Cover and table of contents

10-K 1 psx-20181231_10k.htm 10-K

Index to Financial Statements

2018

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	FORM 10-K

(Mark One)
[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended	December 31, 2018
	OR
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from		to
	Commission file number: 001-35349

	Phillips 66
	(Exact name of registrant as specified in its charter)

	Delaware		45-3779385
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	2331 CityWest Blvd., Houston, Texas 77042
	(Address of principal executive offices) (Zip Code)
	Registrant’s telephone number, including area code: 281-293-6600

	Securities registered pursuant to Section 12(b) of the Act:
	Title of each class		Name of each exchange on which registered
	Common Stock, $0.01 Par Value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.				[X] Yes [ ] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.				[ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.				[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).				[X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.				[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [X]	Accelerated filer [ ]	Non-accelerated filer [ ]	Smaller reporting company [ ]
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.				[ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).				[ ] Yes [X] No

The aggregate market value of common stock held by non-affiliates of the registrant on June 29, 2018, the last business day of the registrant’s most recently completed second fiscal quarter, based on the closing price on that date of $112.31, was $52.1 billion. The registrant, solely for the purpose of this required presentation, had deemed its Board of Directors and executive officers to be affiliates, and deducted their stockholdings in determining the aggregate market value.

The registrant had 454,913,087 shares of common stock outstanding at January 31, 2019.

Documents incorporated by reference:

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 8, 2019 (Part III).

Index to Financial Statements

TABLE OF CONTENTS
Item	Page
PART I
1 and 2. Business and Properties	1
Corporate Structure	1
Segment and Geographic Information	2
Midstream	2
Chemicals	10
Refining	12
Marketing and Specialties	16
Technology Development	17
Competition	17
General	18
1A. Risk Factors	19
1B. Unresolved Staff Comments	26
3. Legal Proceedings	27
4. Mine Safety Disclosures	27
Executive Officers of the Registrant	28
PART II
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
6. Selected Financial Data	31
7. Management's Discussion and Analysis of Financial Condition and Results of Operations	32
7A. Quantitative and Qualitative Disclosures About Market Risk	68
Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995	70
8. Financial Statements and Supplementary Data	71
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	139
9A. Controls and Procedures	139
9B. Other Information	139
PART III
10. Directors, Executive Officers and Corporate Governance	140
11. Executive Compensation	140
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	140
13. Certain Relationships and Related Transactions, and Director Independence	140
14. Principal Accounting Fees and Services	140
PART IV
15. Exhibits, Financial Statement Schedules	141
16. Form 10-K Summary	141
Signatures	146

Index to Financial Statements

Unless otherwise indicated, “the company,” “we,” “our,” “us” and “Phillips 66” are used in this report to refer to the businesses of Phillips 66 and its consolidated subsidiaries.

This Annual Report on Form 10-K contains forward-looking statements including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. The company does not undertake to update, revise or correct any forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the company’s disclosures under the heading “CAUTIONARY STATEMENT FOR THE PURPOSES OF THE ‘SAFE HARBOR’ PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.”

PART I

Items 1 and 2. BUSINESS AND PROPERTIES

CORPORATE STRUCTURE

Phillips 66, headquartered in Houston, Texas, was incorporated in Delaware in 2011 in connection with, and in anticipation of, a restructuring of ConocoPhillips that separated its downstream businesses into an independent, publicly traded company named Phillips 66. The two companies were separated by ConocoPhillips distributing to its stockholders all the shares of common stock of Phillips 66 after the market closed on April 30, 2012 (the Separation). Phillips 66 stock trades on the New York Stock Exchange under the “PSX” stock symbol.

Our business is organized into four operating segments:

1)

Midstream—Provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and natural gas liquids (NGL) transportation, storage, processing and marketing services, mainly in the United States. This segment includes our master limited partnership (MLP), Phillips 66 Partners LP (Phillips 66 Partners), as well as our 50 percent equity investment in DCP Midstream, LLC (DCP Midstream).

2)	Chemicals—Consists of our 50 percent equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics on a worldwide basis.

3)	Refining—Refines crude oil and other feedstocks into petroleum products (such as gasoline, distillates and aviation fuels) at 13 refineries in the United States and Europe.

4)	Marketing and Specialties (M&S)—Purchases for resale and markets refined petroleum products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of specialty products (such as base oils and lubricants), as well as power generation operations.

Corporate and Other includes general corporate overhead, interest expense, our investment in new technologies and various other corporate activities. Corporate assets include all cash, cash equivalents and income tax-related assets.

At December 31, 2018, Phillips 66 had approximately 14,200 employees.

Index to Financial Statements

SEGMENT AND GEOGRAPHIC INFORMATION

MIDSTREAM

The Midstream segment consists of three business lines:

•	Transportation—Transports crude oil and other feedstocks to our refineries and other locations, delivers refined petroleum products to market, and provides terminaling and storage services for crude oil and refined petroleum products.

•	NGL and Other—Transports, stores, fractionates, exports and markets NGL and provides other fee-based processing services.

•	DCP Midstream—Gathers, processes, transports and markets natural gas and transports, fractionates and markets NGL.

Phillips 66 Partners

Phillips 66 Partners, headquartered in Houston, Texas, is an MLP we formed in 2013 to own, operate, develop and acquire primarily fee-based midstream assets. At December 31, 2018, we owned a 54 percent limited partner interest and a 2 percent general partner interest in Phillips 66 Partners, while the public owned a 44 percent limited partner interest and 13.8 million perpetual convertible preferred units.

Phillips 66 Partners’ operations currently consist of crude oil, refined petroleum product and NGL transportation, processing, terminaling and storage assets that are geographically dispersed throughout the United States. The majority of Phillips 66 Partners’ assets are integral to Phillips 66-operated refineries.

The results of operations of Phillips 66 Partners are included in Midstream’s Transportation and NGL and Other business lines, based on the nature of the activity within the partnership.

