More Advantaged Crude in Front of Refineries
March 23, 2015: Operations at Ponca City Refinery Have Improved with Crude from Nearby Mississippian Lime Shale
Reuters reported on March 23, 2015 that Phillips 66 has added trucks and offloading equipment at several of its refineries including the Ponca City refinery to help reduce its reliance on oil coming from Cushing, Oklahoma, the nation's biggest crude oil crossroads and storage hub. At Cushing, a growing volume of Canadian oil sands is often mixed with lighter domestic shale crude, resulting in blends that can be less profitable than similar oil fresh from the field. While the blends of these crudes may technically meet the API gravity ceiling of 42 at Cushing, industry players say the mixes can be inconsistent in makeup and generate less income because the most desirable stuff is often missing. The blends tend to produce a higher proportion of fuel at two ends of the spectrum: light ends like gasoline, demand for which has dimmed in recent years, and lower-value heavy products like fuel oil and asphalt. What's missing are middle distillates like diesel, where growing demand and profitability lies. "You end up with a dumbbell-like material rich in front and back ends, neither of which refineries find most profitable," said Dennis Sutton, a former chemist and retired crude quality expert with Marathon Petroleum Corp who now heads the Crude Oil Quality Association.
Phillips 66 executives say operations at its 200,000-barrel-per-day refinery in Ponca City, Oklahoma, only 62 miles (100 km) from Cushing, have improved since it began getting more of its crude directly from wells in the Mississippian Lime shale patch nearby. "That's really the key," Phillips 66 President Tim Taylor told Reuters. "With Cushing, you can get a blended barrel that hits the spec, but it's not as consistent as you'd like."[403]
March 2, 2015: Garland Sees Brent-WTI spread Widening to t $6-10/bl
Argus Media reported on March 2, 2015 that Phillips CEO Greg Garland sees the Brent-WTI differential widening to $6-10/bl. Inventories of crude storage at Cushing have gained for 12 consecutive weeks at an average pace of 2mn bl per week. Inventories climbed during the week ending 20 February by 2.4mn bl to 48.7mn bl, the highest level since June 2013. Stock levels have doubled since the end of October, growing at a pace unmatched in more than 10 years of records kept by the Energy Information Administration (EIA). "I believe that Cushing is going to fill or close to fill to the operating level, and that will carry over through a decent portion of the year in terms of impacting inland versus coastal crude differentials," says HollyFrontier chief executive Mike Jennings.[404]
January 5, 2015: Wood River Refinery Spokeswoman Says Falling Oil Prices Have Not Impacted Phillips' Business
Will Buss reported at BDM.com on January 8, 2015 that spokeswoman Melissa Erker of the Phillips 66 Wood River Refinery in Roxana says that falling crude oil prices have not impacted Phillips 66's business because it is not extracting oil from the ground, but purchasing it at a low price. “If we’re paying less for the product and we’re getting less for gasoline, there is really no impact,” Erker said.[405]
November 21, 2014: Ferndale Unloads First Train of Bakken Produced Crude
Argus reported on November 21, 2014 that Phillips 66 received the first unit train of Bakken produced oil earlier this week at its new crude-by-rail facility at its 96,000 b/d refinery in Ferndale, Washington. The 30,000 b/d rail unloading site is designed to unload 54 cars simultaneously. Midstream companies and refiners see Washington state as a growing market for discounted North American crudes and a possible gateway to reach California. All Washington state refiners, including Shell and Tesoro, have invested in rail facilities, and three midstream firms have announced plans to unload crude and transload barrels to ships out of the Port of Grays Harbor.[406]
October 29, 2014: Phillips Increased Advantaged Crude to 95% in Third Quarter
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that during the third quarter, 95% of Phillips U.S. crude slate was advantaged, and this compares with 93% last quarter and this was tied to increased advantaged crude at the Alliance Refinery. "During the quarter, 95% of our U.S. crude slate was advantaged, and this compares with 93% last quarter. This represents a record quarter for us. The improvement was tied to increased crude runs at our Alliance Refinery after their second-quarter turnaround, and was also due to certain crudes becoming advantaged relative to Brent."
"Alliance came back on after turnarounds, so you had more exposure to light and medium grades with that," added Tim Taylor. "And then there was less availability of Maya, the crude, and that was backfilled with more light medium. So we had a mix - effect that gave more exposure to light medium versus heavy in the third quarter."[407]
October 29, 2014: Phillips Began Operations of 75,000 bpd Rail Facility at Bayway Refinery in August
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that in August, Phillips began operations at its 75,000 barrel a day rail rack at the Bayway Refinery. "We're constructing a rail loading facility with up to 200,000 barrels a day of capacity in North Dakota. In August, our Company began operations at its 75,000 barrel a day rail rack at the Bayway Refinery, and the 30,000 barrel a day rail rack at our Ferndale Refinery is in the commissioning phase. This quarter, we improved our advantaged crude capture to 95%."
Garland added that even with the rail rack coming online, Phillips would continue to barge Gulf Coast crude over to the East Coast. " I think we'll continue to do both. We've actually run the Jones Act ship up around the Bayway also, and so I think you'll see us continue to do both."[408]
October 28, 2014: Phillips Partners with Energy Transfer to Build Bakken Crude Oil Pipelines
Businesswire reported on October 28, 2014 that Phillips and Energy Transfer have formed two joint ventures to develop the previously announced Dakota Access Pipeline (DAPL) and Energy Transfer Crude Oil Pipeline (ETCOP) projects. Energy Transfer holds a 75 percent interest in each joint venture and will operate both pipeline systems. Phillips 66 owns the remaining 25 percent interests and will fund its proportionate share of the construction costs. The DAPL and ETCOP projects are expected to begin commercial operations in the fourth quarter of 2016. “Energy Transfer is a valued partner with a proven track record of developing major interstate pipelines,” said Greg Garland, chairman and CEO of Phillips 66. “These joint-venture projects will allow Phillips 66 to increase its access to advantaged North American crude oil and add to the momentum we are building in our Midstream business.”[409]
DAPL is expected to deliver in excess of 450,000 barrels per day of crude oil from the Bakken/Three Forks production area in North Dakota to market centers in the Midwest. DAPL will provide shippers with access to Midwestern refineries, unit-train rail loading facilities to facilitate deliveries to East Coast refineries, and the Gulf Coast market through an interconnection in Patoka, Illinois, with ETCOP.[410]
ETCOP will provide crude oil transportation service from the Midwest to the Sunoco Logistics Partners and Phillips 66 storage terminals located in Nederland, Texas.[411]
September 3, 2014: Phillips to Add Another Jones Act Vessel to its Fleet
Greg Garland told analysts at the Barclays CEO Energy-Power Conference on September 3, 2014 that Phillips is adding another Jones Act Vessel to its fleet. "And logistics around the Gulf Coast are going to be important and an opportunity to create a lot of value. We currently have two Jones Act vessels that we use. Starting in January, we're adding a third Jones Act to the fleet. So we've added capability there coming up this January." Garland added that Phillips can use their Jones Act Vessels to move crude oil from the Texas Gulf Coast to Bayway.[412]
September 3, 2014: Phillips to Build North Dakota Origination Rail Terminal for Bakken Crude
Argus reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips will build a rail-loading facility permitted to handle up to 200,000 b/d of Bakken crude, the first time a US refiner has directly owned a North Dakota origination terminal.[413] "The thing I would say is in terms of North Dakota, we acquired 700 acres of land. We have permits in hand and engineering to construct a new rail loading facility. This is permitted up to 200,000 barrels a day. We'll probably do about a 160,000 barrels a day, about 300,000 barrels of storage there."[414]
September 3, 2014: Phillips to Buy 500 More Railcars To Move Crude to Coastal Refineries
Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips has ordered another 500 railcars to increase its fleet to 3,700 railcars. which will allow it to eventually move up to 185,000 barrels per day (bpd) of North Dakota Bakken crude oil to its refineries on the East and West coasts.[415]
September 3, 2014: Garland Disappointed with Lengthy Permit Process for Rail Offloading at Santa Maria Refinery
Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips was "disappointed" in the lengthy permitting process for a rail offloading project at its refinery in Santa Maria, California, but remained optimistic it would be built. The rail project would bring in about 40,000 bpd of heavy oil, like that produced in Canada rather than light Bakken crude, according to the company. A local planning commission meeting to consider approving the project has been pushed to January from April to allow an environmental impact report produced in late 2013 to be recirculated for more public comment.[416]
September 3, 2014: Phillips Receives First Crude-Only Train at Bayway Refinery
Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Bayway Refinery in Linden, New Jersey, received its first crude-only train at the plant's newly expanded offloading system. The system can take up to 70,000 bpd, in addition to up to 75,000 bpd from a joint venture with Global Partners.[417] "So let me start on the East Coast at Bayway. We've built the 70,000 barrel a day rail rack. It's operational. We unloaded our first unit train in August, August 5. We can do one unit train a day there at Bayway. That was a global deal. We can do 50,000 to 75,000 a day in the global deal. And then we have our Jones Act vessels also to move crude around from the Texas Gulf Coast to Bayway."[418]
September 3, 2014: Rail Off-loading System On Track for 4th Quarter Start at Ferndale Refinery
Reuters reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips 66's 30,000-bpd offloading system at Ferndale Refinery is on track to start up in the fourth quarter. [419] "Thinking about California, work in process, I would say, in terms of putting advantaged crude into California. Ferndale, we have a rail rack under construction, 30,000 barrels a day. It will be ready by the fourth quarter of this year. We're disappointed in the progress to permit our Santa Maria rail rack 40,000 a day, but we have – we're optimistic that we'll get that done. It just takes time in California to get these things permitted."[420]
July 30, 2014: Narrowing Crude Differentials Negatively Impacted Phillips Realized Margins in 2014 Second Quarter
Greg Maxwell told analysts during the 2nd quarter earnings conference on July 30, 2014 that narrowing crude differentials negatively impacted Phillips realized margins. "Realized Refining margins decreased in all of our regions exception for the Western Pacific region. The decrease was driven by weaker distillate market cracks reduced seasonal blending activity, gasoline activity and also lower secondary product realizations," said Maxwell. "In addition, narrowing crude differentials negatively impacted our realized margins. In the Gulf Coast, the LLS Maya differential narrowed by $5.32 per barrel, impacting our Sweeny and our Lake Charles refineries. And on the East Coast the Bakken Brent differential narrowed by $1.43 per barrel impacting our Bayway refinery."[421]
March 12, 2014: Brent-WTI Spread Narrows While Heavy and Sour Canadian Crude Oil Maintain High Margins
Isac Simon writes at "The Motley Fool" that with the Cushing Marketlink pipeline coming online in late January, inventories at the Cushing storage hub of the West Texas Intermediate have eased causing the Brent-WTI spread to shrink to less than $7 a barrel. "Since the two most widely traded crude oil benchmarks diverged in late 2010, a narrowing spread between Brent and WTI has never been a good sign for refiners," writes Simon. "Throughout 2012 and during the fourth quarter of 2013, U.S. refiners enjoyed a solid run -- thanks to the availability of the deeply discounted West Texas Intermediate crude oil when compared against the internationally traded Brent. As a result, refiners such as HollyFrontier, Marathon Petroleum, Valero Energy Corporation, and Phillips 66 could buy cheaper feedstock, while maintaining global prices for refined products."[422]
However sour and heavy variants of crude oil are much cheaper than their light and sweet counterparts and higher volumes of heavy crude -- or bituminous crude -- from Canada's tar sands are slowly making way by rail to the Gulf Coast where most refineries are located according to Simon. "Phillips 66 is expecting 2,000 railcars to be delivered in 2013-2014. These high-capacity railcars will be used primarily to deliver Bakken crude oil to its Bayway and Ferndale refineries. Out of its 11 refineries in the United States, eight are capable of refining heavy sour crude," writes Simon. "Both Canadian crude and the price-advantaged Bakken sweet crude are trading at a discount to the West Texas Intermediate. So while the Brent-WTI spread may be narrowing, there's a different market force at work -- that of directly transporting cheap crude by rail. The better prepared refiner is well on its way to take advantage."[423]
February 12, 2014: Garland Says Phillips Will Get More Advantaged Crude in Front of Refineries
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips will get more advantaged crude in front of refineries. "We're well on our way. Last year, we're 74%, up 10%. As you move to into the fourth quarter, we pushed that up to 90%. So our real opportunities are the East Coast and the West Coast today. I think we've got good advantaged crude in the midcon and in the Gulf Coast, where 51% of our or 55% of our capacity resides today. We're working on our clean product yields. There's $60 million to $100 million of value creation there by pushing our yields. We're working on decreasing operating costs and then we're working on portfolio management in terms of rightsizing the portfolio."[424]
""We have an extensive system of railcars, pipelines, barges, access to ocean-going ships. We're using that in the value capture for advantaged crude to the front end of our refineries," said Garland. "You'll see us expand this system over time. You'll see us add more railcars, more unloading capability and we're working the East and West Coast right now. Bayway we have the rail rack at Bayway. 75,000 barrels a day will come on later this year. On the West Coast, we have the rail rack at Ferndale that'll come on later this year, 35,000 a day. We're in the middle of a comment period on permitting for our Santa Maria rail rack. We're actively working other third-party rail unloading facilities in southern California.[425]
January 30, 2014: in the Fourth Quarter, 94% of Phillips Crude Slate Was Advantaged
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that 94% of Phillips' US crude slate was advantaged. "Our realized margin was $10.75 per barrel, with a market capture rate of 112%. The global crude utilization rate was 92%, and our clean product yield was 84%. During the quarter, 94% of the Company's US crude slate was advantaged, and this compares with 66% last quarter. The increase was largely driven by additional domestic crude's consistently trading at a discount to Brent. We will cover this in more detail on slide 13. The 2013 adjusted return on capital employed for refining was 13%, and the average capital employed for this segment was $14.3 billion," said Garland. "On an annual basis, our advantaged crude slate has increased from 62% in 2012, to 74% in 2013. And this is due to processing an additional 118,000 barrels per day of tight oil, additional domestic crude's that consistently trade at a discount to Brent, as well as higher volumes of heavy Canadian crudes."[426]
October 30, 2013: Phillips May Buy More Railcars to Move Advantaged Crude to US Refineries
Reuters reported on October 30, 2013 that Garland told analysts during the third quarter earnings conference call that Phillips may buy more railcars to move advantaged crude from North Dakota and Canada to its refineries. This would be on top of the 2,000 railcars already expected for delivery this year of which the company has to date received 1,270.[427]
Phillips Bayway refinery had been running about 100,000 barrels per day of U.S. crudes in place of imports - from Texas via tanker and North Dakota's Bakken via rail and barge but the company cut rail shipments to 30,000 bpd day when the discount of U.S. crude benchmark West Texas Intermediate to London's Brent all but dried up during the quarter. The discount of North Dakota Bakken crude to WTI also narrowed. However, Phillips 66 is ramping rail shipments back up and running less imported crude now that the spread has widened to more than $10 a barrel. "The spreads now incent us to run Bakken at Bayway today," said Tim Taylor, executive vice president for commercial, marketing, transportation and business development, in a post-call interview.[428]
Phillips 66 is building a new rail offloading facility at Bayway to further increase shipments by 75,000 bpd by the second half of 2014. The company also received all necessary permits to build a similar facility at its 100,000 bpd refinery in Ferndale, Washington, to handle 30,000 bpd also by the second half of next year.[429]
July 31, 2013: Narrowing of WTI-Brent Gap Contributes to Disappointing Earnings for Phillips' 2nd Quarter
FuelFix reported on July 131, 2013 that Phillips underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. “We should have run better and our earnings results reflect this,” said Garland. Phillips 66′s adjusted earnings per share of about $1.50 was well below analyst expectations of about $1. 81 for that figure.[430]
Higher domestic oil prices pushed down profits as the gap between the price of West Texas Intermediate, a benchmark for domestic crude, and Brent, a measure of international oil prices, narrowed substantially during the second quarter. That trend is expected to continue through the remainder of the year, with Brent currently around $107 and WTI at about $105. U.S. refiners had previously enjoyed a huge advantage over their foreign competitors because WTI prices were as much as $20 lower than Brent prices , with some U.S. crudes priced far lower because there was limited access to foreign markets.[431]
July 31, 2013: Phillips Has Taken Delivery of 650 Rail Cars Out of 2,000
FuelFix reported on July 31, 2013 that Phillips has already taken delivery of 650 rail cars of the 2,000 that they ordered in 2012. “These cars will be used to transport advantaged crude to Phillips 66 refineries on the east and west coasts," said Garland. “Phillips 66 has been an early mover on adding logistical infrastructure to improve its flexibility of taking lower cost domestic crudes to refineries across its portfolio and this flexibility we believe will lower their feedstock costs over the long run,” said Jeff Dietert, and analyst for Simmons & Co. International.[432]
July 21, 2013: Brent-WTI Spread Disappears For Now
James Hamilton reports on Econobrowwer that on July 19, 2013 West Texas Intermediate sold for the same price as Brent for the first time in almost three years. "Since 2010, infrastructure for transport and delivery of crude to U.S. refiners by rail and barge has grown tremendously," writes Hamilton. "This has narrowed the Brent-WTI spread, but is not enough to eliminate it, since pipelines are an economically more efficient (and environmentally more friendly) way to transport oil." However Hamilton adds that other projects will also likely soon be bringing even more oil from Canada and the U.S. into Cushing including the 600,000 b/d from the South Flanagan project and another 800,000 b/d that could be delivered through the proposed Canada-to- Nebraska leg of the Keystone project. "All of this means that the elimination of the Brent-WTI spread may prove to be a short-lived phenomenon."[433]
May 21, 2013: Phillips Plans to Increase Advantaged Crude Processing to 100% Within the Next Few Years
Greg Maxwell, Executive Vice-President for Finance and Phillips CFO, told analysts at the UBS Global Oil and Gas Conference on May 21, 2013 that the first and largest lever in improving earnings is increasing advantaged crude processing. "We are well-positioned to utilize the emerging advantaged crudes in our domestic refineries. For example, from a sensitivity perspective, $1 per barrel change in our crude cost, if we can capture $1 a barrel change, that improves our net income by $440 million per year. And already, we're running shale crudes at eight of our domestic refineries. We increased our advantaged crude runs from 52% in 2011 to 62% in 2012, and 68% in the first quarter of this year. These crudes are being delivered via truck, and being delivered by rail, barge, ocean-going vessel, and also by pipelines. And our plan is to be able to run 100% advantaged crudes within the next few years."[434]
Fox News reported on May 1, 2013 that Phillips has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.[435]
March 20, 2013: Phillips Signs Deals to Boost Deliveries of Cheap Crude by Pipeline and Rail
Eliot Caroom reported on Bloomberg on March 20, 2013 that Phillips will increase deliveries of cheaper crudes to its refineries nationwide by as much as 130,000 barrels a day under three transportation deals and a new investment.[436]
First is a three-year deal with Enbridge Energy Partners LP for loading rail cars with up to 35,000 to 45,000 barrels a day of Bakkan crude from Enbridge’s terminal in Berthold, North Dakota. The crude will be delivered to Bayway Refinery on the east coast and Ferndale Refinery on the West Coast. Some crude could also be sent to Gulf Coast refineries at Lake Charles, Alliance, and Sweeney.[437]
Second is a pact with Targa Resources Partners LP (NGLS) for five years to provide rail-unloading and barge-loading services in Tacoma, Washington for about 30,000 barrels a day of U.S. and Canadian crudes that will go to the Ferndale Refinery. Phillips’s Rodeo refinery near San Francisco could also receive crude deliveries, displacing imports from outside North America.[438]
Finally Phillips has signed a pipeline deal with Magellan Midstream Partners LP (MMP) to move 20,000 barrels a day of crude to near the Marland Refinery in Ponca City, replacing West Texas Intermediate from Cushing with oil from the Mississippian Lime play. Magellan service will begin in late 2013, reaching full volume by January 2014. Phillips will also invest in its own Oklahoma assets to transport an additional 40,000 barrels a day of Mississippian Lime to Ponca City. Mississippian Lime crude comes from the Anadarko Basin, which spans Oklahoma and neighboring states. Two new pipelines carrying the grade are planned to start service this year, according to a February EIA report. “We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” Greg Garland, Phillips 66 chairman and chief executive officer, said in the statement. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses.”[439]
January 30, 2013: Garland Says Phillips is Running More Advantaged Crude
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that Phillips is running more advantaged crudes with 67% of Phillips U.S. crude in advantaged crude compared to 57% in the fourth quarter of last year.[440]
January 30, 2013: Garland Says Feedstock Advantage Increased Earnings for $300 Million for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that improvements in feedstock advantage increased earnings in the Gulf Coast by over $200 million and by over $100 million in the Central Corridor. "The positive $3.69 per barrel adjustment per feedstocks stems from running certain crudes and other feedstocks that are priced lower than our benchmark crudes," said Garland. "For example, our feedstock advantage this quarter was primarily related to running for an heavy-sour crudes at our Gulf Coast refineries and Canadian crudes in our refineries in the Central Corridor. In addition, our crude slate is increased to include more shale crudes, primarily Bakken and Eagle. Finally, the other category primarily reflects the impacts of volume gain and product differentials."[441]
January 8, 2013: Global Partners to Deliver 50,000 bpd of Bakken Crude to Bayway Refinery
The Boston Globe reported on January 8, 2013 that Global Partners LP has signed a five-year contract with Phillips 66 to deliver crude oil from North Dakota to Bayway Refinery using its rail transloading, logistics, and transportation system to deliver about 91 million barrels of crude oil to the Phillips refinery over the life of the contract. That equates to approximately 50,000 barrels per day.[442] “Global has established a ‘virtual pipeline’ for the reliable transportation of Bakken crude,” said Tim Taylor, Executive Vice President, Commercial, Marketing, Transportation & Business Development of Phillips 66. “Our five-year agreement with Global assures us long-term access to advantaged crude for our Bayway refinery through what we believe is a cost competitive origin-to-destination supply system to the East Coast.” The Bakken crude oil is expected to be transloaded at Basin Transload LLC’s North Dakota rail facilities.[443]
December 13, 2012: Phillips Announces Marine Charter Agreements to Supply Alliance and Bayway Refineries
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that they had recently signed time charter agreements for two medium-range Jones Act marine vessels that will supply the Alliance and Bayway refineries, and potentially the company’s other Gulf Coast refineries, with Eagle Ford crude beginning in early 2013.[444]
September 19, 2012: Greg Garland Says Structural Change in Crude Prices Provide an Opportunity for US Refiners
Fuelfix reported on September 19, 2012 that with new shale crudes coming on there has been a structural change in crude prices that presents a real opportunity for the U.S. refining businesses. "You still have 2 to 3 million barrels a day of new light sweet crude coming on out of these new shale plays," said Garland. "And I think ultimately there’s 2 to 3 million barrels a day of Canadian heavy that comes south. I think the U.S. is going to find itself, particularly the mid-continent areas and the Gulf Coast areas — where 51 percent of our capacity is — with an advantaged crude price versus the rest of the world. That’s a structural change."[445]
September 5, 2012: All Three Business Segments Are Well Positioned to Take Advantage of the Prolific Shale Plays and the Canadian Heavy
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that all three business segments, the R&M business, the Midstream business, and the Chemicals business, are well positioned to take advantage of the prolific shale plays and the Canadian heavy. "A big source of competitive advantage we think we can have in our business is the access to advantaged crudes. It's 75% of our cost structure, a lot of work going across the Company in accessing these advantaged crudes."[446]
August 15, 2012: Crack Spread is $29.05 a barrel for Texas and Midwest Refiners
Paragon reported on August 15, 2012 that new crude production from Texas and the Midwest has resulted in profits reaching their highest levels since 2007 with the difference between the cost of crude and the price companies could sell fuel 9crack spread) in the April-June quarter at $29.05 a barrel according to data collected from Bloomberg. "The prospects for U.S. refiners have turned around dramatically," said John Auers, senior vice president of Turner Mason & Co., a petroleum and refinery consulting company. "Cheap crude has given an advantage to the U.S. refining system, already the most advanced, most complex and most efficient in the world." U.S. refiners have outperformed all other energy sectors in the S&P 500 Index with an average gain of 42 percent. In comparison the S&P 500 Integrated Oil & Gas Index has gained just 2.85 percent year-to-date.[447]
August 1, 2012: The Spread between Brent and Bakken Crude is still around $19/barrel
Michael Fitzsimmons wrote on Seeking Alpha on August 1, 2012 that in February2, 102 Fitzsimmons wrote that the price differential between WTI and Brent (then $19/barrel) would tighten up once the Seaway pipeline was reversed. "I was wrong in my prediction. What I missed was the huge increase in oil production coming out of the Bakken (now over 600,000 bpd) and Eagle Ford shales," writes Fitzsimmons. "While I was expecting production to increase, I had no idea it would increase at such a rate as to pretty much fill up Seaway and still be left with the same problem as before it was reversed."[448]
August 1, 2012: Phillips to Buy 2,000 Rail Cars to Move Bakken Crude to Bayway and Ferndale Refineries
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude.[449]
June 5, 2012: Phillips May Add Several Thousand Railroad Cars in an Effort to Expand Capacity
Streetinsider reported on Jun 5, 2012 that Phillips may purchase a "couple thousand" additional rail cars to provide transportation from US shale formations to refineries.[450] The railroad cars would cost $200 million and enable Phillips to carry 120,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.[451] "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.[452]
June 5, 2012: Garland Wants to Get More Advantaged Crude to the Front End of Refineries
On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.[453]
Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."[454]
There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."[455]
June 5, 2012: Greg Garland Wants a Pipeline on Wheels to Get the Barrels in Front of the Facilities
Streetinsider reported on Jun 5, 2012 that Phillips may purchase a "couple thousand" additional rail cars to provide transportation from US shale formations to refineries.[456] The railroad cars would cost $200 million and enable Phillips to carry 120,000 barrels of oil a day from mid-continent, where oil is cheaper, to Phillips coastal refineries.[457] "We're going to add rail capacity," said Garland. "We're considering buying a couple thousand more railcars so we can get Bakken crude either east and west." The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains. "That's a pipeline on wheels. So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country." Many analysts say rail will be a bigger part of the oil delivery picture for years because shale wells - often scattered, small and of uncertain lifespan - won't justify pipeline construction.[458]
Simone Sebastian reported in the Houston Chronicle on July 2, 2012 that the nation's energy transportation network is undergoing a multibillion-dollar overhaul, as oil and natural gas production surges in new regions of the country and energy producers charge into new areas with technology that can reach oil and natural gas trapped in shale and other tight rock formations leaving pools of crude and gas stranded far from the Gulf Coast refineries and petrochemical plants that need them. "Where it used to be isn't where it is now. Where it needs to go isn't where it used to go," says Terrance McGill, president of fuel carrier Enbridge Energy. "You're seeing this fundamental shift of crude oil across the country." Phillips 66 CEO Greg Garland says his company is considering buying 2,000 more rail cars that could carry an additional 150,000 barrels a day from shale regions (PDF) to its refineries across the country because the glut of crude oil pouring out of the newly tapped shale oil plays like North Dakota’s Bakken has kept the price of Mid-Continent crude at a record-wide discount of up to $27 per barrel relative to its rival European benchmark Brent crude because there is not enough pipeline capacity to get Bakken crude to Gulf coast refineries. "That's a pipeline on wheels," says Garland. "You'll see us stepping out and doing some more things around infrastructure. Like everyone else, we're doing everything we can to get more barrels in front of those facilities."[459][460]
May 24, 2012: Clayton Reasor Says Price Spread between West Texas Intermediate Crude and Brent Crude futures Likely to Narrow Sharply in 2013
NASDAQ reported on May 24, 2012 that according to Clayton Reasor, Phillips 66's senior vice president of strategy and corporate affairs, the price spread between West Texas Intermediate crude and Brent crude futures is likely to narrow sharply in 2013 as increased domestic pipeline capacity relieves the glut created by new shale-oil supplies. "The WTI-Brent differential will narrow as the onshore pipeline capacity is built up and removes some of the bottlenecks that exist between Cushing and the Gulf Coast," said Reasor.[461]
May 22, 2012: New Pipelines to Bring Bakken Crude to Ponca City Refinery and Cushing
Janet McGurty wrote in the Calgary Herald on May 22, 2012 that Kinder Morgan’s Pony Express Pipeline and Belle Fourche Pipeline are looking for shippers to use their newly planned pipeline to send their light, sweet crude from outside Baker, Montana, just over the state line from North Dakota’s booming Bakken oil shale play, about 1,000 miles southeast to Ponca City, home of Phillips 66 refinery before continuing on to the oil storage hub of Cushing, Oklahoma. Once the Pony Express reaches Cushing it will be near the Seaway pipeline, now able to carry 150,000 bpd of oil to the Gulf Coast with expansion plans to over 400,000 in the works. Although plans are on the book to move Bakken crude north and east, production in the region topped 510,000 bpd in March and is expected to continue to expand.[462]
May 15, 2012: Gregory J. Millman Says Mid-Continent Refineries Have Access to Cheap, High Quality Crudes
Gregory J. Millman wrote in the Wall Street Journal on May 15, 2012 that mid-continent refineries have access to high quality crudes that are cheap because there are no pipelines to carry them to world markets, and therefore they are in superabundant supply. Since the product price is a world market price, and refineries have access to export markets, those that can use cheaper crudes enjoy fatter margins and are more profitable than those who cannot.[463]
May 10, 2012: Simon Moore Says New Pipelines Will Bring Bakken Oil to Mid-Continent Refineries
Simon Moore writes on Seeking Alpha on May 10, 2012 that with all the new piplines getting ready to come online to move Bakken Oil to Cushing, starting material for refineries in the Mid-Continent Segment will soon become relatively cheaper which will benefit Phillips 66 with three Gulf coast refineries with a total capacity of 733 MMbpd for the next several years. Moore notes that the Seaqay Pipline reversal will go online on May 17, 2012 brining 150,000 barrels/day of light sweet crude from Cushing, Oklahoma to the Gulf Coast and there are currently plans to expand the pipeline to approximately 400,000 barrels/day and then to 850,000 barrels/day. In addition the new Flanagan South Pipeline will move another 585,000 barrels/day from Illinois to Cushing. Finally the Bakken Express Pipeline from Oneok (OKE) will move 200,000 barrels/day from the Bakken to Cushing. "PSX stands to benefit from the extra crude that will be piped from Cushing to the Gulf Coast increasingly over time."[464]
May 1, 2012: Phillips 66 Plans to Run More Shale Oil
Kristen Hays wrote on Reuters on May 1, 2012 that Greg Garland says the Phillips 66 aims to process more shale oil "everywhere we can get it." Garland added that several refineries are already well positioned to receive shale oil, such as its 247,000 barrels-per-day (bpd) refinery in Sweeny, Texas, in proximity to the state's prolific Eagle Ford shale play, or Midwest plants. The company last fall also ran unit trains from the Bakken shale oil play in North Dakota to its 238,000 bpd Bayway refinery in Linden, New Jersey, and has taken trains to West Coast refineries. "You'll see us stepping out and doing some more things around infrastructure," he said. "Like everyone else, we're doing everything we can to get more barrels in front of those facilities."[468]
May 1, 2012: Investments in refining will enhance its export abilities and connections to lower-cost crude
Garland told the Houston Chronicle on May 1, 2012 that investments in refining will enhance its export abilities and connections to lower-cost crude. "But you won't see us investing to increase refining capacity," Garland says. Garland says that Phillips 66 will execute a number of strategies to revitalize the refining business. Phillips 66 will target lower-cost oil and focus more of its refining capacity on producing diesel and other high-yield fuels. The company also will ramp up exports to foreign markets that offer higher prices for their fuel.[469]
April 30, 2012: Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent
According to Christopher Helman writing in Forbes magazine, Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent — from Texas north to Montana including the Sweeny refinery [sic], Ponca City, Wood River and Billings. The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing," writes Helman. "The bottleneck that kept oil from getting out of Cushing also kept its price at a record-wide discount relative to its rival European benchmark Brent crude. At one point last year you could buy a barrel of WTI for $27 less than a barrel of Brent. Historically WTI has been slightly more expensive." In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries. However, this opportunity is not going to last long term because there will soon be plenty of new options for getting crude out of Cushing and Garland agrees that the price differential will collapse. “Over three to five years those wide differentials that we’re seeing in the Midcon will collapse to the transportation differential,” he told me. “So more like $3 to $5 a barrel. It’s not going to be $20 forever.”[470]
Increase Profitability by Increasing Exports
August 13, 2014: Phillips Evaluates Export of Super-Light Crude Oil
Kristen Hays reported at Reuters on August 13, 2014 that Phillips is evaluating the export of super-light crude oil known as condensate, after two industry peers received U.S. government approval to ship it overseas after minimal processing but declined to say if it has sought formal permission to export condensate from the U.S. Department of Commerce, which is tasked with interpreting exceptions to a decades-old ban on crude exports. "We're evaluating the process and seeking a better understanding," said Chris Chandler, Phillips 66's head of natural gas liquids (NGLs). "That process is still a little unclear to us." Asked if the export facility could potentially export condensate that has been minimally processed, Chandler said: "This Freeport facility has a lot of expansion possibilities. It's close to the Gulf of Mexico, three miles from open water. We have the capability of doing a lot more here than we do currently."[472]
May 7, 2014: Garland Softens Position - Doesn't Oppose Crude Oil Exports
Fuelfix reported on May 7, 2014 that Garland said Phillips doesn’t oppose exporting U.S. oil, putting the company at odds with other independent refiners who have lobbied aggressively against lifting the nation’s crude exports ban. In the past, Garland has expressed outright support for lifting the ban, garnering him attention for reportedly being the first major refining head to take that position. According to Fuelfix, Garland is now taking a slightly softer position. “We’ve never said we’re for — we’ve said we don’t oppose,” Garland said. “In our view, it’s time to have an honest, open dialogue about energy policy in the U.S., and we need to be holistic in that,” Garland continued. Garland said he isn’t very confident U.S. policy on crude exports will change any time soon. “In an election year, I think it’s going to be difficult for Congress to move on this issue simply because they have too many other things on their plate,” Garland said. “Politically, it’s a very difficult thing right now.”[473]
April 11, 2014: Phillips Exports Oil to Canada
Reuters reported on April 11, 2014 that after securing an export license in 2013, Phillips is now exporting oil to Canada. A Phillipsspokesman declined to say where in Canada its exports are headed and in what volume and did not disclose if the oil will reach its destination via rail or barges. "As a matter of practice, Phillips 66 does not comment on commercial activity," said spokesman Dennis Nuss. The United States does not allow exports of its own oil, but makes exceptions such as barrels going to Canada and re-exports of foreign oil.[474]
April 11, 2014: Phillips to Build Splitter at Sweeny Refinery to Process Condensates into Fuel Components that Can Be Exported
Reuters reported on April 11, 2014 that Phillips plans to build a condensate splitter at Sweeny refinery which will allow it to process condensates into fuel components that can be exported.[475]
March 5, 2014: BP Skirts US Crude Export Ban with Mini-Refineries: Phillips May Follow Suit
Bloomberg reports that the oil industry is pressuring President Barack Obama to end the 41-year-old ban on most crude exports but British Petroleum (BP) isn’t waiting for a decision. The British oil giant has signed on to take at least 80 percent of the capacity of a new $360 million mini-refinery in Houston that will process crude just enough to escape restrictions on sales outside the country. “It’s a relatively inexpensive way around the export prohibition,” says Judith Dwarkin “You can lightly ruffle the hydrocarbons and they are considered processed and then they aren’t subject to the ban.” Amid a flood of new US oil], the demand for simple, one-step plants capable of transforming raw crude into exportable products such as propane is feeding a construction boom along the Gulf Coast. The first such mini-refinery, built for 1/10 the cost of a complex, full-scale refinery, is scheduled to open the first phase of its 100,000 barrel-a-day crude processing plant in July, The mini-refineries take advantage of the law that allows products refined from oil to be sold overseas, though not the raw crude itself. "The international buyers of these products will likely need to refine them further, so this is basically a veiled form of condensate exports,” says Leo Mariani.[476][477][478]
According to Bloomberg, three additional plants have been proposed by other pipeline or trading companies, and refiners including Valero and Phillips said they may follow suit.[479]
February 19, 2014: Christopher Helman Says the US Oil Boom is Not So Bad for Refinery Owners
Christopher Helman wrote at Forbes Magazine on February 19, 2014 that increasingly, the oil giants seem to have realized that there’s better returns to be made, with fewer headaches, by turning their focus back to the USA and that it’s the smaller operators that have been able to capitalize best on the unconventional oil and gas revolution. "Thanks to the U.S. oil boom, refineries in this country are chronically oversupplied with cheap oil (as witnessed by the discount of WTI to Brent) and will continue to be as long as oil exports remain prohibited. This frustrates the small independent drillers who would like to sidestep the refiners and export their crude to the world market (if it weren’t prohibited). But it’s not so bad if you happen to own a refinery; then you can capture much of that differential by exporting finished gasoline and diesel to the world market," writes Helman. "That’s why Exxon, Chevron and Shell are unlikely to jettison any U.S. refineries as long as this dynamic remains. On the contrary, notes Deutsche Bank’s oil analyst Paul Sankey, we may soon see the day when a big independent oil producer buys a small refining company — “relative multiples would make this a highly accretive move,” Sankey wrote."
