Refineries Plan Eagle Ford Projects

Brian Hicks

Written By Brian Hicks

Posted August 29, 2012

Two domestic refiners are angling to exploit the Eagle Ford shale in South Texas to greater extents than has been possible thus far.

Flint Hills Resources hopes to invest $250 million in order to push its Eagle Ford crude supply over 150,000 barrels per day, while Phillips 66’s (NYSE: PSX) refinery in Sweeny, TX, which currently handles 247,000 barrels per day, will take in 30,000 bpd of Eagle Ford crude. This will occur after Kinder Morgan Energy Partners (NYSE: KMP) is done with a $90 million expansion of a pipeline running to the plant.

Eagle Ford’s output has more than tripled in a year, and it has U.S. energy companies flocking to exploit it. The Flint Hills project still requires at least one or two years before the Texas Commission on Environmental Quality and the U.S. EPA sign off on it, and then another two years while it adds all necessary equipment to the Corpus Christi refinery.

From Bloomberg:

“We want to spend a bunch of money to increase our capacity for Eagle Ford and to reduce our air emissions,” said Phil Gaarder, Flint Hills Corpus Christi vice president and refining manager in a conference call with reporters.

Kinder Morgan’s 27-mile expansion for the Sweeny refinery means the lateral pipeline could expand to a total capacity of 100,000 barrels per day, up from its current capacity of 30,000 bpd.

Thanks to the tripling of production from the Eagle Ford shale, energy companies involved in the play produced a total of 283,292 barrels of oil per day as of this June. The light, sweet crude is priced lower than denser crudes from elsewhere around the world, and this means refiners get to save on costs. Eagle Ford crude on Wednesday commanded $93.75 per barrel.

Alongside the Kinder Morgan expansion, nine other similar projects are planned, all devoted to carrying the surging production from the Eagle Ford along the Gulf Coast.

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