Transportation

We own or lease various assets to provide transportation, terminaling and storage services. These assets include crude oil, refined petroleum product, NGL, and natural gas pipeline systems; crude oil, refined petroleum product and NGL terminals; a petroleum coke handling facility; marine vessels; railcars and trucks.

Pipelines and Terminals

At December 31, 2018, our Transportation business was comprised of over 21,000 miles of crude oil, refined petroleum product, NGL and natural gas pipeline systems in the United States, including those partially owned or operated by our affiliates. We owned or operated 39 refined petroleum product terminals, 20 crude oil terminals, 4 NGL terminals, a petroleum coke exporting facility and various other storage and loading locations.

The Beaumont Terminal in Nederland, Texas, is the largest terminal in the Phillips 66 portfolio. During 2018, we continued to invest in the terminal by adding 3.5 million barrels of crude oil storage capacity. At December 31, 2018, the terminal storage capacity was 14.6 million barrels, which included 10.9 million barrels of storage capacity for crude oil and 3.7 million barrels of storage capacity for refined petroleum products. A further expansion of 2.2 million barrels of crude oil capacity is planned for completion in the first quarter of 2020.

The Bayou Bridge Pipeline joint venture delivers crude oil from Nederland, Texas, to Lake Charles, Louisiana. Phillips 66 Partners has a 40 percent interest in the joint venture, and our co-venturer serves as the operator. An extension of the pipeline from Lake Charles to St. James, Louisiana, is expected to be in service in March 2019. The pipeline has a capacity of approximately 480,000 barrels per day (BPD).

Index to Financial Statements

The Gray Oak Pipeline system will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Freeport markets on the Texas Gulf Coast, including the Sweeny Refinery. The planned capacity of the pipeline is 900,000 BPD. At December 31, 2018, Phillips 66 Partners had an effective ownership interest in the pipeline system of 48.75 percent. In February 2019, another party exercised its option to acquire an interest in the pipeline system that reduced Phillips 66 Partners’ effective ownership interest to 42.25 percent. The pipeline system is expected to be in service by the end of 2019.

Phillips 66 Partners owns a 25 percent interest in the South Texas Gateway Terminal, which will connect to the Gray Oak Pipeline in Corpus Christi, Texas. The marine terminal, under development by a co-venturer, will have two deepwater docks and an initial storage capacity of 6.5 to 7 million barrels. The terminal is expected to start-up by mid-2020.

An open season commenced for the Red Oak Pipeline system on November 12, 2018. As proposed, this pipeline system would provide shippers the opportunity to transport crude oil from Cushing, Oklahoma, to Corpus Christi, Houston, and Beaumont, Texas. The initial throughput capacity on the pipeline is expected to be 400,000 BPD, with potential for further expansion. The pipeline system is anticipated to be placed in service in the fourth quarter of 2020.

An open season also commenced on the Liberty Pipeline system on November 12, 2018. As proposed, this pipeline system would provide shippers the opportunity to transport crude oil from the Rockies and Bakken production areas to Corpus Christi, Texas. The initial throughput capacity on the pipeline is expected to be 350,000 BPD, with potential for further expansion. The pipeline system is anticipated to be placed in service in the fourth quarter of 2020.

Index to Financial Statements

The following table depicts our ownership interest in major pipeline systems at December 31, 2018:

Name		State of Origination/Terminus		Interest			Length (Miles)			Gross Capacity (MBD)
Crude Oil
Bakken Pipeline †		North Dakota/Texas		25	%		1,915			525
Bayou Bridge †		Texas/Louisiana		40			49			480
Clifton Ridge †		Louisiana		100			10			260
CushPo †		Oklahoma		100			62			130
Eagle Ford Gathering †		Texas		100			28			54
Glacier †		Montana		79			865			126
Line 100		California		100			79			54
Line 200		California		100			228			93
Line 300		California		100			61			48
Line 400		California		100			153			40
Line O †		Oklahoma/Texas		100			276			37
Louisiana Crude Gathering		Louisiana		100			80			25
New Mexico Crude †		New Mexico/Texas		100			227			106
North Texas Crude †		Texas		100			224			28
Oklahoma Crude †		Texas/Oklahoma		100			217			100
Sacagawea †		North Dakota		50			95			175
STACK PL †		Oklahoma		50			149			250
Sweeny Crude		Texas		100			56			265
West Texas Crude †		Texas		100			1,064			156
Refined Petroleum Products
ATA Line †		Texas/New Mexico		50			293			34
Borger to Amarillo †		Texas		100			93			76
Borger-Denver		Texas/Colorado		70			397			38
Cherokee East †		Oklahoma/Missouri		100			287			55
Cherokee North †		Oklahoma/Kansas		100			29			57
Cherokee South †		Oklahoma		100			98			46
Cross Channel Connector †		Texas		100			5			180
Explorer †		Texas/Indiana		22			1,830			660
Gold Line †		Texas/Illinois		100			686			120
Harbor		New Jersey		33			80			171
Heartland*		Kansas/Iowa		50			49			30
LAX Jet Line		California		50			19			50
Los Angeles Products		California		100			22			112
Paola Products †		Kansas		100			106			96
Pioneer		Wyoming/Utah		50			562			63
Richmond		California		100			14			26
SAAL †		Texas		33			102			33
SAAL †		Texas		54			19			30
Seminoe †		Montana/Wyoming		100			342			33
Standish †		Oklahoma/Kansas		100			92			72
Sweeny to Pasadena †		Texas		100			120			294
Torrance Products		California		100			8			161
Watson Products		California		100			9			238
Yellowstone		Montana/Washington		46			710			66

Index to Financial Statements

Name		State of Origination/Terminus		Interest			Length (Miles)			Gross Capacity (MBD)
NGL
Blue Line		Texas/Illinois		100	%		688			29
Brown Line †		Oklahoma/Kansas		100			76			26
Chisholm		Oklahoma/Kansas		50			202			42
Conway to Wichita		Kansas		100			55			38
Medford †		Oklahoma		100			42			10
Powder River		Wyoming/Texas		100			705			14
River Parish NGL†		Louisiana		100			510			133
Sand Hills †		Texas		33			1,466			485
Skelly-Belvieu		Texas		50			571			45
Southern Hills †		Kansas/Texas		33			941			192
Sweeny LPG		Texas		100			232			942
Sweeny NGL		Texas		100			18			204
TX Panhandle Y1/Y2		Texas		100			289			61
Natural Gas
Rockies Express**
East to West		Ohio/Illinois		25			670			2.6 Bcf/d
West to East		Colorado/Ohio		25			1,712			1.8 Bcf/d

† Owned by Phillips 66 Partners; Phillips 66 held a 56 percent ownership interest in Phillips 66 Partners at December 31, 2018.

