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.
In Chemicals, CPChem, a 50/50 joint venture with Chevron, intends to invest in domestic growth projects, capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2014 capital expenditures is expected to be $1.0 billion, 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.Phillips 66 plans to spend $1.0 billion of direct capital expenditures in Refining, approximately 70 percent of which will be for sustaining capital. These investments are related to reliability and maintenance, safety and environmental projects, including those to comply with Tier 3 emission standards. Sustaining capital helps ensure the operating integrity of the company’s facilities and is consistent with Phillips 66’s focus on operating excellence. 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. In Marketing and Specialties, the company plans to invest about $140 million of 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.
|Phillips 66 Planned 2014 Capital Program|
|Millions of Dollars|
|Marketing and Specialties||141||-||141|
|Corporate and Other||136||-||136|
|* Includes Phillips 66's share of capital spending by DCP Midstream, Chevron Phillips Chemical Company and WRB Refining, which are expected to be self-funded in 2014.|