1,300-mi., $5-billion Western Gateway Pipeline approved by Phillips 66 joint venture
Phillips 66, Kinder Morgan and HF Sinclair have reached FID on the $5 billion, 1,300-mile Western Gateway Pipeline, advancing a major new refined products route to Arizona and California.
(P&GJ) — Phillips 66, Kinder Morgan and HF Sinclair have reached a final investment decision (FID) to move forward with the proposed $5 billion Western Gateway Pipeline, a 1,300-mile refined products system designed to create a new fuel supply route across the western United States.
The companies have finalized a joint venture agreement under which Phillips 66 will own 49.9% of Western Gateway, Kinder Morgan 35.1% and HF Sinclair 15%.
The proposed system would connect St. Louis, Missouri, and expanded Gulf Coast origin points with markets in Arizona and California. Western Gateway is designed to transport 230,000 bpd of refined products and allow future capacity expansions with limited additional capital and no new pipeline construction.
A major component of the project is approximately 900 miles of new 20- and 24-inch pipeline extending from Borger, Texas, to Phoenix, Arizona. Phillips 66 will construct and operate the new-build segment.
Kinder Morgan will contribute its existing SFPP East Line between El Paso, Texas, and Phoenix and Tucson, Arizona, as well as its SFPP West Line between Colton, California, and Phoenix. The West Line would be reversed to transport refined products east-to-west into California. Kinder Morgan will continue operating both pipelines.
Supply to Western Gateway would also be supported by Phillips 66’s existing Gold Pipeline, which connects with the Explorer Pipeline. The Gold Pipeline would be reversed to move refined products toward Borger and into the new system.
“The final investment decision reflects the strength of this industry partnership,” Phillips 66 Chairman and CEO Mark Lashier said. “By combining the capabilities of Phillips 66, Kinder Morgan and HF Sinclair, Western Gateway is expected to strengthen fuel supply reliability and deliver a more cost-effective, resilient path for growing markets across the West.”
Kinder Morgan CEO Kim Dang said the project combines new and existing infrastructure to improve fuel supply reliability across the region.
“This project brings together strategic supply access, existing infrastructure and experienced operators to improve affordability and assurance of supply for customers in the Western United States,” Dang said.
Western Gateway has an estimated enterprise value of approximately $5 billion. Phillips 66 expects to contribute approximately $2.5 billion in cash, while HF Sinclair will contribute about $750 million and Kinder Morgan approximately $250 million.
Once the new Borger-to-Phoenix pipeline is completed, Kinder Morgan’s SFPP East and West Line assets will be contributed to the joint venture at a value of approximately $1.5 billion.
The system is underpinned primarily by 10-year, take-or-pay contracts.
Western Gateway is targeting completion in 2029, subject to permitting and regulatory approvals.