February 14, 2014: Garland Says Phillips is Well Placed to Compete in the Export Market to South America
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips is well placed to compete in the export market. "We have 7 coastal refineries, so roughly 75% of our domestic capacity is on the coast. These are going to be the best position refineries to participate in the export opportunities that we see," said Garland. "We believe that you're going to have to access the export markets to be able to continue to run high utilization rates and hence our focus on growing our export capability to 500,000 barrels a day." Garland said that in December we sold 250,000 barrels a day to Latin America and South America. "We do believe that the U.S. refining business is really well positioned to compete in those export markets. You have an energy price advantage over European and Asian refiners. You have -- you're in the right zip code so you have a transportation cost advantage. Then you factor in an advantaged crude position. So these refineries and when you look at the complexity, size and the scale of the U.S. refining business, well positioned to compete in the export markets. That's true of Phillips 66 also."[480]
January 29, 2014: Garland Reiterates Support of Crude Exports
In response to a question from Doug Leggate of Merrill Lynch, Greg Garland reiterated his support for crudge exports during the 4th quarter earnings conference call on January 29, 2014. "I think I came out in May of 2012, and said we wouldn't be opposed to lifting the ban on crude exports. We do encourage a thoughtful and broad conversation around energy policy in our country, and I think you have got to look at that holistically. It is not just crude exports, but it is also infrastructure. And that could be pipelines, that could be marine, and I think you just can't take one of them and pull it out separately. So we don't oppose lifting the crude ban. But I think you have got to look at RFS. You have got to look at infrastructure pipeline. Can we approve a pipeline or not in this country? All the way to marine infrastructure limitations that we have in this country. So and generally we are free-traders, but we would like to see a free market also."[481]
January 29, 2014: Phillips Hits New Record Exporting 200,000 BPD, Ultimate Target is 500,000 BPD
Greg Garland disclosed during the 4th quarter earnings conference call on January 29, 2014 that Phillips exported nearly 200,000 barrels a day. "Our total export capacity is just over 400,000 barrels per day, up from 285,000 barrels at the end of 2012." Garland added that the increase in export capacity is primarily Gulf Coast. "I think we will continue to push the limits. We are looking for cheap ways that we can just get more barrels across there. Certainly, we have stated our ultimate target is about 500 a day, but almost all that increase is going to be on the Gulf Coast. Minor debottlenecks on the West Coast, and then we have underutilized capacity today on the East Coast."[482]
May 21, 2013: Phillips is Increasing Export Capabilities
Greg Maxwell, Executive Vice-President for Finance and Phillips CFO, told analysts at the UBS Global Oil and Gas Conference on May 21, 2013 that Phillips is increasing export capabilities. "We have projects in progress to increase export capability from our Gulf Coast and our West Coast refineries by 115,000 barrels per day over the next few years. And during the first quarter, we moved 150,000 barrels per day into the export market. And these projects position us with the capability to export up to 30% of our total clean product production from our coastal refineries."[483]
January 10, 2013: Michael Fitzsimmons Writes that Garland's Support of Crude Exports is Grounded in Confidence in the Future and in Relations with ConocoPhillips
Michael Fitzsimmons wrote in Seeking Alpha on January 10, 2013 that Fitzsimmons has a theory as to why Phillips CEO Garland has unpredictably come public in December in support of is supporting crude oil exports: Could it be that Phillips 66's position on the crude oil export question goes back to its relationship to - ConocoPhillips? After all, Fitzsimmons says, since the spin-off many COP executives and employees likely hold stock in PSX, and vice-versa. Fitzsimmons says that COP produces over 130,000 boe/day of high quality light-sweet crude in the Eagle Ford - very close to PSX's Texas refineries. "Even though the companies are now separate publicly traded entities, you know that COP and PSX management talk turkey quite often. So I wonder what PSX might get from COP in return for publicly supporting crude exports? First dibs on Eagle Ford production at a favorable rate? Discounts on natural gas feedstock for its refinery and chemical operations? Discounts on WCS from COP's top-tier position in the Canadian oil sands? The point is this - by working in tandem, there is certainly room for COP and PSX to optimize the overall returns for both companies."[484]
"While an easing of the crude oil export ban will likely reduce the Brent/WTI spread and thus crimp profits in the company's refining sector, I take it as a very bullish and almost cocky indicator of the confidence PSX management has in its future - exports or no exports. I also believe COP and PSX will work closely together to maximize the benefits to both companies should the ban on crude oil exports be lifted or substantially eased - something I see as very likely."[485]
December 13, 2012: Garland Supports Exports of Crude Oil
Reuters reported on December 13, 2013 that Phillips 66 CEO Greg Garland told reporters at a lunch in New York that Phillips would support exports of crude oil from the United States, arguing the boost they would give the country's economy would trump the higher costs for the company and for American consumers. "When you think about what is good for U.S. economy, what drives job growth... all of these are reasons why we support crude oil exports," said Garland. "If we're allowed to export refined products I think others should be allowed to export the crude they produce." Garland is the first head of a major refiner to speak openly in favor of exporting crude.[486]
The United States in the past three years has become a major exporter of gasoline, jet fuel, and diesel as domestic demand has fallen in reaction to higher prices and a slow economic recovery. Some say the decades old ban on crude oil exports is outdated should North America become energy independent in the coming years, though it is likely to be a fiercely fought political issue. Garland said that U.S. sea-borne crude oil imports could be as low as 2 million barrels per day (bpd) within five years. The drop in sea-borne imports, from a peak above 8 million bpd in the middle of the last decade, has led many to speculate the U.S. could eventually become a net exporter of crude.[487]
Garland praised the cheap energy-led "renaissance" in American manufacturing. "We consider ourselves a manufacturing company... Last year the biggest export from the United States was not planes or automobiles but refined products - and that's the first time since the 1940s."[488]
September 19, 2012: Phillips Plans to Increase Exports to 220,000 bbl by End of 2013
FuelFix reported on September 19, 2012 that Phillips 66 exported about 100,000 barrels a day and plans to increase daily exports to 220,000 by the end of 2013. "If we can export to make more money, we’ll do that. If we can sell in the U.S. and optimize earnings, we’ll do that too. But to date, exporting has actually gotten us a higher price than selling in the U.S." Garland added that it doesn't take a huge investment to increase exports. "These aren’t huge investments. It’s access to tanks and pipes and dock space. It’s less than $100 million of investment for us to do this." Garland says that demand is down in the United States, so increasing exports is beneficial for the country. "Last year, the U.S. industry’s No. 1 export oil products, gasoline and diesel essentially. When we think about exports, we think it’s great for the country. It makes jobs for us. Ultimately, I think it results in better prices for American consumers. We are running our refineries harder, we are spreading those fixed costs over more barrels. So what you are seeing is relatively high utilization rates in the U.S. refining industry today even though demand has been down."[489]
Increase Profitability by Increasing Clean Product Yields
February 12, 2014: Garland Says Phillips is Pushing Our Clean Yields
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that there's $60 million to $100 million of value creation by pushing our clean yields.[491]
January 29, 2014: Phillips Benefited from Clean Product Differentials
Greg Garland told analysts at the fourth quarter earnings conference on January 29, 2014 that Phillips benefited from clean product differentials. "During the quarter, we realized better prices on average for clean products, compared with the benchmark prices. In addition, as RIN prices moderated, the benefit of resulting lower expenses is reflected in this bar."[492]
May 21, 2013: Phillips Plans to Increase Product Yields
Greg Maxwell, Executive Vice-President for Finance and Phillips CFO, told analysts at the UBS Global Oil and Gas Conference on May 21, 2013 that Phillips plans to increase product yields. "Over the last few years, we've increased our total clean product yields by 2% percent with an emphasis on maximizing our diesel yield. As you know, global demand for diesel is strong and growing. Our distillate yield is 3% higher than the United States industry average. And we believe we have a peer leading distillate yield. This is worth approximately $150 million in net income per year based on today's market prices. And 11 of our refineries have small projects to increase both clean product and diesel yields."[493]
April 9, 2012: Garland Wants to Increase Clean Product Yields
"As we look at our refining business, we pulled capital down over the past couple years. Our sustaining level of capital in the R&M segment is about $1 billion a year. We will focus some incremental spend in R&M on margin improvement projects. We think that there's opportunities to capture more feed stock advantaged crudes. We can drive our clean product yields, increase our export capability. 1% improvement in clean product yield gives us about $100 million to $150 million of net income improvement. If we can capture $1 a barrel of WTI/Brent differential, it's worth about $90 million of net income. There is powerful economic incentives to capture these margin improvements."[494][495][496]
June 5, 2012: Garland Wants to Increase Clean Product Yields
On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns. Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity." Phillips wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.[497]
Increase Profitability by Decreasing Costs
See * Operational Excellence
Increase Profitability by Optimizing Portfolio
See * Phillips' Divestiture of Non-Core Assets Through Sale, Exchange, or Closure
Phillips' Divestiture of Non-Core Assets Through Sale, Exchange, or Closure
February 16, 2015: Phillips 66 Sells Interests in Three Pipeline Systems to Phillips 66 Partners
Reuters reported on February 16, 2015 that Phillips 66 is sellings interests in three pipeline systems to Phillips 66 Partners, a master limited partnership formed by Phillips 66, for a total of $1.01 billion. The deal includes two natural gas pipeline systems based in Texas, as well as a 19.46 percent interest in the Explorer Pipeline Company, which operates a pipeline carrying refined products between the Gulf Coast and the Midwest in the United States.[501]
February 9, 2015: Phillips Completes Sale of Bantry Bay Oil Terminal in West Cork, Ireland
Houston Business Journal reported on February 9, 2015 that Phillips 66 has completed the sale of the Bantry Bay Oil Terminal in West Cork, Ireland to a new Houston energy company founded last year by the Warburg Pincus LLC private equity firm. "We are pleased to have acquired the Bantry Bay Terminal, which serves as a critical commercial link in northwest Europe for crude and refined products," Zenith CEO Jeffrey Armstrong said in a prepared statement. "The terminal's attractive deepwater location on Bantry Bay enables our customers to take advantage of many trade opportunities, and the terminal will remain an important part of Ireland's strategic petroleum reserve." The terminal, located on Whiddy Island in Bantry Bay, has a storage capacity of more than 8 million barrels and is one of the largest in Europe. Zenith said it intends to continue operating the terminal on a commercial basis.[502]
February 9, 2015: Forbes Says Delta Made a Mistake Buying the Trainer Refinery from Phillips 66
Christopher Helman wrote in Forbes Magazine on February 9, 2015 that two-and-a-half years after Delta Airlines decision to buy the Trainer Refinery from Phillips 66 Delta has sunk $420 million of capital into the refinery, which has generated roughly $100 million of losses. "This deal is even more idiotic now than it was then,” says Ed Hirs. Buying a refinery just isn’t a big hedge against fuel prices because the real cost of fuel is the oil, not the refining. “It’s as wrongheaded as buying a bakery to hedge against rising bread prices,” says Hirs. “If you really want to hedge your bread price, then buy a wheat field. Likewise, if these guys want to hedge fuel prices what they should buy are oilfields–which are on sale right now.” Delta would have been better off just waiting for oil prices to fall and then locking in lower fuel prices in the futures market. Instead it’s stuck with an expensive albatross.
Delta still tries to put a good face on Trainer. After sinking some $40 million more into the plant in 2014, Delta said in a December presentation that Trainer was profitable in the fourth quarter because fuel prices did not fall quite as fast as crude oil.[503]
December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay
Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.[504]
November 12, 2014: Phillips to Sell Maleka Refinery for $635 Million
FuelFix reported on November 12, 2014 that Phillips has made a deal to sell its 47-percent stake in a Malaysian refinery for $635 million in cash that is expected to close at the end of 2014. “This divestiture allows us to redeploy resources to more strategic areas of our business,” said Larry Ziemba, executive vice president of refining for Phillips 66, in a written statement. Dean Acosta, a spokesman for Phillips 66, said the firm won’t have a refining presence in Asia after the deal closes. “We continually evaluate the assets in our portfolio to identify opportunities to significantly enhance returns,” Acosta said in an email. “We do that through portfolio management as well as improving margins on our current assets.”[505]
October 29, 2014: Sale of Maleka Refinery is an Ongoing Process
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the sale of the Melaka Refinery is an ongoing process. "We have an ongoing process at Melaka. And I think our expectation is certainly end of this year, first quarter next year, that we'll complete that process."[506]
October 29, 2014: Sale of Whitegate Refinery is a Failed Process
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the sale of the Whitegate Refinery is a failed process. "Whitegate, really a failed process. No interest in someone buying the Whitegate Refinery, so that asset is essentially off the market for now."[507]
September 4, 2014: Chevron Phillips to Sell Performance Polymers Business for $220 Million
Bloomberg reported on September 4, 2014 that Chevron Phillips has agreed to sell Ryton polyphenylene sulphide plants, a performance polymers business, to Belgian chemical maker Solvay for $220 million to expand its offering of lightweight plastics for replacing heavier metal parts in cars. “Ryton PPS fits neatly with our unique specialty polymers portfolio and reinforces our unrivalled capabilities to provide solutions to our customers in dynamic innovative end-markets,” said Augusto Di Donfrancesco, president of Solvay Specialty Polymers. Solvay will gain Ryton PPS sites in Texas and Oklahoma, and a plant in Belgium. Solvay plans to invest in a PPS production technology developed by Chevron Phillips that hasn’t “achieved its full potential,” the company said. Completion of the deal is expected in the fourth quarter.[508]
August 28, 2014: Phillips Sells Whiddy Oil Terminal
The Irish Examiner reported on Augusut 28, 2014 that Phillips has reached an agreement to sell the Whiddy Island oil terminal in Bantry, which holds a third of Ireland’s strategic oil reserves, to the US startup, Zenith Energy. “We understand from Phillips 66 that Zenith intend to continue operating the terminal on a commercial basis. The Bantry terminal will therefore remain an important element of Irish oil infrastructure, regardless of its ownership,” said the Department of Energy Communications, Energy and Natural Resources. Phillips 66 employs 30 people directly at the site and the operation indirectly supports 100 contractor jobs. The Whiddy facility, which has a storage capacity of 7.5 million tonnes, is considered one of the best fuel storage facilities in Europe following significant investment over the past 15 years.[509]
April 3, 2014: Phillips Gives Up Trying to Sell Whitegate Refinery
Alison Sider reported in the WSJ on April 3, 2014 that after nearly a year of trying to sell its Whitegate refinery in Ireland, Phillips is calling off the search for a buyer and will just keep running it. “Based on the level of interest from potential buyers, we will take the next step in the sales process for the Bantry Bay storage terminal only,” company spokesman Rich Johnson said. According to Sider European refineries are struggling because fuel demand in the region is down amid a sluggish economy, plus there’s increasing competition from plants in the Middle East, Asia and even the U.S.[510]
February 14, 2014: Garland Says Phillips Has Gotten Good at Selling the Good Things
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips has gotten very good at selling the good things but now Phillips is going to have to get very good at selling the not-so-good things. "I think we've demonstrated that we're willing to create value for shareholders by deal. So we sold ICHP, the power plant, nice ten multiple for that facility in 2013 or was it 2012, 2013 we closed. Then the flow improver deal was just a deal that had to be done. Nice multiple for the, effective ten multiple tax-free transaction. It made a lot of sense for a big shareholder of our Company, but also made a lot of sense for Phillips 66. It was done like-kind exchange, share exchange for the business. So that deal needed to be done. We're starting to run out of those deals in the portfolio. We've gotten very good at selling the good things. I told Clayton we're going to have to get very good at selling the not-so-good things."[511]
February 14, 2014: Garland Says Phillips Expects to Sell Melaka and Whitegate in 2014
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips expects to sell Melaka and Whitegate Refineries in 2014. "We've gotten very good at selling the good things. I told Clayton we're going to have to get very good at selling the not-so-good things. Certainly [we] have a process underway with Whitegate. We have a process underway with Melaka. What I would say in that you should expect that we will draw those processes to a conclusion in 2014.[512]
February 14, 2014: Phillips to Sell Gold Product Pipeline System to Phillips 66 Partners for $700 million
The Oil and Gas Journal reported on February 14, 2014 that Phillips will sell the Gold Product Pipeline System, also known as the “Gold Line System,” and the Medford Spheres, two newly constructed refinery-grade propylene storage spheres, for a total consideration of $700 million.
The Gold Line system shuttles approximately 132,000 barrels per day of refined products from a Phillips 66 refinery in Borger, Texas, north to Cahokia, Ill. It also includes two lateral lines, and four terminals with 4.3 million barrels of aggregate storage capacity.
The two propylene storage systems are located in Medford, Okla., with a combined capacity of 70,000 barrels. The units will serve as a temporary stopover for refinery-grade propylene coming from the Phillips 66 refinery in Ponca City, Okla., en route to the major natural gas liquids hub in Mont Belvieu, Texas. It also includes two lateral lines, and four terminals with 4.3 million barrels of aggregate storage capacity.
