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Phillips 66 Plans to Build Terminal in Texas to Export Propane and Butane Overseas

10/31/2013 | 07:27am US/Eastern
   By Alison Sider 
 

Phillips 66 plans to build a terminal in Texas aimed at exporting propane and butane overseas to meet growing demand for those inexpensive fuels, which are being produced in the U.S. alongside oil and natural gas.

The company's terminal will be built at the company's existing site in Freeport, Texas, on the coast south of Houston, and will be capable of exporting 4.4 million barrels of fuel a month.

"There are attractive markets outside of the United States for products like butane and propane." said Tim Taylor, an executive vice president of Phillips 66, referring to high demand in Latin America and Asia as well as Europe.

Phillips 66, the refinery and chemicals business spun off by ConocoPhillips in 2012, said it is in the process of obtaining permits for the new Freeport terminal. The company anticipates final approval during the first half of 2014, with operations beginning in 2016.

Oil and natural-gas production has boomed across the U.S. as companies drill in shale formations. All that drilling has resulted in a surge of other associated fuels, including propane and butane, which are used for heating, refrigeration and even as transportation fuel for vehicles.

The trend has been a welcome development for countries around the world looking for inexpensive fuel, and for U.S. energy companies grappling with low prices at home and are seeking new outlets to ship it abroad. The U.S. became a net exporter of propane and butane for the first time last year, according to the U.S. Department of Energy's Energy Information Administration.

Companies are racing to build out storage and dock space at the Gulf Coast to boost exports of propane, butane and other fuels. Earlier this month, Williams Companies Inc. (>> Williams Companies, Inc.) and Boardwalk Pipeline Partners LP (>> Boardwalk Pipeline Partners, LP) created a joint venture to develop an export facility in Lake Charles, La.

And Enterprise Products Partners LP (>> Enterprise Products Partners L.P.) recently announced plans to build a second export terminal to handle propane and butane on the Gulf Coast, though it has not announced the location, and plans to expand its existing facility on the Houston Ship Channel in Texas.

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