Phillips 66 profits plunge to close weak refining year

Houston-based Phillips 66 saw its quarterly profit  fall 75 percent from 2015 to close out a “disappointing” quarter and year for U.S. refiners.

Phillips 66’s refining business lost $95 million for the quarter, but that was offset  by profits in the chemical and specialty products markets.

Phillips 66’s $163 million quarterly profit  compares to $650 million in earnings at the end of 2015. For all of 2016, Phillips 66 reported a $1.56 billion profit versus $4.23 billion in 2015.

U.S. refiners struggled in 2016 with low or non-existent profit margins on fuel products as oil prices grew and low gasoline prices lagged behind. This year is projected to improve as fuel prices are expected to increase for much of 2017.

Phillips Chairman and Chief Executive Greg Garland also warned the 20 percent border-adjusted tax proposed by House leaders and President Trump could increase gasoline prices by as much as 40 cents a gallon because of refiners’ reliance on heavier crude oil from Canada, Mexico, Venezuela and others.

The fourth quarter though did see Phillips 66 bring its new liquefied petroleum gas export terminal in Freeport online that allows the company to ship propane and butane worldwide.

The company touted major projects coming online this year, such as Chevron Phillips’ massive petrochemical expansion being finished later this year in Baytown and Old Ocean.

Phillips 66 owns a 25 percent stake in the controversial Dakota Access Pipeline project led by Dallas-based Energy Transfer Partners.

The pipeline project, which has led to protests and hundreds of arrests, is more than 95 percent complete and expected to be finished by mid-2017 after receiving a final approval from the U.S. Army Corps of Engineers, the company said.

In December, Phillips 66 said it will cut its capital spending by 25 percent this year, taking a conservative approach as the energy sector pulls out of the two-year oil bust.