Phillips 66 slashes 2016 capital budget by $1 billion

Phillips 66 reported plans for a 2016 capital budget of $3.6 billion, excluding Phillips 66 Partners’ capital program. That’s down from the $4.6 billion the Houston-based firm budgeted for 2015.

Excluding Phillips 66 Partners’ capital spending, Phillips 66 plans to invest $2 billion in its midstream business. In its natural gas liquids segment, the company continues construction of the 4.4 million-bbl/month Freeport LPG export terminal on the Texas Gulf Coast, with completion expected in second-half 2016. The budget also includes spending associated with expansion of the Sweeny NGL midstream hub in Mont Belvieu, Tex.

In transportation, the company is investing in the new DAPL and ETCOP pipeline projects to move crude oil from the Bakken production area of North Dakota to market centers throughout the US. Storage capacity is being added at the Beaumont terminal in Nederland, Tex., and the company is investing in the Bayou Bridge pipeline project to move crude from Texas to Louisiana (OGJ Online, July 31, 2015).

Phillips 66 plans $1.2 billion of capital expenditures in refining, with 70% to be invested in reliability, safety, and environmental projects, including compliance with the new Tier 3 gasoline specifications (OGJ Online, Apr. 15, 2015).

Discretionary refining capital of about $400 million will improve product yields and lower feedstock costs, the company says. These investments include a modernization of the fluid catalytic cracker at Bayway, NJ, and an upgrade of the vacuum tower at Billings, Mont.

Phillips 66 over the summer reported second-quarter earnings of $1.02 billion, up from $997 million in the first quarter and $872 million in second-quarter 2014 (OGJ, Aug. 24, 2015, p. 16). The company’s refining adjusted earnings were $604 million in the second quarter, up from $495 million in the first quarter.