Phillips 66's Contributions to Ponca City
by Hugh Pickens November 8, 2012
The purpose of this report is to look at the benefits that the Phillips 66's Marland Refinery in Ponca City provides to the community in wages to local employees, property taxes paid to the community, and direct philanthropic contributions to the community and compare these contributions to the contribution in profits that the Marland Refinery provides to the company. We will evaluate four categories:
- Wages Paid to Local Employees
- Property Taxes Paid the Community
- Direct Philanthropic Contributions to the Community
- Profits from the Refinery to Phillips 66
The Phillips 66 Refinery located in Ponca City, Oklahoma, has a published crude oil processing capacity of 187,000 barrels per day making it by far the largest refinery in Oklahoma. The refinery processes a mixture of light, medium and heavy crude oil. Most of the crude oil processed is received by pipeline from the Gulf of Mexico, Oklahoma, Texas and Canada. Additional foreign crude is purchased into the Gulf Coast and delivered by pipeline. The Ponca City Refinery is a high-conversion facility that produces a full range of products, including gasoline, diesel fuel, jet fuel, LPG and anode-grade petroleum coke. Its facilities include fluid catalytic cracking, delayed coking and hydrodesulfurization units. Finished petroleum products are shipped by truck, railcar, and company-owned and common-carrier pipelines to markets throughout the Mid-Continent Region.
The Phillips 66 Refinery in Ponca City contributed a net profit of over $500 million in 2011 to Phillips bottom line, making it the most profitable of Phillips 66's fifteen worldwide refineries.
Based on Phillips' second quarter earnings report for 2012 and the realized crack spread of $26.34 for mid-continent refineries (Borger Refinery, Billings Refinery, Marland Refinery in Ponca City, and Wood River in Ravena, Illinois), profits are on target for the Marland Refinery in Ponca City to contribute of over $600 million of net profits in 2012 to Phillips bottom line.
Based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line.
Wages Paid to Ponca City Residents
The Ponca City News reported on October 14, 2012 that Refinery Manager Pete Stynes spoke to the Ponca City Lions Club on October 10, 2012 about Phillips 66's Refinery in Ponca City and said that 800 employees work at the refinery with the direct employment of 625 Phillips employees.
FuelFix reported on January 12, 2012 that according to the United Steelworkers International representing 30,000 refinery and chemical workers at 168 production, refining, marketing, transportation, pipeline and petrochemical facilities nationwide the average wage of US refinery and chemical workers is $33.85 an hour. We estimate that of the 800 workers at the Marland Refinery, 100 of them are in engineering or managerial positions earning an average yearly salary of $110,000. We estimate that the cost of additional employee benefits including social security payments, unemployment benefits, pension benefits, vacation days, sick days, holidays, and medical benefits adds an additional 60% to direct wages paid. This cost is known as the burden rate.
|Marland Refinery in Ponca City||Hourly Employees||Salaried Employees|
|Hourly Wage||$ 33.85|
|Yearly Salary||$ 70,408.00||$110,000.00|
|Number of Employees||700||100|
|Payroll Taxes (10%)||$4,928,560.00||$1,100,000.00|
|Wages and Payroll Taxes||$54,214,160.00||$12,100,000.00|
|Total Wages and Payroll Taxes for Hourly and Salaried Employees||$66,314,160.00|
Under these assumptions the total wages and payroll taxes paid to the 800 employees at the Marland Refinery in Ponca City including both hourly employees and salaried employees is $66,314,160.00 (54,214,160.00 + 12,100,000.00).
Comparison with Borger Refinery
By way of comparison with the Phillips Refinery in Borger, Texas, the Borger News Herald reported on July 11, 2012 that refinery manager Chris Coon spoke to the Borger Rotary Club on July 10, 2012 about employment and payroll at the Borger Refinery. Coon told members that the Borger refinery has about 920 full time employees including 200 routine contractorswith a pannual payroll of $65 million. Phillips also pays $6 million in payroll taxes and about $12 million in property taxes. The Borger Refinery is comparable in capacity with the Marland Refinery in Ponca City having a throughput capacity of 146,000 barrels per day compared with Marland's throughput capacity of 187,000 bpd.
|Borger Refinery||All Employees|
|Hourly Wage||$ 34.00|
|Average Yearly Salary||$ 70,652.00|
|Number of Employees and Routine Subcontractors||920|
|Payroll Taxes (10%)||$6,000,000.00|
|Wages and Payroll Taxes||$71,000,000.00|
The figures provided by the refinery manager at Borger are consistent with the calculations made for employees at the Marland Refinery in Ponca City. Using the same average yearly salary of employees at Borger Refinery, the annual wages plus payroll taxes for the Marland Refinery at Ponca City is $61,739,000.00.
