Phillips 66, Kinder Morgan, Inc., and HF Sinclair Corporation announced Tuesday they have finalized a joint venture agreement and reached a final investment decision to proceed with the Western Gateway Pipeline system. The approximately $5 billion project will create a new refined products pipeline route from Texas and other origin points to Arizona and California.
The system is designed to transport gasoline, jet fuel, and diesel with a capacity of 230,000 barrels per day.
Project Scope and Route
Western Gateway is a proposed 1,300-mile refined products pipeline system. It includes an approximately 900-mile new-build 20-inch and 24-inch pipeline from Borger, Texas, in the Texas Panhandle, to Phoenix, Arizona. Phillips 66 will construct and operate the new-build segment.
Kinder Morgan will contribute its existing SFPP East Line from El Paso, Texas, to Phoenix and Tucson, Arizona, and its SFPP West Line from Colton, California, to Phoenix. The West Line will be reversed to move product east to west into California. Kinder Morgan will continue to operate those pipelines.
Phillips 66’s Gold Pipeline, which currently runs from Borger, Texas, to St. Louis, Missouri, will also be reversed to help supply the system from Midwest and Gulf Coast origin points. The overall project is expected to allow for future expansion with limited additional capital.
Investment and Timeline
Phillips 66 will contribute nearly $2.5 billion in cash. Kinder Morgan will contribute about $250 million plus existing assets valued at approximately $1.5 billion. HF Sinclair will contribute about $750 million. The project carries an estimated enterprise value of $5 billion and is supported primarily by 10-year take-or-pay contracts.
Completion is targeted for 2029, subject to regulatory approvals. The companies said the pipeline is intended to strengthen fuel supply reliability for Western markets.
Executive Statements
“The final investment decision reflects the strength of this industry partnership. 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,” said Phillips 66 Chairman and CEO Mark Lashier in the companies’ joint announcement.
“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,” said Kinder Morgan CEO Kim Dang. “Kinder Morgan is proud to contribute its long-standing presence and decades of experience safely and reliably serving the region’s energy needs.”
“We believe in the merits of Western Gateway and are proud to be a part of such a transformational endeavor shaping the fuels markets of the West,” said HF Sinclair CEO Franklin Myers.
