Phillips 66, Kinder Morgan Advance Texas to Arizona Pipeline Project

Kinder Morgan Inc and Phillips 66 said Monday they have secured enough long-term customer commitments to proceed with a proposed pipeline for refined oil products from Texas to Arizona.

"Customer response during the open season underscores the importance of Western Gateway in addressing long-term refined products logistics needs in the region", Phillips 66 chair and chief executive Mark Lashier said in a joint statement. "Strong market interest validates the role this project can play in improving supply flexibility and reliability for West Coast markets".

Kinder Morgan CEO Kim Dang said, “We’re pleased to be able to use our existing assets to leverage growth opportunities for the Arizona and California markets".

Decision on the Western Gateway project is still subject to "the execution of definitive transportation service agreements, joint venture agreements, and respective board approvals", the companies said.

The partners held two open seasons to attract shippers.

Western Gateway would include a newbuild pipeline from Borger, Texas to Phoenix, Arizona. This would be connected to Kinder Morgan's existing SFPP pipeline from Colton, California, to Phoenix, which would be reversed to flow to California, according to the partners.

The Phillips 66-operated Gold Pipeline, currently flowing from Borger to St Louis, would also be reversed to carry refined products from Mid-Continent refineries to Borger and supply Western Gateway.

Targeted for completion 2029, Western Gateway has a planned capacity of 200,000 barrels per day (bpd).

Phillips 66 would build the new segment and operate the line from Borger to El Paso. Kinder Morgan would operate the line from El Paso to its Phoenix, Arizona terminal and the remainder of the line, according to the project website.

"Using Kinder Morgan's existing terminals and co-locating with their existing pipelines minimizes Western Gateway's footprint and brings produced fuel from the Midcontinent region directly into Phoenix, reaching markets in Arizona and California, with further optionality into Las Vegas, Nevada with connectivity to Kinder Morgan's Calnev Pipeline", the project website says.

Phillips 66 recently fully took over the Borger refinery in Texas, which has a declared production of up to 100,000 bpd of gasoline and 70,000 bpd of distillates. The takeover was part of its $1.4-billion purchase of an additional 50 percent stake in WRB Refining LP from Cenovus Energy Inc.

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