Property Tax Paid to the Community
Tax Assessment of the Refinery
The Phillips Refinery is assessed under According to Tax Record 30,446.
|Total Market Value||$ 542,889,080|
|Total Assessed Value (14%)||$ 76,004,471|
|Total Exemption||$ 4,255,329|
|Net Assessed||$ 71,749,142|
|Tax Paid||$ 6,771,684|
The total annual tax paid by Phillips 66 for the refinery is $ 6,771,684.
Tax Assessment for Real Estate
On May 21, 2012, Conoco transferred real estate in Kay County to Phillips 66 for a value of $69,223,000.00. Real property in the Ponca City School District is taxed at a rate of .00948 for a annual tax of $656,234. Philips 66's real estate in Ponca City includes the following.
|75003302602E100700||Refinery - 31.85 Acres (31.85 Acres)||22,323,400.00|
|75003302602E100200||1000 S. Pine PLANT AREA BLDG 33, 31 Container Bldg, etc. (108.94 Acres)||17,948,028.00|
|80000302502E200300||3400 N 7th St Defense Plant Central Control Room (287.83 Acres)||6,114,668.00|
|75003302602E100800||Atrium with Stairwell (2.09 Acres)||2,915,796.00|
|75003302602E101600||"Research Building" (4.92 Acres)||2,497,566.00|
|80000302502E200330||GAS TO LIQUIDS PLANT, BLDG ONLY (0.00 Acres)||2,293,541.00|
|75003302602E000100||1000 S. Pine (0.50 Acres)||1,313,326.00|
|75003302602E101300||Swimming Pool and Atrium (1.06 Acres)||1,194,994.00|
|80000402502E100100||Warehouse, TPS Facility (150.78 Acres)||1,189,585.00|
|75003302602E100300||Tower Complex - Research South (0.83 Acres)||1,155,484.00|
|75003402602E200100||East Plant Buildings (71.08 Acres)||965,078.00|
|75003302602E101900||Tower Complex - Research North (0.61 Acres)||920,928.00|
|75003302602E400100||Tank Farm - 157.92 Acres (157.92 Acres)||527,735.00|
|75003302602E101000||Cannot Identify Total Living Area 110620 (2.41 Acres)||511,513.00|
|75003302602E100100||Buildings 21 - 26 (2.61 Acres)||505,235.00|
|75003202602E300400||1600 S WAVERLY ST (10.00 Acres)||500,235.00|
|75003302602E101400||BLDG 1938 0x0 14 (1.56 Acres)||385,110.00|
|80000302502E300400||3550 S 7TH ST (10.00 Acres)||311,763.00|
|75003402602E300100||1500 S 4TH (45.76 Acres)||264,911.00|
|132000000000000000||UTILSHOP STEEL FR 1985 120x50 AVG (68.89 Acres)||207,050.00|
|80001002502E200200||117 Acres (117.64 Acres)||170,431.00|
|75003302602E101700||Library (0.13 Acres)||133,993.00|
|80000302502E100900||3258 S 14TH (7.34 Acres)||132,700.00|
|80000302502E100800||3258 S 14TH (7.77 Acres)||122,479.00|
|80000302502E101800||3277 S 7TH (0.54 Acres)||62,074.00|
|145000026003000000||1404 S 7TH- Sold on 6/22/2012 (0.00 Acres)||43,272.00|
|19903402602E400100||UTILMSCF UTIL SHED conc. fl 1979 36x28 6 (15.88 Acres)||39,669.00|
|145000026001000000||1400 S 7TH (0.00 Acres)||27,541.00|
|107000003001000000||1000 S 4TH (0.00 Acres)||21,000.00|
|050000020009000000||1316 S 5TH - Sold on 6/29/2012 (0.00 Acres)||19,927.00|
|145000025013000100||1321 S 5TH- Sold on 5/7/2012 (0.00 Acres)||17,929.00|
|19903402602E400200||Site of Standing Bear Museum (46.85 Acres)||16,055.00|
|095000000019000000||1407 S 5TH (0.00 Acres)||13,348.00|
|082000046000000000||1ST & SOUTH AVE (0.00 Acres)||11,178.00|
|75003202602E400200||1700 S WAVERLY (2.78 Acres)||9,035.00|
|145000026009000000||1414 S 7TH (0.00 Acres)||7,088.00|
|145000026012000000||1418 S 7TH (0.00 Acres)||7,088.00|
|145000026027000000||1403 S 6TH (0.00 Acres)||5,670.00|
|145000026005000000||1408 S 7TH (0.00 Acres)||4,916.00|
|050500002018000000||1513 S 5TH (0.00 Acres)||4,725.00|
|095000000011000000||513 E ENGLAND (0.00 Acres)||3,780.00|
|095000000013000000||1425 S 5TH (0.00 Acres)||3,780.00|
|145000026016000000||1421 S 6TH (0.00 Acres)||3,591.00|
