1 Company Quietly Positioning Itself to Profit from Energy Exports

With little fanfare, Phillips 66 is slowly moving to join companies such as Enterprise Products Partners among the group of leading leading energy exporters.

Jun 18, 2014 at 11:10AM

Ig Refining

Photo credit: Phillips 66. 

Earlier this month, Phillips 66 (NYSE:PSX) announced the acquisition of a Gulf Coast terminal facility to little fanfare. The company didn't even disclose the price of the terminal that it purchased from Chevron.

This is just another quiet step the company is taking to profit from increased American energy exports by following in the footsteps of leading exporters such as Enterprise Products Partners (NYSE:EPD).

Location, location, location
Phillips 66 is acquiring Chevron's Beaumont Terminal complex near Beaumont, Texas. The terminal has 7.1 million barrels of storage capacity that encompasses 4.7 million barrels of crude-oil capacity and 2.4 million barrels of refined products capacity.

Most noteworthy, the facility has deepwater access via two marine docks capable of handling Aframax tankers and one large barge dock. It also has rail and truck loading and unloading facilities, as well as access to major crude oil and refined product pipelines.

The company noted that the facility is strategically positioned for the increased movement of North American crude oil into the Gulf Coast, as well as for the growth in refined product exports. Furthermore, Phillips 66 pointed out that the asset has significant expansion potential. Bottom line here is this site is perfectly positioned for the export market.

Building blocks
Phillips 66 has slowly been building up its energy export capacity over the past year. As the following slide notes, the company is growing its refined product export capacity from 410,000 barrels per day as of last year to 550,000 barrels per day by 2016.

Phillips

Source: Phillips 66 Investor Presentation. 

The company announced earlier this year that it would build a liquefied petroleum gas export terminal in Freeport, Texas. The project, which should be complete by the middle of 2016, will have the initial capacity to export 4.4 million barrels per month.

Phillips 66 is also investing to export propane, which is in prolific supply due to the shale gas boom. America has quietly become the leader in exporting propane throughout the world thanks in large part to all of the export capacity built by Enterprise Products Partners. Through the end of May Enterprise Products Partners alone exported 34 million barrels of propane throughout the world. The company's propane export capacity is expected to grow from its current capacity of 7.5 million barrels per month to 16 million barrels per month by the end of next year.

 G

Photo credit: Phillips 66 

The tremendous amount of propane expected to be produced over the next few years will offer plenty of profit opportunities for both Phillips 66 and Enterprise Products Partners. In fact, we're likely to see both companies announce additional export capacity expansions in the future.

We're also likely to see more movement from both companies when it comes to the export of oil-based refined products. While America can't export oil, it can export refined petroleum products such as gasoline and diesel fuel. With plenty of demand outside our borders, particularly for diesel, we should see a lot more export capacity being built over the next few years. 

Investor takeaway
Exports of both natural gas and oil are hotly debated topics in America. But no one is noticing as Phillips 66 quietly joins Enterprise Products Partners to export increasing amounts of refined petroleum products and propane. Unnoticed moves like these should make investors a lot of money in the long term.

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Matt DiLallo owns shares of Enterprise Products Partners and Phillips 66. The Motley Fool recommends Chevron and Enterprise Products Partners. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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