• Total pipeline system is 419 miles. Phillips 66 has an ownership interest in multiple segments totaling 49 miles.

** Total pipeline system consists of three zones for a total of 1,712 miles. The third zone of the pipeline is bi-directional and can transport 2.6 Bcf/d of natural gas from east to west.

Index to Financial Statements

The following table depicts our ownership interest in terminal and storage facilities at December 31, 2018:

Facility Name		Location		Commodity Handled		Interest			Gross Storage Capacity (MBbl)			Gross Rack Capacity (MBD)
Albuquerque †		New Mexico		Refined Petroleum Products		100	%		274			18
Amarillo †		Texas		Refined Petroleum Products		100			296			29
Beaumont		Texas		Crude Oil, Refined Petroleum Products		100			14,600			8
Billings		Montana		Refined Petroleum Products		100			88			16
Billings Crude †		Montana		Crude Oil		100			236			N/A
Borger		Texas		Crude Oil		50			772			N/A
Bozeman		Montana		Refined Petroleum Products		100			130			13
Buffalo Crude †		Montana		Crude Oil		100			303			N/A
Casper †		Wyoming		Refined Petroleum Products		100			365			7
Clemens †		Texas		NGL		100			9,000			N/A
Clifton Ridge †		Louisiana		Crude Oil		100			3,800			N/A
Coalinga		California		Crude Oil		100			817			N/A
Colton		California		Refined Petroleum Products		100			207			21
Cushing †		Oklahoma		Crude Oil		100			675			N/A
Cut Bank †		Montana		Crude Oil		100			315			N/A
Denver		Colorado		Refined Petroleum Products		100			310			43
Des Moines		Iowa		Refined Petroleum Products		50			217			15
East St. Louis †		Illinois		Refined Petroleum Products		100			2,031			78
Freeport		Texas		Crude Oil, Refined Petroleum Products, NGL		100			3,624			N/A
Glenpool †		Oklahoma		Refined Petroleum Products		100			571			19
Great Falls		Montana		Refined Petroleum Products		100			198			12
Hartford †		Illinois		Refined Petroleum Products		100			1,468			25
Helena		Montana		Refined Petroleum Products		100			195			10
Jefferson City †		Missouri		Refined Petroleum Products		100			103			16
Jones Creek		Texas		Crude Oil		100			2,580			N/A
Junction		California		Crude Oil		100			524			N/A
Kansas City †		Kansas		Refined Petroleum Products		100			1,410			66
Keene †		North Dakota		Crude Oil		50			503			N/A
La Junta		Colorado		Refined Petroleum Products		100			109			10
LCPL Storage		Louisiana		Refined Petroleum Products		50			3,143			N/A
Lincoln		Nebraska		Refined Petroleum Products		100			217			21
Linden †		New Jersey		Refined Petroleum Products		100			360			121
Los Angeles		California		Refined Petroleum Products		100			156			75
Lubbock †		Texas		Refined Petroleum Products		100			182			17
Medford Spheres †		Oklahoma		NGL		100			70			N/A
Missoula		Montana		Refined Petroleum Products		50			365			29
Moses Lake		Washington		Refined Petroleum Products		50			216			13
Mount Vernon †		Missouri		Refined Petroleum Products		100			365			46
North Salt Lake		Utah		Refined Petroleum Products		50			755			41
North Spokane		Washington		Refined Petroleum Products		100			492			N/A
Odessa †		Texas		Crude Oil		100			521			N/A
Oklahoma City †		Oklahoma		Crude Oil, Refined Petroleum Products		100			355			48

Index to Financial Statements

Facility Name		Location		Commodity Handled		Interest			Gross Storage Capacity (MBbl)			Gross Rack Capacity (MBD)
Palermo †		North Dakota		Crude Oil		70	%		235			N/A
Paola †		Kansas		Refined Petroleum Products		100			978			N/A
Pasadena †		Texas		Refined Petroleum Products		100			3,234			65
Pecan Grove †		Louisiana		Crude Oil		100			177			N/A
Ponca City †		Oklahoma		Refined Petroleum Products		100			51			23
Ponca City Crude †		Oklahoma		Crude Oil		100			1,229			N/A
Portland		Oregon		Refined Petroleum Products		100			650			33
Renton		Washington		Refined Petroleum Products		100			243			20
Richmond		California		Refined Petroleum Products		100			343			28
River Parish †		Louisiana		NGL		100			1,500			N/A
Rock Springs		Wyoming		Refined Petroleum Products		100			132			19
Sacramento		California		Refined Petroleum Products		100			146			13
San Bernard		Texas		Refined Petroleum Products		100			231			N/A
Santa Margarita		California		Crude Oil		100			398			N/A
Sheridan †		Wyoming		Refined Petroleum Products		100			94			15
Spokane		Washington		Refined Petroleum Products		100			351			24
Tacoma		Washington		Refined Petroleum Products		100			316			17
Torrance		California		Crude Oil, Refined Petroleum Products		100			2,128			N/A
Tremley Point †		New Jersey		Refined Petroleum Products		100			1,701			25
Westlake		Louisiana		Refined Petroleum Products		100			128			16
Wichita Falls †		Texas		Crude Oil		100			225			N/A
Wichita North †		Kansas		Refined Petroleum Products		100			769			19
Wichita South †		Kansas		Refined Petroleum Products		100			272			N/A

† Owned by Phillips 66 Partners; Phillips 66 held a 56 percent ownership interest in Phillips 66 Partners at December 31, 2018.