|132000010006000000||501 STANDING BEAR PA (0.00 Acres)||3,240.00|
|145000026020000000||1415 S 6TH (0.00 Acres)||3,201.00|
|050000019003000000||1406 S 5TH (0.00 Acres)||3,150.00|
|050000019005000000||1412 S 5TH (0.00 Acres)||3,150.00|
|050000020012000000||1320 S 5TH (0.00 Acres)||3,150.00|
|095000000003000000||1408 S 6TH (0.00 Acres)||3,150.00|
|095000000005000000||1410 S 6TH (0.00 Acres)||3,150.00|
|095000000007000000||1416 S 6TH (0.00 Acres)||3,150.00|
|095000000015000000||1421-1423 S 5TH (0.00 Acres)||3,150.00|
|095000000017000000||1415 S 5TH (0.00 Acres)||3,150.00|
|095000000021000000||1405 S 5TH (0.00 Acres)||3,150.00|
|095000000023000000||1401 S 5TH (0.00 Acres)||3,150.00|
|107000001013000000||919 S 4TH (0.00 Acres)||3,150.00|
|107000001015000000||917 S 4TH (0.00 Acres)||3,150.00|
|107000001017000000||915 S 4TH (0.00 Acres)||3,150.00|
|107000002013000000||1023 S 4TH (0.00 Acres)||3,150.00|
|107000002015000000||1015 S 4TH (0.00 Acres)||3,150.00|
|107000002017000000||1013 S 4TH (0.00 Acres)||3,150.00|
|107000002019000000||1009 S 4TH (0.00 Acres)||3,150.00|
|107000002021000000||1005 S 4TH (0.00 Acres)||3,150.00|
|107000002023000000||1003 S 4TH (0.00 Acres)||3,150.00|
|145000021013000000||1223 S 4TH (0.00 Acres)||3,150.00|
|145000021017000000||1215 S 4TH (0.00 Acres)||3,150.00|
|145000021019000000||1211 S 4TH (0.00 Acres)||3,150.00|
|145000021021000000||1207 S 4TH (0.00 Acres)||3,150.00|
|145000021023000000||1203 S 4TH (0.00 Acres)||3,150.00|
|145000022013000000||1119 S 4TH (0.00 Acres)||3,150.00|
|145000022015000000||1117 S 4TH (0.00 Acres)||3,150.00|
|145000022017000000||1115 S 4TH (0.00 Acres)||3,150.00|
|145000022019000000||1107 S 4TH (0.00 Acres)||3,150.00|
|145000022021000000||1105 S 4TH (0.00 Acres)||3,150.00|
|145000022023000000||1101 S 4TH (0.00 Acres)||3,150.00|
|145000026023000000||1411 S 6TH (0.00 Acres)||3,150.00|
|145000026025000000||1407 S 6TH (0.00 Acres)||3,150.00|
|145000027012000000||1324 S 7TH (0.00 Acres)||3,150.00|
|050500001004000000||1510 S 7TH (0.00 Acres)||3,087.00|
|050000019001000000||1402 S 5TH (0.00 Acres)||2,835.00|
|145000026018000000||1417 S 6TH (0.00 Acres)||2,833.00|
|095000000000000000||1400 S 6TH (0.00 Acres)||2,520.00|
|095000000000000100||1329 S 5TH (0.00 Acres)||2,520.00|
|145000026015000000||1425 S 6TH (0.00 Acres)||2,520.00|
|132000025001000000||204 WAYNE (0.00 Acres)||2,063.00|
|095000000009000000||1420 S 6TH (0.00 Acres)||2,048.00|
|050000019001000100||1404 S 5TH (0.00 Acres)||1,890.00|
|095000000009000100||1420 1/2 S 6TH (0.00 Acres)||1,103.00|
Phillips 66 Philanthropic Contributions to Ponca City
The Ponca City News reported on October 21, 2012 that Phillips 66 provides financial and in-kind support to community organizations through corporate and employee based programs. "Our philanthropic contributions in Ponca City and the surrounding area are significant. In 2011, direct contributions to non-profit agencies, matching United Way contributions, and contributions based on employee and retiree hours or monetary contributions were in excess of $1.1 million dollars. When employee and retiree contributions are added to the company contributions, the total is over $1.7 million dollars."
Profits Earned by the Marland Refinery
The Ponca City Refinery earned profits in excess of $500 million in 2011 for Phillips 66 and based on Phillips' third quarter earnings report for 2012 with a realized crack spread of $31.83 for mid-continent refineries and a capacity utilization of 102%, the Marland Refinery in Ponca City will contribute at an annualized rate of over $1 billion ($1.032 B) of net profits in 2012 to Phillips bottom line.
