Phillips 66 (PSX) continues to strengthen its NGL system in the Permian Basin, as the company is moving forward on construction of a new gas processing plant, called Iron Mesa.
Executives made the announcement during the company’s first-quarter earnings call on April 25.
“It really just demonstrates the progress we're making in building out our NGL value chain,” said Don Baldridge, executive vice president of midstream and chemicals for Phillips 66. “It does support our Permian G&P [gathering and processing] growth and position in terms of barrels coming out of our own gas plants.”
Iron Mesa is scheduled to enter service in the beginning of 2027. The plant, located in Ector County close to the company’s Goldsmith plant, where the construction will include upgrades and retirements of some facilities. The plant will have connections to the Midland and Delaware basins, as well as the company’s Sand Hills NGL system.
Iron Mesa is expected to drive growth and help achieve the company’s goal of $4.5 billion in midstream adjusted EBITDA by 2027, the company said.
Phillips has made strengthening its NGL system a priority.
Phillips 66 completed the acquisition of EPIC NGL on April 1, expanding takeaway capacity from the Permian and securing fee-based earnings growth. EPIC consists of a system of NGL transport lines, distribution systems and fractionators connected to facilities along the Texas Gulf Coast.
Iron Mesa will complement the Phillips Dos Picos and Dos Picos II plants in the Midland Basin. Dos Picos will go into service in the second half of 2025, Baldridge said. The two facilities will add the processing capacity to generate more than 100,000 bbl/d of NGLs.
Financially, the company returned $716 million to shareholders through dividends and share repurchases. The company reported a bigger than expected first-quarter loss of $937 million. During first-quarter 2024, the company posted a $216 million profit.
CEO Mark Lashier said the loss was due to one of its largest spring refinery turnaround programs in the company’s history. The program enhanced operational flexibility at the Sweeny Refinery in Southeast Texas and improved feedstock capabilities at its Bayway Refinery facility.
The loss also included a $246 million pre-tax impact of accelerated depreciation for the planned closing of the Los Angeles refinery at the end of 2025.
The poor financial showing comes after Elliott Investment Management has squared off against the company—proposing that PSX sell or spin off its midstream business. The activist shareholder has also proposed candidates for Phillips 66’s board.
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