Philips 66 Enters Joint Venture to Build $2.5 Billion Red Oak Pipeline

Phillips 66 has teamed up with Plains All American Pipeline LP to construct the $2.5 billion Red Oak Pipeline system that will deliver crude oil from Cushing, Oklahoma, and the Permian Basin in West Texas to Corpus Christi, Ingleside, Houston and Beaumont, Texas.

The plan is to build a 30-inch pipeline from Cushing to Wichita Falls and Sealy, Texas. It also will build a 30-inch pipeline segment from Sealy to Corpus Christi and Ingleside and a 20-inch pipeline segment from Sealy to Houston and Beaumont.

The company expects to commence initial service as early as the first quarter of 2021. As per the release, Plains will handle project construction and Phillips 66 will operate the pipeline.

“Red Oak represents a capital-efficient industry solution that will utilize existing assets and provide pull-through benefits to our systems,” Willie Chiang, CEO of Plains All American, said in the release. “We look forward to working closely with Phillips 66 and our committed shippers to bring Red Oak into service and further optimize our assets upstream and downstream of the new pipeline system. We also look forward to creating jobs and supporting economic growth in Oklahoma and Texas.”


Two Companies Joining Forces to Build Crude Connector System in Midland Basin

Concho Resources Inc. and Frontier Midstream Solutions IV, LLC have announced to execute an agreement to create Beta Crude Connector, LLC (BCC), which will build and provide crude oil gathering, transportation and storage services in the Northern Midland Basin, supporting continued oil production growth in the region.

The new gathering and transportation system will consist of an approximately 100 mile gathering system, 250,000 barrel per day of crude oil storage facilities as well as truck terminals.

The pipeline system will have the initial capacity to deliver 150,000 bpd of crude oil to multiple delivery points, accessing local refineries and connecting to several downstream pipelines.

Construction will commence following an open season set for April 2019, targeting initial flows in mid-2019. Both companies own a 50% equity interest in BCC, with Frontier serving as operator.


Chevron Partners with Microsoft to Digitize, Streamline Energy Operations

Chevron has entered into a seven-year partnership with Microsoft as part of its digitization initiative to increase automation and streamline IT operations from the reservoir to the retail pump.

Microsoft's Azure platform will aim to help Chevron IT's workforce enable more advanced technologies and optimize exploration, reservoir management, production operations, midstream logistics, and more.

Chevron's digitization initiative is also an aim to streamline workflows, become more efficient, increase revenue, lower costs, and improve the safety and reliability of its operations.

Microsoft will be Chevron's primary cloud provider, enabling Chevron to leverage Microsoft's capabilities "across areas like high-performance computing and Internet of Things (IoT) to become a truly digital business," said Jason Zander, corporate vice president of Microsoft Azure.


Deloitte: Caution in Slow Road to Recovery Could Bring New Wave of Digital Technology Adoption to Oil, Gas

A survey shows oil and gas executives' confidence in the market recovery has shifted from optimistic back to cautious, creating a need to find new cost-cutting efficiency gains in business operations by way of a new wave of digital technology adoption.

Deloitte's "2017 Oil and Gas Industry Executive" survey finds that many oil and gas executives believe the road back to recovery has become longer. Most respondents of the survey expect WTI crude to remain between $40-$50 a barrel in 2017, not hitting $70 a barrel until 2020.

With a more cautious outlook on the market, many respondents of the survey said their strategic focus for upstream companies in 2017-2018 will be to maintain or increase production levels while simultaneously reducing general and administrative expenses.

More than half of midstream executives expect a decrease in capital expenditures in 2018 versus 2016. These executives say pipelines are the best opportunity for growth in 2018 but could be stunted by environmental issues, controlling costs, and regulations.

Downstream executives are slightly less likely to expect reductions in capital expenditures, according to they survey. Downstream opportunities include increased exports and low prices stimulating the economy.

More than half of upstream executives see improving operational efficiencies as the best path forward in this new market reality, although the industry is still "immature on the adoption curve" compared to other industries.

Investing in advanced digital analytics could potentially deliver annualized savings for upstream of about $30 billion and create multi-billion dollar revenue streams for oil field service players.

"The bottom line is that companies should focus on cost discipline and operational efficiency. Digitization is likely the next frontier in this new normal, offering a lifeline for new efficiencies, cost reductions, and productivity," said Andrew Slaughter, executive director at Deloitte Center for Energy Solutions.

World Oil