On October 31, 2012 Phillips reported their adjusted earnings for refining operations were $1,580 million in their 3rd Quarter Earnings Report for 2012. Phillips also reported the crack spreads for the Mid-Continent, Gulf Coast, Atlantic Basin, and Western Pacific of $31.83, $11.42, $13.02, and $13.30 respectively. The total profit for each refinery is calculated by determining the crack spread times the normalized throughput capacity for each refinery to allocate the total refinery profit to each refinery.
|Location||Capacity (KBD)||[A] Normalized Capacity (KBD)||[B] Crack Spread ($)||[C] Capacity Utilization (%)||[A]*[B]*[C]||Per Cent Contribution to Total Refining Profits||Extrapolated Yearly Profit|
|Ponca City, OK||187||187||31.83||102||6,071||16||1,032|
|Belle Chasse, LA||247||247||11.42||88||2,482||7||422|
|Old Ocean, TX||247||247||11.42||88||2,482||7||422|
Using this method for 2012, the Marland Refinery in Ponca City will make a contribution to Phillips 66's net profit of over $ 1 billion ($1.032 B), by far the largest of any of Phillips' refineries.
- Ponca City News. "Stynes Shares Refinery Update With Noon Lions" October 14, 2012.
- Bartlesvile Examiner-Enterprise. "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" by Ryan Lance and Greg Garland. May 1,2012.
- ConocoPhillips. "Worldwide Refining"
- Ponca City News. "Stynes Shares Refinery Update With Noon Lions" October 14, 2012.
- FuelFix. "Refiners, unions prepare for strike as contract deadline looms" January 30, 2012.
- Investopedia. "Burden Rate" retrieved on November 11, 2012.
- Borger News Herald. "Phillips 66 seeing success in Borger" by Michelle Berry. July 11, 2012.
- Ponca City News. "Phillips 66 Continues to Invest in Community" October 21, 2012.
About the Author
Hugh Pickens (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, crossed the empty quarter of Saudi Arabia, and built satellite control stations for NASA all over the world. Retired in 1999, Pickens and his wife moved back to his hometown of Ponca City, Oklahoma in 2005 where he cultivates his square foot garden, mows nine acres of lawn, and photographs local events at the Poncan Theatre and Ponca Playhouse.
Since 2001 Pickens has edited and published “Peace Corps Online,” serving over one million pageviews monthly. His other writing includes contributing over 1,200 stories to “Slashdot: News for Nerds,” and articles for Wikipedia, “Ponca City, We Love You”, and Peace Corps Worldwide.
Other Articles by Hugh Pickens about Ponca City
- The Pioneer Woman Models Should Return to Ponca City July 13, 2007
- The Pioneer Woman Models Come Home to Ponca City February 26, 2010
- President Barack Obama's Mother Grew Up in Ponca City February 6, 2009
- Standing Bear Looks to the Future
- What to See in Ponca City
- Ponca Playhouse to Present "The Broken Statue" January 17, 2012
- What Ponca City Owes EW Marland June 20, 2012
- How Much Money Does the Marland Refinery in Ponca City Earn for Phillips 66? July 23, 2012
I am an independent investor who is a stockholder in Phillips 66 and the purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the Marland Refinery in Ponca City, Oklahoma. I began building my position in PSX when Phillips 66 went public on May 1, 2012 and am long PSX. I will disclose publicly if I close my position on PSX or go short. Unless stated otherwise, there is a citation for every statement in this article. The only exception is the "Conclusions Section" in this report which includes my own judgments and findings. Nothing in this report is to be taken as a recommendation to buy or to sell stock in Phillips 66 (PSX). I am an advocate that that it would be beneficial for both Phillips 66 and the community of Ponca City for Phillips 66 rename its Ponca City refinery the "Marland Refinery in Ponca City" to honor an oil pioneer who together with Frank Phillips brought prosperity and advancement to Northern Oklahoma.
Updates to the Web Site
This web page is frequently updated so check back periodically to see the latest information added to "An Independent Evaluation of Phillips 66, its Business Strategy, and Execution." If you have any information or insights that you would like to see added to this report on Phillips 66 and Ponca City please contact Hugh Pickens by email at hughpickens AT gmail DOT com.
The material in this article is licensed under under the Creative Commons under an Attribution-Noncommercial-Share Alike 2.0 Generic license. Except for short, fair use excerpts, the material on this article cannot be used for commercial purposes without permission of Hugh Pickens. Attribution for use of any material from this article must be provided to Hugh Pickens and if used on the web a link must be provided to http://hughpickens.com.