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Phillips 66 reports weak fourth quarter on storm-hit USGC refining results

Increase font size  Decrease font size Date:2021-02-01   Views:209
Phillips 66's fourth-quarter results were weighed down from the hurricane impact on its US Gulf Coast refineries as the company looks to reshape its refining footprint by increasing its renewables fuels position.

For the fourth quarter, Phillips 66's USGC refineries ran at 48% of capacity compared with its overall system, which ran at 69% of capacity. The extremely active 2020 hurricane season -- which set a record for the number of storms-- greatly impacted Phillips 66's USGC refinery operations and intensified the impact of coronavirus pandemic-led demand drop.
The 255,600 b/d Alliance refinery in Belle Chasse, Louisiana, was shut down mid-September for Hurricane Laura, not restarting until early January following completion of planned work on the reformer which was moved up from 2021.

"And then Lake Charles with the two hurricanes that came through there. We were just about up and running from the first one, and then we came back with the second one," said CEO Greg Garland on Jan. 29 fourth quarter results call referring to Phillip 66's 260,000 b/d Westlake, Louisiana, plant.

The Alliance refinery restarted in early January and the Lake Charles plant "is up and processing crude" despite some operating issues arising from the power outages of the hurricanes, Garland added.

Phillips 66 did not give guidance for first quarter refinery utilization, saying it would be according to market conditions. In January, Phillips 66's refining system was running in the low 70% range.

Rodeo Renewed advances
Phillips 66, which earlier this month created a separate emerging energy unit to evaluate low-carbon investments, said it Rodeo Renewed project is advancing, with the conversion of the diesel hydrotreater to process renewable feed stock in lieu of hydrocarbons expected to come online in mid-2021.

This unit will be able to produce 8,000 b/d of renewable diesel and is the first step in the repurposing of the 120,200 b/d Rodeo, California, plant.

"Full conversion of the facility in early 2024 will produce over 50,000 b/d of renewable fuels," said Garland, adding it will reduce the plant's greenhouse gas emissions by 50%.

Phillips 66 announced a 2021 capital spending budget of $1.7 billion, of which $1.1 billion of sustaining capital will be used for "reliability, safety and environmental projects," said Garland.

"In addition, $600 million is directed toward in-flight projects and investments in renewable fuels." He added.

Diversification
Phillips 66's diversified operations helped modulate the company's weak refining results.

Phillips 66 reported a $539 million loss in the fourth quarter, with positive results from its midstream, chemicals and marketing specialities units overshadowed by the $1.1 billion refining loss.

In the midstream segment, Phillips 66 in the fourth quarter brought on line two fractionators at its Sweeny, Texas, hub – Sweeny 2 and Sweeny 3 to process natural gas liquids into pure NGL products like ethane, propane and butane.

"We plan to resume construction of our fourth fractionator in the second half of 2021. Upon completion the Sweeny Hub will have 550,000 b/d of fractionation capacity supported by long-term customer commitments," said Garland.

Phillip 66 also bolstered its USGC crude and product export capabilities during the fourth quarter, with the completion of the fourth dock at its Beaumont, Texas, facility, bringing dock throughput capacity to 800,000 b/d. The terminal currently has crude and product storage capacity of 16.8 million barrels.

The second dock at the Buckeye-operated South Texas Gateway Terminal began exporting crude oil during the fourth quarter. The terminal is expected to be completed in the first quarter of 2021 and have 8.6 million barrels of storage capacity and 800,000 b/d of dock throughput capacity. Phillips 66's sponsored master limited partnership, Phillips Energy Partners, has a 25% stake in the project.
 
 
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