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Phillips 66 goes ahead with Liberty, Red Oak pipelines
US
PHILLIPS 66 and Bridger Pipeline announced this week that they were proceeding with con- struction of the Liberty pipeline, having formed a 50:50 joint venture to move forward with the scheme.
e companies said in a joint June 10 state- ment that the 24-inch (610-mm) pipeline would carry crude from operations in the Bakken play and the Rockies region to the oil hub at Cushing, Oklahoma. From there, the oil can be shipped on to the US Gulf Coast for export.
e Liberty project, which is estimated to cost US$1.6 billion, is supported by long-term shipper volume commitments, the partners added. A supplemental binding open season is due to be announced at a later date, according to the companies, allowing other shippers to sign up to the project. Start-up of the pipeline is anticipated in the rst quarter of 2021 pending the receipt of necessary permits and regulatory approvals.
“ e Liberty pipeline presents us with a great opportunity to serve producers in the growing Bakken and Rockies production areas,” said Phillips 66’s, chairman and CEO, Greg Garland, in the statement. “ e pipeline adds to our inte- grated infrastructure network that serves the key shale oil producing regions with connectivity to major Gulf Coast market centres. Our pipeline network has strategic alignment with our Cen- tral Corridor and Gulf Coast re neries, further enhancing value across our assets,” he added.
“ e Liberty pipeline is an important under- taking on the part of our company to ensure that oil from Wyoming, the Rockies and the Bakken can get to markets in the US and around the world,” added Bridger’s president, Hank True. “Our commitment to the Liberty pipeline will give producers con dence to grow oil produc- tion in these important regions.”
e comments come as the Permian Basin continues to dominate US tight oil production, but output is also growing in other regions. Indeed, a number of drillers have increasingly been looking outside the Permian, where pro- duction remains constrained by shortages of takeaway capacity until new pipelines come online in the second half of this year. e Bakken play is forecast by the US Energy Information Administration (EIA) to produce 1.42 million bpd this month, up by 16,000 bpd from May. Meanwhile, production from new wells drilled in Wyoming – with horizontal wells comprising an increasingly large share of this – is reported to have taken the state’s oil output to its highest level since 1993.
Houston-based Phillips 66 will lead construc- tion on Liberty and will be the project’s operator.
A number of
drillers have increasingly been looking outside the Permian, where production remains constrained.
The companies said they would use existing pipeline and utility corridors for the projects where possible, and would employ “advanced construction techniques to limit environmental and community impact”.
Red Oak
In a separate announcement also made on June 10, Phillips 66 said it was partnering with Plains All American Pipeline in a 50:50 joint venture to build the Red Oak pipeline system. e pipeline system will transport oil from Cushing and the Permian Basin in West Texas to Corpus Christi, Ingleside, Houston and Beaumont, Texas. e Red Oak project, which is estimated to cost roughly US$2.5 billion, is also expected online in 2021 pending the receipt of regulatory approvals and permits.
e Red Oak joint venture will lease capac- ity on Plains’ Sunrise Pipeline system, which extends from Midland to Wichita Falls, Texas. e partners are planning to build a new 30-inch (762-mm) pipeline from Cushing to Wichita Falls and Sealy, Texas. From Sealy, they will con- struct an additional 30-inch pipeline segment to Corpus Christi and Ingleside, as well as a 20-inch (508-mm) pipeline segment to Houston and Beaumont.
Like the Liberty pipeline, Red Oak is under- pinned by long-term shipper volume commit- ments, with a supplemental binding open season due to be held at an unspeci ed later date.
Plains will lead construction on the project, while Phillips 66 will operate the pipeline.™
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w w w . N E W S B A S E . c o m Week 23 13•June•2019