Phillips 66 and the partnership will enter into transportation, storage, and terminaling agreements that include minimum throughput volume commitments, with terms ranging from 5 to 10 years. The minimum volume commitments account for more than 80% of expected throughput volumes. The partnership expects these assets to contribute EBITDA of approximately $65 million to $70 million in their first full year of operation. Annual maintenance capital expenditures are initially expected to be between $3 million to $4 million.[513][514]
January 30, 2014: Garland Says the West Coast is a Challenged Environment
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that the West Coast is a very challenged environment for refineries. "It is a high cost area to operate. Our assets are good assets. We are on a path to fix it, I would say. As you think about, a net income positive, single-digit return business, and how do we get crude advantaged to the West Coast? So I think, you can ask me in April, we will probably tell you more about what we are doing to get advantaged crudes into California. But it is a combination of investments and third-party as we work that. And then, I think we said openly that all options for California I think are on the table, in terms of those assets, whether it could be a spin, an IPO, variable MLP, a joint venture. As you look at the West Coast, we think those are valuable assets ultimately, because there is -- we have 110,000-barrels a day of coking capacity there. And so, those assets in the future will probably be worth more than what people think they are worth today, is my view. And I mean, the California market is a big market as everyone knows, and so, we have a continuing interest there. But as we think through the assets, our path today is to make it better and more profitable, run those assets well. We don't see any big capital investments in front of us on the West Coast, and so, the hold option really cost us nothing."[515]
December 30, 2013: Phillips Sells Specialty Products Unit to Warren Buffett's Berkshire Hathaway for $1.4 Billion
Phillips reported on December 30, 2013 that Berkshire Hathaway Inc. is acquiring Phillips Specialty Products Inc., a flow improver business, from Phillips 66 in exchange for shares of Phillips 66 common stock currently held by Berkshire Hathaway. PSPI leads the science of drag reduction and specializes in developing polymers to maximize the flow potential of pipelines. “Berkshire Hathaway made a strong offer for our high-performing flow improver business,” said Greg Garland. “This transaction optimizes our portfolio and focuses growth on our Midstream and Chemicals businesses.”[516]
Wells Fargo analyst Roger D. Read said Phillips 66's entire specialty division generates about $250 million in annual earnings before interest, taxes, depreciation and amortization (EBITDA), with PSPI generating just a portion of those earnings. Read estimates that the specialty unit will generate just 4% of Phillips 66's 2014 EBITDA and that PSPI was sold a premium price relative to the firm's valuation. Buffett and Berkshire appear able to afford a premium priced PSPI acquisition using Phillips 66 shares. Berkshire Hathaway marked the cost of its Phillips 66 shares at $660 million in its 2012 shareholder letter. Meanwhile, the stock-for-PSPI swap will come with tax advantages for Berkshire Hathaway. "The cash-rich split "is a way for a holder of appreciated stock to dispose of it in a very tax efficient way," says Robert Willens, an independent tax expert. "The distribution of PSPI to BRK is intended, no doubt, to qualify under Sec. 355 of the Internal Revenue Code. If its does, neither PSX nor BRK will recognize gain on the exchange of the stock of PSPI for BRK's PSX stock."[517]
Antoine Gara wrote at The Street that "one wonders whether Phillips 66's sale of its PSPI unit to a large shareholder raises conflicts of interest." "That's especially the case since Berkshire will be paring its stake in Phillips 66 significantly through the PSPI acquisition. A press release announcing the deal and an 8-k filing with the Securities and Exchange Commission also don't list any advisors on the stock transaction."[518]
October 30, 2013: Garland Says East Coast and West Coasts Refineries are in Challenged Markets
Garland told analysts at the third quarter earnings conference that Bayway is a great asset and a challenged market. "But when we look at our assets around the Midcontinent and Gulf Coast, we think those are pretty good assets, and long-term those assets will probably be in our portfolio, because if we think about West Coast and East Coast and U.S, it is not necessarily true, Atlantic Basin is a very challenging place if you well know," said Garland. "If you look at that, 30,000 feet the market that we are in North America and Europe aren't going to be growing market, in fact they're probably declining markets. And so the opportunity to employ capital and make a good return on that is just more difficult. I’d rather move into the higher valued businesses in midstream in chemical and we have been pretty consistent about that. But we are always going to look at our portfolio and optimize the portfolio."[519]
October 30, 2013: Garland Says Phillips Still Looking to Sell Whitegate Refinery and Its Interest in Melaka Refinery
Garland told analysts at the third quarter earnings conference on October 30, 2013 that Phillips is still looking at "selling possibly our Whitegate refinery in Ireland and our interest in the Melaka refinery in Malaysia, and so those efforts continue. We’re in the process of evaluating specifically the opportunities around Whitegate. So I think those have been the pieces of portfolio for us that long-term are really where the strategic interest is."[520]
September 12, 2013: Phillips 66 says It Has Buyers Interested in Whitegate Refinery
Greg Garland told analysts at the Barclays Energy-Power Conference in New York that Phillips has potential buyers interested in its Whitegate Refinery. Garland declined to elaborate, but analysts had speculated that buyers would be tough to find.[521]
July 15, 2013: Phillips Creates Phillips 66 Partners LP, a Master Limited Partnership with Pipline Assets
Phillips announced on July 15, 2013 that they were creating Phillips 66 Partners LP, a limited partnership and subsidiary of Phillips 66, with an initial public offering of 15,000,000 common units, representing limited partner interests. The common units are expected to trade on the New York Stock Exchange under the ticker symbol “PSXP.” The partnership’s assets include the Clifton Ridge crude oil pipeline, terminal and storage system in Louisiana; the Sweeny to Pasadena refined petroleum product pipeline, terminal and storage system in Texas; and the Hartford Connector refined petroleum product pipeline, terminal and storage system in Illinois.[522]
June 10, 2013: Phillips Wants to Sell Whitegate Refinery
Reuters reported on June 11, 2013 that Phillips wants to sell the Whitegate Refinery in Cork, Ireland. However Seth Kleinman, head of energy research at Citigroup says the odds of finding a buyer look slim and that the refinery would probably have to be shut down as it will be hard to find a buyer for it. In the meantime Phillips will continue to operate the refinery. "Phillips 66 intends to continue operating the assets as usual during the marketing process, which is expected to last for several months," said company spokesman Rich Johnson in a statement.[523]
Europe's refining sector has been struggling because of over capacity and Coryton refinery in the UK, owned by the bankrupt Petroplus group, closed last year after administrators failed to find a buyer for it. Micheal Martin, the leader of Ireland's main opposition party Fianna Fail, said the sale of the refinery had potentially serious consequences for its economy as it is the only refinery in Ireland supplying about one third of Ireland's oil products. "Whitegate is a key strategic asset. It provides one third of all our transportation fuel and is a long-term principal supplier to the National Oil Reserves Agency. The threat to its future has serious implications for Ireland's energy supply and consequently for our economy," Martin said in a statement. "It has been a major employer in the area for decades, supporting hundreds of jobs directly and indirectly. Its loss would be a serious blow to local economy."[524]
"The move is part of a fire sale of Irish assets by Phillips," writes James Detar on Investor's Business Daily. "which is also selling an oil and refined products storage terminal in Bantry Bay in County Cork, and its Ireland wholesale marketing business."[525]
May 11, 2013: Phillips Sells Power Plant at Humber Refinery
The Grimsby Telegraph reported on May 11, 2013 that the 1,220 MWe power plant employing 56 people and providing steam and electricity to Phillips 66's Humber Refinery, steam to the neighboring Lindsey refinery, and electricity to the National Grid is being sold to the Vitol Group, based in Switzerland, for an undisclosed sum. Expanded at a cost of £210 million in 2010, the power plant has at least twice been subject of a review by ConocoPhillips and by Phillips 66. "While a high-quality business and asset, ICHP was determined not be a core asset for Phillips 66's business strategy," said Brian Coffman, general manager of Phillips 66 Humber Refinery, and lead executive in the UK. "ICHP is a good solid business with strong potential in the UK electricity market."[526]
March 7, 2013: Phillips May Sell Refineries in Europe and Asia if the Price is Right
Alison Sider reported at Hyrdocarbon Processing on March 7, 2013 that Larry Ziemba, executive vice president for refining, project development and procurement, told analysts that, for the right price, the company would consider selling its 71,000 barrel-per-day refinery in Cork, Ireland, its 47 percent interest in the 170,000 barrels per day (bpd) Melaka, Malaysia Refinery and its 18.75 percent stake in the 300,000 bpd Mineraloelraf?nerie Oberrhein GmbH refinery in Southwest Germany. "They're really not strategic," said Ziemba. The company's stake in Malaysia's Maleka refinery is a holdover from Phillips 66's days as the refining arm of ConocoPhillips, which had upstream operations in Malaysia. Now, "it might be worth more to Petronas or someone else than it is to us," said Ziemba.[527][528]
Ziemba added that most of Phillips refining capacity is located in the US, where the company is looking to take full advantage of booming production of relatively inexpensive "advantaged" crude-oil and that the share of "advantaged" oil has grown from 52% of the crude Phillips 66 ran in 2011, to 70% by the end of 2012. "Ultimately, our objective is to push all the Brent crudes out of our system," said Ziemba.[529][530]
January 30, 2013: Garland Does Not Rule Out a Sale of Los Angeles Refinery and San Francisco Refinery
Reuters reports that Greg Garland told investors on January 30, 2013 at the 4th quarter earnings conference that Phillips did not rule out a sale of Phillips two California refineries, one at Los Angeles and one at San Francisco, given challenges with state regulatory requirements and high costs. "We're studying any and all options for California in terms of where do we go long-term in the business," said Garland. "We are doing everything we can to improve it. I don't feel it's a distressed asset. We want to take our time and be thoughtful."[531]
Garland told analysts that Phillips 66 was looking at getting railcars capable of hauling even cheaper Canadian heavy crude to the company's refineries in California. However, he said resistance to such a move was likely. A 2006 California law requiring sharp cuts in emissions has a component that would require refineries to run crudes produced in environmentally friendly ways. Canadian crude production comes with high emissions. Plus, California has the huge Monterey shale, estimated by the U.S. government to have more reserves than the prolific Eagle Ford in Texas or Bakken in North Dakota. But output has been spotty with geology that differs from those other plays. Given those uncertainties, Garland told Reuters in an interview that for the time being, Phillips 66 will focus on improving the California refineries' single-digit returns while studying a possible sale, joint venture or spinoff. "The option value to hold California is zero. It really costs us nothing."[532]
December 13, 2012: Phillips Likely to Sell Whitegate Refinery in Ireland and its stake in Melaka Refinery in Malaysia
Reuters reported on December 13, 2012 that Greg Garland told reporters on December 13, 2012 that Phillips will likely look to sell its Whitegate refinery in Cork, Ireland, and its stake in the 2 Melaka refinery in Malaysia. Phillips plans to retain stakes in the refineries it owns in the United Kingdom and Germany. "We don't envision growing in the Asian refining space," said Garland.[533]
December 13, 2012: Phillips to Transfer Transportation Assets to a Master Limited Partnership
Marketwatch reported on Decmeber 13, 2012 that Phillips will transfer transportation assets to a master limited partnership that will debut in the stock market in 2013. The assets could include crude and product pipelines and terminals, natural gas liquids assets, or rail cars and infrastructure, but it was unclear what portion of Phillips 66's business would go to the MPL, analysts at Simmons said in a note.[534] “We expect to use the master limited partnership as an efficient vehicle to fund growth investments in the transportation and midstream sectors,” said Phillips 66 Chairman and CEO Greg Garland. “We believe the proposed MLP will enable us to enhance value for our shareholders and increase the transparency of our business.”[535]
December 3, 2012: Standard and Poor Says Some Phillips Facilities Are Candidates for Divestiture or Closure
Standard and Poor reported on December 3, 2012 that the overall quality of Phillips operations is mixed, with some facilities being candidates for divestiture or closure over the next few years. "Notwithstanding the relatively favorable market conditions at times over the past year, we view long-range industry fundamentals as difficult given persisting excess production capacity globally and a secular decline in demand for some key transportation fuel products in developed markets," the report says. "While we believe that Phillips 66 Co. will be able to further improve the operating performance of its refining assets, we expect opportunities for doing so will be mostly incremental in nature."[536]
October 31, 2012: California Refineries are in Lower Performing Part of Refinery Portfolio and Must Improve
Tim Taylor was asked at the Phillips Third Quarter Earnings Conference on October 31, 2012 if Phillips' position with its two major refineries in California was sufficiently advantaged to warrant continued participation and replied that when Phillips looks at the West Coast, it's been one of the more challenged markets from a recovery standpoint post-recession. "In California, specifically, it's a tough regulatory environment, as well, so costs are higher. And there is a lot of potential additional costs as new regulations come into effect. That said, it's still a very significant market and we think it's really important to look at how can we get some of these crudes out of the middle part of the country into the West Coast, particularly California. So we're working hard on that to try and change that. The comment I'd make in Washington is that that's got a natural access to the Bakken in North Dakota and Canadian crudes. We separate the Washington piece from the California piece that way. But everyone's working hard to look at some crude solutions for the West Coast to improve its competitive position."[537]
"I think we look at the market and say demand continues to struggle out there, as well, post-recession," added Taylor. "And then I think you look more fundamentally at the operating environment and the costs associated with particularly the environmental regulations. And we think that's going to continue to keep pressure on operations and operating costs out there. So, yes, I would say that from a California perspective it is one of the more challenged parts of our portfolio in terms of the basic value equation. So that's why we're still looking at the crude side of it. And continuing to stay abreast and on top of what it's going to take to comply with things like AB32 to really maintain your operations out there."[538]
Asked if California would still remain part of Phillips' core portfolio Taylor replied that right now California is in the lower performing part of Phillips portfolio. "So I think that if our assessment would become that it's going to be challenged for some period of time, we've either got to find a way to improve that operation or find some other way to deal with that."[539]
October 17, 2012: Phillips Decides Not to Build Research and Training Campus in Louisville, Colorado
Timescall reported on October 17, 2012 that Phillips has decided not to build a a global training center and research and development campus, a facility heralded for its potential to bring thousands of jobs and an economic boom, in Louisville, Colorado and plans to sell the 432-acre property off U.S. 36. "The uses that ConocoPhillips originally envisioned for this site don't really fit into Phillips 66's long-term plans at this time," said Louisville Mayor Bob Muckle. After the split from ConocoPhillips, Phillips 66 acquired the research facility in Bartlesville, Okla., and moved forward on plans to establish an international training center at its new corporate headquarters in Houston. "After careful consideration of the needs of the new company and its employees, Phillips 66 has decided to sell its 432-acre property in Louisville, Colo.," said Phillips 66 officials in the statement. "Phillips 66's predecessor company, ConocoPhillips, purchased the Louisville property in 2008. As a result of the repositioning of ConocoPhillips into two independent energy companies, the Louisville site became an asset of Phillips 66." The campus was to be constructed in three phases: the opening of 1.6 million square feet of office, research, training and hotel space by 2013, another 150,000 square feet by 2018 and the final 750,000 square feet by 2032.[540]
October 9. 2012: Phillips Sells Riverhead, NY Marine Petroleum Terminal
The Sacramento Bee reported on October 9, 2012 that Phillips announced the sale of the Riverhead, N.Y., marine petroleum terminal and associated assets to United Refining Co. for an undisclosed sum. The terminal is located on the north shore of Long Island in New York and is used as a storage and shipment hub for crude, heavy fuel, diesel and gasoline. It has the only deep-water loading and unloading platform on the East Coast.[541]
September 19, 2012: Greg Garland Says There's No Need to Expand Refining Capacity
Fuelfix reported on September 19, 2012 that no need to expand the refining capacity at Phillips 66. "This market is well supplied," said Garland. "I think we have the opportunity to improve margins and improve returns because of these structural changes in crude and the opportunity to uplift export. But even for us, while looking at exports, the refineries tend to have very localized markets. So you think globally, but act locally in this business for the most part."[542]
September 19, 2012: Greg Garland Says Underperforming Refineries Could be Sold
Garland added that in the future there could be more sales of refineries. "We have $50 billion in assets and in the last six years we’ve sold $10 billion. You would expect that some assets are really good and some aren’t quite as good. Over time you want to move the under-performing assets and take that money and invest it in higher performing assets. That’s business.," said Garland. "I don’t have any refineries today that have a huge capital requirement. It’s not that we’re in dire straights and we have to do something with any asset we have. It becomes a question of what assets do we think long-term will provide the highest returns in the portfolio. And the ones that don’t meet that criteria, what can we do to fix them? I would prefer to fix them first. And we’re going to give people time to do that. But ultimately, if we can’t get a way to fix them, we’ll see if someone will pay something for them, more than they’re worth."[543]
September 5, 2012: Garland says Phillips Will Always Work the Tail of its Portfolio
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that over the last six years Phillips has sold $10 billion of $50 billion worth of assets and that investors should expect that over time that Phillips will always work the tail in its portfolio. "We're not going to be real specific about which assets that we might sell. But you should expect that we'll always manage that core. We did have Alliance on the market. The offers came -- we had 20 people go through the data room. We probably had four offers, none really serious. We think that with LLS and where it's going, we see more opportunity for Alliance in the future than we saw a year ago when we put it on the market. But yes, you should always expect that we're going to have some rationalization of the portfolio."[544]
August 1, 2012: Phillips Does Not Have Plans to Acquire Additional Refineries
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 is not planning potential acquisitions -- refineries or other assets -- at this time. "We have looked at what is out there on the market right now in acquisitions and there is nothing really interesting to us at this time," said Phillips CEO Greg Garland. "So we have got our plate full in terms of executing the plan around improving our base R&M business, improving margins, [and] returns."[545][546]
August 1, 2012: Phillips Won't Sell Alliance Refinery
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips 66 has decided to retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there.[547]
June 13, 2012: Delta Airlines Set to Close its Landmark Deal on June 22 to buy Phillips Trainer Refinery
June 7, 2012: Greg Garland says Phillips has no plans to Buy or Expand its Portfolio of 11 Domestic Refineries
In an interview with Barrons published June 7, 2012 Phillips CEO Greg Garland said that Phillips has no plans to buy or expand its portfolio of 11 domestic refineries. Philips has an advantage because about 60% of its crude comes at advantageous prices relative to the world market thanks in part to the company's midcontinent presence where crude-production growth has depressed prices.[548]
June 5, 2012: Garland Says It Takes a Lot of Money to Close Down a Refinery
When asked a question about rationalizing refining capacity by closing down plants Garland said at the Investor Conference on June 5, 2012 that it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."[549]
June 5, 2012: Phillips 66 Reconsiders Sale of Alliance Refinery
Nasdaq reported on June 5, 2012 that Phillips 66 CEO Greg Garland told financial analysts during an investors conference that although Phillips 66 has been considering the sale of its Alliance refinery in Belle Chasse, Louisiana since December 2011, the company is now rethinking the prospect amid falling prices for Light Louisiana Sweet (LLS) crude oil and may not put the refinery up for sale after all. "Our view of that refinery has increased," said Garland. "We think LLS will become an advantaged crude." hillips 66 and other refiners have been rearranging their geographic footprint to take advantage of a boom in US oil and natural gas production that has scrambled the refining map. Refineries with access to new, discounted oil in the U.S. midcontinent have prospered, while coastal refineries have seen profit margins decline.[550] LLS sold for about $95 a barrel Tuesday, down nearly 17% since December. The premium of about $12 LLS commands over inland-crude-oil benchmark West Texas Intermediate should fall as more WTI crude comes to the Gulf Coast via pipelines and rail cars.[551]
According to an article in the Wall Street Journal on June 7, 2012, it may be difficult for Phillips to find a buyer for the Alliance Refinery because long term US gasoline consumption is falling. "Other refineries all have assets on the chopping block, but in a world where domestic fuel sales are in long-term decline, potential buyers are in short supply," write Ben Lefebre. However lower crude prices are making the economics of refining attractive again. "There may be a gleam of hope for Gulf Coast refiner profitability," writes Lefebre. "Exports are growing and Gulf Coast crude economics are getting better. The surge in domestic crude production could bring down the cost of regional oil benchmark Light Louisiana Sweet, giving refines in the region a distinct advantage, refiners and analysts have said."[552]
June 5, 2012: Fox News reports Sunoco and BP Have Refineries on the Selling Block
Other refineries are on the selling block include Sunoco's 35,000-barrel-a-day refinery in Philadelphia. Sunuco closed its refinery in Marcus Hook in December, 2011. BP PLC (BP, BP.LN) is also trying to sell its 265,000-barrel-a-day Carson refinery in California.[553]
May 23, 2012: Morningstar Analyst Recommends Sale of Underperforming Refining Assets
According to Allen Good writing in Morningstar on May 23, 2012 Phillips 66 needs to start selling underperforming assets in their Refining and Marketing Business Segment and Phillips 66's refinery assets are definitely a mixed bag. Phillips' four Mid-Continent refineries in Billings, Ponca City, Wood River, and Borger "are some of the company's best positioned, given their access to discount domestic and Canadian crudes." The three Gulf Coast refineries in Alliance, Lake Charles and Sweeny facilities are some of the most attractive in Phillips portfolio, given their size and complexity says Good. Phillips has already let it be known that the Alliance Refinery is up for sale at the right price but "we won't let it go cheap." The two refineries in California at Los Angeles and San Fransisco face higher costs and environmental regulation which weighs on their value. "Efforts to boost cost-advantaged feedstock should help, but a weak economy in the short term and regulatory capital spending in the long term will be headwinds." Finally the sale or closure of the one remaining East Coast refinery at Bayway in Linden, NJ would "further high-grade the portfolio" although Greg Garland has already said that Bayway will be the "last refinery standing" in PADD I.[554]
May 1, 2012: Phillips Sells Trainer Refinery to Delta Airlines
May 1, 2012: Phillips 66 is Trying to Sell Alliance Refinery
Reuters reported on May 1, 2012 that Greg Garland says that Phillips 66 aims to double refined product exports to 200,000 bpd in the next two years, but its 247,000 bpd Alliance refinery in Belle Chasse, Louisiana -- which runs light-sweet crude -- is on the block. Increasing U.S. light-sweet inland shale oil output along with more infrastructure to move it to the refinery-heavy Gulf Coast means more advantaged crude prices could show up in the region in the coming years, increasing Alliance's value, Garland said. If the price isn't right for what he called "a good export platform for us," Phillips 66 will keep it, Garland said. "We wouldn't let the refinery go cheap."[555]
July 14, 2011: Greg Garland says “There’s enough refineries in the world today"
In recent years ConocoPhillips has sold a European refinery and backed out of a big project with Saudi Aramco to build a brand-new refinery in Saudi Arabia. Phillips 66 is looking to sell its Alliance refinery in Louisiana and its Trainer plant in Pennsylvania “We’ve been selling and shutting down unprofitable assets,” says Garland. “There’s enough refineries in the world today." “No one knows these assets better than the guys at ConocoPhillips; if they think it’s a good idea to jettison this baggage, shouldn’t you too?” says Ed Hirs, a professor of energy economics at the University of Houston. “No one is going to want to buy into Phillips 66. They have no growth, no upside and huge environmental liabilities."[556] Jim Mulva reiterated in his conference call to financial analysts on July 14, 2011 in answering a question by Ed Westlake of Credit Suisse that "if we have an alternative to sell one of the less sophisticated refineries in a way, we are not going to delay until this is done accomplishing and doing that."[557][558]
Phillips Expansion, Construction, Acquisitions and Purchases
November 6, 2014: Phillips May Be Interested in Purchasing Citgo's Lemont Refinery
Reuters reported on November 6, 2014 that potential buyers from at least six leading oil companies including Phillips 66 have visited Citgo Petroleum Corp’s 172,045 bpd refinery in Lemont, Illinois. The Lemont Refinery is considered attractive because it enjoys consistent profits because it runs cheap oil from Canada's tar sands fields in Alberta, and not heavy Venezuelan crude as do the Citgo's other two refineries for sale at Lake Charles, Louisiana and Corpus Christi, Texas. Sources told Reuters that teams from the following companies have carried out detailed inspections of the Illinois refinery: India's Reliance Industries, independent refiner PBF Energy, U.S. West Coast refiner Tesoro Corp, Marathon Petroleum Corp, Valero Energy Corp and Phillips 66. Representatives from Phillips 66 visited the Lemont refinery this week, sources said. Marathon, Phillips 66, Tesoro and Valero representatives declined to discuss their companies' possible interest in Citgo's assets. PBF and Reliance did not reply to requests for comment. Some refiners take the opportunity of a site visit while a refinery is being offered for sale to gain intelligence on how a competitor operates.[559]
October 29, 2014: Chevron Phillips Considers New Ethylene Cracker
Argus reported on October 29, 2014 that Chevron Phillips continues to consider new US construction projects, including whether to build a new ethylene cracker, but those discussions are still early in the process and no decisions have been made. "We still think the US Gulf coast is still the best place to invest, and we wouldn't hesitate to go forward with a second cracker. But the challenge is where do you put it and what are you going to feed it," said chief executive Greg Garland.[560]
October 28, 2014: Phillips Partners with Energy Transfer to Build Bakken Crude Oil Pipelines
Businesswire reported on October 28, 2014 that Phillips and Energy Transfer have formed two joint ventures to develop the previously announced Dakota Access Pipeline (DAPL) and Energy Transfer Crude Oil Pipeline (ETCOP) projects. Energy Transfer holds a 75 percent interest in each joint venture and will operate both pipeline systems. Phillips 66 owns the remaining 25 percent interests and will fund its proportionate share of the construction costs. The DAPL and ETCOP projects are expected to begin commercial operations in the fourth quarter of 2016. “Energy Transfer is a valued partner with a proven track record of developing major interstate pipelines,” said Greg Garland, chairman and CEO of Phillips 66. “These joint-venture projects will allow Phillips 66 to increase its access to advantaged North American crude oil and add to the momentum we are building in our Midstream business.”[561]
DAPL is expected to deliver in excess of 450,000 barrels per day of crude oil from the Bakken/Three Forks production area in North Dakota to market centers in the Midwest. DAPL will provide shippers with access to Midwestern refineries, unit-train rail loading facilities to facilitate deliveries to East Coast refineries, and the Gulf Coast market through an interconnection in Patoka, Illinois, with ETCOP.[562]
ETCOP will provide crude oil transportation service from the Midwest to the Sunoco Logistics Partners and Phillips 66 storage terminals located in Nederland, Texas.[563]
September 3, 2014: Truck Loading Facility at Ponca City Refinery to Have 100,000 b/d Capability by mid-2015
Greg Garland told analysts at Barclays CEO Energy-Power Conference on September 3, 2014 that Phillips has invested in a truck loading facility at the Ponca City Refinery for indigenous Oklahoma crudes with a capability of 70,000 barrels a day, that by mid-2015 the facility will have a capability of 100,000 barrels a day, and that the Magellan pipe will bring another 20,000 barrels a day to Ponca City. "So, we're buying indigenous Oklahoma crudes at the wellhead, very consistent product, we know what we're getting and that's translating into better yields at the refinery, good throughputs," said Garland. "And so, as we go to wellhead and buy, we know the crude, the quality of the crude that's coming in, and another opportunity to leverage our expertise in our commercial business into our refining business."[564]
September 3, 2014: Phillips Acquires 100% of Cogen Facility at Sweeny to Prevent a Recurrence of 2013 Outages
Greg Garland told analysts at Barclays CEO energy-Power Conference on September 3, 2014 that Phillips wants to prevent a reccurence of the electrical problems that plagued Sweeny in the first and second quarters of 2013. "We took out our other equity owner, 50% owner of the 440 megawatt Cogen facility at Sweeny. when you think about the existing investment we have, the new investment going in at Sweeny, both from PSX and also CPChem, we want to make sure we harden that electrical infrastructure. You remember in the first quarter and second quarter of last year, we had some issues, mostly related to our third-party providers. We want to ensure that we've got that well in hand and we don't have that ever happen to us again and so that was part of the reason for that.[565]
FuelFix reported on July 31, 2013 that Phillips 66 underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. The refinery at Sweeny had two power outages that were a major problem. “We had a second power outage in the second quarter and in my view that’s unacceptable,” Garland said. The refinery is powered both by an on-site generation facility and by a power company. The power company was the cause of the two outages. “To me, personally, the biggest disappointment in the quarter was having a second power outage at Sweeny,” Garland added.[566]
September 3, 2014: Phillips to Build North Dakota Origination Rail Terminal for Bakken Crude
Argus reported on September 3, 2014 that Greg Garland told analysts at the Barclays CEO Energy-Power Conference that Phillips will build a rail-loading facility permitted to handle up to 200,000 b/d of Bakken crude, the first time a US refiner has directly owned a North Dakota origination terminal. We have permits in hand in engineering to construct a new rail-loading facility. This is permitted up to 200,000 b/d. We'll probably do about 160,000 b/d" and build about 300,000 bl in storage said Garland.[567]
August 13, 2014: Phillips Breaks Ground on LPG Export Terminal at Freeport
Jordan Blum reported in the Houston Business Journal on August 13, 2014 that Phillips broke ground on its $1 billion liquefied petroleum gas export terminal — its first ever — in Freeport to sell propane, butane and more to international markets. The project, which is expected to be completed in mid-2016, will export 4.4 million barrels of fuel a month to countries in Europe and Asia. The terminal will get the fuel from its Sweeny complex in Old Ocean and its Gulf Coast Fractionators facility in Mont Belvieu. "We are investing, we are building and we are growing," Phillips 66 Chairman and CEO Greg Garland said at the groundbreaking. "The projects we're breaking ground on … total more than $3 billion of investment for our company, … and it's happening right here in our own backyard in the communities of Sweeny and Freeport." Freeport has advantages over operating out of the Houston Ship Channel because Freeport is 3 miles from deep water, compared to 50 miles for the channel says Jim Webster, Phillips 66’s general manager of midstream.[568]
August 7, 2014: Phillips Not Interested in Purchasing Citgo Refineries
CSPNet reported on August 7, 2014 that Venezuela, strapped for cash at home and staring down costly litigation overseas, is considering a deal for CITGO Petroleum which has three U.S. refineries with combined capacity of approximately 750,000 barrels per day but the offer does not appear to be drawing much interest from other refiners. "I think we've consistently said we have better opportunities to invest in our midstream and chemicals business," says Garland.[569]
June 23, 2014: Phillips to Acquire Lubricant Manufacturer Spectrum Corp
Olivia Pulsinelli reported in the Houston Business Journal on June 23, 2014 that Phillips is acquiring Memphis-based Spectrum Corp. a specialty lubricants company from Dominus Capital LP as it plans to grow its lubricants business. There are approximately 225 employees working at Spectrum today who will become Phillips 66 employees upon closing of the transaction,” a Phillips 66 spokesman told the Houston Business Journal. “The acquisition of Spectrum complements our strong-performing lubricants business by increasing our access to specialized global lubricants markets and is in line with our strategy to selectively grow our marketing and specialties segment,” Tim Taylor, president of Phillips 66, said in a statement. “It also creates new opportunities to expand our worldwide lubricants customer base.”[570]
June 5, 2014: Phillips Buys Big Oil Storage Terminal On Gulf Coast
Fuelfix reported on June 5, 2014 that Phillips plans to purchase the Beaumont Terminal, capable of carrying 7.1 million barrels of oil equivalent, from Chevron subsidiary UNOCAL. “This acquisition supports our midstream growth strategy,” said Tim Taylor. “Given our expectations for increasing volumes of North American crude oil movements into the Gulf Coast region and growth in refined product exports, the Beaumont Terminal is well positioned to serve this growing market while providing significant expansion potential.”[571]
September 29, 2013: Coker Reactors Moved into Place at Ponca City Refinery
The Ponca City News reported on September 30, 2013 that two $70 million, 232 ton coker reactors manufactured in Japan were moved into place into two slots on the working platform at the Ponca City Refinery on September 29, 2013 and carefully lowered into position by the Mammoet PTC-140 heavy lift crane.[572]
Marketing and Special Products
Phillips 66 treats marketing and special products as part of the R&M Business Segment but a significant portion of the earnings of R&M are not related directly to refining. Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that marketing and special products is a very stable business that brings in $500 million to $700 million of annnual net income. "When we talk about marketing in the US, we do not own any stations. We market through branded wholesale stations in the US. There's about 8,000 branded stations that are marketed under either the Phillips 66, the Conoco, or the 76 brand. About half of our marketing margin is actually moved through unbranded wholesale. In Europe, we do sell direct. We have about 900 stations in Germany and Austria, another 250 stations in Switzerland in a joint venture with Coop. In Germany and Austria, we -- Switzerland and UK we market under the JET brand. Extremely high market efficiency out of these stations. Strong ROCEs in excess of 30%. We like the European retail presence. We look at the European market. It's a lot like North America. It's really a flat to declining market. So we will grow, but we'll grow marginally in the European business. We're also a large top three supplier of lubricants in the US, the other business we like and we'll continue to grow that business."[573]
Marketing
December 5, 2014: Phillips to Invest $170 Million in 2014 in Marketing and Specialties
Phillips 66 announced on December 5, 2014 that in Marketing and Specialties, the company plans to invest $170 million for growth and sustaining capital. The growth investment reflects Phillips 66’s continued plans to expand and enhance its fuel marketing business.[574]
December 6, 2013: Phillips to Invest $140 Million in 2014 in Marketing and Specialties
Phillips reported on December 6, 2013 that they plan to invest $140 Million in 2014 in Marketing and Specialties growth and sustaining capital. The growth investment reflects Phillips 66’s intent to expand its international fuel marketing business. The company plans to add approximately 200 new retail sites in Europe over the next five years.[575]
September 26, 2013: Former Phillips 66 Marketer Shuns Big Oil for E15
Domestic Fuel reported on September 26, 2013 that Scott Zaremba, a Kansas retailer who sold fuel under the Phillips 66 brand for 28 years, has decided to drop Phillips 66 so he can offer consumers the choice of E15 ethanol. “They changed the rules mid-stream for what they would allow me to do once E15 came out,” said Zaremba. “And so I re-branded my locations to Zarco USA and created a brand of American Fuels.” Zaremba says it was necessary to offer something else, becoming the first retailer in the nation to offer E15 and hopes others will follow his lead and break with Big Oil and choose the cleaner, more economical and stable renewable fuel, ethanol. “We see the great opportunity now of being able to give the consumer a choice, reduce our dependency on foreign oil, and move forward being able to have something for the consumer that will give them higher octane in a cleaner burning product, and give stability to our economy.”[576]
June 10, 2013: Phillips Forces Gas Station Owners to Either Label or Stop Selling Gasoline Blended with 15 percent Ethanol
Cezary Podkul reported on Fox Business on June 10, 2013 that according to new Phillips 66 guidelines any gasoline with more than 10 percent ethanol has to be served from a separate, yellow hose with the aim of distinguishing E15 from other Phillips 66-branded gasolines with 10 percent or less ethanol. On April 1, Zaremba received a notice from Phillips 66, the nation's third-largest refiner, that he could no longer sell the E15 fuel from his regular black fuel hoses, as he had been selling it since last July. "He has other options, but they aren't cheap - or very feasible," writes Podkul. "For example, it would cost $100,000 to $250,000 to install new stand-alone gas pumps for E15, Zaremba said. Or he can always pay a $412,000 fee to Phillips 66 to break his marketing contract - expensive options that have so far kept him in compliance with the Phillips 66 guidelines, the only way he said he could." Phillips 66 Spokesman Dennis Nuss said in a statement that they were simply part of an occasional update to its brand standards meant "to ensure a positive and consistent customer experience at the pump." Oil producers say they are just doing the responsible thing - holding firm to a 10 percent maximum blend of ethanol in gasoline, or E10 - because anything more than that can cause engine damage in many vehicles on the road today.[577]
May 14, 2013: Phillips to Celebrate New Company During Marketing Conference
CSP Daily News reported on May 14, 2013 that Phillips will have booths manned by informed company representatives from the fuels, lubricants and aviation divisions to promote Phillips 66 Lubricants, Phillips 66 Motor Fuels Marketing and Phillips 66 Aviation at the 2013 Marketing Conference & Trade Show from May 21 to May 24 2013 at the Aria Resort in Las Vegas. Phillips chose the theme "New Energy, New Possibilities" to celebrate the establishment and spirit of the new corporation. "The theme expands on our excitement and passion for providing you new opportunities, ideas and ways to help grow your business," the company said. "Expect informative and beneficial breakout sessions, engaging speakers, a comprehensive trade show, exciting entertainment and much more."[578]
January 2, 2013: California Sues Phillips for Environmental Violations at Gas Stations
Bloomberg reported on January 2, 2013 that California Attorney General Kamala Harris and and seven county district attorneys filed a complaint on January 2, 2013 in state court seeking an order to force ConocoPhillips and Phillips 66 to comply with California’s laws for underground gasoline storage tanks as well as unspecified civil penalties for violating the state’s health and safety code. “The state’s hazardous waste laws help protect our residents from contaminated groundwater,” Harris said in a statement. “This lawsuit safeguards public health by ensuring proper maintenance of the tanks that store fuel beneath many California communities.” The People v. Phillips 66, RG13661894, Superior Court of California, Alameda County (Oakland) accuses the two companies of improperly monitoring, inspecting and maintaining underground storage tanks.[579]
Specialty Coke
September 5, 2012: Garland Says Speciality Coke Provides Stable Earnings
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the specialty coke business provides stable earnings and really slightly stronger earnings in the base refining business. "As we think about specialty coke, really two types, anode coke and the needle coke. Anode coke is critical to the production of aluminum. We think the aluminum market grows about 5% to 7% a year. We have about a 7% market share of global demand in this business. So this business provides stable earnings and really slightly stronger earnings in the base refining business. We also make a needle grade coke at two of our refineries. It's the only type of coke that's used to make graphite anodes in the steel recycling industry. This industry is growing about 2% to 4% a year, very high profit for us. This is based upon proprietary PSX technology. So you'll see us grow this business over time.[580]
Specialty Lubricants
June 23, 2014: Phillips to Acquire Lubricant Manufacturer Spectrum Corp
Olivia Pulsinelli reported in the Houston Business Journal on June 23, 2014 that Phillips is acquiring Memphis-based Spectrum Corp. a specialty lubricants company from Dominus Capital LP as it plans to grow its lubricants business. There are approximately 225 employees working at Spectrum today who will become Phillips 66 employees upon closing of the transaction,” a Phillips 66 spokesman told the Houston Business Journal. “The acquisition of Spectrum complements our strong-performing lubricants business by increasing our access to specialized global lubricants markets and is in line with our strategy to selectively grow our marketing and specialties segment,” Tim Taylor, president of Phillips 66, said in a statement. “It also creates new opportunities to expand our worldwide lubricants customer base.”[581]
Technology Development
Proprietary Technology
CPChem's Proprietary Technology
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that CPChem's success is partly based upon their proprietary technology. "We think this ensures low cost. It ensures competitive position via the other peers out there."[582]
Research Center
October 27, 2012: Bartlesville Research Center Dodges a Bullet
Rod Walton reported in the Tulsa World on October 27, 2012 that with Phillips decision not to build a long-planned major research and training center in Colorado, Bartlesville employees are breathing a sigh of relief because many feared that their piece of the company might be headed to the Rocky Mountains. "Any time a major employer in the community makes a sizable investment in another location, it generates concerns," said David Wood, president of Bartlesville Development Corp. "The formal announcement that Phillips 66 will be selling the Louisville property puts this issue to rest." The Bartlesville research center has a long history. Phillips Petroleum Co. had its headquarters in the city from the early 20th century until the merger with Conoco Inc. in 2002. Now it looks like the research center is safe and sound for some years to come. "Without being complacent, indications are that the research center will continue to be a large, high-wage employer in Bartlesville for the foreseeable future," Wood said. "We couldn't be more pleased with that outcome."[583]
October 17, 2012: Phillips Decides Not to Build Research and Training Campus in Louisville, Colorado
Timescall reported on October 17, 2012 that Phillips has decided not to build a a global training center and research and development campus, a facility heralded for its potential to bring thousands of jobs and an economic boom, in Louisville, Colorado and plans to sell the 432-acre property off U.S. 36. "The uses that ConocoPhillips originally envisioned for this site don't really fit into Phillips 66's long-term plans at this time," said Louisville Mayor Bob Muckle. After the split from ConocoPhillips, Phillips 66 acquired the research facility in Bartlesville, Okla., and moved forward on plans to establish an international training center at its new corporate headquarters in Houston. "After careful consideration of the needs of the new company and its employees, Phillips 66 has decided to sell its 432-acre property in Louisville, Colo.," said Phillips 66 officials in the statement. "Phillips 66's predecessor company, ConocoPhillips, purchased the Louisville property in 2008. As a result of the repositioning of ConocoPhillips into two independent energy companies, the Louisville site became an asset of Phillips 66." The campus was to be constructed in three phases: the opening of 1.6 million square feet of office, research, training and hotel space by 2013, another 150,000 square feet by 2018 and the final 750,000 square feet by 2032.[584]
New Technology
December 11, 2013: Phillips to Develop Algae Crude Oil with Sapphire Energy
UPI reported on December 11, 2013 that Phillips is teaming with green crude oil producer Sapphire Energy expand Sapphire's test program in New Mexico to show algae can be converted to crude oil using traditional refining methods. "We believe this joint development project with Sapphire Energy could produce a refinery-ready, sustainable product for Phillips 66, creating yet another exciting opportunity in this rapidly changing energy landscape," Merl Lindstrom, a vice president in charge of technological develops for Phillips. Sapphire said it expects to have a commercial demonstration project up and running by 2015 and be able to produce as much as 23 million barrels of green crude oil per year by 2025.[585]
August 21, 2012: Team Sets New world Record in Power Conversion Efficiency for Polymer-based Organic Photovoltaic (OPV) Cells
Marketwatch reported on August 21, 2012 that Phillips 66, the South China University of Technology (SCUT), and Solarmer Energy, Inc. successfully set a new world record in power conversion efficiency for polymer-based organic photovoltaic (OPV) cells with a 9.31 percent efficiency certified by the Newport Technology & Application Center's Photovoltaic Lab in Long Beach, CA. "The breakthrough in efficiency offers a good opportunity for the commercialization of the organic photovoltaic technology," said Dr. Byron Johnson, manager of Sustainability Technologies at Phillips 66. "This marks an important milestone for the industry and has the potential to deliver truly low cost energy for the world." OPV is lightweight, has a better performance in low light and is easier to manufacture -- making it a potentially cost-effective renewable energy technology on par with current conventional energy technologies.[586]
Technology Transfer
March 21, 2013: Phillips 66 to License E-Gas™ Technology to CB&I
Hydrocarbon Processing reported on March 21, 2013 that Phillips has entered into an agreement with CB&I to provide Phillips E-Gas solids gasification technology, a process that converts coal or petcoke into syngas, which can be used for power generation or further converted to substitute natural gas, hydrogen and downstream methanol-related chemicals production. Financial details were not disclosed. “We look forward to adding the E-Gas Technology to our portfolio, which will mark our entry into the syngas value chain," said Daniel McCarthy, group president of CB&I’s technology operating group. "It also will bring added synergy to our delayed coking technology offering for integrated power generation, and other options to the refining and power industries."[587]
May 21, 2012: Phillips 66 to License E-Gas™ Technology to India's Planned Gasification Plants at Jamnagar
Phillips 66 announced on May 21, 2012 that it will will license its E-Gas™ Technology to Reliance and provide process engineering design and technical support relating to Reliance's Jamnagar site, the largest refining complex in the world, with an aggregate refining capacity of 1.3 million barrels of oil per day. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas that will be used as feedstock for a new chemical complex and will fuel the refinery's existing gas turbine power generation units. “We look forward to this opportunity to work with Reliance on the largest gasification project in the world,” said Rex Bennett, President, Specialties and Business Development at Phillips 66. “Our E-Gas™ Technology will be used to turn petcoke and coal into clean, reliable energy for Reliance’s refinery and petrochemical plant operations.”[588]
Index of Sections
Major Sections of this report include:
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Corporate
- Creation of Phillips 66
- Governance of Phillips 66
- CEO Greg Garland
- Phillips Board of Directors
- Management Effectiveness
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Strategic and Financial
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Stock Market
- The Stock Market and Investor Relations
- Phillips 66's Stock Performance
- Phillips 66's Dividends and Stock Repurchases
- Earnings Conferences
- Investor Conferences
- What Financial Analysts Say About Phillips 66
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Safety, Environment, Legal, Labor
- Safety and Environment
- Litigation and Legal Issues with Phillips
- Operational Excellence
- Labor Relations and Human Resources
- Government Relations
- Media Relations and Public Relations
- Philanthropic and Community Benefits
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Refineries and Marketing Business Segments
- Refineries and Marketing Business Segment
- Phillips 66 Refinery Status
- Increasing Profitability in the Refining and Marketing Business Segment
- Phillips' Divestiture of Non-Core Assets Through Sale, Exchange, or Closure
- Phillips Acquisitions and Purchases
- Marketing and Special Products
- Technology Development
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Detailed Look at Ponca City Refinery
- Ponca City and its Century-Old Oil Legacy and History
- How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?