The following table depicts our ownership interest in marine, rail and petroleum coke loading and offloading facilities at December 31, 2018:

Facility Name		Location		Commodity Handled		Interest			Gross Loading Capacity*
Marine
Beaumont		Texas		Crude Oil, Refined Petroleum Products		100	%		60
Clifton Ridge †		Louisiana		Crude Oil		100			48
Freeport		Texas		Crude Oil, Refined Petroleum Products, NGL		100			46
Hartford †		Illinois		Refined Petroleum Products		100			3
Pecan Grove †		Louisiana		Crude Oil		100			6
Portland		Oregon		Crude Oil		100			10
Richmond		California		Crude Oil		100			3
San Bernard		Texas		Refined Petroleum Products		100			2
Tacoma		Washington		Crude Oil		100			12
Tremley Point †		New Jersey		Refined Petroleum Products		100			7
Rail
Bayway †		New Jersey		Crude Oil		100			75
Beaumont		Texas		Crude Oil		100			20
Ferndale †		Washington		Crude Oil		100			30
Missoula		Montana		Refined Petroleum Products		50			41
Palermo †		North Dakota		Crude Oil		70			100
Thompson Falls		Montana		Refined Petroleum Products		50			41
Petroleum Coke
Lake Charles		Louisiana		Petroleum Coke		50			N/A

† Owned by Phillips 66 Partners; Phillips 66 held a 56 percent ownership interest in Phillips 66 Partners at December 31, 2018.

• Marine facilities in thousands of barrels per hour; Rail in thousands of barrels daily (MBD).

Index to Financial Statements

Marine Vessels

At December 31, 2018, we had 13 international-flagged crude oil, refined petroleum product and NGL tankers and two Jones Act-compliant tankers under time charter contracts, with capacities ranging in size from 300,000 to 1,100,000 barrels. Additionally, we had a variety of inland and offshore tug/barge units. These vessels are used primarily to transport crude oil and other feedstocks and refined petroleum products for certain of our refineries. In addition, the NGL tankers are used to export propane and butane from our fractionation, transportation and storage infrastructure.

Truck and Rail

Our truck and rail fleets support our feedstock and distribution operations. Rail movements are provided via a fleet of more than 10,000 owned and leased railcars. Truck movements are provided through numerous third-party trucking companies, as well as through our wholly owned subsidiary, Sentinel Transportation LLC.

NGL and Other

Our NGL and Other business includes the following:

•	A U.S. Gulf Coast NGL market hub comprised of the Freeport LPG Export Terminal and Phillips 66 Partners’ 100,000-BPD Sweeny Fractionator. These assets are supported by 9 million barrels of gross capacity at Phillips 66 Partners’ Clemens Caverns storage facility. We refer to these facilities as the “Sweeny Hub.”

•	A 22.5 percent interest in Gulf Coast Fractionators, which owns an NGL fractionation plant in Mont Belvieu, Texas. We operate the facility, and our net share of its capacity is 32,625 BPD.

•	A 12.5 percent undivided interest in a fractionation plant in Mont Belvieu, Texas. Our net share of its capacity is 30,250 BPD.

•	A 40 percent undivided interest in a fractionation plant in Conway, Kansas. Our net share of its capacity is 43,200 BPD.

•	Phillips 66 Partners owns the River Parish NGL logistics system in southeast Louisiana, comprising approximately 500 miles of pipeline and a storage cavern connecting multiple fractionation facilities, refineries and a petrochemical facility.

•	Phillips 66 Partners owns a direct one-third interest in both the DCP Sand Hills Pipeline, LLC (Sand Hills) and DCP Southern Hills Pipeline, LLC, which own NGL pipeline systems that connect the Eagle Ford, Permian Basin and Midcontinent production areas to the Mont Belvieu, Texas, market hub.

•	Phillips 66 Partners, through its ownership of Merey Sweeny LLC, successor to Merey Sweeny, L.P. (both referred to herein as Merey Sweeny), owns a vacuum distillation unit with a capacity of 125,000 BPD and a delayed coker unit with a capacity of 70,000 BPD located at our Sweeny Refinery in Old Ocean, Texas.

Phillips 66 Partners’ Sweeny Fractionator is located adjacent to our Sweeny Refinery in Old Ocean, Texas, and supplies purity ethane to the petrochemical industry and purity NGL to domestic and global markets. Raw NGL supply to the fractionator is delivered from nearby major pipelines, including the Sand Hills Pipeline. The fractionator is supported by significant infrastructure including connectivity to two NGL supply pipelines, a pipeline connecting to the Mont Belvieu market center and the Clemens Caverns storage facility with access to our liquefied petroleum gas (LPG) export terminal in Freeport, Texas.

The Freeport LPG Export Terminal leverages our fractionation, transportation and storage infrastructure to supply petrochemical, heating and transportation markets globally. The terminal can simultaneously load two ships with refrigerated propane and butane at a combined rate of approximately 36,000 barrels per hour. In support of the terminal, we have a 100,000-BPD unit near the Sweeny Fractionator to upgrade domestic propane for export. In addition, the terminal exports 10,000 to 15,000 BPD of natural gasoline (C5+) produced at the Sweeny Fractionator.

Index to Financial Statements

At the Sweeny Hub, we are constructing two 150,000-BPD NGL fractionators and associated pipeline infrastructure, and Phillips 66 Partners is adding 6 million barrels of storage capacity at Clemens Caverns. DCP Midstream has committed to supply the fractionators with raw NGL and has an option to acquire up to a 30 percent ownership interest in the fractionators. Upon completion of the expansion, expected in late 2020, the Sweeny Hub will have 400,000 BPD of NGL fractionation capability and 15 million barrels of storage capacity at Clemens Caverns.

