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Phillips 66 seeing success in Borger

July 11, 2012

Chris Coon, Refinery Manager for Phillips 66 in Borger, spoke to the Borger Rotary Club Tuesday about the work of the refinery and the company in general. PHOTO BY DON RICE

Phillips 66 is seeing success in the Borger area.
Chris Coon, who is Refinery Manager for Phillips 66, was the featured speaker at the Borger Rotary Club Tuesday afternoon.
On May 1, what was ConocoPhillips became two companies, with the upstream portion maintaining the Conoco name and the downstream portion, which is refining, marketing, and transportation, became Phillips 66.
“That was really driven by a recognition of the fact that as a single entity ConocoPhillips, or even Phillips before that, never enjoyed the multiples on earnings that some others did,” Coon said. “They just didn’t get the stock value out of the company that they thought they would.”
The company was ginning along at about $70 a share, and after some discussion, the decision was made to split the two entities out, with the belief that better value would result. Everyone would be clear on the business objectives of each company. As of Tuesday morning, Coon said Phillips 66 was trading at about $33 and ConocoPhillips was trading at about $54.
“It worked to some degree. We really want it to go to about $100, $120, $130,” he said. “The strategy is working at least from a stock price point of view.”
He said ConocoPhillips was considered the smallest of the “majors” group, so by dividing the company, Coon said the company has now become the largest fish in each of its respective ponds. He said from that viewpoint, it was a good strategical move.
Phillips 66 considers itself as a vantage downstream energy company, he said. The company is headquartered in Houston, and is still in the process of completely separating from ConocoPhillips in that area. As of May 1, the company had $40 billion in assets, around 14,000 employees and was the second largest refinery in the United States.
Coon said the company’s focus is not just on refinery, marketing, and transportation, but also participates in several joint ventures, which includes DCP for Midstream and CPChem for chemicals. He said this allows the company to distinguish itself from its competitors who do not have such strengths.
The company still has a worldwide presence in about 14 countries, primarily through joint ventures, but also through overseas refineries, transportation, and marketing assets.
“We’re still in a good position to capture world markets,” Coon said.
Phillips 66’s refining and marketing segment includes global refining and marketing, transportation, specialty businesses, and commercial and licensing interests. Coon said Phillips 66 is involved in a heavy industry that produces safe mobile energy. He said everything in life is energy-based, and is dependent on a safe source of mobile energy.
Being the second largest refinery in the United States, Phillips 66 produces about 2.2 million barrels of crude per day that is processed into various products. It is the sixth largest non-government controlled refinery in the world.
The refining business is divided among four regions, which are the Western U.S./Pacific, Mid-Continent, Gulf Coast, and Eastern U.S. and Europe.
Coon said the asset is really a 50/50 limited partnership with a company known as Cenovus out of Canada, and Phillips is the operator. When the company split, the downstream portion went with Phillips 66 and the upstream portion went with ConocoPhillips. He said he expects this partnership to last for a long time to come.
Of the 2.2 million barrels produced, the Borger refinery produces around 146,000 barrels of crude a day. It also brings in around 25,000 barrels of natural gas liquids per day, mostly provided by DCP, with which Phillips 66 has a joint venture. He also said the company is interdependent on CPChem.
“There are a lot of interdependencies in Borger,” Coon said. “It’s a very ‘complex’ complex. CPChem is dependent on us and we on them, likewise with DCP.”
There is a pipeline that operates the crude and products terminal on the company’s behalf, and a third party cogen in the middle of the plant that provides the refinery with steam and sells electricity out on the grid.
Coon said the Borger refinery has about 720 full-time employees and 200 routine contractors. However, at the beginning of August, a turnaround is beginning at the plant that will go through the first of October. The peak loading is going to be around 3,000 people, which amounts to about 1,500 per shift. He said this should benefit those involved in restaurants, hotels, and leasing.
Of the 146,000 barrels produced, he said 50,000 of those are gasoline. Other products include aviation gasoline, jet fuel, specialty solvents (which includes elements found in insulation and toothpaste), propylene, LPGs, fuel coke, and sulphur for ag chemicals.
The refinery has a $65 million payroll annually, and is on the rolls for almost $6 million in payroll taxes and about $12 million in property taxes.
The company markets its products in about 49 states, and markets in Europe as well. Lubricants is another important part of its business. Specialty businesses include petroleum coke for anodes for steel mills.
Phillips 66 conducts its Midstream business primarily through a 50 percent equity investment in DCP Midstream, LLC, a joint venture with Spectra Energy. DCP Midstream is considered a leader in its sector as one of the largest natural gas gatherers and processors, and NGL producers and marketers in the United States.
The company conducts its Chemicals business through a 50 percent equity investment in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. CPChem is one of the world’s top producers of olefins and polyolefins, and a leading supplier of aromatics and styrenics.

Source 
Borger News Herald
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