- Ponca City and the "Merger of Equals" with Phillips in 2001
- Ponca City and the Spinoff of Phillips 66 in 2012
- Latest News from the Refinery in Ponca City
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Other Business Segments
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Other Locations
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Reference
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How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?
The Phillips 66 Refinery located in Ponca City, Oklahoma, has a published crude oil processing capacity of 187,000 barrels per day[592] making it by far the largest refinery in Oklahoma.[593] The refinery processes a mixture of light, medium and heavy crude oil. Most of the crude oil processed is received by pipeline from the Gulf of Mexico, Oklahoma, Texas and Canada. Additional foreign crude is purchased into the Gulf Coast and delivered by pipeline. The Ponca City Refinery is a high-conversion facility that produces a full range of products, including gasoline, diesel fuel, jet fuel, LPG and anode-grade petroleum coke. Its facilities include fluid catalytic cracking, delayed coking and hydrodesulfurization units. Finished petroleum products are shipped by truck, railcar, and company-owned and common-carrier pipelines to markets throughout the Mid-Continent Region.[594]
The Phillips 66 Refinery in Ponca City contributed a net profit of over $500 million in 2011 to Phillips bottom line, making it the most profitable of Phillips 66's fifteen worldwide refineries.
Based on Phillips' second quarter earnings report for 2012 and the realized crack spread of $26.34 for mid-continent refineries (Borger Refinery, Billings Refinery, Marland Refinery in Ponca City, and Wood River in Ravena, Illinois), profits are on target for the Marland Refinery in Ponca City to contribute over $600 million of net profits in 2012 to Phillips bottom line.
Based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line.
Background
How Oil Prices are Set
When an oil producer sells to a refiner, they generally agree to a price set on an exchange such as the New York Mercantile Exchange. After the oil is refined into gasoline, it is sold by the refiner to a distributor, again pegged to the price of wholesale gasoline on an exchange. Finally, gas station owners set their own prices based on how much they paid for their last shipment, how much they will have to pay for their next shipment, and, perhaps most importantly, how much their competitor is charging. Oil companies and refiners have to accept whatever price the market settles on -- it has no relation to their cost of doing business. When oil prices are high, oil companies make a lot of money, but they can't force the price of oil up.[595]
Large refiners like Phillips have the capital resources and ability to use their infrastructure to maximize the difference between the spot prices and final product. For decades the mid-continental oil benchmark, West Texas Intermediate (WTI) was priced at a premium above other benchmarks such as North Sea Brent. At the start of 2010 this began to change radically. Brent became more expensive and the last few months Brent has sold around $15-$25 higher than WTI. Even more, interior continental oil plays like Niobrara (Colorado) and the Bakken (North Dakota) have sold for as low as $40 under Brent. Phillips is able to take advantage of the cheap mid-continent oil available to their refineries in Billings, Borger, Ponca City, and Ravena to buy crude oil cheap and sell the refined products high with record realized crack spreads for the mid-continent refineries of $26.34 per barrel reported by Phillips for the 2nd quarter of 2012.[596]
Benchmarks
There are two benchmarks for oil prices that are very important to determining the profitability of the refinery at Ponca City: Brent and West Texas Intermediate (WTI). Brent Crude is a major trading classification of sweet light crude oil comprising Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation). Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.[597] West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of Chicago Mercantile Exchange's oil futures contracts. The price of WTI is often referenced in news reports on oil prices, alongside the price of Brent crude from the North Sea.[598]
Prior to September 2010, there existed a typical price difference per barrel of between +/-3 USD/bbl compared to WTI and OPEC Basket.[599] Since the autumn of 2010 there has been a significant divergence in price compared to WT with a $10-$15 spread between the two developing that has remained ever since.[600]. Many reasons have been given for this widening divergence ranging from a speculative change away from WTI trading (although not supported by trading volumes), Dollar currency movements, regional demand variations, and even politics. The depletion of the North Sea oil fields is one explanation for the divergence in forward prices.[601] According to James Hamilton writing at Econbrowser, the gap is essentially a geographic difference between the price paid for oil in the central United States and that paid on the U.S. coasts and anywhere else in the world.[602] In February 2011 the divergence reached $16 during a supply glut, record stockpiles, at Cushing, Oklahoma and is currently (August 2011) above $23. Historically the different price spreads are based on physical variations in supply and demand (short term).[603]
Barclays Plc (BARC) cut its 2012 forecast for West Texas Intermediate oil on July 5. WTI will average $96 a barrel this year and Brent will average $113, according to a report published today by analysts Paul Horsnell and Amrita Sen in London. That’s down from $105 for WTI and $120 for Brent that the bank had projected in a report on June 25. So right now the differential is $17 per barrel.[604]
Advantaged Oil
Companies that have pipelines in the Mid-Continent region - which is to say, the Texas Panhandle, Oklahoma, Kansas - are inherently in a position to source cheap crude. And companies that have refining assets on the coasts - the West Coast, the East Coast and the Gulf Coast - are in a much tougher position when it comes to sourcing cheap crude because, generally speaking, they have to buy crude that's imported. And import crudes are at a premium to WTI.[605]
The CEO of Phillips 66 says to process more shale oil "everywhere we can get it." "We want to increase our exposure in both the West Coast and East Coast for some of those advantaged barrels."[606] That includes more rail unloading, rail cars and storage to facilitate, in the medium term, movement of cheaper inland crude to coastal markets until more pipelines are built to alleviate bottlenecks, he said. Phillips 66 is the only refiner that has plants in all U.S.markets.[607] Garland noted several refineries are already well positioned to receive shale oil, such as its 247,000 barrels-per-day (bpd)refinery in Sweeny, Texas, in proximity to the state's prolific Eagle Ford shale play, or Midwest plants.[608]
Last fall Phillips 66 also ran unit trains from the Bakken shale oil play in North Dakota to its 238,000 bpd Bayway refinery in Linden, New Jersey, and has taken trains to West Coast refineries.[609] "You'll see us stepping out and doing some more things around infrastructure," he said. "Like everyone else, we're doing everything we can to get more barrels in front of those facilities."[610] Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shale related crudes.[611]
Mid-Continent Oil
Phillips 66 has 15 refineries globally and 2.2 million barrels a day of capacity. "When we think about our refining business we like to think about it in four segments. One is the Mid-Continent, about 21% of our capacity is there. Margins have been very strong in this area, as you know," says Phillips 66 CEO Greg Garland.[612] "Our largest region is the Gulf Coast, about 33% of our capacity is there.We have large economy of scale here. We have very complex refineries on the Gulf Coast. The Western US and Pacific region is about 20%, includes our interests in the Melaka refinery.The West Coast has typically had high margins historically, but the last couple years has been challenged in part due to the economic slowdown in California."[613]
Phillips 66′s most profitable refineries of the past couple years are in what’s called the Mid-Continent — from Texas north to Montana including the Borger refinery, Ponca City, Wood River and Billings. [614] The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. "Because there was a lot of new oil and not enough pipeline capacity to get it down to the Gulf Coast mega-refineries, the crude got bottled up in the storage tanks at Cushing," writes Helman. "The bottleneck that kept oil from getting out of Cushing also kept its price at a record-wide discount relative to its rival European benchmark Brent crude.[615] At one point last year you could buy a barrel of WTI for $27 less than a barrel of Brent.[616] In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries.[617]
Phillips to Run More Mississippi Lime Shale Crude through the Ponca City Refinery
Reuters reported on Phillips second-quarters earnings report on August 2, 2012 that Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems.[618] Rod Walton reported in the Tulsa World on September 24, 2011 that Mississippi Lime - porous limestone formations in northern Oklahoma and southern Kansas has been yielding reservoirs to horizontal operators such as SandRidge, Chesapeake, Devon and Tulsa-based Eagle Energy LLC during the past two years. The "new" reserves actually lie slightly below formations that were big producers 100 years ago. Phillips Petroleum Co., for instance, made its name in the nearby Burbank Field, on the eastern edge of the play that includes Osage, Pawnee, Kay, Garfield, Woods, Alfalfa and other northern Oklahoma counties. "It's sort of amazing that all of this has been sitting there and waiting for horizontal drilling," says Eagle CEO Steve Antry. "The vertical wells hardly drained any of that." The move now is toward the deposits containing mostly oil and natural gas liquids. [619]
The Mississippi Lime's ratio is often 52 to 55 percent oil, according to reports. "We're into the second tier of this renaissance," says Chip Minty, a spokesman for Oklahoma City-based Devon Energy Corp. "Now what we're doing is taking the same technology beyond the shales to the carbonates, such as limestone." One advantage of the Mississippi Lime is that limestone's porosity and natural fractures can mean less expense on the drilling and hydraulic fracturing parts of the project. Expenses can total half and even a fourth of typical unconventional well efforts. Another advantage is that there is already plenty of seismic data available for the area from past exploration and drilling. "It's a reasonably low-cost play where hydrocarbons have been found before, with a lot of wells drilled in the past," says RAM spokesman Robert Phaneuf. And that gives you good data points."[620]
Methodology for Determining the Profitability of the Ponca City Refinery
The methodology for determining the profitability of the refinery at Ponca City is to begin with a very crude estimate of profitability using figures from Phillips 66 presentations to financial analysts, and then to drill down into these figures and add in additional factors, refining the figures through more detailed scenarios to come up with a better estimate.
Phillips 66 does not break out their profitability by refinery. However they do provide the profitability of the Refining and Marketing Business Segment and they break out the profitability of their domestic refineries and their international refineries. Further Phillips 66 CEO Greg Garalnd has provided guidance as to the what portion of the R&M Business Segment is due to advantaged oil that is TI related and refined in Phillips Mid-Continent refineries at Borger, Ponca City, Wood River, and Billings.
In addition, on August 1, 2012 Philips 66 publicly reported the realized crack spreads during their 2nd quarter 2012 presentation to financial analysts for Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific refineries.
Our methodology will look at the following scenarios:
- Scenario 1: Look at the Total R&M Segment Profitability and divide it equally into Phillips 66's fifteen worldwide refineries
- Scenario 2: Look at the Total R&M Segment Profitability for domestic refineries only and divide it into Phillips 66's eleven domestic refineries by throughput capacity
- Scenario 3: Determine what the profit contribution has been for advantaged West Texas Intermediate-related crude (WTI) and allocate the portion attributable to the Ponca City Refinery based on the refinery's throughput capacity
- Scenario 4: Determine the portion of the R&M Profitability which is not attributable to advantaged TI-related oil and allocate it to each refinery based on throughput capacity. Include a correction factor for the portion of the R&M profitability that is attributable to Marketing.
- Scenario 5: Determine the sum of TI-related net income (Scenario 3) and non-TI-related net income (Scenario 4) for each refinery.
- Scenario 6: Determine the projected profitability of each refinery for 2012 based on Phillips 2nd Quarter Earnings and the Realized Crack Spread for the Mid-Continent refineries
- Scenario 7: Determine the projected profitability of each refinery for 2012 based on Phillips 3rd Quarter Earnings and the Realized Crack Spread for the Mid-Continent refineries
Profitability of the Ponca City Refinery
Scenario 1: Total R&M Earnings Divided by Worldwide Refineries
The very simplest formulation for determining the profitability of of the Ponca City Refinery is to simply look at the overall R&M profits for 2011 ($2,664 Million) and divide it by the fourteen Phillips 66 worldwide refineries giving a profit contribution of $178 million for each refinery.
Scenario 2: Total Domestic R&M Earnings Divided by Domestic Refineries
Phillips 66 breaks out the profitability of the Refining and Marketing Business Segment by international refineries and by domestic refineries, so we will look at only the domestic refineries in the second scenario. Dividing the R&M profits for domestic refineries for 2011 ($2,365 Million) by the eleven Phillips 66 domestic refineries gives a profit contribution of $215 million for each domestic refinery.
Scenario 3: Portion of the Net Earnings Attributable to TI-Related Crude
According to Phillips 66 CEO Greg Garland, each dollar of WTI-Brent differential translates to $90 million in additional net income to Phillips 66. West Texas Intermediate is used in Phillips' mid-Continent refineries.[621]
In 2011 the average differential for WTI crude was $15 which contributed $1,350 million in net income to Phillips. Breaking out the TI-related advantaged oil that is refined in Phillips 66 mid-continent refineries.
| Location | Total Capacity (KBD) | Normalized Capacity (KBD) | % of Total Mid-Continent | Net Income from TI-related Crude ( $ millions) |
|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 35.2% | 475 |
| Roxana, IL | 306 | 153 | 28.2% | 389 |
| Billings, MT | 118 | 118 | 22.2% | 300 |
| Borger, TX | 146 | 73 | 13.7% | 186 |
| Total Mid-Continent | 531 | 100.0% | 1,350 |
- Note that the Wood River refinery is owned by WRB Refining, Phillips 50-50 joint venture with Cenovus Energy Inc. The Borger refinery is operated by Phillips in a 50-50 joint venture with Cenovus Energy Inc. Therefor only half of the throughput of each of these two refineries is will be attributed to Phillips 66 for purposes of calculating the use of TI-related advantaged crude.
The total throughput of the four mid-continent refineries is 531,000 barrels per day. The Ponca City Refinery, with a throughput of 187,000 bpd, accounts for 35.2% of the TI-related advantaged crude.
Incidental Use of Non-TI Related Crude
As a footnote, the Ponca City refinery does not refine WTI crude exclusively. One of the reasons that ConocoPhillips resisted reversing its Seaway Pipeline from Cushing to the Gulf for so long was that ConocoPhillips had said it was in the company's best interests to maintain the status quo to help supply its 198,400 bpd refinery in Ponca City to produce "premium coke" at the Ponca City Refinery. However, this has a negligible effect on the Marland Refinery's overall profitability because the proportion of non-TI related crude supplied to Ponca is a small percentage of the total, the profit margin on specialty products is also high, and other Phillips mid-continent refineries are in a similar situation of refining a small proportion of non-advantaged crudes.[622][623][624][625]
Scenario 4: Portion of the Net Earnings Not Attributable to TI-Related Crude
Subtracting out for earnings attributable to TI-related advantaged crude gives $1,015 million in net income attributable to normal earnings for refining during this part of the business cycle and attributed to each domestic refinery on the basis of throughput capacity.
Phillips 66 does not break out the marketing earnings separately for the Refining and Marketing Business Segment in their reports. However slide 16 from the April 9, 2012 presentation to investors shows that for the years 2009 to 2011 marketing contributed 24% to Phillips 66 total earnings while Refining contributed 40% to Phillips 66 total cumulative earnings earnings for those years. The total adjusted earnings for the Refining and Marketing Business Segment for 2009, 2010, and 2011 was $ 4,057 million. Marketings contribution to the R&M bottom line would be 37.5% which translates to $1,521 million and on the assumption the marketing profitability was relatively stable across the three year period would be $507 million for each of the three years.
This leaves $543 million in normal non TI-related profitability for 2011 to be divided among the 15 domestic and international refineries, so based on throughput the net income for normal refinery operations attributable to the Ponca City Refinery is 10% of Phillips 1,866,000 bpd in domestic production which translates to an additional $ 54 million in net income attributable to the Ponca City Refinery after the adjustment for marketing has been made.
Scenario 5: Total Net Income for Domestic Refineries
The total net income for each Phillips domestic refinery is the sum of the TI-related net income and the non-TI related net income as shown in the following table:
| Location | Capacity (KBD) | Normalized Capacity (KBD) | TI-Related Net Income ($ M)) | non TI-Related Net Income ($ M) | Total Net Net Income ($ M) |
|---|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 475 | 54 | 529 |
| Roxana, IL | 306 | 153 | 389 | 44 | 433 |
| Billings, MT | 118 | 118 | 300 | 34 | 334 |
| Borger, TX | 146 | 73 | 186 | 21 | 207 |
| Belle Chasse, LA | 247 | 247 | 71 | 71 | |
| Old Ocean, TX | 247 | 247 | 71 | 71 | |
| Linden, NJ | 238 | 238 | 69 | 69 | |
| Westlake, LA | 239 | 239 | 69 | 69 | |
| Carson, CA/Wilmington, CA | 139 | 139 | 40 | 40 | |
| Rodeo, CA | 120 | 120 | 34 | 34 | |
| Ferndale, WA | 105 | 105 | 30 | 30 | |
| Total | 1,866 | 1,350 | 543 | 1,893 |
With a a contribution to Phillips 66's net profit of over $500 million, the Phillips 66 Refinery in Ponca City contributes more than one-quarter of the net income to Phillips Refining bottom line and contributes more than the the total of the seven least profitable Phillips refineries combined.
Scenario 6: Estimates for 2012 based on Phillips 2nd Quarter Earnings and Realized Crack Spreads
On August 1, 2012 Phillips reported their adjusted earnings for refining operations were $851 million in their 2nd Quarter Earnings Report for 2012. Phillips has taken out R&M earnings attributable to marketing and specialty products($334 million). Phillips also reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $26.34, $9.36, $7.76, and $7.91 respectively. The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery to allocate the total refinery profit to each refinery.
| Location | Capacity (KBD) | [A] Normalized Capacity (KBD) | [B] Crack Spread ($) | [C] Capacity Utilization (%) | [A]*[B]*[C] | Per Cent Contribution to Total Refining Profits | Annualized Yearly Profit ($ Million) |
|---|---|---|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 26.34 | 95 | 4,995 | 18 | 600 |
| Roxana, IL | 306 | 153 | 26.34 | 95 | 3,829 | 14 | 491 |
| Billings, MT | 118 | 118 | 26.34 | 95 | 2,953 | 11 | 379 |
| Borger, TX | 146 | 73 | 26.34 | 95 | 1,827 | 7 | 234 |
| Belle Chasse, LA | 247 | 247 | 9.36 | 91 | 2,104 | 8 | 270 |
| Old Ocean, TX | 247 | 247 | 9.36 | 91 | 2,104 | 8 | 270 |
| Westlake, LA | 239 | 239 | 9.36 | 91 | 2,036 | 8 | 261 |
| Linden, NJ | 238 | 238 | 7.76 | 95 | 1,755 | 6 | 225 |
| Whitegate, England | 71 | 71 | 7.76 | 95 | 523 | 2 | 67 |
| Humber, Germany | 221 | 221 | 7.76 | 95 | 1,629 | 6 | 209 |
| Carson/Wilmington, CA | 139 | 139 | 7.91 | 89 | 979 | 4 | 126 |
| Rodeo, CA | 120 | 120 | 7.91 | 89 | 845 | 3 | 108 |
| Melaka, Malaysia | 76 | 76 | 7.91 | 89 | 535 | 2 | 69 |
| Ferndale, WA | 105 | 105 | 7.91 | 89 | 739 | 3 | 95 |
| Total | 2,245 | 28,730 | 100 | 3,404 |
Using this method for 2012, the Marland Refinery in Ponca City will make a contribution to Phillips 66's net profit of $600 million, by far the largest of any of Phillips' refineries.
Scenario 7: Estimates for 2012 based on Phillips 3rd Quarter Earnings and Realized Crack Spreads
On October 31, 2012 Phillips reported their adjusted earnings for refining operations were $1,580 million in their 3rd Quarter Earnings Report for 2012. Phillips also reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $31.83, $11.42, $13.02, and $13.30 respectively. The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery to allocate the total refinery profit to each refinery.
| Location | Capacity (KBD) | [A] Normalized Capacity (KBD) | [B] Crack Spread ($) | [C] Capacity Utilization (%) | [A]*[B]*[C] | Per Cent Contribution to Total Refining Profits | Extrapolated Yearly Profit ($ Millions) |
|---|---|---|---|---|---|---|---|
| Ponca City, OK | 187 | 187 | 31.83 | 102 | 6,071 | 16 | 1,032 |
| Roxana, IL | 306 | 153 | 31.83 | 102 | 4,967 | 13 | 844 |
| Billings, MT | 118 | 118 | 31.83 | 102 | 3,831 | 10 | 651 |
| Borger, TX | 146 | 73 | 31.83 | 102 | 2,370 | 6 | 403 |
| Belle Chasse, LA | 247 | 247 | 11.42 | 88 | 2,482 | 7 | 422 |
| Old Ocean, TX | 247 | 247 | 11.42 | 88 | 2,482 | 7 | 422 |
| Westlake, LA | 239 | 239 | 11.42 | 88 | 2,402 | 6 | 408 |
| Linden, NJ | 238 | 238 | 13.02 | 100 | 3,099 | 8 | 527 |
| Whitegate, England | 71 | 71 | 13.02 | 100 | 924 | 2 | 157 |
| Humber, Germany | 221 | 221 | 13.02 | 100 | 2,877 | 8 | 489 |
| Carson/Wilmington, CA | 139 | 139 | 13.30 | 97 | 1,793 | 5 | 305 |
| Rodeo, CA | 120 | 120 | 13.30 | 97 | 1,548 | 4 | 263 |
| Melaka, Malaysia | 76 | 76 | 13.30 | 97 | 980 | 3 | 167 |
| Ferndale, WA | 105 | 105 | 13.30 | 97 | 1,355 | 4 | 230 |
| Total | 2,245 | 28,730 | 100 | 6,320 |
Using this method for 2012, the Marland Refinery in Ponca City will make a contribution to Phillips 66's net profit of $1,032 million, by far the largest of any of Phillips' refineries.
Variations in the Realized Crack Spread Among Phillips' Four Mid-Continent Refineries
One of the factors not accounted for in the methodology used to calculate the earnings attributable to the Marland Refinery in Ponca City is that Phillips 66 does not break out the crack spreads by refinery but only provides the composite realized crack spread for the mid-continent refineries which include the Billings Refinery, Borger Refinery, Marland Refinery in Ponca City, and Wood River Refinery in Roxana, Illinois.
On September 7, 2012 Brent was selling at $112.85 and WTI at $91.40 for a Brent-WTI differential of $21.45. North Dakota Sweet was selling at $74.50 for a Brent-North Dakota Sweet differential of $38.40. The Borger Refinery primarily runs WTI while the Billings and Wood River Refineries run Canadian and Bakken crude respectively. Except for some specialty products, the Marland Refinery in Ponca City runs primarily WTI but has been increasing the amount of Mississipi Lime Shale crude that it has been buying from oil producers in Northern Oklahoma and Southern Kansas like Red Fork Energy who recently signed a contract with Phillips to provide Mississippi crude to Ponca City. Phillips 66 hasnot disclosed the amount of Mississipi Shale crude provided to the Marland Refinery in Ponca City nor the price that Phillips has negotiated for the shale crude. The contribution to the realized crack spread from the Brent differential will be somewhere between the Brent-WTI differential of $21.45 and the Brent-North Dakota Sweet differential of $38.40 depending on the quantity of Mississipian run through the Marland Refinery in Ponca City and the price that has been negotiated for the Mississippi Lime Shale crude.[628]
Phillips to Run 60,000 bbl of Shale Crude Through Ponca City
Phillips reported during their second-quarters earnings report on August 1, 2012 that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day and has a plan to get advantaged crude into most of Phillips' refineries. "We are trying to get those crudes to every refinery we can," said Phillips CEO Greg Garland. "Ponca about 60,000 barrels a day."[629]
The Oil and Gas Journal reported on August 8, 2012 that the Pony Express Pipeline company has received sufficient binding shipper commitments to move forward with its Pony Express Oil Project that will deliver crude oil from receipt points near Guernsey, Wyo., to the Phillips 66 Ponca City Refinery as well as to Cushing, Okla. The 220,000 b/d pipeline will enter service third-quarter 2014. Once the Pony Express Pipeline is in operation, this will make interior continental oil plays like Niobrara in Colorado available to the refinery in Ponca City which have sold for as low as $40 under Brent.[630][631]
Phillips did not disclose how much shale oil is presently being refined at the Marland Refinery in Ponca City at the 2nd Quarter Earnings Report on August 1, 2012 nor what the realized crack spread is for the refinery in Ponca City. But every barrel of shale crude that runs through the Marland Refinery in Ponca City replaces a barrel of TI-related crude and adds an additional $17 of Brent differential so once Phillips gets up to their full 60,000 bbl target this will add another $372 million in profit for Phillips. Until Phillips breaks out the realized crack spread for each refinery, the additional profit will be reflected in an increased crack spread for the mid-continent refineries.
How Much Does Phillips 66 Contribute to Ponca City?
- For more detailed information see Phillips 66's Contributions to Ponca City
Phillips 66's Marland Refinery in Ponca City provides benefits to the local community in wages to local employees, property taxes paid to the community, and direct philanthropic contributions to the community. We will evaluate three categories:
- Wages Paid to Local Employees
- Property Taxes Paid the Community
- Direct Philanthropic Contributions to the Community
Wages Paid to Ponca City Residents
The Ponca City News reported on October 14, 2012 that Refinery Manager Pete Stynes spoke to the Ponca City Lions Club on October 10, 2012 about Phillips 66's Refinery in Ponca City and said that 800 employees work at the refinery with the direct employment of 625 Phillips employees.[632]
FuelFix reported on January 12, 2012 that according to the United Steelworkers International representing 30,000 refinery and chemical workers at 168 production, refining, marketing, transportation, pipeline and petrochemical facilities nationwide the average wage of US refinery and chemical workers is $33.85 an hour.[633] We estimate that of the 800 workers at the Marland Refinery, 100 of them are in engineering or managerial positions earning an average yearly salary of $110,000. We estimate that the cost of additional employee benefits including social security payments, unemployment benefits, pension benefits, vacation days, sick days, holidays, and medical benefits adds an additional 60% to direct wages paid. This cost is known as the burden rate.[634]
| Marland Refinery in Ponca City | Hourly Employees | Salaried Employees |
|---|---|---|
| Hourly Wage | $ 33.85 | |
| Yearly Salary | $ 70,408.00 | $110,000.00 |
| Number of Employees | 700 | 100 |
| Wages | $49,285,600.00 | $11,000,000.00 |
| Payroll Taxes (10%) | $4,928,560.00 | $1,100,000.00 |
| Wages and Payroll Taxes | $54,214,160.00 | $12,100,000.00 |
| Total Wages and Payroll Taxes for Hourly and Salaried Employees | $66,314,160.00 |
Under these assumptions the total wages and payroll taxes paid to the 800 employees at the Marland Refinery in Ponca City including both hourly employees and salaried employees is $66,314,160.00 (54,214,160.00 + 12,100,000.00).
Comparison with Borger Refinery
By way of comparison with the Phillips Refinery in Borger, Texas, the Borger News Herald reported on July 11, 2012 that refinery manager Chris Coon spoke to the Borger Rotary Club on July 10, 2012 about employment and payroll at the Borger Refinery. Coon told members that Phillips pays with an annual payroll of $65 million to 920 full time employees (including 200 routine contractor) at the Borger refinery. Phillips also pays $6 million in payroll taxes and about $12 million in property taxes.[635] The Borger Refinery is comparable in capacity with the Marland Refinery in Ponca City having a throughput capacity of 146,000 barrels per day compared with Marland's throughput capacity of 187,000 bpd.
| Borger Refinery | All Employees |
|---|---|
| Hourly Wage | $ 34.00 |
| Average Yearly Salary | $ 70,652.00 |
| Number of Employees and Routine Subcontractors | 920 |
| Wages | $65,000,000.00 |
| Payroll Taxes (10%) | $6,000,000.00 |
| Wages and Payroll Taxes | $71,000,000.00 |
The figures provided by the refinery manager at Borger are consistent with the calculations made for employees at the Marland Refinery in Ponca City. Using the same average yearly salary of employees at Borger Refinery, the annual wages plus payroll taxes for the Marland Refinery at Ponca City is $61,739,000.00.