During 2018, Phillips 66 Partners continued development of a new 25,000-BPD isomerization unit at our Lake Charles Refinery to increase production of higher octane gasoline blend components. The project is expected to be completed in the third quarter of 2019.

DCP Midstream

Our Midstream segment includes our 50 percent equity investment in DCP Midstream, which is headquartered in Denver, Colorado. At December 31, 2018, DCP Midstream owned or operated 49 active natural gas processing facilities, with a net processing capacity of approximately 6.7 billion cubic feet per day (Bcf/d). DCP Midstream’s owned or operated natural gas pipeline systems included gathering services for these facilities, as well as natural gas transmission, and totaled approximately 62,000 miles of pipeline. DCP Midstream also owned or operated 12 NGL fractionation plants, along with natural gas and NGL storage facilities, and NGL pipelines.

The residual natural gas, primarily methane, which results from processing raw natural gas, is sold by DCP Midstream at market-based prices to marketers and end users, including large industrial companies, natural gas distribution companies and electric utilities. DCP Midstream purchases or takes custody of substantially all of its raw natural gas from producers, principally under contractual arrangements that expose DCP Midstream to the prices of NGL, natural gas and condensate. DCP Midstream also has fee-based arrangements with producers to provide midstream services such as gathering and processing. In addition, DCP Midstream markets a portion of its NGL to us and our equity affiliates under existing contracts.

During 2018, DCP Midstream completed or advanced the following growth projects:

•	Construction of the 200-million-cubic-feet-per-day (MMcf/d) Mewbourn 3 natural gas processing plant located in the Denver-Julesburg (DJ) Basin was completed in the third quarter of 2018.

•	Continued construction of the 300-MMcf/d O'Connor 2 natural gas processing facility and associated gathering infrastructure in the DJ Basin. The O’Connor 2 facility will have 200 MMcf/d of processing capacity and up to 100 MMcf/d of bypass capacity, which are expected to be placed into service in the second and third quarters of 2019, respectively.

•	Development of the Gulf Coast Express pipeline project (GCX project), in which DCP Midstream owns a 25 percent interest. The GCX project is designed to transport up to approximately 2 Bcf/d of natural gas to the Gulf Coast markets. The mostly 42-inch pipeline would traverse approximately 500 miles and be placed in service in the fourth quarter of 2019.

•	The Cheyenne Connector pipeline will provide takeaway solutions with capacity of at least 600 MMcf/d for DCP Midstream's DJ Basin assets, connecting natural gas to Rockies Express Pipeline LLC’s Cheyenne Hub, where it can then be delivered to numerous markets across the country. DCP Midstream holds an option to invest in this pipeline at a later date.

•	Expansion of the Sand Hills Pipeline to 485,000 BPD was completed in the fourth quarter of 2018. This expansion included a partial looping of the pipeline and the addition of new pump stations.

Index to Financial Statements

CHEMICALS

The Chemicals segment consists of our 50 percent equity investment in CPChem, which is headquartered in The Woodlands, Texas. At December 31, 2018, CPChem owned or had joint venture interests in 28 manufacturing facilities located in Belgium, Colombia, Qatar, Saudi Arabia, Singapore and the United States. Additionally, CPChem has two research and development centers in the United States.

We structure our reporting of CPChem’s operations around two primary business lines: Olefins and Polyolefins (O&P) and Specialties, Aromatics and Styrenics (SA&S). The O&P business line produces and markets ethylene and other olefin products. The ethylene produced is primarily used by CPChem to produce polyethylene, normal alpha olefins (NAO) and polyethylene pipe. The SA&S business line manufactures and markets aromatics and styrenics products, such as benzene, cyclohexane, styrene and polystyrene. SA&S also manufactures and/or markets a variety of specialty chemical products including organosulfur chemicals, solvents, catalysts, and chemicals used in drilling and mining.

The manufacturing of petrochemicals and plastics involves the conversion of hydrocarbon-based raw material feedstocks into higher-value products, often through a thermal process referred to in the industry as “cracking.” For example, ethylene can be produced by cracking ethane, propane, butane, natural gasoline or certain refinery liquids, such as naphtha and gas oil. Ethylene primarily is used as a raw material in the production of plastics, such as polyethylene and polyvinyl chloride (PVC). Plastic resins, such as polyethylene, are manufactured in a thermal/catalyst process, and the produced output is used as a further raw material for various applications, such as packaging and plastic pipe.

The following table reflects CPChem’s petrochemicals and plastics product capacities at December 31, 2018:

	Millions of Pounds per Year*
	U.S.			Worldwide
O&P
Ethylene**	11,635			14,110
Propylene	2,675			3,180
High-density polyethylene	5,305			7,470
Low-density polyethylene	620			620
Linear low-density polyethylene	1,590			1,590
Polypropylene	—			310
Normal alpha olefins	2,335			2,850
Polyalphaolefins	125			255
Polyethylene pipe	500			500
Total O&P	24,785			30,885
SA&S
Benzene	1,600			2,530
Cyclohexane	1,060			1,455
Styrene	1,050			1,875
Polystyrene	835			1,070
Specialty chemicals	440			575
Total SA&S	4,985			7,505
Total O&P and SA&S	29,770			38,390

• Capacities include CPChem’s share in equity affiliates and excludes CPChem’s NGL fractionation capacity.

** Effective January 1, 2019, the U.S. and Worldwide ethylene capacities increased to 11,935 million pounds per year and 14,410 million pounds per year, respectively.

Index to Financial Statements

During 2018, CPChem completed its U.S. Gulf Coast (USGC) Petrochemicals Project. The ethane cracker at CPChem’s Cedar Bayou facility in Baytown, Texas, commenced operations in the second quarter of 2018. Along with the two polyethylene units that started up in the third quarter of 2017, the USGC project increased CPChem’s global ethylene and polyethylene capacity by 31 percent from January 1, 2017. Effective January 1, 2019, the capacity of the ethane cracker increased to 3.8 billion pounds per year.

