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Phillips 66 puts emphasis on rail

March 21, 2013 at 7:06 AM   |   Comments

HOUSTON, March 21 (UPI) -- Deals for oil transportation by rail and pipeline gives energy company Phillips 66 an advantage in the North American market, Chairman Greg Garland said.

Phillips announced deals with Enbridge Energy Partners and Targa Resources Partners for rail loading of crude. A separate deal with Magellan Midstream Partners secures access to oil pipelines.

"We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities," Garland said in a statement. "Increasing our utilization of those advantaged crudes should allow us to capture significant value in our refining and marketing businesses."

Rail delivery of crude oil from the United States is at historic highs because production is straining pipeline capacity. Rail delivery is more expensive but quicker than pipeline.

The three-year deal with Enbridge gives Phillips as much as 40,000 barrels of crude oil per day from North Dakota for its U.S. refineries.

The company under a five-year deal with Targa secures as much as 30,000 bpd of U.S. or Canadian crude for west coast refineries.

The deal with Magellan would replace Western Texas Intermediate crude from Cushing, Okla., with crude oil from the nearby Mississippian Lime play through its pipelines.

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