Phillips 66 Partners is launching an open season in September to expand the new Gray Oak Pipeline by adding crude takeaway capacity and an extra destination in Texas' Victoria County, the midstream company said Aug. 31.
The Gray Oak crude system ramped up activity in the spring to move up to 900,000 b/d across 850 miles, connecting the Permian Basin to Corpus Christi and to Phillips 66's Sweeny refining hub near Houston.
Despite a surplus of long-haul crude capacity from the Permian, especially during the ongoing coronavirus pandemic, Phillips 66 Partners is seeking interested customers in adding more takeaway capacity, it said in a statement.
Gray Oak will connect to a third-party midstream system near Victoria with access to export docks, said Phillips 66 spokesman Dennis Nuss. The expansion is expected to be in service during the first half of 2022 when global crude demand could be fully recovered.
Phillips 66 would not provide any additional details on the potential capacity expansion.
"The open season is a confidential process and we're not able to share details at this time," said Nuss.
Phillips 66 Partners operates Gray Oak and holds a 42.25% ownership stake. Subsidiaries of Enbridge, Marathon Petroleum and Diamondback Energy own the remaining pipelines stakes.
The Permian's crude pipeline capacity is expected to hit almost 8 million b/d by the end of 2021, while crude output should still be relatively flat near 4.2 million b/d, according to S&P Global Platts Analytics. And that's even after a slate of pipeline project cancellations and deferrals.
Permian crude production plunged from a high of 4.8 million b/d down to an estimated 4.1 million b/d in August as activity plummeted and wells were shut in, according to the US Energy Information Administration. Crude takeaway capacity is now close to 6 million b/d and will soon rise to about 6.5 million b/d when Enterprise Products Partners' new Midland to ECHO III pipeline to Houston comes online in September.
That Enterprise pipeline will link next year into the ExxonMobil-led Wink to Webster crude system that will push capacity to above 7.5 million b/d. Wink to Webster was pushed back from the spring of 2021 to a likely third quarter completion date. And, by the end of next year, Enterprise still plans to bring online its delayed 450,000 b/d Midland to ECHO IV pipeline.