Phillips 66 Property Tax Paid to Kay County
According to property tax records of the Kay County Assesor's Office Phillips 66 has two different types of property that pay tax in Kay County: the refinery itself and real estate around Ponca City including office buildings, warehouses, and residential properties.
Tax Assessment of the Refinery
The Phillips Refinery is assessed under According to Tax Record 30,446.
| Amount | |
|---|---|
| Total Market Value | $ 542,889,080 |
| Total Assessed Value (14%) | $ 76,004,471 |
| Total Exemption | $ 4,255,329 |
| Net Assessed | $ 71,749,142 |
| Tax Paid | $ 6,771,684 |
The total annual tax paid by Phillips 66 for the refinery is $ 6,771,684.
Tax Assessment for Real Estate
On May 21, 2012, ConocoPhillips transferred real estate in Kay County to Phillips 66 for a value of $69,223,000.00. Real property in the Ponca City School District is taxed at a rate of .00948 for an annual tax of $656,234 on this real estate.
Phillips 66 Charitable Contributions to Ponca City
The Ponca City News reported on October 21, 2012 that Phillips 66 provides financial and in-kind support to community organizations through corporate and employee based programs. "Our philanthropic contributions in Ponca City and the surrounding area are significant. In 2011, direct contributions to non-profit agencies, matching United Way contributions, and contributions based on employee and retiree hours or monetary contributions were in excess of $1.1 million dollars. When employee and retiree contributions are added to the company contributions, the total is over $1.7 million dollars."[636]
News, Issues, and Status at Other Refineries
This section has moved to:
Chemical Business Segment within Phillips 66
There are two other operating segments in the new company: Chemicals and Midstream. “You never really heard us talk about chemicals; you never heard us talk about midstream, and both of those businesses trade at higher multiples than the refining business," says Garland. Phillips 66 will own half of the ChevronPhillips Chemical Company, a JV with Chevron. “Midstream and chemicals is what differentiates us."[638]
Garland said during his analyst call on April 9, 2012 that the Chemicals segment is primarily conducted through our 50/50 JV with Chevron. CPChem is one of the largest producers of olefins and poly olefins and has spent the last 10 years building one of the best positions in the Middle East, and CPChem has significant assets in the US which are advantaged given the NGLs from the North American shale plays.[639][640][641]
"As we've said, our Chemicals operations are conducted through our CPChem joint venture with Chevron. Our Chemicals businesses delivered superior returns. We think it's an exceptional growth platform. CPChem produces petrochemicals in over 70,000 different commercial and industrial products, holds global market positions in several key products, such as olefins, poly olefins, aromatics and other specialties. It has a large global footprint and we're rapidly expanding outside of the US. We think part of CPChem's success and its foundation is based upon -- is proprietary technology.We believe this ensures lower cost for us, it enhances our competitiveness.These are markets, these are technologies that we understand thoroughly. As you know, advantage feed stocks is critical to profitability and sustained returns in this business. CPChem has a substantial footprint in the Middle East. CPChem also has a large asset base in the US. It's primarily based upon ethane. It's allowing CPChem to recover attractive margins today.We believe after the Middle East, the US-based ethane based ethylene margins are going to be significantly advantaged versus margins in Asia and Europe, which are primarily based on naphtha. CPChem's done a good job over the last few years in terms of their portfolio management. They've been very disciplined on their costs.They have been shifting investments into higher returning opportunities, and the have moved from really last in their peer group to number one in their peer group on economic return."[642][643][644]
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is the only downstream independent company to have a significant ownership in a petrochemicals business. "We conduct our chemicals operation primarily through Chevron Phillips Chemical Company, 50/50 JV with Chevron. This joint venture is 12 years old. It stood the test of time. We have a great relationship with Chevron. We like the management team. We think they're a very talented group of individuals. We think there's good value between Phillips and Chevron as we manage the joint venture. We're completely aligned in terms of the growth profile, significant organic investment opportunity and growth in CPChem over the last ten years and certainly in the next ten years that we see."[645]
Chevron Phillips Chemical
Chevron Phillips Chemical, a joint venture with Chevron that will be part of Phillips 66, is benefiting from low prices for the natural gas it uses as feedstock to make products such as ethylene and polyethylene plastic. The company has made it clear that Chevron Phillips Chemical is a top priority. It has announced plans to invest in a new $5 billion ethylene cracker at Cedar Bayou.[646]
Phillips 66's Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Now in its 12th year of operations, CPChem is one of the world's top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. The rapid development of natural gas and NGL from shale formations in the United States is driving major growth opportunities for CPChem. At its Cedar Bayou Chemical Complex in Baytown, Texas, CPChem is building the world's largest on-purpose 1-hexene plant capable of producing up to 250,000 metric tons (551,000,000 lbs.) per year. Construction of the 1-hexene plant is expected to begin in the first half of 2012, and the project is anticipated to start up during 2014. CPChem also aims to construct a world-scale ethane cracker at its Cedar Bayou facility in Baytown, Texas, and two polyethylene facilities near its Sweeny facility in Old Ocean, Texas, with anticipated startup in 2017, pending final investment decisions. "Phillips 66 starts out with a clear advantage over many other downstream companies," said Garland. "We have a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce, and a continued commitment to safety and operating excellence. We have an unparalleled foundation for success."[647]
Latest News and Views on the Chemical Business Segment
December 5, 2015: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay
Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.[648]
December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville
The Tulsa World reported on December 19, 2014 that Chevron Phillips Chemical Co. LP plans to build a polyethylene pilot plant at its research and technology facility in Bartlesville that should be completed in 2017. The new facility will replace the current site, which has been focused on “developing improvements in current resins or new polymer kind of innovations” since the 1970s. “As a global producer of polyethylene, we strive to support our customers with the latest technological advances and process improvements through the efforts of our research and development personnel,” said Don Lycette, vice president of research and technology for Chevron Phillips Chemical, in a written statement. “Chevron Phillips Chemical continues to build on a long history of scientific discoveries, particularly at our facility in Bartlesville, which was originally built in 1950 by Phillips Petroleum Co.” The new pilot plant will incorporate Chevron Phillips Chemical’s proprietary MarTech process for polyethylene production and technology that enables production of bimodal polyethylene resins for advanced applications.[649]
Philips CEO Greg Garland previously made mention of the expansion at the Research Center when he spoke to the Bartlesville Chamber of Commerce in August 2014.[650]
December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex
Businesswire reported on December 11, 2014 that CP chemical announced completion of an ethylene expansion at its Sweeny complex that was started in 2013. With the addition of a tenth furnace to ethylene unit 33 at the Sweeny complex, the expansion is expected to increase annual production by 200 million pounds giving the Sweeny facility the capability of producing roughly 12 million pounds of ethylene per day, or 4.3 billion pounds annually. This represents the next increment of expansion to our ethylene business. We’re building toward the startup of the U.S. Gulf Coast Petrochemicals Project in 2017 and supporting incremental growth of our olefins derivative businesses,” said Dave Smith, olefins & natural gas liquids vice president for Chevron Phillips Chemical.[651]
December 5, 2014: Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment
Phillips 66 announced on December 5, 2014 that in Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in projects aimed at capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2015 capital expenditures is expected to be $1.4 billion. Funding supports advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The expected start-up for these facilities is mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem’s normal alpha olefins production capacity at Cedar Bayou continues, with estimated completion in mid-2015.[652]
October 29, 2014: Chevron Phillips Considers New Ethylene Cracker
Argus reported on October 29, 2014 that Chevron Phillips continues to consider new US construction projects, including whether to build a new ethylene cracker, but those discussions are still early in the process and no decisions have been made. "We still think the US Gulf coast is still the best place to invest, and we wouldn't hesitate to go forward with a second cracker. But the challenge is where do you put it and what are you going to feed it," said chief executive Greg Garland.[653]
October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014
Argus reported on October 29, 2014 that Chevron Phillips Chemical's Port Arthur, Texas olefins unit will restart by the end of the year, Phillips 66 executives stated on the company's earnings call today. The Port Arthur plant can produce up to 807,000 t/yr of ethylene.[654]
October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem earnings were strong despit downtime at Port Arthur. " In our Chemicals business, despite downtime at the CPChem Port Arthur facility, earnings were strong, also reflecting favorable market conditions."
"In Chemicals, CPChem's global Olefins and Polyolefins capacity utilization rate for the quarter was 83%. This reflects downtime at the Port Arthur facility, resulting from the fire the impacted their ethylene furnaces early in the third quarter," added Garland. "In Olefins and Polyolefins, the decrease of $51 million is largely due to the CPChem's Port Arthur ethylene cracker being down. Although Port Arthur represents approximately 11% of CPChem's total O&P production capacity, the impacts from it being off-line were lessened as CPChem was ableto pull down inventory."[655]
October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips expects the Port Arthur Olefins Units to restart in November. "The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[656]
October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire
Tim Taylor told analysts during the third quarter earnings conference call on October 29, 2014 that Port Arthur probably had a five month outage because of the fire. " I think when we look at it, I like to think about it that we've probably got about a five-month outage when we think about Port Arthur. So that's roughly in the range of say 750 million, 800 million pounds of lost production, and then you can put the margin on that."[657]
October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the fire at Port Arthur will not prevent the Hexene Facility from being able to sell full volumes. "I don't think that Port Arthur is going to impact the run rate on hexene-1. As it ramps up into 2015, Port Arthur is going to be back up and running. And so I don't think Port Arthur is going to enter into the equation in terms of the run rate. In terms of fully ramping the facility, I don't know, Tim,it will probably ramp over 2015 and 2016 would be my guess."[658]
October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou. "In Chemicals, CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou, which began operations in the second quarter. The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[659]
September 4, 2014: Chevron Phillips to Sell Performance Polymers Business for $220 Million
Bloomberg reported on September 4, 2014 that Chevron Phillips has agreed to sell Ryton polyphenylene sulphide plants, a performance polymers business, to Belgian chemical maker Solvay for $220 million to expand its offering of lightweight plastics for replacing heavier metal parts in cars. “Ryton PPS fits neatly with our unique specialty polymers portfolio and reinforces our unrivalled capabilities to provide solutions to our customers in dynamic innovative end-markets,” said Augusto Di Donfrancesco, president of Solvay Specialty Polymers. Solvay will gain Ryton PPS sites in Texas and Oklahoma, and a plant in Belgium. Solvay plans to invest in a PPS production technology developed by Chevron Phillips that hasn’t “achieved its full potential,” the company said. Completion of the deal is expected in the fourth quarter.[660]
August 7, 2014: Chevron Phillips to Raise Prices in September
Platts reported on August 7, 2014 that Chevron Phillips Chemical joined the growing list of US polyethylene producers planning to raise resin prices in September raising prices for all grades of polyethylene by 3 cents/lb effective September 1. Sources have described the US polyethylene market as tight, pointing in part to a number of feedstock and production-related issues. Feedstock prices have also moved higher, with ethylene contract prices for July fully settled at a 1.75 cents/lb increase, sources said this week.[661]
July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire
The Houston Chronicle reported on July 30, 2014 that during the second quarter conference call, company officials at Phillips said that the Chevron Phillips Chemical plant in Port Arthur remains closed after a fire injured several workers on July 7 and that it's too early to know when it might reopen.[662]
July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur
Plastics News reported on July 15, 2014 that Chevron Phillips has declared force majeure production limits on that material after the fire at the Chemical Plant at Port arthur. Phillips Chevron officials said that reviews are underway to determine when the unaffected areas of the plant can be restarted, and that no timetable has been set for restart of the area affected by the incident. The Port Arthur plant has almost 1.8 billion pounds of annual ethylene capacity and 1.1 billion pounds of annual propylene capacity. [663]
July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant
Plastics News reported on July 15, 2014 that two workers were injured in a fire in a ethylene/propylene unit at the at a Chevron Phillips Chemical Plant in Port Arthur. No cause for the fire was given in a July 9 statement from Chevron Phillips. The statement added that the injured workers remained hospitalized.[664]
Mary Meaux reported at The Port Arthur News on July 8, 2014 that an investigation into the cause of the fire at Chevron Phillips Chemical Company that injured two workers is underway less than 24 hours after the incident. “A team of experts from other Chevron Phillips Chemical facilities has been assembled and has begun the investigation to determine the root cause of the incident,” according to a press release from David Hastings, public affairs manager at Chevron Phillips. The localized fire occurred at the Port Arthur facility at about 8 pm on July 7. The chemical company’s fire response team handled the fire while Port Arthur Fire Department remained on standby with equipment and manpower should it be needed, said Port Arthur Police Maj. John Owens. “The fire chief (Larry Richard) and I went in and were part of their emergency operations center to assist them in decision making and operations should they need outside assistance and to ensure the public and community that we had someone inside the EOC to look at it from the community’s side,” Owens said.[665]
Independent air monitoring throughout the night to ensure the community was safe. “The continuous monitoring picked up zero readings,” said Owens. “We do this any time there is an incident. It is protocol for the fire department’s hazardous response team to perform independent monitoring.”[666]
April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility
Ryan Holeywell reported in FuelFix on April 2, 2014 that Chevron Phillips Chemical broke ground on a a massive new ethane cracker, the first component of a $6 billion expansion and the first new major facility of its type built in the U.S. in a decade. The ethane cracker is a massive piece of equipment with a footprint the size of nearly 50 football fields used to transform ethane, a component of natural gas, into ethylene, a component used to make plastics. "This is a big deal for us — $6 billion is a big project for a company with $10 billion in assets,” said CEO Peter Cella. The investment, which officials say will contribute to the creation of about 400 jobs. Cella said Chevron Phillips is still “a few years away” from developing contracts with customers for the ethylene it will produce, and polyethylene contracts tend to be developed on a year-to-year basis. He expected most of the ethylene produced by the cracker to be used domestically, including by the company itself.[667] “It’s a huge investment for a company like this,” Cella said, all of which is “catalyzed” by the shale boom that is producing lots of ethane that serve as the “competitive feedstock” for the chemical plants. “We see the supply of ethane being pretty substantial going forward,” Cella said in an interview before the Baytown groundbreaking. “It’s important to point out there’s a surge of investments being contemplated or already in progress like ours in the chemical industry."[668]
The other component of the endeavor, in nearby Old Ocean, consists of two polyethylene units, which convert ethylene into polyethylene pellets that can be sold, melted and formed into a variety of industrial and household plastics. The entire project is slated to come online in 2017. The two polyethylene units will develop two different products: a biomodal resin he described as durable but soft, and a metallocene resin that is clear and can receive printing and is commonly used for packaging in retail stores.[669]
December 6, 2013: Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment
Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.[670]
October 30, 2013: Garland Says CPChem has Necessary Approvals to begin Construction of Ethane Cracker and Two Polyethylene Facilities
Garland told analysts at the third quarter earnings conference on October 30, 2013 that CPChem announced its world-scale Gulf Coast ethane cracker and two new polyethylene facilities earlier this month. "CPChem now has the necessary approvals to begin construction," said Garland. "In addition to the petrochemicals projects CPChem is also completing one hexane unit which is expected to be operational in the first half of 2014 as well at the Sweeny ethylene expansion in 2014. All in CPChem at a 100% basis is expected to spend between $6 million and $8 billion on self-funded capital between now and 2017. They expect to add about $1.5 billion of EBITDA in 2017 once all these growth projects are online."[671]
July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds
Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that outages at the Sweeny facility during both the first quarter and the second quarter of 2013 resulted in loss production of approximately 540 million pounds. "The decrease in earnings was primarily in olefins and polyolefins driven by unplanned power outages at CPChem’s Sweeny Complex as well as an extended 91 day turnaround at its Port Arthur facility. In May of this year, CPChem was required to declare force majeure on ethylene and certain derivatives, following these outages," said Garland. "These outages as well as the downtime at Port Arthur resulted in higher manufacturing costs and decreased production sales volumes for ethylene, polyethylene, and normal alpha olefins in the second quarter of 2013. While industry ethylene margins remained strong, CPChem realized lower margins because of these unplanned events."[672]
July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility
Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that Phillips chemicals joint venture CPChem completed the NGL fractionator expansion project at the Sweeny facility during the second quarter. The project increased capacity by nearly 20%.[673]
July 02, 2013: Phillips to Reduce Polypropylene Deliveries Because of Insufficient Feedstock Supply
Platts reported on July 20, 2013 that Phillips has written a letter to customers announcing that it will be reducing deliveries of polymer-grade propylene because of issues with feedstock supply. "While we are currently producing at full rates with our integrated monomer, this disruption of feedstock supply has forced us to restrict present deliveries," said Phillips 66 the letter to customers. Phillips 66 said it was exploring other sources of feedstock, but that given the circumstances it was "compelled to reduce deliveries of product at this time and apportion the material we have available to our customers in a fair and reasonable manner so that we can build inventory to carry us through the turnaround."[674]
Phillips had planned to use feedstock PGP from Williams Partners, but was left scrambling after Williams suffered an explosion and fire at its Geismar, Louisiana, olefins plant that resulted in two deaths and the disruption of production for an indefinite time frame. Last week, Garyville, Louisiana-based Pinnacle Polymers issued a force majeure declaration on polypropylene, citing feedstock supply issues that market sources said also resulted from the Williams disruption. "It's getting tough to find material," said a source with a distributor.[675]
June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex
The Oil and Gas Journal reported on June 3, 2013 that Chevron Phillips Chemical Co. LP will add a furnace at its Sweeny petrochemical complex that will expand ethylene production by 200 million lb/year. Construction of the furnace will begin within three months and the start-up is expected in 2014. The new furnace will not add to nameplate capacity of the facility, the company said, explaining, “the increased operating factor should result in net increase of 200 million lb of ethylene availability to provide additional operation flexibility and reliability.”[676]
April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital
The Port Arthur News reported on April 27, 2013 that an early morning fire at Chevron Phillips Chemical Company in Port Arthur sent eight contract workers to two hospitals on April 27, 2013. Company officials confirmed that a localized fire occurred at its Port Arthur facility at approximately 4 a.m. during a turnaround period, which resulted in several contractor employees being transported to the local hospital. The fire was quickly extinguished, and there was no impact to the community, according to a press release from Melanie Samuelson with Chevron Phillips corporate communication. “The safety of our employees is our highest priority,” Margie Conway, plant manager at the Port Arthur facility, said in a press release. “We regret very much that this incident has occurred, and are thankful that most of the contractor employees were treated and released from the hospital.”[677]
January 30, 2013: Garland Says Phillips ROCE on Chemical Business Segment Was 31% for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that 2012 return on capital employed from Phillips Chemicals segment increased to 31%, up form 28% last year and Phillips ended the quarter with $3.6 billion in capital employed. "Overall, CPChem achieved a 90% capacity utilization rate and its O&P segment in the fourth quarter," said Garland. "This was down somewhat from the third quarter due to unplanned downtime at the Saudi Polymers petrochemical facility. If we exclude this downtime in SPCo, CPChem’s utilization rate was near capacity for the quarter."[678]
December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Chemical Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.[679]
November 11, 2012: Chevron Phillips Chemical Says the Company is Expanding
Fuel Fix reported on November 11, 2012 that Chevron Phllips Chemical, with about 4,700 employees worldwide, is adding new facilities and employees and expects the number of employees to continue growing over time through projects in North America.. “I am confident we can stack up with just about anybody by delivering new products, our marketing capabilities, and our strategy,” said Dan Coombs, the company’s senior vice president of specialties, aromatics and styrenics.[680]
September 5, 2012: The Chemicals Business is Pursuing Advantaged Feedstock
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the chemicals business is pursuing advantaged feedstock. "We think the shale plays in the US present a new opportunity for advantaged feedstocks here in the US. Most of our US capacity is ethane based. That's a big advantage that we see going forward."[681]
September 5, 2012: Chemicals is Increasing Capacity
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."[682]
September 2, 2012: Low Natural Gas Prices Are a Plus for Phillips' Chemical Business Segment
Emily Pickrell wrote in Fuel Fix on September 2, 2012 that Phillips 66's Midstream Business Segment took a hit in the second quarter along with many companies in the natural gas sector as natural gas prices are at decade lows, reducing the company's second-quarter net profit from $55 million in 2011 to $35 million in 2012 but Phillips 66 uses some of DCP’s natural gas liquids as feedstock for its chemical plants. “For Phillips 66, the low prices are a plus, not a negative. It almost mitigates the negative impacts of NGL prices,” says Fadel Gheit, an analyst with Oppenheimer & Co. “They are one of the largest chemical producers in the country.”[683]
August 10, 2012: Chevron Phillips CEO Pete Cella Says Company Gets More Attention from Phillips 66
The Houston Business Journal reported on August 10, 2012 in a profile of Chevron Phillips CEO Pete Cella that with the ConocoPhillips split of its upstream and downstream business in May, Chevron Phillips makes up a more prominent part of the Phillips 66 business, which is good because the company gets more attention, said Cella. Cella also said that Chevron Phillips is more than a chemical company, it is a manufacturing company. “There is a newfound optimism in manufacturing that goes beyond chemicals,” said Cella, adding that with the recent chemical industry resurgence, there are more opportunities for U.S. companies to manufacture plastic products and chemical-related products that can boost the overall economy.[684]
June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest
Emily Pickrell wrote in San Antonio Express on June 13, 2012 that Phillips 66 executives gathered for a ceremonial groundbreaking on June 12, 2012 at Chevron Phillips Chemical's Cedar Bayou complex that will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. “The facility that we are groundbreaking is an outcome of this new natural gas resource base,” said Pete Cella, CEO of Chevron Phillips Chemical. “Five years ago, the expectation was that the U.S. would become a net importer of ethylene. Now we are expecting that we will not only meet U.S. demand domestically, but will become a major exporter.” The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.[685]
Chevron Phillips Chemical also plans to build a new ethane cracker at Cedar Bayou; two new polyethylene units at a site near its Sweeny plant in Old Ocean; and an expansion of its fractionator that separates the individual components out of natural gas liquids at the Sweeny facility.[686]
June 12, 2012: In Three Years, Phillips 66 may invest in a Second New Chemical Plant in the U.S. Gulf Region
Fox Business reported on June 12, 2012 that reg Garland told the Financial Times that Phillips 66 may invest in a second new chemical plant in the U.S. Gulf region to take advantage of the cheap feedstock in North America that was released by the shale revolution, a decision that could be made in three years' time. "After the Middle East, the U.S. is the next best place to make petrochemicals, because of the advanced feedstock, and we see that continuing for some time," said Garland.[687] Garland said US chemicals manufacturers could buy ethane at about $5 per million British thermal units of energy content, compared to about $18 per mBTU for crude oil and that the US petrochemicals industry, stands at the dawn of a long-term upturn, and Phillips 66 stands to benefit through Chevron Phillips Chemical, its 50/50 joint venture with Chevron. The cheap feedstock persuaded CP Chem to announce last year that it would build a new “cracker” in Baytown, Texas, to convert ethane into ethylene. The Baytown cracker, expected to come into operation in 2017, will employ 10,000 people while under construction, and about 400 when it is running. [688]
June 4, 2012: Chevron Phillips Chemical Looking into Developing Iraq Plant
Olivia Pulsinelli reported in the Houston Business Journal on June 4, 2012 that Chevron Phillips signed a letter of intent with Iraq to examine the feasibility of building a new plant and upgrading an existing petrochemicals facility owned by Iraq. "Data from BP Plc (NYSE: BP) shows Iraq has the fifth-largest crude reserves in the world and the fifth-largest natural gas deposits in the Middle East, Bloomberg reports. While the Iraq wants to diversify into chemicals productions and other industries, the country currently lacks infrastructure to use natural gas as a fuel for electricity plants or feedstock for petrochemicals."[689]
May 17, 2012: Phillips 66 Exec says Glut of Natural Gas will last 4 to 5 Years
Peter Cella, Chief Executive of Chevron Phillips Chemical, a joint venture between Phillips 66 and Chevron, said on May 17, 2012 that the oversupply of natural gas liquids (NGLs)that feed its US plants is likely to last for another four or five years. "The supply source has gotten ahead of the demand need. I think we're doing our share to elevate the capacity to consume," Cella told the Reuters Global Energy & Environment Summit in Houston. "You can drill a well in a month or two, and it takes us five years to build a new cracker, so you've got this mismatch in timelines." Chevron Phillips Chemical, which was formed in 2000 and employs about 4,700 people, is the world's fourth-largest producer of high density polyethylene, used to make everything from food containers to plastic furniture. Cella expects that three or four new crackers will be needed over the next ten years to meet US plastic demand, especially packaging but also a variety of products like lipstick and trash bags, since demand grows with the economy. Chevron Phillips Chemical is spending $5 billion on new ethylene facilities in Texas.[690]
May 10, 2012: Simon Moore says Chemical is doing well Because it has Access to Cheap US Natural Gas
Simon Moore wrote at Seeking Alpha on May 10, 2012 that the Chemical Business Segment is doing well because it has access to extremely cheap US natural gas, which it uses in the manufacturing process and because the margins on certain chemicals, such as ethylene, are much higher when they are manufactured from NGLs versus naphtha (oil derived). "Ethane derived ethylene has a cash margin of more than $600/ton currently. Naptha derived (oil derived) ethylene has a cash margin of only $100-$200 per ton," writes Moore. "PSX has a great supply of cheap NGLs (ethane among them) in the US."[691]
Andrew Bary wrote in the WSJ on May 12, 2012 that the Chemical Business Segment is so profitable, earning $1.4 billion in 2011, because 80% of its capacity is in the US, where low gas prices hold down input costs. "Phillips' petrochemical business will benefit in a disproportionate way from the growth in the production of natural-gas and natural-gas liquids," says ISI Group analyst Doug Terreson.[692]
May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex
The Oil and Gas Journal reported on May 2, 2013 that Chevron Phillips Chemical Co. LP has selected a site near its Sweeny petrochemical complex for two new polyethylene plants with capacities of 1.1 billion lb/year each. Jacobs Engineering Group will design the polyethylene plants which are part of a major Gulf Coast Expansion.[693]
April 9, 2012: According to ConocoPhillips CPChem has a strong history of Successfully Executing Growth Projects
According to the ConocoPhillips Investors Presentation on April 9, 2012 "CPChem has a strong history of successfully executing growth projects. They've executed five mega projects in the Middle East over the past 10 years.They continue to work new opportunities in the Middle East region. They're currently building the world's largest 1-hexene plant at Cedar Bayou.They're actively pursuing a new Gulf Coast cracker.We think it will start up in 2017.This will be the first new cracker to start up on the Gulf Coast."[694][695][696]
Latest News and Views from Port Arthur Chemical Plant
October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014
Argus reported on October 29, 2014 that Chevron Phillips Chemical's Port Arthur, Texas olefins unit will restart by the end of the year, Phillips 66 executives stated on the company's earnings call today. The Port Arthur plant can produce up to 807,000 t/yr of ethylene.[697]
October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem earnings were strong despit downtime at Port Arthur. " In our Chemicals business, despite downtime at the CPChem Port Arthur facility, earnings were strong, also reflecting favorable market conditions."