In the fourth quarter of 2018, CPChem permanently shutdown its paraxylene operations in Pascagoula, Mississippi.

Index to Financial Statements

REFINING

Our Refining segment refines crude oil and other feedstocks into petroleum products (such as gasoline, distillates and aviation fuels) at 13 refineries in the United States and Europe.

The table below depicts information for each of our owned and joint venture refineries at December 31, 2018:

							Thousands of Barrels Daily
Region/Refinery		Location		Interest			Net Crude Throughput Capacity					Net Clean Product Capacity**						Clean Product Yield Capability
At December 31 2018		Effective January 1 2019			Gasolines			Distillates
Atlantic Basin/Europe
Bayway		Linden, NJ		100	%		258		258			155			130			92	%
Humber		N. Lincolnshire, United Kingdom		100			221		221			95			115			81
MiRO*		Karlsruhe, Germany		19			58		58			25			25			87
							537		537
Gulf Coast
Alliance		Belle Chasse, LA		100			247		250			130			120			87
Lake Charles		Westlake, LA		100			249		249			100			115			70
Sweeny		Old Ocean, TX		100			256		265			135			120			86
							752		764
Central Corridor
Wood River		Roxana, IL		50			157		167			85			60			81
Borger		Borger, TX		50			73		75			50			30			91
Ponca City		Ponca City, OK		100			203		213			120			100			93
Billings		Billings, MT		100			60		60			35			30			90
							493		515
West Coast
Ferndale		Ferndale, WA		100			105		105			65			35			81
Los Angeles		Carson/Wilmington, CA		100			139		139			85			65			90
San Francisco		Arroyo Grande/San Francisco, CA		100			120		120			60			65			85
							364		364
							2,146		2,180

• Mineraloelraffinerie Oberrhein GmbH.

** Clean product capacities are maximum rates for each clean product category, independent of each other. They are not additive when calculating the clean product yield capability for each refinery.

Index to Financial Statements

Primary crude oil characteristics and sources of crude oil for our owned and joint venture refineries are as follows:

	Characteristics					Sources
	Sweet	Medium Sour	Heavy Sour	High TAN*		United States	Canada	South America	Europe	Middle East & Africa
Bayway	l	l				l	l			l
Humber	l	l		l		l			l	l
MiRO	l	l	l						l	l
Alliance	l	l				l
Lake Charles	l	l	l	l		l	l	l		l
Sweeny	l	l	l	l		l	l	l
Wood River	l	l	l	l		l	l
Borger	l	l	l			l	l
Ponca City	l	l				l	l
Billings			l	l		l	l
Ferndale	l	l				l	l
Los Angeles		l	l	l		l	l	l		l
San Francisco	l	l	l	l		l	l	l		l

• High TAN (Total Acid Number): acid content greater than or equal to 1.0 milligram of potassium hydroxide (KOH) per gram.

Atlantic Basin/Europe Region

Bayway Refinery

The Bayway Refinery is located on the New York Harbor in Linden, New Jersey. Bayway’s facilities include crude distilling, naphtha reforming, fluid catalytic cracking, solvent deasphalting, hydrodesulfurization and alkylation units. The complex also includes a polypropylene plant with the capacity to produce up to 775 million pounds per year. The refinery produces a high percentage of transportation fuels, as well as petrochemical feedstocks, residual fuel oil and home heating oil. Refined petroleum products are distributed to East Coast customers by pipeline, barge, railcar and truck.

Humber Refinery

The Humber Refinery is located on the east coast of England in North Lincolnshire, United Kingdom, approximately 180 miles north of London. Humber’s facilities include crude distilling, naphtha reforming, fluid catalytic cracking, hydrodesulfurization, thermal cracking and delayed coking units. The refinery has two coking units with associated calcining plants. Humber is the only coking refinery in the United Kingdom, and a producer of high-quality specialty graphite and anode-grade petroleum cokes. The refinery also produces a high percentage of transportation fuels. The majority of the light oils produced by the refinery are distributed to customers in the United Kingdom by pipeline, railcar and truck, while the other refined petroleum products are exported to the rest of Europe, West Africa and the United States by waterborne cargo.

MiRO Refinery

The MiRO Refinery is located on the Rhine River in Karlsruhe, Germany, approximately 95 miles south of Frankfurt, Germany. MiRO is a joint venture in which we own an 18.75 percent interest. Facilities include crude distilling, naphtha reforming, fluid catalytic cracking, petroleum coking and calcining, hydrodesulfurization, isomerization, ethyl tert-butyl ether and alkylation units. MiRO produces a high percentage of transportation fuels. Other products produced include petrochemical feedstocks, home heating oil, bitumen, and anode- and fuel-grade petroleum cokes. Refined petroleum products are distributed to customers in Germany, Switzerland and Austria by truck, railcar and barge.

Index to Financial Statements

Gulf Coast Region

Alliance Refinery

The Alliance Refinery is located on the Mississippi River in Belle Chasse, Louisiana, approximately 25 miles southeast of New Orleans, Louisiana. The single-train facility includes crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, aromatics and delayed coking units. Alliance produces a high percentage of transportation fuels. Other products produced include petrochemical feedstocks, home heating oil and anode-grade petroleum coke. A majority of the refined petroleum products are distributed to customers in the southeastern and eastern United States through major common-carrier pipeline systems and by barge. Additionally, refined petroleum products are exported to customers primarily in Latin America by waterborne cargo.

