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