"In Chemicals, CPChem's global Olefins and Polyolefins capacity utilization rate for the quarter was 83%. This reflects downtime at the Port Arthur facility, resulting from the fire the impacted their ethylene furnaces early in the third quarter," added Garland. "In Olefins and Polyolefins, the decrease of $51 million is largely due to the CPChem's Port Arthur ethylene cracker being down. Although Port Arthur represents approximately 11% of CPChem's total O&P production capacity, the impacts from it being off-line were lessened as CPChem was ableto pull down inventory."[698]
October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips expects the Port Arthur Olefins Units to restart in November. "The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[699]
October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire
Tim Taylor told analysts during the third quarter earnings conference call on October 29, 2014 that Port Arthur probably had a five month outage because of the fire. " I think when we look at it, I like to think about it that we've probably got about a five-month outage when we think about Port Arthur. So that's roughly in the range of say 750 million, 800 million pounds of lost production, and then you can put the margin on that."[700]
October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the fire at Port Arthur will not prevent the Hexene Facility from being able to sell full volumes. "I don't think that Port Arthur is going to impact the run rate on hexene-1. As it ramps up into 2015, Port Arthur is going to be back up and running. And so I don't think Port Arthur is going to enter into the equation in terms of the run rate. In terms of fully ramping the facility, I don't know, Tim,it will probably ramp over 2015 and 2016 would be my guess."[701]
July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire
The Houston Chronicle reported on July 30, 2014 that during the second quarter conference call, company officials at Phillips said that the Chevron Phillips Chemical plant in Port Arthur remains closed after a fire injured several workers on July 7 and that it's too early to know when it might reopen. Garland did not elaborate on a recent fire in July at a Chevron Phillips Chemical Company LLC plant in Port Arthur that involved injuries, but he did say the facility should not be shut down for much longer. "There's no reason for that unit to be down for a prolonged period of time," said Garland.[702]
July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur
Plastics News reported on July 15, 2014 that Chevron Phillips has declared force majeure production limits on that material after the fire at the Chemical Plant at Port arthur. Phillips Chevron officials said that reviews are underway to determine when the unaffected areas of the plant can be restarted, and that no timetable has been set for restart of the area affected by the incident. The Port Arthur plant has almost 1.8 billion pounds of annual ethylene capacity and 1.1 billion pounds of annual propylene capacity. [703]
July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant
Plastics News reported on July 15, 2014 that two workers were injured in a fire in a ethylene/propylene unit at the at a Chevron Phillips Chemical Plant in Port Arthur. No cause for the fire was given in a July 9 statement from Chevron Phillips. The statement added that the injured workers remained hospitalized.[704]
Mary Meaux reported at The Port Arthur News on July 8, 2014 that an investigation into the cause of the fire at Chevron Phillips Chemical Company that injured two workers is underway less than 24 hours after the incident. “A team of experts from other Chevron Phillips Chemical facilities has been assembled and has begun the investigation to determine the root cause of the incident,” according to a press release from David Hastings, public affairs manager at Chevron Phillips. The localized fire occurred at the Port Arthur facility at about 8 pm on July 7. The chemical company’s fire response team handled the fire while Port Arthur Fire Department remained on standby with equipment and manpower should it be needed, said Port Arthur Police Maj. John Owens. “The fire chief (Larry Richard) and I went in and were part of their emergency operations center to assist them in decision making and operations should they need outside assistance and to ensure the public and community that we had someone inside the EOC to look at it from the community’s side,” Owens said.[705]
Independent air monitoring throughout the night to ensure the community was safe. “The continuous monitoring picked up zero readings,” said Owens. “We do this any time there is an incident. It is protocol for the fire department’s hazardous response team to perform independent monitoring.”[706]
April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital
The Port Arthur News reported on April 27, 2013 that an early morning fire at Chevron Phillips Chemical Company in Port Arthur sent eight contract workers to two hospitals on April 27, 2013. Company officials confirmed that a localized fire occurred at its Port Arthur facility at approximately 4 a.m. during a turnaround period, which resulted in several contractor employees being transported to the local hospital. The fire was quickly extinguished, and there was no impact to the community, according to a press release from Melanie Samuelson with Chevron Phillips corporate communication. “The safety of our employees is our highest priority,” Margie Conway, plant manager at the Port Arthur facility, said in a press release. “We regret very much that this incident has occurred, and are thankful that most of the contractor employees were treated and released from the hospital.”[707]
Latest News and Views from Cedar Bayou Chemical Plant
November 6, 2014: Chevron Phillips Considers Further Expansion at Cedar Bayou
Seeking Alpha reported on November 5, 2014 that Chevron-Phillips is considering adding another expansion to its Baytown plant, joining a wave of other petrochemical companies scrambling to take advantage of cheap raw materials unleashed by the U.S. shale boom and is studying how to further increase the plant’s capacity. Rather than build a new unit, the JV is studying the possibility of boosting polyalphaolefins capacity by one-fifth to 58K metric tons/year by adding improvements to make the existing plant more efficient; the potential cost of the expansion has not been disclosed. “There’s a pretty strong demand for that and fairly limited supply worldwide,” Mark Lashier, executive vice president of olefins and polyolefins, said in an interview with Fuel Fix. “It’s a specialty product and the feedstocks to produce it are in short supply now.[708][709]
Construction started in April at the ethane cracker at the Baytown plant, which Chevron Phillips Chemical has said would be the first new major facility of its type built in the U.S. in a decade. Rather than build a new unit, the company is studying the possibility of boosting polyalphaolefins capacity by one-fifth to 58,000 metric tons per year by adding improvements to make the existing plant more efficient, Lashier said. The company did not disclose how much the expansion could cost. A decision is expected late next year. “We’re pretty comfortable with the market demand piece but we really have to understand what the capital cost will be to make this investment in the expansion,” Lashier said. “We don’t want to make an investment that’s not going to provide a favorable return for our shareholders.”[710]
November 5, 2014: 1-Hexene Plant at Cedar Bayou Earns 2014 ABC Houston Chapter Prestigious Excellence in Construction Award
Businesswire reported on November 5, 2014 that the 1-Hexene plant at Cedar Bayou received the top Excellence in Construction “ICE” award in the heavy industrial category and first runner up for "Best of Houston" by the Associated Builders and Contractors, Inc. (ABC) of Greater Houston at its annual gala on Oct. 30. The awards recognize outstanding projects that exemplify innovative design, precise craftsmanship and superior safety performance and practices. “It’s an honor to have our 1-Hexene plant be recognized for its excellence in construction,” said Scott Sharp, Chevron Phillips Chemical’s senior vice president, projects. “S & B worked diligently, effectively and safely to successfully build and help us start up this important project.” Chevron Phillips Chemical announced start-up of the 1-Hexene plant at its Cedar Bayou plant in Baytown, Texas, in June, and with nearly 1.7 million work hours completed, there were no Occupational Safety and Health Administration (OSHA) recordable injuries reported during the construction of the project.[711]
October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou. "In Chemicals, CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou, which began operations in the second quarter. The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[712]
April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility
Ryan Holeywell reported in FuelFix on April 2, 2014 that Chevron Phillips Chemical broke ground on a a massive new ethane cracker, the first component of a $6 billion expansion and the first new major facility of its type built in the U.S. in a decade. The ethane cracker is a massive piece of equipment with a footprint the size of nearly 50 football fields used to transform ethane, a component of natural gas, into ethylene, a component used to make plastics. "This is a big deal for us — $6 billion is a big project for a company with $10 billion in assets,” said CEO Peter Cella. The investment, which officials say will contribute to the creation of about 400 jobs. Cella said Chevron Phillips is still “a few years away” from developing contracts with customers for the ethylene it will produce, and polyethylene contracts tend to be developed on a year-to-year basis. He expected most of the ethylene produced by the cracker to be used domestically, including by the company itself.[713] “It’s a huge investment for a company like this,” Cella said, all of which is “catalyzed” by the shale boom that is producing lots of ethane that serve as the “competitive feedstock” for the chemical plants. “We see the supply of ethane being pretty substantial going forward,” Cella said in an interview before the Baytown groundbreaking. “It’s important to point out there’s a surge of investments being contemplated or already in progress like ours in the chemical industry."[714]
The other component of the endeavor, in nearby Old Ocean, consists of two polyethylene units, which convert ethylene into polyethylene pellets that can be sold, melted and formed into a variety of industrial and household plastics. The entire project is slated to come online in 2017. The two polyethylene units will develop two different products: a biomodal resin he described as durable but soft, and a metallocene resin that is clear and can receive printing and is commonly used for packaging in retail stores.[715]
December 6, 2013: Phillips Plans to Start up 1-hexene plant in Baytown in 2014
Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.[716]
September 5, 2012: Garland Announces $5 Billion Facility at Cedar Bayou
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."[717]====June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest==== Emily Pickrell wrote in San Antonio Express on June 13, 2012 that Phillips 66 executives gathered for a ceremonial groundbreaking on June 12, 2012 at Chevron Phillips Chemical's Cedar Bayou complex that will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. “The facility that we are groundbreaking is an outcome of this new natural gas resource base,” said Pete Cella, CEO of Chevron Phillips Chemical. “Five years ago, the expectation was that the U.S. would become a net importer of ethylene. Now we are expecting that we will not only meet U.S. demand domestically, but will become a major exporter.” The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.[718]
Chevron Phillips Chemical also plans to build a new ethane cracker at Cedar Bayou; two new polyethylene units at a site near its Sweeny plant in Old Ocean; and an expansion of its fractionator that separates the individual components out of natural gas liquids at the Sweeny facility.[719]
June 12, 2012: Garland Says the Baytown Facility Will Come Into Operation in 2017
Fox Business reported on June 12, 2012 that reg Garland told the Financial Times that Phillips 66 may invest in a second new chemical plant in the U.S. Gulf region to take advantage of the cheap feedstock in North America that was released by the shale revolution, a decision that could be made in three years' time. "After the Middle East, the U.S. is the next best place to make petrochemicals, because of the advanced feedstock, and we see that continuing for some time," said Garland.[720] Garland said US chemicals manufacturers could buy ethane at about $5 per million British thermal units of energy content, compared to about $18 per mBTU for crude oil and that the US petrochemicals industry, stands at the dawn of a long-term upturn, and Phillips 66 stands to benefit through Chevron Phillips Chemical, its 50/50 joint venture with Chevron. The cheap feedstock persuaded CP Chem to announce last year that it would build a new “cracker” in Baytown, Texas, to convert ethane into ethylene. The Baytown cracker, expected to come into operation in 2017, will employ 10,000 people while under construction, and about 400 when it is running. [721]
Latest News and Views from Sweeny Petrochemical Complex
December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex
Businesswire reported on December 11, 2014 that CP chemical announced completion of an ethylene expansion at its Sweeny complex that was started in 2013. With the addition of a tenth furnace to ethylene unit 33 at the Sweeny complex, the expansion is expected to increase annual production by 200 million pounds giving the Sweeny facility the capability of producing roughly 12 million pounds of ethylene per day, or 4.3 billion pounds annually. This represents the next increment of expansion to our ethylene business. We’re building toward the startup of the U.S. Gulf Coast Petrochemicals Project in 2017 and supporting incremental growth of our olefins derivative businesses,” said Dave Smith, olefins & natural gas liquids vice president for Chevron Phillips Chemical.[722]
November 30, 2014: County Commissioners Approve Tax Abatement to Improve Chances of Landing Phillips 66’s $1.1 billion Sweeny Expansion
The Facts reported on November 30, 2014 that County commissioners have approved a tax abatement they believe will help Sweeny’s chances of landing Phillips 66’s $1.1 billion expansion to the company’s fractionator plant at Sweeny.[723]
October 30, 2013: Garland Says Sweeny Ethylene Expansion to be Completed in 2014
Garland told analysts at the third quarter earnings conference on October 30, 2013 that CPChem announced its world-scale Gulf Coast ethane cracker and two new polyethylene facilities earlier this month. "CPChem now has the necessary approvals to begin construction," said Garland. "In addition to the petrochemicals projects CPChem is also completing one hexane unit which is expected to be operational in the first half of 2014 as well at the Sweeny ethylene expansion in 2014. All in CPChem at a 100% basis is expected to spend between $6 million and $8 billion on self-funded capital between now and 2017. They expect to add about $1.5 billion of EBITDA in 2017 once all these growth projects are online."[724]
October 29, 2014: Frac One at Sweeny in Progressing Nicely
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Frac One at Sweeny is progressing nicely. "On the picture in front of you, that's a picture of the Sweeny frac one, it's progressing nicely as is the LPG export facility at Freeport. We look forward to giving you frequent updates on these important projects."[725]
October 29, 2014: Phillips is Evaluating Possibility of Another Frac at Sweeny
Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips is evaluating the opportunity for a second frac. "We're also evaluating the opportunity for a second frac, to have the capacity of 110,000 barrels a day. We expect to reach a final investment decision mid-2015. It will be up and operational mid- 2017."[726]
July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds
Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that outages at the Sweeny facility during both the first quarter and the second quarter of 2013 resulted in loss production of approximately 540 million pounds. "The decrease in earnings was primarily in olefins and polyolefins driven by unplanned power outages at CPChem’s Sweeny Complex as well as an extended 91 day turnaround at its Port Arthur facility. In May of this year, CPChem was required to declare force majeure on ethylene and certain derivatives, following these outages," said Garland. "These outages as well as the downtime at Port Arthur resulted in higher manufacturing costs and decreased production sales volumes for ethylene, polyethylene, and normal alpha olefins in the second quarter of 2013. While industry ethylene margins remained strong, CPChem realized lower margins because of these unplanned events."[727]
July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility
Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that Phillips chemicals joint venture CPChem completed the NGL fractionator expansion project at the Sweeny facility during the second quarter. The project increased capacity by nearly 20%.[728]
June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex
The Oil and Gas Journal reported on June 3, 2013 that Chevron Phillips Chemical Co. LP will add a furnace at its Sweeny petrochemical complex that will expand ethylene production by 200 million lb/year. Construction of the furnace will begin within three months and the start-up is expected in 2014. The new furnace will not add to nameplate capacity of the facility, the company said, explaining, “the increased operating factor should result in net increase of 200 million lb of ethylene availability to provide additional operation flexibility and reliability.”[729]
September 5, 2012: CPChem is Increasing Fractionation Capacity at Sweeny
Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."[730]
May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex
The Oil and Gas Journal reported on May 2, 2013 that Chevron Phillips Chemical Co. LP has selected a site near its Sweeny petrochemical complex for two new polyethylene plants with capacities of 1.1 billion lb/year each. Jacobs Engineering Group will design the polyethylene plants which are part of a major Gulf Coast Expansion.[731]
Midstream Business Segment within Phillips 66
Garland said during his analyst call on April 9, 2012 that Phillips 66's Midstream businesses are primarily conducted through our 50/50 JV with Spectra and DCP is one of the largest gatherers and processors of natural gas and NGLs.[733][734][735]
"DCP is one of the largest gatherers and processors of natural gas and natural gas liquids. We do hold assets outside of DCP. We have interest in three fractionators with a net capacity of 112,000 barrels a day.We also have a 25% interest in the Rex pipeline. When you look at our Midstream operations and particularly the DCP, they overlay some of the best shale plays in North America and so just superbly positioned to capture significant growth opportunities. DCP, like CPChem, leads its peers in terms of economic return on assets."[736][737][738]
DCP Midstream
DCP Midstream, is a 50-50 joint venture with Spectra that helped counteract poor refining performance last quarter for ConocoPhillips. "The fundamentals of the business could not look better," said Spectra CEO Greg Ebel. "DCP operates in liquids-rich areas. In those areas, we are seeing dramatic volume growth, which is helping overcome low natural gas prices for our consumers."[739]
Phillips 66 primarily conducts its Midstream operations through DCP Midstream, LLC, a 50 percent joint venture with Spectra Energy and one of the largest natural gas gatherers and processors in the United States, as well as the largest producer of NGL in North America. Now in its 13th year of operations, DCP Midstream is a full-service provider of gathering, processing and NGL logistics services with strategically located assets in liquids-rich developments. The gas collected by DCP Midstream is processed at 61 owned or operated plants and treaters. Growth in liquids-rich developments in the United States is driving infrastructure demand and expansion opportunities for our Midstream segment. DCP Midstream has $4 billion in major projects currently in execution, including two major pipeline projects. The Southern Hills Pipeline will run more than 900 miles to Mont Belvieu, Texas, with a target capacity of more than 150,000 barrels per day of NGL. The project is expected to start up in mid-2013. The Sand Hills Pipeline is a 720-mile NGL line that will run through the Permian and Eagle Ford basins to market centers along the U.S. Gulf Coast. Initial capacity will be 200,000 barrels per day, and service may be expanded to 350,000 barrels per day. The Sand Hills Pipeline will be phased into service, with the first phase completed by the third quarter of 2012 and the second phase expected as soon as the third quarter of 2013.[740]
Growth Strategy in Midstream Segment
"We're investing significantly in both NGL pipelines and gathering, processing capability.When we look at the increased shale production, we believe there's about $70 billion to $80 billion worth of industry investment needed in infrastructure. Of that, about $21 billion has already been announced. And roughly $6 billion of the $21 billion is DCP's announced investments. When you look at DCP's assets, they overlay some of the best shale opportunities in the world today, places like the Eagle Ford, the Permian, the Anadarko, the Niobrara and others. DCP is just superbly positioned to capture and create value in this area and there remains considerable, additional opportunity in this space."[741][742][743]
Latest News and Views of the Midstream Business Segment
October 23, 2015: Phillips 66's Houston Ship Channel Cross-Channel Connector is the 2015 Trenchless Technology Project of the Year for New Installation
Trenchless Technology reported on October 23, 2015 that Phillips' Houston Ship Channel Cross-Channel Connector took two years to design, plan and permit, with safety being of primary importance. The project required a ton of planning before the first drill rod was in the ground, including precision, pinpoint knowledge of what was already buried in the channel, as well as a plan to keep full circulation during pullback. project is described as a record-setting HDD installation for an 18-in. steel gas pipeline for energy giant Phillips 66, reaching what was once thought to be an unachievable distance of 12,459 ft.
“This was all done in a very congested corridor. … Hitting it on the tips was pretty amazing,” says Tim McGuire, vice president at Michels Directional Crossings at Michels Corp. “There’s only a handful of HDD crossings in the world that have ever been attempted greater than 12,000 ft. There were a lot of challenges related to just that aspect alone.” “We hit them right on the ends,” says Michels Directional Crossings operations manager Jeff Mueller. “The pilot holes matched up perfectly. We really didn’t do the intersect operations because it was self-intersecting, if you want to call it that. As a company, Michels has done more than 200 intersects and [attained]tip-to-tip about a half dozen times. It’s pretty rare.”
McGuire notes that during the pilot hole drilling, Michels implored to Phillips 66 to allow the crews to move to a 24/7 work schedule on its property to ensure the integrity of the hole was intact. This was due to the changing soil and drilling conditions. “The string torque was getting elevated and we needed to work 24/7 to keep [the string]moving,” McGuire says. “Had [Phillips 66] not allowed us to do that, there’s a good possibility we would have had a lot of problems and wouldn’t have been successful.” The Michels team lauded Phillips 66 for success in this project, saying it was an outstanding partner in its response to the team’s needs for additional work space and facilitating its 24-hour pilot hole operations.[744]
The Oil and Gas Journal reported on January 4, 2014 that Phillips 66 Pipeline LLC, a wholly owned subsidiary of Phillips 66, would build its 180,000-b/d Cross-Channel Connector refined product pipeline project, expanding transportation capacity across the Houston Ship Channel. The Cross-Channel Connector will combine a 20-in. OD reactivated pipeline under the HSC and expansion of a second active 20-in. line in Pasadena. Phillips 66 plans to connect to Magellan Midstream Partners’ refined product pipeline for transportation from HSC’s south side to Magellan and Kinder Morgan Energy Partners systems on the north side of the channel at Galena Park and East Houston.[745] "Transportation at Phillips 66 is part of our growing Midstream business," said Debbie Adams, president, Phillips 66 Transportation. "The Cross-Channel Connector project is a key investment to help us leverage our infrastructure and the opportunities of the North American energy renaissance." The company anticipates the project could be complete as early as the fourth quarter of 2014, subject to the receipt of necessary permits and regulatory approvals. The Cross-Channel Connector is expected to have an initial system capacity of up to 180,000 barrels per day. The Phase 2 expansion could add an additional 50,000 barrels per day of capacity.[746]
January 30, 2015: DCP Midstream to Cut Workforce by 20%
Natural Gas Intelligence reported on January 30, 2015 that DCP Midstream, a 50-50 joint venture between Phillips 66 and Spectra Energy, has announced it was cutting its workforce by 20% and closing a regional office. The Oklahoma City office is to close, and the workforce is being reduced in the Tulsa office and Midland, TX, office. Functions would be primarily moved to Denver headquarters and the Houston regional office. "With a 90-year history, we are repositioning ourselves for the long term and ensuring we have a sustainable workforce that meets our future needs," said CEO Wouter van Kempen. "While this transition is difficult, we are establishing DCP for continued growth founded upon a culture of operational excellence."[747]
December 5, 2014: Phillips to Invest $3.750 Billion in 2015 in Midstream Business Segment
Phillips 66 announced on December 5, 2014 that in Midstream, excluding DCP, Phillips 66 plans to invest $3.2 billion in its Natural Gas Liquids (NGL) and Transportation business lines. Midstream capital includes approximately $200 million expected to be spent by Phillips 66 Partners to support organic growth projects. In NGL, the company continues construction of the 100,000 barrel-per-day Sweeny Fractionator One and the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast. In Transportation, the company is investing in pipeline and rail infrastructure projects to move crude oil from the Bakken/Three Forks production area of North Dakota to market centers throughout the U.S. In addition, expansion of the Beaumont Terminal and related infrastructure opportunities are being pursued.
Additional Midstream investments are planned within DCP, a 50-50 joint venture with Spectra Energy that also includes DCP Midstream Partners. DCP will leverage its infrastructure to launch new gathering, processing, and NGL growth projects, mainly in the Niobrara, Denver-Julesburg, Eagle Ford and Permian basins. DCP also expects to increase natural gas processing capacity in these basins and complete other gathering system expansions during 2015. Phillips 66’s share of DCP’s 2015 planned capital expenditures is $550 million.[748]
November 21, 2014: Phillips Plans Midstream Infrastructure with 76-Mile Sacagawea Pipeline and Palermo Rail Terminal in North Dakota
Phillips Partners LP and Paradigm Energy Partners, LLC announced that they have executed agreements to form two joint ventures to develop midstream logistics infrastructure in North Dakota. Consisting of two previously announced projects, the Sacagawea Pipeline (the “Pipeline JV”) and the Palermo Rail Terminal (the “Rail JV”), the joint ventures are designed to enhance logistical options for crude oil transportation in the Bakken region. Pipeline JV will own and construct a crude oil storage terminal,a central delivery point for various crude gathering systems located in Keene, North Dakota (the “Paradigm CDP”). The Sacagawea Pipeline project is a 76-mile pipeline being developed to deliver crude oil from various points in and around Johnson’s Corner and the Paradigm CDP, located in McKenzie County, to destinations with take away options for both rail and pipeline in Palermo and Stanley, located in Mountrail County. In October, Paradigm recently extended an open season for the pipeline, which is expected to close on December 15. Rail JV will own the Palermo Rail Terminal, a crude oil rail-loading facility, designed to have an initial capacity of 100,000 b/d, with the flexibility to be expanded to 200,000 b/d. The terminal will have direct access to the Sacagawea Pipeline and provide East and West Coast rail access for third-party shippers through the BNSF railway. The transactions are expected to close in the fourth quarter of 2014 and both the pipeline and rail terminal are expected to commence commercial operations in the first quarter of 2016.[749]
September 1, 2014: One Year After Cleanup, DCP Midstream Oil Spill Still Causes Concern
Phil Cross reported at Fox25 on September 1, 2014 that more than a year after an oil spill from an abandoned pipeline owned by DCP Midstream, the landowners say they are still fighting to get it cleaned up. Records indicate DCP hired a company to perform the clean-up of the creek and the OCC document says the state ordered work to be completed by July 15, 2013. The people who own the land just downstream from the spill say that cleanup effort failed. “It should be nice clean water to water the cattle and fertilize the hay and the blackberries in the area,” says Spencer city councilwoman Tonni Canaday who told Fox 25 the town was not notified oil was spilled in Spencer Creek. “I couldn't, in good conscious, put cattle on here right now.”[750]
The issue, the landowners say, is that any slight movement in the water stirs up a glossy sheen. They claim it is residual oil left from the initial spill. Records from the OCC indicated the pipeline spilled about a barrel of oil, but the company only recovered half a barrel of material. The landowners invited Fox 25 to visit the creek this summer, more than a year after the spill and eight months after the final cleanup was deemed complete. On our visit the landowner stirred the creek and a glossy sheen appeared on the water. A soil sample dug from the bottom of the creek revealed a strong odor of oil and was greasy to the touch. “There is absolutely a problem,” Canaday says, “And to each of those people that we've had come out and say it's not that big of a problem; we haven't seen anybody take a drink or take a bottle of water out of there themselves.” The corporation commission says DCP has been willing to do anything they've been asked and that company has voluntarily helped with the cleanup and containment of other pipeline spills they were not responsible for in the past.[751]
August 21, 2014: Four Injured in DCP Midstream Pipeline Fire
NewOK reported on August 21, 2014 that fourworkers were injured in Garvin County in a fire while a crew was performing maintenance on a natural gas pipeline operated by DCP Midstream. The natural gas line fire was quickly extinguished and the workers were taken to the hospital in Lindsay, where they were treated and released. DCP reported the incident to the proper regulatory authorities and will investigate further on its own to determine what happened.[752]
August 13, 2014: Phillips Breaks Ground on LPG Export Terminal at Freeport
Jordan Blum reported in the Houston Business Journal on August 13, 2014 that Phillips broke ground on its $1 billion liquefied petroleum gas export terminal — its first ever — in Freeport to sell propane, butane and more to international markets. The project, which is expected to be completed in mid-2016, will export 4.4 million barrels of fuel a month to countries in Europe and Asia. The terminal will get the fuel from its Sweeny complex in Old Ocean and its Gulf Coast Fractionators facility in Mont Belvieu. "We are investing, we are building and we are growing," Phillips 66 Chairman and CEO Greg Garland said at the groundbreaking. "The projects we're breaking ground on … total more than $3 billion of investment for our company, … and it's happening right here in our own backyard in the communities of Sweeny and Freeport." Freeport has advantages over operating out of the Houston Ship Channel because Freeport is 3 miles from deep water, compared to 50 miles for the channel says Jim Webster, Phillips 66’s general manager of midstream.[753]
July 26, 2014: Front Range Pipeline Transports NGL Through Colorado
The Tribune reported on July 26, 2014 that the 435-mile long Front Range Pipeline, which began operating in February 2014, is expected to become increasingly important as the state’s production of natural gas liquids continues to grow. that runs through eastern El Paso County has positioned Colorado to take advantage of the burgeoning market for natural gas liquids. The pipeline, owned by Texas-based Enterprise Product Partners and Anadarko Petroleum and Denver-based DCP Midstream, transports about 80,000 barrels of NGLs from Weld County, which sits atop the Denver-Julesburg basin, to Skellytown, Texas. There, it connects to the Texas Express pipeline, which carries the liquids to Mont Belvieu, Texas, the largest NGL hub in the country. The liquids are then stored, processed and distributed. The joint venture offers Colorado NGL producers a direct route to Mont Belvieu. Before construction of the Front Range Pipeline, Colorado NGL producers transported their products using the Overland Pass and Mid-America pipelines, both of which pass through the state’s oil and gas basins.[754]
June 5, 2014: Phillips Buys Big Oil Storage Terminal On Gulf Coast
Fuelfix reported on June 5, 2014 that Phillips plans to purchase the Beaumont Terminal, capable of carrying 7.1 million barrels of oil equivalent, from Chevron subsidiary UNOCAL. “This acquisition supports our midstream growth strategy,” said Tim Taylor. “Given our expectations for increasing volumes of North American crude oil movements into the Gulf Coast region and growth in refined product exports, the Beaumont Terminal is well positioned to serve this growing market while providing significant expansion potential.”[755]
March 14, 2014: Phillips Enters Long-Term Deal to Sell LPG to China
Reuters reported on March 14, 2014 that China's largest state refiner, Sinopec Corp, said it had entered a long-term deal to buy liquefied petroleum gas (LPG) from Phillips 66, showing the U.S. shale drilling boom is having an impact on Asian markets. Sinopec, which plans to use the LPG as a petrochemical feedstock, didn't give any details of the contract, the amounts or when the supply starts. Phillips said last October it would develop a $1 billion LPG export terminal at Freeport, Texas, with a capacity of 4.4 million barrels per month, with start-up planned for the middle of 2016. Analysts say the U.S. LPG export boom will be aided by the expansion of the Panama Canal, allowing the passage of so-called very large gas carriers (VLGC) from 2015 and reducing the cost of freight by cutting the sailing time from the United States to Asia by more than two weeks.[756]
February 14, 2014: Garland Says There Will Be Additional Fracks at Sweeney and on Gulf Coast
Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips has named the frack at Sweeny Frack 1 for a reason. "Because there will be Frack 2, Frack 3. We're looking at other fracks not just in Sweeny as we look at the footprint and where we think the capacity is going to be needed for additional frack capacity on the, let's say the U.S. Gulf Coast," said Garland. "We have $4 to $6 billion worth of investments that we see over the next couple years at DCP. You should expect that we will fund the majority of those investments by dropping assets from DCP into DPM. That we'll use DPM as really the vehicle to play out these investments."[757]
February 7, 2014: Phillips Board Okays $3 Billion for Sweeny Fractionator One and Freeport Liquefied Petroleum Gas (LPG) Export Terminal
RTT News reported on February 7, 2014 that Phillips Board of Directors gave approval to go ahead on the Sweeny Fractionator One and Freeport Liquefied Petroleum Gas (LPG) Export Terminal representing an investment of more than $3 billion in the company's Midstream Business Segment.[758]
The Sweeny Fractionator One will be located in Old Ocean, Texas, close to the company's Sweeny Refinery, and will supply purity natural gas liquids (NGL) products to the petrochemical industry and heating markets. The 100,000 barrel-per-day NGL fractionator is expected to start up in the third quarter of 2015.[759]
The Freeport LPG Export Terminal will be located at the site of the company's existing marine terminal in Freeport, Texas, and will have an initial export capacity of 4.4 million barrels per month, the equivalent of eight very large gas carriers, with a ship loading rate of 36,000 barrels per hour. Startup of the export terminal is expected in mid-2016. "Given the anticipated growth in natural gas liquids production, we see substantial advantages in having fractionation and export facilities on the Gulf Coast outside of Mont Belvieu. These projects allow us to maximize our existing infrastructure and will position us for further growth," said Tim Taylor, executive vice president, Phillips 66 Commercial, Marketing, Transportation and Business Development.[760]
Molly Ryan reported in the Houston Business Journal on February 11, 2014 that Phillips' decision to move forward with more than $3 billion worth of projects reflects the company’s strategic decision to chase higher-margin markets. "Midstream spending is expected to pick up in 2014 since energy companies are increasingly realizing the profits that can be found in moving the massive amount of oil and gas coming from U.S. shale plays," writes Ryan. "Phillips 66 specifically hopes to cash in on this through its new liquefied petroleum gas terminal, which will store and transport fluids, and its new fractionator facility, which will supply and transport natural gas liquid products to petrochemical companies."[761]
January 4, 2014: Phillips to Proceed with Houston Ship Channel Cross-Channel Connector
The Oil and Gas Journal reported on January 4, 2014 that Phillips 66 Pipeline LLC, a wholly owned subsidiary of Phillips 66, will build its 180,000-b/d Cross-Channel Connector refined product pipeline project, expanding transportation capacity across the Houston Ship Channel. The Cross-Channel Connector will combine a 20-in. OD reactivated pipeline under the HSC and expansion of a second active 20-in. line in Pasadena. Phillips 66 plans to connect to Magellan Midstream Partners’ refined product pipeline for transportation from HSC’s south side to Magellan and Kinder Morgan Energy Partners systems on the north side of the channel at Galena Park and East Houston.[762] "Transportation at Phillips 66 is part of our growing Midstream business," said Debbie Adams, president, Phillips 66 Transportation. "The Cross-Channel Connector project is a key investment to help us leverage our infrastructure and the opportunities of the North American energy renaissance." The company anticipates the project could be complete as early as the fourth quarter of 2014, subject to the receipt of necessary permits and regulatory approvals. The Cross-Channel Connector is expected to have an initial system capacity of up to 180,000 barrels per day. The Phase 2 expansion could add an additional 50,000 barrels per day of capacity.[763]
December 6, 2013: Phillips to Invest $2.167 Billion in 2014 in Midstream Business Segment
Phillips reported on December 6, 2013 that they plan to invest $2.167 Billion in 2014 in their Midstream Business Segment including $1.417 in direct investment and $0.750 Billion in investment with affiliate groups. Phillips expects to begin construction of a 100,000 barrel-per-day NGL fractionator and a 4.4 million-barrel-per-month liquefied petroleum gas export terminal on the U.S. Gulf Coast. In addition, several rail offloading facilities and other crude handling projects will increase the company’s access to advantaged refining feedstocks. Phillips 66 Transportation is also developing pipeline expansion and connection projects that will grow capacity and allow for greater refined product exports.[764]
