Following an initial open season, Phillips 66 announced construction is a go for the Gray Oak Pipeline, set to be in service by late 2019 transporting Permian crude to the Texas coast. Depending on the results of a second open season, which began April 26th, the pipeline will initially transport up to 700,000 barrels per day from the West Texas counties of Reeves, Loving, Winkler, and Crane to two coastal locations: near a new terminal in Corpus Christi and to existing facilities in Sweeney/Freeport. Ultimately, if the pipeline is fully subscribed, it could transport as much as 1 million barrels per day to downstream markets.
"Our growth budget promotes value through investment in capital projects offering attractive returns!"
The Gray Oak Pipeline is a joint venture between Phillips 66 Partners (75% owned) and Andeavor (25% owned) which is likely to merge with Marathon Petroleum. Enbridge also has a option to acquire up to 32% interest, which would ultimately reduce Phillips 66 Partners' interest to 42.25%.
The Gray Oak Pipeline falls in line with Phillips 66's larger commitment to the growth of its midstream segment, where it will be spending $1 billion on various projects in 2018. P66 CEO Greg Garland stated in December, "Our growth budget promotes value through investment in capital projects offering attractive returns. Long-term, we continue to target re-investing 60 percent of our cash flow back into the business and returning 40 percent to our shareholders."
Enbridge, a partner in the Gray Oak project, is similarly committed to midstream growth, announcing last fall that it plans to refocus its businesses on its pipelines and storage core.