Phillips 66 (NYSE: PSX), Kinder Morgan, Inc. (NYSE: KMI) and HF Sinclair Corporation (NYSE and NYSE Texas, Inc.: DINO) announced they have finalized a joint venture agreement and made a final investment decision to move forward with the proposed Western Gateway Pipeline system (Western Gateway). Under the joint venture, Phillips 66, Kinder Morgan and HF Sinclair will own 49.9%, 35.1% and 15% of the system, respectively.

“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. “This project will connect our Central Corridor and Gulf Coast refining assets to our West Coast and Southwest Marketing assets and demonstrates the value of our integrated business model and the opportunities it creates.”

Kinder Morgan CEO Kim Dang added, “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. Kinder Morgan is proud to contribute its long-standing presence and decades of experience safely and reliably serving the region’s energy needs. We expect to earn attractive returns on our investment based on the incremental project earnings above those of our contributed assets.”

“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 Franklin Myers, CEO, HF Sinclair.

Western Gateway is a proposed 1,300-mile refined products pipeline system that would create a new fuel supply path from St. Louis, Missouri, and expanded Gulf Coast origin points to Arizona and California. With a design capacity of 230,000 barrels per day, the project is also being developed to allow for future expansion with limited capital and no new pipe necessary as future demand requires. The project will include:

  - Approximately 900-mile new-build 20-inch and 24-inch pipeline from Borger, Texas, to Phoenix, Arizona. Phillips 66 will construct and operate the new-build pipeline.
  - Kinder Morgan’s contribution of its existing SFPP East Line pipeline from El Paso, Texas to Phoenix and Tucson, Arizona, and its SFPP West Line pipeline from Colton, California, to Phoenix, which would be reversed to move product east to west into California. Kinder Morgan will continue to operate those pipelines.
  - Supply to Western Gateway would also be supported by Phillips 66’s Gold Pipeline, which will connect to the Explorer Pipeline. The Gold Pipeline would be reversed to allow refined products to flow toward Borger.

The project’s enterprise value is approximately $5.0 billion. Upon completion of the new build pipeline from Borger into Phoenix, Kinder Morgan’s existing SFPP East Line and West Line assets would be contributed to the joint venture at a value of approximately $1.5 billion. Based on the approximately $5.0 billion enterprise value, Kinder Morgan will also make cash contributions of approximately $250 million. Phillips 66 would make cash contributions of approximately $2.5 billion, and HF Sinclair would make cash contributions of approximately $750 million to the project. The new system is underpinned by primarily 10-year, take-or-pay contracts. It is expected that the midstream project will generate attractive returns consistent with the high-quality, long-term contracted volumes that underpin the project.

The Western Gateway project is targeting completion in 2029, subject to the receipt of all permits and regulatory approvals.

About Phillips 66

Phillips 66 (NYSE: PSX) is a leading integrated downstream energy provider that manufactures, transports and markets products that drive the global economy. The company’s portfolio includes Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels businesses. Headquartered in Houston, Texas, Phillips 66 has employees around the globe who are committed to safely and reliably providing energy and improving lives while pursuing a lower-carbon future.

About Kinder Morgan

Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. Access to reliable, affordable energy is a critical component for improving lives around the world. We are committed to providing energy transportation and storage services in a safe, efficient, and environmentally responsible manner for the benefit of the people, communities, and businesses we serve. We own an interest in or operate approximately 78,000 miles of pipelines, 136 terminals, more than 700 billion cubic feet of working natural gas storage capacity, and have renewable natural gas generation capacity of approximately 6.9 Bcf per year of gross production. Our pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO2, renewable fuels and other products, and our terminals store and handle various commodities including gasoline, diesel fuel, jet fuel, chemicals, metals, petroleum coke, and ethanol and other renewable fuels and feedstocks.

About HF Sinclair Corporation

HF Sinclair Corporation (NYSE and NYSE Texas, Inc.: DINO), headquartered in Dallas, Texas, is an independent energy company that produces and markets high-value light products such as gasoline, diesel fuel, jet fuel, renewable diesel and other specialty products. HF Sinclair owns and operates refineries in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah. HF Sinclair provides petroleum products and crude oil transportation, terminaling, storage and throughput services to its refineries and the petroleum industry. HF Sinclair markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. It supplies high-quality fuels to more than 1,800 branded stations and licenses the use of the Sinclair brand to more than 350 additional locations throughout the country. HF Sinclair produces renewable diesel at two of its facilities in Wyoming and also at its facility in Artesia, New Mexico. In addition, we produce and market base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and export products to more than 80 countries.