Phillips expects to invest $750 Million in DCP, a 50/50 joint venture with Spectra Energy. DCP anticipates leveraging its existing NGL infrastructure to initiate new gathering and processing growth projects, mainly in the North and Permian regions. DCP also expects to increase natural gas processing capacity in the Denver-Julesburg Basin and complete other gathering system expansions during 2014.[765]
October 30, 2013: Garland Says Phillips May Build 100,000 barrel-per-day NGL Fractionator at Phillips Sweeny Complex
Garland told analysts at the third quarter earnings conference on October 30, 2013 that Phillips may build a 100,000 barrel-per-day NGL fractionator at Phillips Sweeny complex along with the associated infrastructure. "We expect that first we’ll incubate the project at Phillips 66 and eventually drop them in to Phillips 66 Partners. Potential candidates for this approach would include the 100,000 barrel-per-day NGL fractionator at our Sweeny complex along with the associated infrastructure," said Garland. "Startup of the frac is expected in 2015 with the export facility following closely to 2016. We’ve seen increasing number of opportunities to participate in the NGL market and we will use our midstream business to supply petrochemical, heating and transportation markets globally. The combination of refining free cash flow and our MLP provides us with a unique position and options to accelerate our growth in the midstream space."[766]
October 30, 2013: Garland Says Phillips is Developing an LPG Export Terminal at Freeport, Texas
Garland told analysts at the third quarter earnings conference on October 30, 2013 that Phillips is "developing an LPG export terminal project at Freeport, Texas. The LPG export facility is expected to enable us to take advantage of the Company's existing midstream transportation and towards infrastructure." Garland added that combining NGL fractionator project and the LPG export terminal project represented two discrete $1 billion investment over the next 2 to 3 years. "Ultimately once we're up and running at full capacity we expect these projects to generate on the order of $400 million to $500 million of EBITDA annually."[767]
October 28, 2013: Activist Sandell Urges Strategic Action on DCP Midstream
4-traders reported on October 28, 2013 that Activist investor Sandell Asset Management is urging Spectra Energy Corp to swap its interest in DCP Midstream Partners LLC for equity in Phillips 66's master limited partnership in a deal meant to improve the valuation of the companies, according to a letter seen by Reuters. Sandell, which owns less than 1 percent of pipeline company Spectra and 1 percent of refining company Phillips 66, said in a letter dated October 2 it believes DCP's assets are a better fit with Phillips. DCP is jointly owned by Spectra and Phillips 66. The letter marks the second time since June that Sandell has pressed Spectra for changes. Sandell said in the earlier letter that it believes Spectra is undervalued and should trade around $48 per share, 33 percent above its Friday closing price of $35.95.[768]
April 19, 2013: DCP Plans Gas Plant Near Carlsbad, New Mexico
Gary Gerew reported in the Albuquerque Business Journal on April 19, 2013 that DPC Midstream plans to build a gas plant on 164 acres in Lea County and a 50-mile pipeline that will run through Eddy County for the collection of natural gas from operators in Eddy and Lea counties. “Right now, we are following regulatory requirements, evaluating the feasibility of the project and understanding our customer’s needs,” said DCP spokewoman Lisa Newkirk. Robert Gomez, BLM realty specialist, said DCP Midstream has requested access to public lands to construct the gas plant and pipeline.[769]
April 19, 2013: DCP Pipeline Awaits Approval in Colorado
Steve Block reported in the Trinidad Times on April 19, 2013 that a proposed 13.75-mile pipeline section planned to go through northeast Las Animas County, Colorado is awaiting approval from the county planning commission and then the county board. As designed, the pipeline has a capacity of 150,000 barrels per day, which could be readily expanded to approximately 230,000 barrels per day and could begin service in the fourth quarter of 2013. Permit land agent Mike Rutherford said the company thought it only needed a special-use permit from the county for the project, which it had in hand before the state gave its final approval. It later turned out that it also needed a 1041 permit under county regulations. “We thought it was just going to be an SUP only and we already had that,” Rutherford said. “I guess if we’d known it was going to be a full-blown 1041, we could have gotten that four or five months ago, and been through this temporary approval process months ago.” The permitting process requires public notice of the application, followed by a 30-day period for comment from interested parties to the county board. Meanwhile, the application must work its way through the planning department approval process. Fourteen days after that, the planning commission and county board can approve the application at the same time, thus speeding up the process. Dixie Newnam, county attorney, said the entire process could take 45 – 60 days from the time the application was submitted.[770]
April 5, 2013: Explosion at DCP Midstream Gas Compressor Station in Langston, Oklahoma
Channel 2 News reported on April 5, 2013 that authorities say a worker inside a natural gas compressor station owned by DCP Midstream was able to escape without injury after an explosion near Langston, Oklahoma, about 45 miles north of Oklahoma City. The Guthrie Fire Department, along with Meridian and Coyle fire departments, all responded to the explosion but firefighters let the natural gas in the line burn off before they could safely fight the blaze and the fire was extinguished several hours after the blast. DCP Midstream doesn't know what started the explosion in rural Logan County, but is investigating along with the Department of the Environmental Quality and the Oklahoma Corporation Commission. "It was a tremendous fire ball in the sky and was able to be seen for quite a few miles," said Guthrie Fire Chief Eric Harlow adding that he believes weather may have been a factor in the fire. "We didn't have much wind last night, which would allow the gas to kind of stay in place, instead of dissipating, at that point any spark, whether it be static electricity or even the spark of vehicle ignition could likely set it off." Three homes had to be evacuated and DCP Midstream offered to pay for one other family's hotel if they wanted to evacuate. "We've never had any problems at the compressor station before," said William Savory, who has lived in Wellston for 20 years and decided not to take DCP up on its offer. "And I told my wife, all it's just going to do is burn off, it's going to burn off because it's so wet."[771][772]
April 2, 2013: DCP Midstream Withdraws Plan to Build Megatank in Searsport
Abigal Curtis reported in the Bangor Daily News on April 2, 2013 that DCP Midstream is withdrawing thire application to build a controversial liquid propane gas terminal and storage tank project at Mack Point in Searsport. “We really, really wanted to do business in Maine,” said Roz Elliott, spokesperson for Denver-based DCP Midstream, citing the Searsport Planning Board’s initial meetings last week to review the $40 million project before issuing a final decision later this spring. “It’s unfortunate, but with these local circumstances, we don’t forsee doing future capital development in Maine.” The board members found that certain elements of the project did not meet the town’s ordinances. “Very extensive time, resources, passion — we really believed in this,” Elliott said, adding that the company decided to withdraw the application “as a courtesy” to the Searsport Planning Board.[773]
April 2, 2013: DCP Midstream Increases Ownership in Eagle Ford Venture to 80%
Mike Thomas reported in the San Antonio Business Journal that DCP Midstream Partners LP has completed its acquisition of an additional 47 percent interest in an Eagle Ford joint venture for $626 million bringing its stake inthe partnership up to 80 percent. The partnership also increased its ownership in a cryogenic processing plant at Goliad with a capacity of 200 million cubic feet per day that is under construction. The new plant is expected to be complete by the first quarter of 2014 and would be one of the largest gathering and processing plants in the Eagle Ford Shale play.[774]
April 2, 2013: Phillips to Build 100,000 bpd Fractionator in Old Ocean, Texas to Process Natural Gas
4-traders reported on April 2, 2013 that Phillips is pursuing development of a 100,000 barrel-per-day natural gas liquids (NGL) fractionator to be located in Old Ocean, Texas, close to the company's Sweeny Refinery. NGL feedstock for the Old Ocean fractionator project would be supplied by several nearby pipelines avoiding the Mont Belvieu congestion, and purified products produced by the fractionator would be marketed primarily to petrochemical customers in the region with access to Mont Belvieu. "This project would enable us to take advantage of strong existing midstream transportation and storage infrastructure along with demonstrated operations excellence," said Phillips 66 Chairman and CEO Greg Garland. "We see excellent market-facing opportunities to grow the natural gas liquids business, and the chance to supply purity NGLs and liquefied petroleum gas to the petrochemical industry and heating markets." The project is currently in the engineering design phase, and the company is in the process of filing for all applicable permits.[775]
March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO
Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.[776]
March 13, 2013: DCP Midstream Pipeline to Serve Permian Basin
Mella McEwen reported in the Midland Reporter-Telegram on March 13, 2013 that DCP Midstream LLC is spending $1 billion on projects, including the new Sand Hills Pipeline, a natural gas liquids pipeline that will carry natural gas liquids from the Permian Basin and Eagle Ford Shale to the Gulf Coast, including the fractionation complex at Mont Belvieu. The Eagle Ford leg of the pipeline came online late last year and the Permian Basin portion will begin coming online this summer, reports Greg Smith, newly named president of the midcontinent and Permian business units. DCP's new Rawhide Plant, a 75 million cubic feet per day natural gas processing plant is also under construction in Glasscock County. DCP currently operates 17 gas processing plants in the Permian Basin with processing capacity of 1.3 billion cubic feet per day, recently adding 150 million cubic feet per day of processing capacity through the expansion and restart of existing facilities.[777]
January 30, 2013: Garland Says Phillips ROCE for Midstream Business Segment was 22% for 2012
Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that although NGL prices were down 36% compared to 2011, return on capital employed for the year was still strong at 22%. Midstream's adjusted earnings for 2012 were $62 million, includes $38 million in earnings associated with Phillipsinterest in DCP Midstream and $24 million for other Midstream businesses. "We ended the quarter with $1.3 billion in capital employed in our Midstream segment," said Garland. "And as I said earlier, during the fourth quarter we closed our investments in the Sand Hills and the Southern Hills pipelines that are being constructed by DCP Midstream, and these pipes are scheduled for startup this year."[778]
January 5, 2013: Two Hundred Turn Out in Searsport to Protest DCP Midstream's LPG Storage Tank
The Republican Journal reported on January 8, 2013 that about 200 people turned up at Mosman Park on January 5, 2013 and formed a circle to show the footprint of a 137-foot-tall liquefied petroleum gas storage tank proposed for Mack Point.[779]
December 13, 2012: Phillips to Invest $1.461 Billion in 2013 in Midstream Business Segment
Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that DCP Midstream plans to invest $2.2 billion primarily for new logistics infrastructure and NGL production during 2013.[780]
December 5, 2012: No Injuries After Gas Line Explosion And Fire Near DCP Midstream Plant at Goldsmith
Permian Basin reported on December 5, 2012 that two gas lines exploded outside of the DCP Midstream plant near Goldsmith around 6 PM and a large fire also broke out in the area of the explosion. The owner of the ruptured lines -- West Texas Gas -- shut off 4 miles of the line and let the fire burn out while DCP Midstream evacuated all employees from their plant safely after the explosion happened.[781]
November 15, 2012: Spectra Acquires one-third Interest in Sand Hills and Southern Hills Pipelines Owned by DCP Midstream
The Sacramento Bee reported on November 15, 2012 that Spectra Energy Corp announced it has closed its previously announced acquisition of a one-third interest in the Sand Hills and Southern Hills pipelines, both of which currently are under construction by DCP Midstream, a 50/50 joint venture between Spectra Energy and Phillips 66. Spectra Energy, Phillips 66, and DCP Midstream each own a one-third interest in the two pipelines – and will equally fund the remaining capital expenditures through completion. The aggregate investment by Spectra Energy in the two pipeline projects is expected to be approximately $700-800 million.[782]
November 12, 2012: Proposed Consent Decree Reached over Contamination at Cahokia Site
The Madison Record reported on November 12, 2012 that the federal government last week sued and reached a proposed settlement with thePhillips 66 Pipeline LLC in St. Clair County seeking to recover some of the money it spent on cleaning up the Rogers Cartage Site in Cahokia after the Environmental Protection Agency (EPA) issued an enforcement action memorandum in 2011 noting the presence of polychlorinated biphenyls (PCBs) at the site and directing Phillips 66 to excavate and remove about 16,575 tons of soil. Rogers Cartage Co. and its corporate parent, Tankstar Inc., were listed as potentially responsible parties to the contamination in a 2009 EPA liability notice. Phillips 66 received the notice as the current owner of the site. In 2011, Phillips 66 sued Rogers Cartage for cost recovery and injunctive relief. Phillips 66 will amend its complaint to pursue a claim for contribution if the proposed decree is approved.[783]
October 24, 2012: DCP Midstream Announces Opening of First Segment Sand Hills Pipeline
DCP Midstream issued a press release on October 24, 2012 announcing that Sand Hills Pipeline has initiated service on the first segment in South Texas online to provide service from the Eagle Ford Shale to Eagle Ford NGLs. Sand Hills will consist of approximately 720 miles of 20-inch pipeline with an initial capacity of more than 200,000 barrels per day, which can grow to 350,000 bbl/d with the installation of additional pump stations. "When finished, Sand Hills Pipeline will be a major link between the liquids-rich Eagle Ford and Permian producing regions and growing Gulf Coast markets," said Tom O'Connor, chairman and chief executive officer of DCP Midstream.[784]
September 7, 2012: Maine Fuel Board Approves Permit for DCP Midstream's Searsport Megatank
The Free Press reported on September 7, 2012 that the Maine Fuel Board has issued a permit to DCP Midstream to build a 22.7 million gallon propane storage tank in Searsport, the final permitting hurdle at the state and federal levels. The next step is for the company to submit the complete site application, including all state and federal permits, to the Searsport planning board for review.[785]
September 2, 2012: Low Natural Gas Prices for DCP Midstream Are a Plus for Phillips' Chemical Business Segment
Emily Pickrell wrote in Fuel Fix on September 2, 2012 that DCP Midstream took a hit in the second quarter along with many companies in the natural gas sector as natural gas prices are at decade lows, reducing the company's second-quarter net profit fell from $55 million in 2011 to $35 million in 2012 but Phillips 66 uses some of DCP’s natural gas liquids as feedstock for its chemical plants. “For Phillips 66, the low prices are a plus, not a negative. It almost mitigates the negative impacts of NGL prices,” says Fadel Gheit, an analyst with Oppenheimer & Co. “They are one of the largest chemical producers in the country.” Analysts predict that Phillips will continue to benefit as new chemical and processing plants come online in the next two to five years. “I think it’s a great place to be,” says John Stekla, an analyst with IHS. “The petrochemical industry is betting tremendous sums of money that NGLs will stay advantaged as a feedstock for the rest of the world. I have no doubt there will be huge growth in NGLs.” DCP has also set about building infrastructure to pick up gas at the wellhead and transport natural gas liquids to market centers on the Gulf Coast converting two pipelines to transport natural gas liquids to Mont Belvieu, a gas storage and processing center east of Houston. “We decided we probably should be looking harder at owning more natural gas liquids infrastructure and more natural gas liquids pipelines,” says Tom O’Connor, CEO of DCP Midstream, the entity that owns the general partner of DCP Midstream Partners, describing DCP’s strategy to position itself as the premier one-stop services company to get natural gas liquids from the well to customers. “We are on the front end of this energy revolution."[786]
August 24, 2012: DCP Midstream GP appoints Bill Waldheim as New President
Equities.com reported on August 24, 2012 that Bill Waldheim has been appointed to the position of president of DCP Midstream General Partner effective September 1, 2012. Bill Waldheim is currently the president of the natural gas liquids, gas, and crude oil logistics business unit for DCP Midstream, LLC, a position he has held since 2011. Prior to that time, Waldheim was president of DCP Midstream, LLC's northern business unit since 2009 and was responsible for executive management of commercial and operations of assets in the Midcontinent, Rocky Mountain, Michigan and Gulf Coast regions as well as being responsible for downstream marketing of gas, NGLs and condensate. "The Board believes that Bill Waldheim has the demonstrated leadership skills and capabilities to ensure the long term growth and stability of DCP Midstream Partners, LP, or the 'Partnership' as we continue to execute on our multi-faceted growth strategy with increased emphasis on co-investment with DCP Midstream, LLC," said Tom O'Connor, the chairman of the board of the General Partner. "Through Bill's leadership DCP has been able to advance numerous high value projects including Sand Hills and Southern Hills pipelines."[787]
August 21, 2012: CEO Mark Borer of DCP Midstream General Partner Resigns
FuelFix reported on August 21, 2012 that DCP Midstream Partner’s Chief Executive Officer Mark Borer will resign at the end of the 2012. “I have been with the DCP enterprise since 1999 and am honored to have been a key executive during its growth into the largest NGL producer in the United States,” said Borer in a written statement. “With an effectively planned succession and transition, now is the time for me to retire from the Partnership and experience other avenues of personal and professional growth.”[788]
August 8, 2012: DCP Midstream Year-to-Year Adjusted Net Income Down in 2nd Quarter
Nasdaq reported on August 8, 2012 that DCP Midstream reported adjusted net income attributable to the company for the quarter was $13.9 million or $0.08 per limited partner unit, compared to the net income of $20.5 million or 0.33 per limited partner unit a year ago.[789][790]
August 6, 2012: DCP Midstream set to Double Processing Capacity in Colorado
The Denver Post reported on August 6, 2012 that DCP Midstream plans to double its capacity in the Denver-Julesberg Basin increasing processing capacity to 800 million cubic feet per day for natural gas and 70,000 barrels a day for liquids by 2014. "The Denver-Julesberg Basin continues to reinvent itself, and the introduction of horizontal drilling is uncovering associated natural gas discoveries in the Niobrara Shale and Codell formations," says Wouter van Kempen, president of the company's gathering and processing business unit. DCP Midstream recently broke ground on a plant, west of LaSalle in Weld County, with a capacity of 110 million cubic feet per day, due to be completed in the second half of 2013 and is also constructing two compressor stations near the LaSalle Plant, and an associated gathering system due to be in service by the second half of 2013.[791]
July 26, 2012: DCP Midstream Increases Quarterly Distribution to Partners
Marketwatch reported on July 26, 2012 that the board of directors of DCP Midstream declared a quarterly cash distribution of $0.67 per unit for the quarter ended June 30, 2012, an increase of 1.5 percent over the last quarterly distribution of $0.66 per unit paid May 15, 2012.[792]
July 25, 2012: DCP Midstream Fined $631,000 For 11 Air Quality Violations
Permian Basin 360 reported on July 25, 2012 that the Texas Commission on Environmental Quality fined DCP Midstream $631,628 for 11 different air quality violations found during an inspection at a DCP Midstream, LP site in Panola County on August 9, 2011.[793]
July 13, 2012: DCP Midstream Breaks Ground on $270 Million Facility in Colorado
Denver Business Journal reported on July 13 that DCP Midstream LLC of Colorado broke ground in June on its $270 million processing plant in Weld County. DCP also recently grew its Mewbourn Plant just south of Greeley, to keep up with demand from clients working in theDenver-Julesburg Basin in northeastern Colorado.[794]
July 5, 2012: DCP Midstream Completes Acquisition of Crossroads Processing Plant
DCP Partners Midstream issued a press release on July 5, 2012 that the company had completed the acquisition of the Crossroads Processing Plant for $63 million.[795]
June 18, 2012: DCP Midstream Partners to Acquire Crossroads Processing Plant
DCP Midstream Partners, a joint venture between Spectra Energy and Phillips 66, issued a press release on June 18, 2012 announcing that has entered into an agreement with Penn Virginia Resource Partners, L.P. ("PVR") to acquire the Crossroads processing plant and associated gathering system, for approximately $63 million. The Crossroads system, located in the southeastern portion of Harrison county in East Texas, includes approximately 8 miles of gas gathering pipe, an 80 million cubic feet per day cryogenic processing plant, approximately 20 miles of NGL pipeline and a 50% ownership in an approximately 11-mile residue gas pipeline. This system will allow the Partnership to increase critical midstream services to producers that are expanding their liquids rich Haynesville shale and Cotton Valley drilling programs in East Texas. "This immediately accretive acquisition provides us with an opportunity to increase our market position in East Texas and demonstrates our commitment to provide integrated midstream services to our customers," said Mark Borer, president and CEO of the Partnership. "The addition of the Crossroads system is a synergistic bolt-on acquisition to our existing East Texas system and will expand our processing capabilities to support our customers' growth."[796]
June 6, 2012: DCP Midstream's Plans Move Forward on Building Large Propane Tank in Maine as Opposition Grows
The Free Press reported on June 6, 2012 that Searsport officials met with representatives of DCP Midstream on June 4, 2012 to review the company's application to build a 23-million-gallon propane storage facility at Mack Point and found the application was missing a gas storage tank permit from the Maine Fuel Board and was also missing some minor but important documentation, including the square footage of each individual building and structure proposed for the development and written documents to town officials and abutting property owners informing them of the development. When the application is deemed complete, the planning board begins reviewing the contents of the application and must schedule a public hearing within 30 days.[797]
June 1, 2012: Plan for DCP Midstream's Giant Propane Gas Tank in Maine Generates Opposition
The Maine Public Broadcasting Company reported on June 1, 2012 that DCP Midstream's plan to build a 137-foot high, 23-million gallon liquid propane gas tank next to the Mack Point industrial area has generated heated opposition in communities along the midcoast as selectmen on the island community of Islesboro added their names to the list of people raising concerns about the tank. "Concerns about the project on the mainland have fallen into several categories," writes Jay Field. "There are those who say the tank is simply an eyesore that dwarfs all other industrial facilities in the area and threatens the sense of place on the midcoast. Others dread the large increase in truck traffic on Route 1 that will come if the project moves forward. Still others worry about the safety hazards of storing so much highly-flammable, liquid petroleum gas in one place." Even if it's approved, the project is all but certain to be challenged in court by opponents for years to come.[798]
May 26, 2012: Oklahoma Property Owners Fight DCP's Gas Pipeline
The Daily Oklahoman reported on June 18, 2012 that DCP Midstream has filed lawsuits in district court that seek eminent domain judgments against 14 property owners in Oklahoma County as landowners have rejected DCP offers to pay for a portion of their land and say they will fight to keep the company off their land. “It’s not a matter of money for most of us, it’s a matter of principle,” says Joe Freund, a retired physician who lives on 40 acres of forestland about a mile east of Arcadia who is concerned that clearing a 75-foot wide strip of forest that runs the length of his property would tarnish the aesthetics that attracted him to this plot in the first place. “They claim that it’s for the public good and perhaps it is, but they won’t even move their pipeline one inch to avoid taking down trees a hundred years old.” DCP Midstream says the pipeline would tie gathering and processing systems across central and western Oklahoma to their existing line and is part of $2 billion in capital investments currently under development by DCP. “It’s about de-bottlenecking for the producers and finally giving them an opportunity to get their product to market," says Roz Elliott, vice president at DCP Midstream, adding that DCP hopes to run 250 million cubic feet of liquid natural gas to coastal markets every day by the middle of 2013.[799]
Conclusions
Note: This section of the report contains our conclusions based on the documented facts that are presented in the rest of the report. All responsibility for the conclusions are ours. If you have any additional information or insights that you would like to see added to this report please contact Hugh Pickens by email at hughpickens AT gmail DOT com.
Our analysis of the information publicly available on Phillips 66 leads us to the following conclusions:
Positives
- The Refining and Marketing Business Segment will be more important to Phillips 66 than it was to ConocoPhillips.
- The Refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips.
Negatives
- The Refining and Marketing Business Segment is the least profitable Business Segment and will be de-emphasized with unprofitable refineries closed or sold off.
- There will be a reduction in Capital Allocation to the Refining and Marketing Business Segment.
- The Refinery in Ponca City is unlikely to be closed or sold In the medium term as margins have been strong in the Mid-Continent Segment and are expected to remain high for the next three to five years.
Refinery and Marketing Segment will be More Important to Phillips 66 than it was to ConocoPhillips
Based on the earnings contribution of the Refining and Marketing business segment, it is possible to estimate the relative importance of the segment to the overall business of both ConocoPhillips and Phillips 66. For Q1 2012 Exploration and Production (E&P) had $2,548M in earnings, Midstream was $93M, Chemicals was $218M, and finally Refining and Marketing was $452M. The total earnings for ConocoPhillips is $3,310M of which R&M's contribution was 13.7%. Considering only the three business segments that will be moving over to Phillips 66, the total earnings were $763M of which the same R&M's contribution was 59.2%. In other words, relatively speaking the R&M business segment is moving over from a small fish in a big pond (ConocoPhillips) to a big fish in a small pond (Phillips 66). The same earnings contribution from the Refining and Marketing Business Segment is 4.3 times as important to Phillips 66 as it was to ConocoPhillips.[800]
The Refinery in Ponca City will be More Important to Phillips 66 than it was to ConocoPhillips
ConocoPhillips does not break out earnings numbers to each refinery. However it is possible to make an estimate of the contribution of Ponca City's refinery to the overall Refinery and Marketing segment by looking at the production of the refineries. According to Garland's presention to financial analysts on April 9, 2012, although ConocoPhillips has reduced throughput refining capacity about 450,000 barrels a day over the past three years, in 2011 it stood at about 2.2 Million barrels per day. According to ConocoPhillips figures, the Ponca City refinery has a crude oil processing capacity of 187,000 barrels per day.[801] In terms of throughput capacity, Ponca City provides 8.5 per cent of Phillips 66 production. From a business standpoint, what is important is the earnings contribution. The Ponca City refinery is part of the Mid-Continent segment with about 21% of Phillips 66 capacity and margins have been very strong in this area so the contribution to earnings would exceed the contribution to throughput. We estimate that the Ponca City refinery contributes about 10% of the earnings to the Refining portion of the Refining and Marketing business segment.
A detailed financial analysis found that the Ponca City Refinery earned a net profit of over $500 million in 2011 and is on track to earn in exess of $600 million in 2012, contributing more than one-quarter of the net income to Phillips Refining bottom line and contributing more than the the total of the seven least profitable Phillips refineries combined.[802]
R&M Segment is the Least Profitable Business Segment and Will be De-Emphasized
The three operating segments of Phillips 66 have very different ROCE's. In 2011 the ROCE of the Refining and Marketing segment was 12%, the ROCE of the Midstream segment was 30%, and the ROCE of the Chemical segment was 28%. Because the ROCE of the Chemical segments and the Midstream segments is so much higher than the ROCE in the R&M segment, Garland plans to plans to aggressively grow the Chemicals and Midstream segments of Phillips 66 and de-emphasize the Refining and Marketing segments of the company.
According to information available on April 17, 2012, Phillips 66 plans to aggressively grow the Chemicals and Midstream segments of the new company and de-emphasize the Refining and Marketing segment of the company. The Refinery and Marketing segment of the company is the lowest profit margin segment of the company and Phillips 66 plans on selling and shutting down unprofitable assets in this segment.
There will be a Reduction in Capital Allocation to R&M Segment
Phillips 66 plans a major change in this allocation. "Long-term we have a vision that about 50% of our capital employed will be directed towards the R&M segment (down from 84% in 2011). And the other 50% will be directed towards Midstream and Chemicals." This is a 40% reduction in capital allocation from from 84% of capital allocated to the R&M segment in 2011. The conclusion we draw is that there will be less capital investment and improvements in the existing Phillips 66 refineries in general and in the refinery in Ponca City in particular.
Refinery in Ponca City Unlikely to be Closed or Sold in the Near Term as Margins Have Been Strong in the Mid-Continent Segment
The Ponca City refinery is part of the Mid-Continent segment with about 21% of Phillips 66 capacity and margins have been very strong in this area. The conclusion we draw is that although Phillips 66 plans to sell or close down some of their less profitable refineries, it is unlikely that any of those in the mid-continent region would be closed.
Phillips 66′s most profitable refineries of the past couple years are in the Mid-Continent including the Sweeny refinery, Ponca City, Wood River and Billings. The reason for their high profitability has been the glut of crude oil pouring into the region from newly tapped shale oil plays like North Dakota’s Bakken. In an April conference call with analysts, Garland said the company had been generating $90 million in annual net income for every dollar of WTI-Brent price differential that it could capture for its refineries. However, this opportunity is not going to last long term because there will soon be plenty of new options for getting crude out of Cushing and Garland agrees that the price differential will collapse. “Over three to five years those wide differentials that we’re seeing in the Midcon will collapse to the transportation differential,” he told me. “So more like $3 to $5 a barrel. It’s not going to be $20 forever.”[803]
What Does the Creation of Phillips 66 Mean to Ponca City?
The refinery in Ponca City will be more important to Phillips 66 than it was to ConocoPhillips - 4.3 times as important - because the Refining and Marketing business segment will be a larger part of Phillips 66, a smaller company, focused on downstream operations, than it ever was to ConocoPhillips, where the Refining and Marketing business segment was only a small part of the company, dwarfed by the exploration side of the house. Since the refinery in Ponca City is part of the more profitable mid-continent segment (ConocoPhillips does not break out earnings by refinery.) the refinery is more important to the profitability of Phillips 66 than than it was to ConocoPhillips. Because of these two factors the refinery in Ponca City can expect more attention at the corporate level. The refinery can expect more visits from Phillips 66 upper management. The refinery can expect that technical and community concerns will be listened to with more attention.
Although Phillips 66 is already moving to sell two of its least profitable refineries, it is unlikely that Phillips 66 will move quickly to sell the refinery in Ponca City because of its complexity and the high profitability of the mid-continent segment which is expected to last another three to five years. On the downside, although the Refining and Marketing Business segment of Philips 66 makes the largest overall contribution to the company's earnings, in terms of percentage profitability it is the least profitable business segment with only a 10% COBE so Phillips 66 has made a decision to de-emphasize Refining and Marketing and increase the investment in the Chemical and Midstream business segments with higher COBE's which is also where the new CEO, Greg Garland has his background. Because of this factor, the refinery in Ponca City can expect that there will be relatively little interest at the corporate level at expanding the refinery or making new investments in the refinery.
External Links
Corporate Links and Presentations
- Phillips 66 Presentations & Conference Calls
- "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland September 5, 2012
- Slide Presentation for Phillips 66 second-quarter earnings call August 1, 2012
- Transcript for Phillips 66 second-quarter earnings call August 1, 2012
- Presentation by Clayton Reasor to UBS Conference May 24, 2012
- Slide Presentation for Phillips 66 Investor Update April 9, 2012
- Transcript of Phillips 66 Analyst Update April 9, 2012
- Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011
- ConocoPhillips Analyst Meeting - Color Slides "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ConocoPhillips Worldwide Refining
- We Are Phillips 66 (YouTube Video)
- Transcript of Phillips First Stockholder's Meeting May 8, 2013
Third Party Links and Presentations
- Honor the Legacy of EW Marland
- Weekly Lists of Refinery Events compiled by the United Steelworkers
- Department of Energy "Energy Assurance Daily"
- EPA Greenhouse Gas Emissions from Large Facilities
References
- ↑ The Center for Association Leadership. "Getting It Done: Larry Bossidy on Execution" retrieved May 18, 2012.
- ↑ Strategy + Business. "Larry Bossidy: The Thought Leader Interview" by Randall Rothenberg. 2002.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
- ↑ Petroleum Economist. "ConocoPhillips splits and the experiment begin" by Shaun Polczer. May 25, 2012.
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Tulsa World. "ConocoPhillips streamlines with Phillips 66 refining side spinoff" by Rob Walton. "April 28, 2012.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips. "Creating Two Leading Energy Companies" July 14, 2011.
- ↑ ConocoPhillips Final Transcript "ConocoPhillips Conference Call to Discuss its Pursuing Plan to Separate Into Two Stand-Alone, Publicly Traded Companies" July 14, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ Tulsa World "ConocoPhillips to call its downstream firm Phillips 66" by Rod Walton. November 11, 2011.
- ↑ ConocoPhillips. "ConocoPhillips’ Board of Directors Approves Spin-off of Phillips 66" April 4, 2012
- ↑ Convenience Store News. "ConocoPhillips CFO: Phillips 66 Spinoff Will Definitely Be on May 1" by Brian Berk. April 23, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ CSPNet. "Phillips 66 Rises Again" November 11, 2012.
- ↑ ConocoPhillips "FAQs:Why was the name Phillips 66 chosen?" retrieved April 26, 2012.
- ↑ 25.0 25.1 Houston Chronicle. "Spun-off refiner gets Phillips 66 name" by Simone Sebastian. November 10, 2011.
- ↑ Phillips 66 Web Site. "Our History" retrieved April 26, 2012.
- ↑ Houston Chronicle. "Spun-off refiner gets Phillips 66 name" by Simone Sebastian. November 10, 2011.
- ↑ Bartlesville Examiner-Enterprise. "ConocoPhillips, Phillips 66 embark on a new future" April 29, 2012.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
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- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
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- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.
- ↑ Houston Business Journal. "Day in the Life with Pete Cella of Chevron Phillips Chemical Company" August 10, 2012.
- ↑ Tulsa World. "Tulsa Index stocks surge in third quarter" by Laurie Winslow. October 3, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Phillips 66. "2012 Barclays CEO Energy-Power Conference" presented by Phillips CEO Greg Garland. September 5, 2012.
- ↑ Wikipedia. "Return on capital employed" retrieved Arpil 23, 2012.
- ↑ Fox News. "Phillips 66 CEO Says Decision on Louisiana Refinery Will Come in Summer: June 5, 2012.
- ↑ Houston Business Journals. "Phillips 66’s new investments represent shift from refining to promise of high-margin markets" by Molly Ryan. February 11, 2013.
- ↑ ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
- ↑ ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
- ↑ Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Seeking Alpha. "Phillips 66: A Lot Of Upside Potential" by Simon Moore. May 10, 2012.
- ↑ Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014
- ↑ Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.
- ↑ Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.
- ↑ Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.
- ↑ Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.
- ↑ Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.
- ↑ Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014
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- ↑ Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.
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- ↑ Fuelfix. "Phillips 66 increases capital budget, approves more buybacks" July 10, 2014
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13. 2012.
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- ↑ Houston Chronicle. "Oil giant's profit falls before spinoff" by Simone Sebastian and Emily Pickrell. April 23, 2012.
- ↑ Tul;sa World. "10 years after merger, ConocoPhillips to split" by Rod Walton. April 28, 2012.
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- ↑ Houston Chronicle. "Oil giant's profit falls before spinoff" by Simone Sebastian and Emily Pickrell. April 23, 2012.
- ↑ Tulsa World. "10 years after merger, ConocoPhillips to split" by Rod Walton. April 28, 2012.
