Phillips 66 (NYSE: PSX), an integrated energy manufacturing and logistics company, announces plans for $2.7 billion of capital expenditures in 2014, approximately 40 percent higher than its 2013 capital target. The increased spending reflects the company’s strategy to grow its Midstream segment. Including the company’s share of expected capital spending by joint ventures DCP Midstream (DCP), Chevron Phillips Chemical Company (CPChem) and WRB Refining, its total 2014 capital program 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.”
In Midstream, Phillips 66 plans $1.4 billion of investment in its Natural Gas Liquids (NGL) Operations and Transportation business lines. This represents an increase of more than $800 million over 2013. In 2014, the company 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.
Additional midstream investments are planned within 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. Phillips 66’s share of DCP’s 2014 planned capital expenditures is $750 million.
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