Midstream - Pipelines | Capital Markets | Capital Expenditure | Corporate Strategy | Capital Expenditure - 2021

Phillips 66 Slashes Capital Budget 43% for 2021

Share Print Bookmark    |    Monday,December 14,2020

Phillips 66 has set its 2021 capital budget of $1.7 billion, which includes $0.3 billion at Phillips 66 Partners.

This is a substantial 43% decrease compared to its 2020 capex of $3.0 billion.

In Midstream, the company plans to invest $610 million, including $300 million of Phillips 66 Partners adjusted capital spending. The budget is directed toward completing near-term committed and optimization projects, focusing on pipeline operations and progressing construction of Sweeny Frac 4 and the C2G Pipeline. In addition, the Midstream budget includes sustaining capital to enhance asset integrity and reliability.

The Refining capital budget includes $521 million of sustaining capital for reliability, safety and environmental projects. The Refining budget will also include $255 million to fund high-return, quick-payout projects to enhance margins by improving clean product yields and reducing feedstock costs, as well as investments to competitively position the company for a lower carbon future. The Refining budget includes pre-construction engineering and design costs related to the company's plans to reconfigure its San Francisco Refinery in Rodeo, California, to produce renewable fuels. Upon expected completion in early 2024, the facility would have over 50,000 barrels per day, or 800 million gallons per year, of renewable fuel production capacity, making it one of the world's largest facilities of its kind. The conversion is expected to reduce the facility's greenhouse gas emissions by 50% and help California meet its low carbon objectives.

Greg Garland, chairman and CEO of Phillips 66, said: "Our 2021 capital budget is supported by our diversified portfolio, strong financial position and capital discipline. We continue to focus on reducing capital expenditures as market conditions remain challenged. We are prioritizing completion of in-progress projects, as well as advancing our investments in renewable fuels. Phillips 66 is committed to financial flexibility, enabled by our balance sheet and strong investment grade credit ratings. We continue to execute our strategy with a focus on disciplined capital allocation and long-term value creation for our shareholders, including a secure, competitive, growing dividend."

The Marketing and Specialties budget primarily reflects the development and improvement of our international retail sites.

The Corporate and Other capital budget will primarily fund digital transformation projects.

CPChem's growth capital will fund expansion of its normal alpha olefins production, optimization and debottleneck opportunities in the olefins and polyolefins chains, as well as continuing development of world-scale petrochemicals projects in the U.S. Gulf Coast and Qatar.

WRB's capital spending will be directed to sustaining projects, crude flexibility and distillate yield enhancement.