Lake Charles Refinery

The Lake Charles Refinery is located in Westlake, Louisiana, approximately 150 miles east of Houston, Texas. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrocracking, hydrodesulfurization and delayed coking units. Refinery facilities also include a specialty coker and calciner. The refinery produces a high percentage of transportation fuels. Other products produced include off-road diesel, home heating oil, feedstock for our Excel Paralubes joint venture in our M&S segment, and specialty graphite and fuel-grade petroleum cokes. A majority of the refined petroleum products are distributed to customers in the southeastern and eastern United States by truck, railcar, barge or major common carrier pipelines. Additionally, refined petroleum products are exported to customers primarily in Latin America and West Africa by waterborne cargo.

Sweeny Refinery

The Sweeny Refinery is located in Old Ocean, Texas, approximately 65 miles southwest of Houston, Texas. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, aromatics units, and a Phillips 66 Partners owned delayed coking unit. The refinery produces a high percentage of transportation fuels. Other products include petrochemical feedstocks, home heating oil and fuel-grade petroleum coke. A majority of the refined petroleum products are distributed to customers throughout the Midcontinent region, southeastern and eastern United States by pipeline, barge and railcar. Additionally, refined petroleum products are exported to customers primarily in Latin America by waterborne cargo.

Central Corridor Region

WRB Refining LP (WRB)

We are the operator and managing partner of WRB, a 50-percent-owned joint venture that owns the Wood River and Borger refineries.

•	Wood River Refinery

The Wood River Refinery is located in Roxana, Illinois, about 15 miles northeast of St. Louis, Missouri, at the confluence of the Mississippi and Missouri rivers. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrocracking, hydrodesulfurization and delayed coking units. The refinery produces a high percentage of transportation fuels. Other products produced include petrochemical feedstocks, asphalt and fuel-grade petroleum coke. Refined petroleum products are distributed to customers throughout the Midcontinent region by pipeline, railcar, barge and truck.

•	Borger Refinery

The Borger Refinery is located in Borger, Texas, in the Texas Panhandle, approximately 50 miles north of Amarillo, Texas. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, and delayed coking units, as well as an NGL fractionation facility. The refinery produces a high percentage of transportation fuels, as well as fuel-grade petroleum coke, NGL and solvents. Refined petroleum products are distributed to customers in West Texas, New Mexico, Colorado and the Midcontinent region by pipeline.

Index to Financial Statements

Ponca City Refinery

The Ponca City Refinery is located in Ponca City, Oklahoma, approximately 95 miles northwest of Tulsa, Oklahoma. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, and delayed coking units. The refinery produces a high percentage of transportation fuels and anode-grade petroleum coke. Refined petroleum products are primarily distributed to customers throughout the Midcontinent region by company-owned and common-carrier pipelines.

Billings Refinery

The Billings Refinery is located in Billings, Montana. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization and delayed coking units. The refinery produces a high percentage of transportation fuels and fuel-grade petroleum coke. Refined petroleum products are distributed to customers in Montana, Wyoming, Idaho, Utah, Colorado and Washington by pipeline, railcar and truck.

West Coast Region

Ferndale Refinery

The Ferndale Refinery is located on Puget Sound in Ferndale, Washington, approximately 20 miles south of the U.S.-Canada border. Facilities include crude distillation, naphtha reforming, fluid catalytic cracking, alkylation and hydrodesulfurization units. The refinery produces a high percentage of transportation fuels. Other products produced include residual fuel oil, which is supplied to the northwest marine bunker fuel market. Most of the refined petroleum products are distributed to customers in the northwest United States by pipeline and barge.

Los Angeles Refinery

The Los Angeles Refinery consists of two facilities linked by pipeline located five miles apart in Carson and Wilmington, California, approximately 15 miles southeast of Los Angeles. The Carson facility serves as the front end of the refinery by processing crude oil, and the Wilmington facility serves as the back end of the refinery by upgrading the intermediate products to finished products. Refinery facilities include crude distillation, naphtha reforming, fluid catalytic cracking, alkylation, hydrocracking, and delayed coking units. The refinery produces a high percentage of transportation fuels. The refinery produces California Air Resources Board (CARB)-grade gasoline. Other products produced include fuel-grade petroleum coke. Refined petroleum products are distributed to customers in California, Nevada and Arizona by pipeline and truck.

San Francisco Refinery

The San Francisco Refinery consists of two facilities linked by a 200-mile pipeline. The Santa Maria facility is located in Arroyo Grande, California, 200 miles south of San Francisco, California, while the Rodeo facility is located in the San Francisco Bay Area. Intermediate refined products from the Santa Maria facility are shipped by pipeline to the Rodeo facility for upgrading into finished petroleum products. Refinery facilities include crude distillation, naphtha reforming, hydrocracking, hydrodesulfurization and delayed coking units, as well as a calciner. The refinery produces a high percentage of transportation fuels, including CARB-grade gasoline. Other products produced include fuel-grade petroleum coke. The majority of the refined petroleum products are distributed to customers in California by pipeline and barge. Additionally, refined petroleum products are exported to customers primarily in Latin America by waterborne cargo.

Index to Financial Statements

MARKETING AND SPECIALTIES

Our M&S segment purchases for resale and markets refined petroleum products (such as gasolines, distillates and aviation fuels), mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of specialty products (such as base oils and lubricants), as well as power generation operations.

Marketing

Marketing—United States

We market gasoline, diesel and aviation fuel through independently owned outlets that utilize the Phillips 66, Conoco or 76 brands. At December 31, 2018, we had approximately 7,520 independently owned marketing outlets in 48 states.

Our wholesale operations utilized a network of marketers operating approximately 5,600 outlets. We place a strong emphasis on the wholesale channel of trade because of its lower capital requirements. In addition, we held brand-licensing agreements covering approximately 1,120 sites. Our refined petroleum products are marketed on both a branded and unbranded basis. A high percentage of our branded marketing sales are made in the Midcontinent, Rockies and West Coast regions, where our wholesale marketing operations provide efficient off-take from our refineries. We continue to utilize consignment fuel arrangements with several marketers whereby we own the fuel inventory and pay the marketers a fixed monthly fee.

