Kinder Morgan to supply Phillips 66 Texas refinery with Eagle Ford shale crude

Kinder Morgan Energy Partners and Phillips 66 have entered into an agreement for Kinder Morgan to transport Eagle Ford crude and condensate to Phillips 66's Sweeny refinery in Brazoria County, Texas, the companies said on Thursday.

Under the agreement, Kinder Morgan said it plans to build a 27-mile, 12-inch diameter lateral pipeline to extend its Kinder Morgan Crude Condensate (KMCC) pipeline.

Kinder Morgan will provide Phillips 66 with a significant portion of the lateral pipeline's initial 30,000 bpd of capacity, which is expandable to 100,000 bpd, the company said.

The Phillips 66 Sweeny refinery has 247,000 bpd of capacity.

Kinder Morgan will invest approximately $90 million in the project, which also involves adding associated receipt facilities by building a five-bay truck offloading facility and three new storage tanks with roughly 360,000 bbl of crude/condensate capacity in DeWitt County and Wharton County, Texas.

Pending receipt of environmental and regulatory approvals, construction is scheduled to begin in the fourth quarter of 2012.

“This pipeline lateral will provide yet another attractive delivery point for customers of our KMCC pipeline while providing Phillips 66 with enhanced access to price-advantaged Eagle Ford crude and condensate,” said Tom Bannigan, president of KMP Products Pipelines.

Kinder Morgan's crude/condensate pipeline, which was ready for service in June 2012, transports crude/condensate from the Eagle Ford shale to the Houston Ship Channel through 65 miles of new-build construction and 113 miles of converted natural gas pipeline.

“This agreement aligns with a fundamental part of the Phillips 66 business strategy to get advantaged crude to our refineries,” said Glenn Simpson, general manager for Phillips 66 Crude & International Supply.

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