Phillips 66 said Monday it would buy a Texas network of natural gas liquids pipelines and processing facilities from Epic NGL for $2.2 billion.
The Houston oil giant has said it aims to boost its sales of natural gas liquids such as ethane, propane and butane. As part of this goal, it spent $3.8 billion to double its stake in pipeline company DCP Midstream in 2023.
Energy companies are growing their chemicals business as the transition away from fossil fuels accelerates. While demand for oil is expected to decline within the next two decades, demand for chemicals such as ethane, propane and butane is expected to rise as their use in cleaner-burning fuels and as building blocks of plastics increases.
Ethane is a precursor to ethylene, which is used to make compounds such as polyethylene, a basic plastic used in packaging, and polyvinyl chloride, or PVC, polymers used in everything from construction to consumer electronics.
“This transaction bolsters Phillips 66’s position as a leading integrated downstream energy provider,” Mark Lashier, chairman and CEO of Phillips 66, said in a statement. “This transaction optimizes our Permian NGL value chain, allows Phillips 66 to provide producers with comprehensive flow assurance, reaching fractionation facilities near Corpus Christi, Sweeny, and Mont Belvieu, Texas, and is expected to deliver attractive returns in excess of our hurdle rates.”