Rome wasn’t built in a day and neither were the large, wellhead-to-market natural gas and NGL networks that Phillips 66 and a handful of other midstream empires have assembled — many of them targeting the all-important Permian. Now, P66 has reached an agreement to acquire Pinnacle Midstream, whose associated gas gathering system and gas processing complex in the heart of the Midland Basin nicely complement a host of other gathering and processing assets P66 controls through its majority stake in DCP Midstream. In today’s RBN blog, we’ll discuss P66’s planned purchase of Pinnacle Midstream and what it means for the Permian piece of the acquiring company’s broader natgas/NGL system.
As we said a few months ago in Every Step of the Way, P66 is probably best known for its fleet of complex refineries — it owns 100% of seven refineries in the U.S. and half stakes in two others, as well as full ownership of a refinery in the U.K. and a 19% stake in a refinery in Germany. (P66’s net refining capacity tops 1.9 MMb/d.) But the Houston-based company is also involved in marketing, chemicals and midstream services. In fact, P66 is one of only a small number of midstreamers offering everything from gas gathering and processing to NGL pipelines, storage, fractionators and export facilities. We also noted in that blog that P66’s standing among NGL midstream providers was only enhanced by the tripling of its ownership interest in DCP Midstream to 86.8% with two transactions in 2022-23. As P66’s strategy to compete with the other major integrated NGL players unfolds, those DCP assets are looking better and better.
The vast majority of P66’s natgas/NGL-related assets — including those owned via the company’s 86.8% stake in DCP Midstream — involve gathering and processing associated gas in four key production areas (the Permian, the Eagle Ford, the Anadarko and the Denver-Julesburg, or DJ); piping mixed NGLs (aka Y-grade) to NGL storage and fractionation hubs in Mont Belvieu and Old Ocean in Texas (the latter known as the Sweeny Hub) and Conway, KS; fractionating NGLs into purity products (ethane, propane, butanes, natural gasoline, etc.) at the three hubs; storing purity products and distributing them to domestic end users; and exporting LPG from P66’s terminal in Freeport, TX. The main map in Figure 1 provides an overview.
Figure 1. Selected Phillips 66/DCP Midstream Assets and Pinnacle Midstream Assets. Source: P66
Join Backstage Pass to Read Full Article