- ↑ Bartlesville Examiner-Enterprise. "ConocoPhillips, Phillips 66 embark on a new future" April 29, 2012.
- ↑ New York Times. "Golden Parachutes Are Still Very Much in Style" by Pradnya Joshi. June 29, 2013.
- ↑ Austin Business Journal. "High-profile oilman gives $75M gift to University of Texas for medical research" December 14, 2016.
- ↑ Fox 11. "Expanded SNC sports center to be named for Mulva family" April 28, 2016.
- ↑ Huffington Post. "ConocoPhillips CEO Gets $260 Million On His Way Out The Door" March 28, 2013.
- ↑ ValueWalk. "As Tide Goes Out, Effects Of Buybacks Exposed – The ConocoPhillips (COP) Poster Child" by 720 Global. February 10, 2016.
- ↑ Bloomberg. "CEO Pay: Is It Still Out of Sync?" by Jena McGregor and Nanette Byrnes. August 26, 2009
- ↑ We Are Green Bay. "New cultural facility in the works for De Pere" by Kris Schuller. October 27, 2015.
- ↑ Huffington Post. "ConocoPhillips CEO Gets $260 Million On His Way Out The Door" March 28, 2013.
- ↑ Detroit News. "GM CEO Akerson paid $7.7M in 2011" by Melissa Burden. April 26, 2012.
- ↑ Your Houston News. "James Mulva leads off ALPS fall lectures" September 4, 2012.
- ↑ University of Texas. "Mulva Family Donates $60 Million to Business and Engineering Schools" January 24, 2014.
- ↑ ConocoPhillips "Greg C. Garland" retrieved April 23, 2012.
- ↑ Chevron Phillips. "Company Overview" retrieved November 10, 2013.
- ↑ Businessweek. "Conoco Names CEOs for New Production, Refining Companies" by Jim Polson and Edward Klump. October 7, 2011.
- ↑ University of Colorado. "Greg Garland, Phillips 66 CEO, visits CU-Boulder" April 25, 2013.
- ↑ Texas A&M. "Texas A&M Engineering Education Complex receives major donation from Phillips 66" October 30, 2014.
- ↑ Phillips 66. "Greg Garland" retrieved November 5, 2015.
- ↑ Barrons. "Wall Street Should Pump Up Phillips 66's P/E" by Andrew Bary. June 9, 2012.
- ↑ ConocoPhillips "Greg C. Garland" retrieved April 23, 2012.
- ↑ ConocoPhillips "Greg C. Garland" retrieved April 23, 2012.
- ↑ University of Colorado. "Greg Garland, Phillips 66 CEO, visits CU-Boulder" April 25, 2013.
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- ↑ FuelFix. "Line of succession: ConocoPhillips overhauls its executive ranks" by Tom Flowler. October 7, 2011.
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- ↑ FuelFix. "ConocoPhillips keeps looking for Dream Team, but what about the coach?" by Tom Fowler. October 7, 2010.
- ↑ Reuters. "ConocoPhillips names insiders to head new units" October 7, 2013.
- ↑ Houston Chronicle. "ConocoPhillips split becomes official as company 'shrinks to grow'" by Simone Sebastian and Emily Pickrell. April 30, 2012.
- ↑ Oxy. "Occidental Petroleum Corporation Names WCW Chiang Executive Vice President, Operations" May 23, 2012.
- ↑ Reuters. "ConocoPhillips names insiders to head new units" October 7, 2011.
- ↑ Reuters. "BRIEF-Phillips 66 says CEO Greg Garland's 2016 total compensation was $25.1 mln" March 22, 2017.
- ↑ Guru Focus. "Phillips 66 (PSX) Chairman and CEO Greg C. Garland Sold $6.4 million of Shares" November 14, 2016.
- ↑ The Bibey Post. "PHILLIPS 66 (NYSE:PSX)’S STOCK INSIDER SELLING – GREG GARLAND UNLOADED 62,500 SHARES" June 6, 2016.
- ↑ American Petroleum Insitute. "API Board elects Ryan Lance as chair, Greg Garland as finance chair" November 9, 2015.
- ↑ Houston Chronicle. "Overall, executive pay is down, but not for top energy chiefs" by L. M. Sixel. July 25, 2015
- ↑ Houston Chronicle. "Overall, executive pay is down, but not for top energy chiefs" by L. M. Sixel. July 25, 2015
- ↑ Reuters. "Phillips 66 cuts CEO bonus after 2014 share decline" March 9, 2015.
- ↑ Houston Business Journal. "5 Houstonians to know — the public company edition" by B. Candace Beeke. June 29, 2015.
- ↑ Reuters. "Phillips 66 cuts CEO bonus after 2014 share decline" March 9, 2015.
- ↑ Argus Media. "Analysis: Cushing storage on track to fill by May" March 2, 2015.
- ↑ the Daily Cougar. "Phillips 66 CEO talks responsibility, ethical practices to students" by Conrad Schafman. September 25, 2014.
- ↑ Fortune Magazine. "Fortune 500 for 2014 - Phillips 66" retrieved October 7, 2014.
- ↑ Borger by Jane Snyder Agee. Copyright 2012. page 49.
- ↑ The statement that Borger refinery has a "troubled history" is the result of analysis by Hugh Pickens. See following footnotes.
- ↑ The Frederick Daily Leader reported on October 26, 1979 that two refinery workers trying to repair equipment at the Phillips Petroleum refinery at Borger, Texas were killed and 11 other were injured by deadly fumes from a paralyzing gas or acid lead in the area where they were working. One of the injured was in "very critical" condition. The accident occurred when either hydrogen sulfide gas or hydrflouric acid began leaking. "Apparently, ther was just a leakage of gas, said Jim Ormsby, director of human resources at Phillips. Ormsby said the situation had been brought under control and work at the plant was not interrupted. Frederick Daily Leader. "Fumes at Refinery Kill Two, Injure 11 Borger Workers" October 26, 1979.
- ↑ Officials said they were relatively certain the disabling fumes were from hydrogen sulfide gas that dissipated quickly, but the substance could have been dhydroflouric acid. A Lubbock, Texas, doctor said strong doses of hydrogen sulfide immediately paralyze the respiratory system and can kill within seconds. The gas is very dangerous, the doctor said, because it quickly overcomes a person's sense of smell. Ormsby said the 13 workers had been overhauling an "alkylation unit" at refinery unit 22 in recent weeks and "were getting it ready to start up." The fumes from the leak drifted over a platform crowded with workers after 1 pm, Ormsby said. Times-Union. "Fumes From Leakage At Refinery Kill 2" October 26, 1979.
- ↑ Phillips Petroleum was fined $19,600 for violating government safety regulations in connection with the death of the two workers at Borger Refinery. OSHA cited Phillips for "two willful and two serious" safety violations after the two workers fell to their deaths after they inhaled lethal gas on October 25, 1979 during a maintenance check of a special refinery tower at the refinery. Willful violations are those committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act and OSHA regulations. A serious violation is defined as one in which there is a substantial probability that death or serious physical harm could result, and the employer knew or should have known of the hazard. Jerry Bailey, OSHA's area director, said that while the autopsies were inconclusive, there was "strong evidence" to show the men died from hydrogen sulfide poisoning. The Prescott Courier. "Oil Firm Fined in Deaths" December 28, 1979.
- ↑ Bailey added that an OSHA inspector noted the two men did not have respirators, breathing equipment or facial protection available to them when toxic gas spewed from a pipe thought to be empty. "We feel that had Phillips been in compliance with regulations, the deaths could have been prevented," Bailey said. Lawrence Journal-World "Report Says Phillips Hit with Safety Fine" December 30, 1979.
- ↑ Dan Murtaugh reported at Businessweek on July 3, 2014 that Phillips plans to shut most of its Borger Refinery for as long as 35 days after it was unable to recover from a power failure, according to a report from Energy News Today. Phillips declined to comment on the report when contacted by Bloomberg. Businessweek. "Trains Keep Rolling From Permian Basin on Crude Discounts" by Dan Murtaugh. July 3, 2014.
- ↑ Greg Garland told analysts during the 2nd quarter earnings conference on July 30, 2014 that with Borger's major turnaround in March and the 30-day-plus outage in July, Borger hasn't run well this year. "So we're working on improving operational reliability at Borger really to me are expectations. But the July event, by the way Borger is back up and running today. But July then was unplanned outage." Seeking Alpha. "Phillips 66's (PSX) CEO Greg Garland on Q2 2014 Results - Earnings Call Transcript" July 30, 2014.
- ↑ Phillips said it would shut most of the production units at its refinery in Borger, Texas, over the July Fourth weekend to start a month of repairs following a power outage early this week, said sources familiar with operations at the refinery. The company had already been planning to shut the refinery's 25,000 b/d delayed coking unit over the weekend for a three-week overhaul, sources told Reuters. Trade sources have said the refinery was planning a multi-unit overhaul this month to correct operational problems created by the power outage. US Department of Energy. "Energy Assurance Daily" July 7, 2014
- ↑ CSP Daily News reported on March 26, 2014 that Phillips will pay a $500,000 penalty for violations of the Clean Air Act at the Borger Refinery in Borger, Texas, the Lake Charles Refinery in Westlake, La., the Wood River Refinery in Roxana, Ill., the Alliance Refinery in Belle Chasse, La., the Sweeny Refinery in Old Ocean, Texas, and several terminals across the country. Phillips also agreed to retire more than 21 billion sulfur credits that could have been used in the production of gasoline, which could potentially lead to significantly less pollution from vehicles. In a administrative settlement agreement, the EPA alleged that the company generated invalid sulfur credits between 2006 and 2012 and that Phillips failed to comply with recordkeeping, reporting, sampling and testing requirements at the five refineries. EPA discovered these violations during facility inspections and through a review of company records, which included the results of third-party company audits required by the Clean Air Act. CSP Daily News. "Phillips 66 to Pay $500,000 Over Clean Air Act Violations" March 26, 2014.
- ↑ Channel 7 Amarillo reported on March 18, 2014 that two Phillips employees and a contractor were injured in an accident at Borger refinery that took place at about 5 pm on March 18, 2014. The injured were taken to Golden Plains Community Hospital to receive medical treatment and the condition of the individuals is not life threatening. One employee is at Golden Plains Community Hospital, the second has been transported to the Lubbock Burn Center, and the contract worker is under observation at Golden Plains Community Hospital. Scanner traffic indicated the injured had been exposed to hydrogen sulfide. Phillips is investigating the incident. Channel 7 Connect Amarillo. "Phillips 66 employees hospitalized" by Larry Lemon. March 18, 2014.
- ↑ According to the "Borger News-Herald" the incident occurred during turnaround at the unit that handles hydrofluric (HF) acid. The hydrofluric acid unit was shut down at the time the accident occurred. Phillips did not confirm the exact nature of the incident. Phillips is investigating the cause and implications of the incident and details are still being clarified as the influx of turnaround workers has increased traffic inside the plant. "We want to figure out exactly what happened," said Dennis Nuss, a Senior Advisor for Phillips 66 who works with Project Communications. "We want to make sure that something similar will not happen again." When asked if the incident was due to either a chemical exposure or a fire, Nuss said, "There was no fire." The Borger News-Herald is reaching out to contract companies and contractors for more information and will update the story as more information is released. Borger News-Herald. "Workers injured in industrial accident at Phillps 66" by JC Cortez. March 19, 2014.
- ↑ KVII-TV in Amarillo, Texas, reported on May 1, 2012 an employee at the Phillips 66 refinery in Borger, Texas fell from a height of 100 feet at about 3pm and was taken to the Golden Plains Community Hospital in Borger where he died. "ConocoPhillips deeply regrets the loss of our employee and wishes to extend sympathy to the employee's family, friends and co-workers," said spokesman Rich Johnson. "ConocoPhillips is investigating the cause of the accident." Officials with Phillips 66 say the incident remains under investigation. It is reported that this is the first fatality at the refinery in 25 years. Reuters. "Employee dies after fall at Phillips refinery" May 1, 2012.
- ↑ ConnectAmarillo.com "Borger ConocoPhillips employee dies after falling" by Travis Ruiz. May 1, 2012.
- ↑ Tulsa World. "Phillips 66 CEO addresses fuel efficiency, overseas market" by Susan Hylton. August 27, 2013.
- ↑ Presentation to the Bartlesville Chamber of Commerce by Phillips CEO Greg Garland. August 13, 2014
- ↑ Bartlesville Examiner-Enterprise. "Phillips 66 gives $1.7M to BPSD" by Nathan Thompson. August 13, 2014.
- ↑ Presentation to the Bartlesville Chamber of Commerce by Phillips CEO Greg Garland. August 13, 2014
- ↑ Presentation to the Bartlesville Chamber of Commerce by Phillips CEO Greg Garland. August 13, 2014
- ↑ Tulsa World. "Ponca City losing hundreds of ConocoPhillips jobs" February 27, 2009.
- ↑ Bartlesville Examiner-Enterprise. "Phillips 66 CEO: Company remains committed to Bartlesville" by Nathan Thompson. August 13, 2014.
- ↑ Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.
- ↑ Pickens' source for the information on the Phillips 66 Signature Community Initiative grant application that was turned down is a Ponca City official who spoke on background and requested that he remain an unnamed source. The source added that Phillips provided very little information on why the application was turned down or how the application could be improved in a future round of grants. Comment made on August 22, 2014.
- ↑ Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.
- ↑ 4-traders. "Insys Therapeutics Inc : Stock Price Movements, Clinical Study Results, and New Appointments - Research Report on Pfizer, Gilead Sciences, Amgen, Celgene, and Insys Therapeutics" October 22, 2013.
- ↑ CSPNet. "Phillips 66 Rises Again" November 11, 2012.
- ↑ ConocoPhillips "FAQs:Why was the name Phillips 66 chosen?" retrieved April 26, 2012.
- ↑ Bartlesville Examiner-Enterprise. "Phillips 66 CEO praises city" by Kelcey King. August 28, 2008.
- ↑ Tulsa World. "Spinoff of Phillips 66 positive, profitable, CEO Greg Garland tells Bartlesville chamber" by Rod Walton. September 12, 2012.
- ↑ Bartlesville Examiner-Enterprise. "CEO: City strategic to Phillips 66" by Jessica Miller. September 13, 2012.
- ↑ Bartlesville Examiner-Enterprise. "CEO: City strategic to Phillips 66" by Jessica Miller. September 13, 2012.
- ↑ Businessweek. "Executive Profile - Greg C. Garland"
- ↑ ConocoPhillips. "John E. Lowe, Executive VP, Planning, Strategy & Corporate Affairs" retrieved April 28, 2012.
- ↑ The Street. "Phillips 66 Board Elects A New Director" from Business Wire. May 10, 2012.
- ↑ CBS News "Phillips 66 Names Board of Directors" April 16, 2012.
- ↑ Marketwatch. "ConocoPhillips Announces Future Board of Directors for Phillips 66" April 16, 2012.
- ↑ Businesswire. "Phillips 66 Board Elects New Directors" October 7, 2016.
- ↑ Reuters. "S&P rates Phillips 66 Co. 'BBB' with stable outlook" by Standard and Poor. December 3, 2012.
- ↑ WatchList News. "Phillips 66 Assigned A Credit Rating (PSX)" September 7, 2015.
- ↑ Mideast Times. "Phillips 66 Receives A Credit Rating from Morningstar (PSX)" April 27, 2015.
- ↑ Moody's "Rating Action: Moody's upgrades Phillips 66 to A3" August 26, 2014.
- ↑ Fort Mills Times. "A.M. Best Affirms Ratings of Spirit Insurance Company" June 6, 2013.
- ↑ Fort Mills Times. "A.M. Best Affirms Ratings of Spirit Insurance Company" June 6, 2013.
- ↑ Reuters. "S&P rates Phillips 66 Co. 'BBB' with stable outlook" by Standard and Poor. December 3, 2012.
- ↑ Businesswire. "Phillips 66 Appoints Government Affairs Executive" July 30, 2012.
- ↑ The Telegraph. "Shimkus, Bost talk Canadian crude" by Cory Davenport. October 20, 2014.
- ↑ Legal Times. "Phillips 66 Retains Van Ness Feldman as New D.C. Lobbyists" by Andrew Ramonas. February 20, 2013.
- ↑ Legal Times. "Phillips 66 Retains Van Ness Feldman as New D.C. Lobbyists" by Andrew Ramonas. February 20, 2013.
- ↑ Fuel Fix. "Refining chiefs expect more regulations under Obama" by Simone Sebastian. November 14, 2012.
- ↑ Detroit News. "NADA president to join Phillips 66 as top lobbyist" by David Shepardson. July 30, 2012.
- ↑ Businesswire. "Phillips 66 Appoints Government Affairs Executive" July 30, 2012.
- ↑ Virtual Strategy. "Phillips 66 Us Marketing Wins The American Marketing Association Houston Chapter 2014 Marketer Of The Year Award" March 6, 2014.
- ↑ New Times. "Good Fences" by The Shredder. December 31, 2014.
- ↑ Santa Maria Sun. "Judge rules that Phillips 66 news media policy violates the law" by David Minsky. December 25, 2014.
- ↑ US News and World Report. "U.S. Deserves Candor, Transparency From Refineries" by Gregg Laskoski. January 2, 2013.
- ↑ Jalopnik. "Motor Trend Journalist Also Taking Money To Be A Spokesperson For An Oil Company" by Matt Hardigree. November 5, 2012.
- ↑ PR Newswire. "Phillips 66®, 76® and Conoco® Branded Fuels Announce New Findings on Millennials' Gasoline Buying Habits" September 6, 2012.
- ↑ Houston Business Journal. "Phillips 66 tops out new Houston headquarters (Video)" December 17, 2014.
- ↑ Houston Business Journal. "Phillips 66 switches contractors on new Houston campus" by Jordan Blum. October 31, 2014.
- ↑ Houston Business Journal. "Rendering: Phillips 66 breaks ground on new corporate campus" by Shaina Zucker. November 22, 2013.
- ↑ Houston Chronicle. "Phillips 66 reveals rendering of new HQ" July 23, 2013.
- ↑ Phillips 66. "Phillips 66 chooses site of new global headquarters" September 9. 2012.
- ↑ CSP Net. "Phillips 66 Setting Up Shop in Interim HQ" July 9, 2012.
- ↑ Houston Business Journal. "Phillips 66 to build new Houston headquarters" March 20, 2012.
- ↑ Bartlesville Radio KWON. "Philliips 66 Evaluating Controllable Expenses" January 23, 2015.
- ↑ Bartlesville Examiner-Enterprise. "Phillips 66 commitment strong" by Nathan Thompson. January 23, 2015.
- ↑ Businesswire. "Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay" December 5, 2015.
- ↑ Tulsa World. "Chevron Phillips Chemical to build pilot plant in Bartlesville" December 19, 2014.
- ↑ Bartlesville Examiner. "Phillips 66 CEO: Company remains committed to Bartlesville" by Nathan Thompson. August 13, 2014.
- ↑ Phillips 66 Press Release. "Phillips Announces 2015 Capital Program" December 5, 2014.
- ↑ KWOM. "Goff Tower To Be Reopened November 26th" November 19, 2014.
- ↑ Bartlesville Examiner-Enterprise. "Phillips 66 CEO: Company remains committed to Bartlesville" by Nathan Thompson. August 13, 2014.
- ↑ Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.
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- ↑ Tulsa World. "Phillips 66 cancels Colorado research center, putting to rest any worry for Bartlesville" by Rod Walton. October 27, 2012.
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- ↑ Riverbender. "Phillips 66 Wood River Refinery Sponsors SIUE Summer Camps" February 26, 2015.
- ↑ My Hih Plains. "Phillips 66 Presents $25,000 to Rolling Hills Elementary" by Sheryl Proctor. February 13, 2015.
- ↑ My High Plains. "Phillips Donates $15,000 to WT" by Karl Wehmhoener. January 30, 2015.
- ↑ Ponca City News. "Attucks Community Alliance Receives Phillips 66 Grant" January 30, 2015.
- ↑ New Jersey. "Phillips 66 awards $29,000 grant to RWJ Rahway" January 29, 2015.
- ↑ Ponca City News. "City Receives Phillips 66 Grant For Equipment At McGraw Park" January 22, 2015.
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- ↑ Tulsa World. "Phillips 66 CEO announces $1.7 million STEM grant for Bartlesville schools" by Laura Summers. August 13, 2014.
- ↑ Louisiana Tech University. "COES receives gift from Phillips 66 to support student education, experiences" by Dave Guerin. January 21, 2015.
- ↑ New Times. "Good Fences" by The Shredder. December 31, 2014.
- ↑ Plaquemines Gazette. "PHILLIPS 66 GRANTS $100K TO BELLE CHASSE YMCA" December 30, 2014.
- ↑ Paso Roble Daily News. "SLO Railroad Museum receives $30,000 donation" December 23, 2014.
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- ↑ The Telegraph. "Area United Way efforts raise $1.7M" December 9, 2014.
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- ↑ KWOM. "Goff Tower To Be Reopened November 26th" November 19, 2014.
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- ↑ Texas A&M. "Texas A&M Engineering Education Complex receives major donation from Phillips 66" October 30, 2014.
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- ↑ KPLC Tv. "LaGrange receives $100,000 grant from Phillips 66" October 28, 2014.
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- ↑ Stillwater News Press. "Oklahoma State University receives $500,000 gift from Phillips 66" September 9, 2013.
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- ↑ Hydrocarbon Processing. "Phillips 66, Chevron Phillips to fund new Texas petrochemical academy" Augusut 15, 2014.
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- ↑ [http://www.thestreet.com/story/12191517/1/buffetts-berkshire-plays-both-sides-of-phillips-66-breakup.html The Street. "Buffett's Berkshire Plays Both Sides of Phillips 66 Breakup" by Antoine Gara. December 31, 2013.]
- ↑ [http://www.thestreet.com/story/12191517/1/buffetts-berkshire-plays-both-sides-of-phillips-66-breakup.html The Street. "Buffett's Berkshire Plays Both Sides of Phillips 66 Breakup" by Antoine Gara. December 31, 2013.]
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- ↑ Wall Street Journal. "Phillips 66 to Proceed with Cross-Channel Connector Project" January 23, 2014.
- ↑ Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.
- ↑ Business Wire. "Phillips 66 Announces 2014 Capital Program" December 6, 2013.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q3 2013 Results - Earnings Call Transcript" October 30, 2013.
- ↑ 4-traders. "Exclusive: Activist Sandell urges strategic action on DCP Midstream" October 28, 2013.
- ↑ Albuquerque Business Journal "Gas plant planned near Carlsbad" by Gary Gerew. April 19, 2013.
- ↑ The Trinidad Times. "Pipeline permit delays project; Company would like to start June 1" by Steve Block. April 19, 2013.
- ↑ Channel 2 News "No one injured in Langston, Oklahoma DCP Midstream natural gas plant explosion" April 5, 2013.
- ↑ Channel 6 News. "Witnesses Describe Logan County Gas Explosion" by Heather Hope. April 5, 2013.
- ↑ Bangor Daily News. "Developer withdraws proposed Searsport tank application" by Abigail Curtis. April 2, 2013.
- ↑ Antonio Business Journals "DCP Midstream Partners increases ownership in Eagle Ford venture" by Mike Thomas. April 2, 2013.
- ↑ 4-traders. "Phillips 66 : Proposes Fractionator in Old Ocean, Texas" April 2, 2013.
- ↑ Reuters. "Phillips 66 midstream vehicle registers for $300 million IPO" March 27, 2013.
- ↑ Midland Reporter-Telegram. "DCP Midstream pipeline to serve Permian Basin by mid-2013" by Mella McEwan. March 13, 2013.
- ↑ Seeking Alpha. "Phillips 66's CEO Discusses Q4 2012 Results - Earnings Call Transcript" January 30, 2013.
- ↑ The Republican Journal. "Nearly 200 turn out for Saturday tank protest" January 8, 2013.
- ↑ Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13, 2012.
- ↑ Permian Basin 360. "No Injuries After Gas Line Explosion And Fire Near Goldsmith" December 5, 2012.
- ↑ Sacramento Bee. "Spectra Energy Corp Acquires One-Third Interest in Sand Hills and Southern Hills Pipelines" November 15, 2012.
- ↑ Madison Record. "Proposed consent decree reached over contamination at Cahokia site" by Bethany Krajelis. November 12, 2012.
- ↑ MarketWatch. "DCP Midstream Announces Opening of Sand Hills Pipeline Providing NGL Access from the Eagle Ford Shale" October 24, 2012.
- ↑ The Free Press. "Maine Fuel Board Approves Permit for Searsport Megatank" by Christine Parrish. September 7, 2012.
- ↑ Fuel Fix. "Company ramping up infrastructure for natural gas" by Emily Pickrell. September 2, 2012.
- ↑ Equities.com "DCP Midstream GP appoints new president" August 24, 2012.
- ↑ FuelFix. "CEO of DCP Midstream General Partner resigns" August 21, 2012.
- ↑ Nasdaq. "DCP Midstream Partners Q2 Profit Rises" August 8, 2012.
- ↑ Seeking Alpha. "DCP Midstream Partners' CEO Discusses Q2 2012 Results - Earnings Call Transcript" August 10, 2012.
- ↑ Denver Post. "DCP Midstream set to double processing capacity in Colorado" August 8, 2012.
- ↑ Marketwatch. "DCP Midstream Partners Declares Increase in Quarterly Distribution" July 26, 2012.
- ↑ Permian Basin 360. "T.C.E.Q. Fines DCP Midstream For Air Quality Violations" by Dylan Brooks. July 25, 2012.
- ↑ Denver Business Journal. "DCP Midstream expands to meet natural gas demand" by Paula Moore. July 13, 2012.
- ↑ Marketwatch. "DCP Midstream Partners Completes Crossroads System Acquisition in East Exas" July 5, 2012.
- ↑ BusinessWire. "DCP Midstream Partners to Expand East Texas Natural Gas Processing Business Through Acquisition of Crossroads Processing Plant" June 18, 2012.
- ↑ The Free Press. "Searsport Moving Forward on Building Large Propane Tank, Opposition Grows" by Christine Parrish. June 6, 2012.
- ↑ Maine Public Broadcasting Company. "Plan for Giant Propane Gas Tank in Searsport Generates Opposition" by Jay Field. June 1, 2012.
- ↑ NewOK.com "Oklahoma County property owners fight against gas pipeline" by Zeke Campfield. May 26, 2012.
- ↑ BusinessWire. "ConocoPhillips Reports First-Quarter Earnings of $2.9 Billion or $2.27 Per Share" April 23, 2012.
- ↑ ConocoPhillips. "Refining"
- ↑ Research and Ideas. "How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66?" by Hugh Pickens. July 24, 2012.
- ↑ Forbes Magazine. "As ConocoPhillips Spins Off Refining Assets, Think Twice Before Buying The New Phillips 66" by Christopher Helman. April 30, 2012.
Master Index of Articles about Phillips 66
by Hugh Pickens, Ponca City Oklahoma
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The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.
Major Sections of this report on Phillips 66 include:
About the Author
Hugh Pickens (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, crossed the empty quarter of Saudi Arabia, and built satellite control stations for Goddard Space Flight Center all over the world. Retired in 1999, Pickens and his wife moved from Baltimore back to his hometown of Ponca City, Oklahoma in 2005 where he cultivates his square foot garden, mows nine acres of lawn, writes about local history, photographs events at the Poncan Theatre and, with his wife, produce the annual Oklahoma Pride series at Ponca Playhouse.
In 1996, Pickens edited and published My Life In Review: Have I Been Lucky of What?, the memoirs of Jack Crandall, professor of history at SUNY Brockport. Since 2001 Pickens has edited and published “Peace Corps Online,” serving over one million monthly pageviews. Pickens' other writing includes contributing over 2,000 stories to “Slashdot: News for Nerds,” and articles for Wikipedia, “Ponca City, We Love You”, and Peace Corps Worldwide.
History, Biography, and Politics
- Jon Carson -The Man Who Won the Presidential Nomination for Barack Obama (>300,000 pageviews)
- Barack Obama's Mother Grew Up in Ponca City February 6, 2009 (>120,000 pageviews)
- America's Fresh Water Submarines in World War II (>40,000 pageviews)
- Academy Award Winning Screenwriter Chris Terrio (>90,000 pageviews)
- What Happened to Okies after "The Grapes of Wrath"
Science and Technology
- Stories on Slashdot
- Stories on Soylent News
- Building NASA's GRO Remote Terminal System (GRTS) in Australia
- Why I enjoy Writing for Slashdot
- Why I enjoy Writing for Wikipedia
Business
- An Independent Evaluation of Phillips 66, its Business Strategy, and Execution (>380,000 pageviews)
- A History of the Ponca Refinery in Ponca City (>110,000 pageviews)
- A Financial Model for Tucows and Ting (>110,000 pageviews)
Ponca City, Oklahoma
- Ponca City, We Love You
- The Pioneer Woman Models Should Return to Ponca City July 13, 2007
- The Pioneer Woman Models Come Home to Ponca City February 26, 2010
- President Barack Obama's Mother Grew Up in Ponca City February 6, 2009
- Standing Bear Looks to the Future
- What to See in Ponca City
- Ponca Playhouse to Present "The Broken Statue" January 17, 2012
- What Ponca City Owes EW Marland June 20, 2012
- How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66? July 23, 2012
- EW Marland and the Movie "The Ends of the Earth" May 23, 2013
Peace Corps Writing
- Peace Corps Online
- Peace Corps Library
- The Peace Corps "Sharp Incident" in Kazakhstan
- Senate Foreign Relations Committee Hearing on the Nominee for Peace Corps Director
- An Interview with Peace Corps Director Ron Tschetter
- An Interview with Peace Corps Director Gaddi Vasquez
- A Profile of Peace Corps Director Aaron Williams
Personal Essays
- Death Be Not Proud
- My Favorite Christmas
- A Victorian Mansion in Baltimore's Reservoir Hill
- Remembering John D MacDonald and His House on Siesta Key
Phillips 66
For nearly 100 years oil refining has provided the bedrock of Ponca City's local economy and shaped the character of our community. Today the Ponca City Refinery is the best run and most profitable of Phillips 66's fifteen worldwide refineries. The purpose of this collection of reports is to provide a comprehensive overview of Phillips 66's business that documents and explains the company's business strategy and execution of that strategy.
Full Disclosure
I am an independent investor who is a stockholder in Phillips 66 and the purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies and to analyze the company's business strategy particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the Marland Refinery in Ponca City, Oklahoma. I began building my position in PSX when Phillips 66 went public on May 1, 2012 and am long PSX. I will disclose publicly if I close my position on PSX or go short. Unless stated otherwise, there is a citation for every statement in this article. The only exception is the "Conclusions Section" in this report which includes my own judgments and findings. I am an advocate that that it would be beneficial for both Phillips 66 and the community of Ponca City for Phillips 66 rename its Ponca City refinery the "Marland Refinery in Ponca City" to honor an oil pioneer who together with Frank Phillips brought prosperity and advancement to Northern Oklahoma. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Phillips 66 (PSX).
Updates to the Web Site
This web page is frequently updated so check back periodically to see the latest information added to "An Independent Evaluation of Phillips 66, its Business Strategy, and Execution" or subscribe to the rss feed for this article. If you have any information or insights that you would like to see added to this report on Phillips 66 please contact Hugh Pickens by email at hughpickens AT gmail DOT com.
Copyright
The material in this article is licensed under under the Creative Commons under an Attribution-Noncommercial-Share Alike 2.0 Generic license. Except for short, fair use excerpts, the material on this article cannot be used for commercial purposes without permission of Hugh Pickens. Attribution for use of any material from this article must be provided to Hugh Pickens and if used on the web a link must be provided to http://hughpickens.com.