In the Gulf Coast and East Coast regions, most sales are conducted via the unbranded channel of trade, which does not require a highly integrated marketing and distribution infrastructure to secure product placement for refinery pull through. We are expanding our export capability at our U.S. coastal refineries to meet growing international demand and increase flexibility to provide product to the highest-value markets.

In addition to automotive gasoline and diesel, we produce and market aviation gasoline and jet fuel. Aviation gasoline and jet fuel were sold through dealers and independent marketers at approximately 800 Phillips 66-branded locations.

Marketing—International

We have marketing operations in four European countries. Our European marketing strategy is to sell primarily through owned, leased or joint venture retail sites using a low-cost, high-volume approach. We use the JET brand name to market retail and wholesale products in Austria, Germany and the United Kingdom. In addition, we have an equity interest in a joint venture that markets refined petroleum products in Switzerland under the COOP brand name.

We also market aviation fuels, LPG, heating oils, transportation fuels, marine bunker fuels, bitumen and fuel-grade petroleum coke specialty products to commercial customers and into the bulk or spot markets in the above countries.

At December 31, 2018, we had 1,310 marketing outlets in Europe, of which 985 were company owned and 325 were dealer owned. In addition, we had interests in 320 additional sites through our COOP joint venture operations in Switzerland.

Specialties

We manufacture lubricants and sell a variety of specialty products, including petroleum coke products, waxes, solvents and polypropylene.

Lubricants

We manufacture and sell automotive, commercial, industrial and specialty lubricants which are marketed worldwide under the Phillips 66, Kendall, Red Line and other private label brands. We also market Group III Ultra-S base oils through an agreement with South Korea’s S-Oil Corporation.

In addition, we own a 50 percent interest in Excel Paralubes LLC (Excel), an operated joint venture that owns a hydrocracked lubricant base oil manufacturing plant located adjacent to the Lake Charles Refinery. The facility has a nameplate capacity to produce 22,200 BPD of high-quality Group II clear hydrocracked base oils. Excel markets the produced base oil under the Pure Performance brand. The facility’s feedstock is sourced primarily from our Lake Charles Refinery.

Index to Financial Statements

Other Specialty Products

We market high-quality specialty graphite and anode-grade petroleum cokes in the United States, Europe and Asia for use in a variety of industries that include steel, aluminum, titanium dioxide and battery manufacturing. We also market polypropylene in North America under the COPYLENE brand name for use in consumer products, and market specialty solvents that include pentane, iso-pentane, hexane, heptane and odorless mineral spirits for use in the petrochemical, agriculture and consumer markets. In addition, we market sulfur for use in agricultural and chemical applications, and fuel-grade petroleum coke for use in the making of cement, glass and power.

Other

Power Generation

We own a cogeneration power plant located adjacent to the Sweeny Refinery. The plant generates electricity and provides process steam to the refinery, as well as merchant power into the Texas market. The plant has a net electrical output of 440 megawatts and is capable of generating up to 3.6 million pounds per hour of process steam.

TECHNOLOGY DEVELOPMENT

Our Technology organization conducts applied and fundamental research to support our current business, provide new environmental solutions to address governmental regulations, and position us for future growth. Technology programs include evaluating advantaged crudes; and modeling to reduce energy consumption, increase product yield and increase reliability. Our sustainability group is focusing efforts on organic photovoltaic polymers, solid oxide fuel cells, atmospheric modeling and air chemistry, water use and reuse and renewable fuels. Additionally, we monitor for emerging technologies that could impact our business.

COMPETITION

The Midstream segment, through our equity investment in DCP Midstream and our other operations, competes with numerous integrated petroleum companies, as well as natural gas transmission and distribution companies, to deliver components of natural gas to end users in commodity natural gas markets. DCP Midstream is one of the leading natural gas gatherers and processors in the United States based on wellhead volumes, and one of the largest U.S. producers and marketers of NGL, based on published industry sources. Principal methods of competing include economically securing the right to purchase raw natural gas for gathering systems, managing the pressure of those systems, operating efficient NGL processing plants and securing markets for the products produced.

In the Chemicals segment, CPChem is ranked among the top 10 producers in many of its major product lines according to published industry sources, based on average 2018 production capacity. Petroleum products, petrochemicals and plastics are typically delivered into the worldwide commodity markets. Our Refining and M&S segments compete primarily in the United States and Europe. We are one of the largest refiners of petroleum products in the United States based on published industry sources. Elements of competition for both our Chemicals and Refining segments include product improvement, new product development, low-cost structures, ability to run advantaged feedstocks, and efficient manufacturing and distribution systems. In the marketing portion of the business, competitive factors include product properties and processibility, reliability of supply, customer service, price and credit terms, advertising and sales promotion, and development of customer loyalty to branded products.

Index to Financial Statements

GENERAL

At December 31, 2018, we held a total of 382 active patents in 20 countries worldwide, including 298 active U.S. patents. The overall profitability of any business segment is not dependent on any single patent, trademark, license or franchise.

In support of our goal to attain zero incidents, we have implemented a comprehensive Health, Safety and Environmental (HSE) management system to support consistent management of HSE risks across our enterprise. The management system is designed to ensure that personal safety, process safety, and environmental impact risks are identified, and mitigation steps are taken to reduce the risk. The management system requires periodic audits to ensure compliance with government regulations, as well as our internal requirements. Our commitment to continuous improvement is reflected in annual goal setting and performance measurement.

See the environmental information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Contingencies” under the captions “Environmental” and “Climate Change.” It includes information on expensed and capitalized environmental costs for 2018 and those expected for 2019 and 2020.

Website Access to SEC Reports

Our Internet website address is http://www.phillips66.com. Information contained on our Internet website is not part of this Annual Report on Form 10-K.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available on our website, free of charge, as soon as reasonably practicable after such reports are filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC). Alternatively, you may access these reports at the SEC’s website at http://www.sec.gov.

Index to Financial Statements