Two Companies Joining Forces to Construct $1.6 Billion Liberty Pipeline

A 50/50 joint venture between Phillips 66 and Bridger Pipeline LLC has formed and the companies will be proceeding with the construction of the 24 inch Liberty Pipeline. The pipeline is expected to cost approximately US$1.6 billion and will provide crude oil transportation services from the Rockies and Bakken production areas to Cushing, Oklahoma.

Subject to receipt of applicable permits and regulatory approvals, initial service on the pipeline is targeted to commence as early as the first quarter of 2021. Phillips 66 will handle both project construction and operating the pipeline.

“The Liberty Pipeline presents us with a great opportunity to serve producers in the growing Bakken and Rockies production areas,” said Greg Garland, Chairman and CEO of Phillips 66. “The pipeline adds to our integrated infrastructure network that serves the key shale oil producing regions with connectivity to major Gulf Coast market centers. Our pipeline network has strategic alignment with our Central Corridor and Gulf Coast refineries, further enhancing value across our assets.”


Plains’ Capline Pipeline Reversal to Begin Service in Third Quarter 2020

Plains All American’s Capline crude pipeline is expected to begin service in the third quarter of 2020, according to an announcement by the company on Tuesday.

The U.S. Midwest to Gulf Coast pipeline has the target in-service date for light oil service in third quarter 2020 while heavy oil service is expected in early 2022.

“The capacity from Cushing, Okla. down to St. James, Lou. should be available on a quicker time frame than heavy moving down from Illinois,” Chief Executive Officer Willie Chiang said on the call.

The Cushing to St. James shipment would include 200,000 barrels a day of expansion, pending a successful open season, and a modest extension of the Diamond JV pipeline that will connect to Capline, Plains said.

Currently, Capline is the largest crude pipeline running from the Gulf Coast to refineries in the Midwest. Volume on Capline have sharply declined as the U.S. shale boom pushed inland crude to East Coast and Gulf Coast.


Exxon Starts Groundwork for Texas Refinery's Shale Oil Expansion

Exxon Mobil has begun groundwork at a Texas refinery that would become the largest in the U.S. in advance of a final decision on the expansion, three sources familiar with Exxon’s plans said.

The company has also began hiring and training staff to operate the distillation unit, which would be the third of its kind at the site. The expansion would increase crude processing capacity at its Beaumont, Texas, refinery by at least 300,000 barrels per day from the current 365,644 bpd, the sources said.

Crude oil would be converted from Texas shale fields into refined products such as diesel and gasoline. The plan is to triple daily crude production in the Permian Basin of West Texas and New Mexico by 2025.

After a final investment decision is made, the crude unit is scheduled to start next year, with processing beginning by 2022, a spokeswoman confirmed in an email this week.

Eight operators were added to the refinery and are gaining experience working on the two existing crude units. After the new processing unit is built, they will move over, sources said.


U.S. Department of Energy Releases 1 Million Barrels of Crude from Strategic Petroleum Reserve Post Harvey Destruction

The U.S. Energy Department is releasing a second batch of oil from its Strategic Petroleum Reserve totaling 1 million barrels due to Tropical Storm Harvey’s disruption of the petroleum industry, the department announced Thursday.

Oil will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana. The refinery is still in good condition as a result of the unprecedented storm that flood the Gulf Coast and other areas of Texas.

400,000 barrels of sweet crude and 600,000 barrels of sour crude will be sent via pipeline to the refinery. Phillips 66 is required to replace the oil at a later date.

The Strategic Petroleum Reserve currently holds 679 million barrels of oil. This is the first tapping of the reserve since an emergency in 2012.

The Energy Department said it would continue to provide help as necessary and will also continue to assess requests for crude oil from the reserve.

Tropical Storm Harvey dumped more than four feet of rain on southeastern Texas and caused the shutdown of nearly a quarter of the country’s refining output.


Tropical Storm Harvey Shuts Down Nearly a Fifth of U.S. Fuel Output Due to Flooding

Massive flooding from Tropical Storm Harvey has shut down nearly a fifth of U.S. oil-refining capacity, or about 3.6 million barrels per day, as the petrochemicals industry still deals with the aftermath of the days-long tempest.

Reuters estimates that about 20 percent of total U.S. capacity is offline in Texas and Louisiana, and restarting plants could take more than a week.

Lack of supply has caused major pipelines to adjust deliveries or shutdown completely as massive outages continue.

Texas has received more than 4 feet of rain during the tropical storm, causing fuel prices to rise as refining capacity remains down and pipelines run short.

Exxon, Marathon Petroleum, Valero Energy, and Motiva Enterprises are among companies that have shut major refineries in Texas due to flooding.

Motiva Enterprises’ Port Arthur refinery is the largest in the nation, which the company began shutting down on Tuesday evening. The nation’s second largest refinery, operated by Exxon in Baytown, also shut down due to high water in the plant.