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Phillips 66 is ‘unlocking the full value’ of its Midstream business

What a difference a year makes.

Last summer, Phillips 66 moved to bolster its Midstream business by announcing its intention to acquire DCP Midstream. Following the acquisition’s completion in June that increased Phillips 66’s economic interest in DCP to 87%, the company is well on its way toward establishing a leading, large-scale wellhead-to-market natural gas liquids business.

“Phillips 66 now participates in every step along the entire NGL value chain,” said Ben Hur, vice president of Midstream Commercial & Business Development. “This integrated system captures more value, enhances reliability and provides much-needed flexibility to producers.”

Indeed, the additional economic interest that Phillips 66 has acquired in DCP, which includes 5.5 billion cubic feet per day of natural gas processing capacity, is expected to generate an incremental $1 billion plus annually to Phillips 66’s adjusted EBITDA.

What’s more, Phillips 66 expects NGL production to grow by 1.3 million barrels per day by the end of the decade, a faster pace than crude oil. The continuing growth of petrochemicals supports growing demand for advantaged U.S.-based natural gas and NGLs.

Phillips 66 already had a robust pipeline system, much of it connected to its refineries. But DCP offers a strong natural gas and NGL footprint in gathering, processing, logistics and marketing across key basins. Those assets feed the Sweeny Hub, a world-class NGL complex that includes four fractionators, cavern storage and export docks.

NGL production is largely focused on the Permian Basin, where gross natural gas production reached a record high of 21.1 billion cubic feet per day in 2022, according to the U.S. Energy Information Administration. DCP’s footprint gives Phillips 66 an advantaged position with producers not only in the Permian, but also in the Denver-Julesburg (DJ) Basin of northeast Colorado and southeast Wyoming.

Phillips 66 is continuing to combine assets, talent and best practices from both companies into one operating model — a big task but one made easier because of similar values and cultures, said Bill Johnson, a legacy DCP employee who now serves as vice president of Midstream Operations.

To date, the integration teams have identified over $400 million of commercial and operating synergies that they expect to capture by 2025, up from $300 million earlier this year, said Michelle Hilger, general manager of Technology & Operational Services.

“With assets as our foundation and operational excellence as our compass, our people are delivering results and unlocking the full value of this integrated business,” said Johnson.