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Kinder Morgan, Phillips 66 and HF Sinclair approve $5 billion Western Gateway JV
The 1,300-mile pipeline is slated for completion in 2029 and begins with 230,000 barrels per day capacity under 10-year take-or-pay contracts.
Kinder Morgan (KMI), Phillips 66 (PSX), and HF Sinclair (DINO) have finalized a joint venture and a final investment decision to build the Western Gateway Pipeline System, a $5 billion project aimed at moving refined petroleum products from the central U.S. and Gulf Coast regions to West Coast and Southwest markets, according to Yahoo Finance.
The Western Gateway system is expected to be completed in 2029. It will run about 1,300 miles and start with capacity of 230,000 barrels per day, with an expansion path described as possible without adding new pipe.
Kinder Morgan will own 35.1% of the system and is contributing existing pipelines including its SFPP East Line from El Paso, Texas to Phoenix, Arizona, and its SFPP West Line from Colton, California to Phoenix, which will be reversed to move refined products east to west into California. The outlet said Kinder Morgan is also contributing $250 million in cash to the JV, while Phillips 66 will own 49.9% and build a new 900-mile pipeline from Borger, Texas to Phoenix, with $2.5 billion in cash to the JV.
HF Sinclair will contribute $750 million to the joint venture. Yahoo Finance also said the project is underpinned by primarily 10-year take-or-pay contracts, a structure that pays the companies regardless of shipped volumes, and that take-or-pay contracts currently account for 65% of Kinder Morgan’s cash flow.