Phillips 66 has budgeted $2 billion in its capital program next year, including $865 million for sustaining capital and $1.1 billion for growth capital.
The company said around 50% of growth capital supports lower-carbon opportunities.
In the Midstream business, growth capital would be directed to the integrated natural gas liquids (NGL) value chain from wellhead to market. In a deal earlier this year, Phillips increased its ownership in DCP Midstream LP, a pipeline and gathering service operator focused in the Permian and the Denver-Julesburg basins.
“The 2023 capital program reflects our ongoing commitment to capital discipline,” said CEO Mark Lashier. “We are also investing in returns-focused growth opportunities, including enhancing our NGL platform and converting our Rodeo facility to produce lower-carbon renewable fuels.
“Additionally, the capital program supports our commitment to return $10 billion to $12 billion to shareholders between the second half of 2022 and the end of 2024 through a secure, competitive and growing dividend and share repurchases,” Lashier said.
The Midstream spend would include DCP Midstream’s sustaining capital of $150 million and $125 million of growth capital. Analysts have said that the Phillips move to bolster NGL exposure also complements its investments in its chemical business and the Sweeny hub near the Houston Ship Channel.
Refining growth capital of $729 million includes the continuing conversion of the San Francisco refinery in Rodeo, CA, into a renewable fuels facility. The conversion will reduce emissions from the facility and produce lower carbon-intensity transportation fuels.
Phillips 66’s proportionate share of capital spending by joint ventures Chevron Phillips Chemical Co. LLC (CPChem) and WRB Refining LPis expected to total $1.1 billion and be self-funded.
CPChem’s growth capital would fund construction of an integrated polymers facility on the Gulf Coast. The facility is expected to begin operations in 2026. Including Phillips 66’s proportionate share of capital spending associated with joint ventures CPChem and WRB, total 2023 capital program is projected to be $3.1 billion.
