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Phillips 66 to Construct Fractionation Capacity at Sweeny Hub

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Phillips 66 (PSX - Free Report) has made progress in the expansion of Sweeny Hub — a key midstream project — that is expected to enhance its integrated NGL value chain.

The project, which is anticipated to cost about $1.5 billion, is scheduled to commence commercial operations in late 2020. The construction of two 150,000 barrel-per-day (bpd) natural gas liquids (NGL) fractionators in Old Ocean, TX, additional NGL storage capacity and related pipeline infrastructure are part of the project.

The company has already secured supply agreements for Y-grade NGL feedstock. This includes an agreement with DCP Midstream LP (DCP - Free Report) , which has an option to buy about 30% ownership interest in the new fractionators.

Currently, the Sweeny Hub has 100,000 bpd of fractionation capacity through Phillips 66 Partners LP’s (PSXP - Free Report) Sweeny Fractionator One, 200,000 bpd of LPG export capability and access to 9 million barrels of gross NGL storage capacity. The midstream project is located near Phillips 66 Partners’ Clemens Caverns.

After completion of the expansion project, the Sweeny Hub will have 400,000 bpd of NGL fractionation capacity and access to 15 million barrels of total storage capacity. The expansion is projected to generate more than 25 new full-time jobs and about 2,000 construction-related jobs in Brazoria County.  

Phillips 66 is a diversified energy manufacturing and logistics company with midstream, chemicals, refining as well as marketing and specialties businesses. The company plans to allocate money toward more profitable business units like Midstream and Chemicals instead of extensive refining and marketing operations. Midstream business is in high demand in the central United States, as there is a huge need for fresh pipeline and infrastructure properties in the flourishing shales. Moreover, improving petrochemical demand will boost the requirement for more chemical business in the United States.

Price Performance

In the past three months, Phillips 66’s shares have gained 22.8% compared with the industry’s 23.2% rise.


Zacks Rank & Key Picks

Phillips 66 currently carries a Zacks Rank #3 (Hold).

A better-ranked player in the same sector is Occidental Petroleum Corporation (OXY - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the last four quarters.

Sugar Land, TX-based CVR Refining is an independent downstream energy partnership with refining and associated logistics properties in the Midcontinent United States. The company delivered an average positive earnings surprise of 7.05% in the last four quarters.

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