Phillips 66 CCUS Infrastructure, $3.8 B DCP Midstream Deal, $85/ton 45 Q Credit, and 1 Humber Project (2025)

CCUS Adoption Risks, Phillips 66 Shifts from Projects to Infrastructure Control

The primary constraint shifting in carbon capture, utilization, and storage (CCUS) adoption is the strategic pivot from focusing on isolated, point-source capture projects to securing control over the entire midstream value chain for CO 2 transport and storage. In 2025, Phillips 66 demonstrated this shift by prioritizing the acquisition of critical infrastructure, a move designed to de-risk future large-scale deployments. This strategy acknowledges that without owned or guaranteed access to pipeline and sequestration capacity, individual capture facilities risk becoming stranded assets.

Phillips 66 Infrastructure-Led Strategy

The company’s approach marks a significant evolution from the industry’s prior focus on technology pilots. While earlier efforts centered on validating capture technologies, the new priority is building the connective tissue required for a functioning carbon management economy.

• The definitive signal of this strategy is the US$3.8 billion acquisition of DCP Midstream, which provides Phillips 66 with strategic access to Tallgrass’s CO 2 transportation network. This move secures a pathway for future CO 2 offtake, directly addressing the midstream bottleneck that challenges many CCUS projects.
• This infrastructure-first approach contrasts with the company’s parallel, project-specific initiatives like the Humber Refinery carbon capture installation. While the Humber project proves the viability of applying Shell’s CANSOLV technology, the DCP Midstream deal enables a portfolio of future projects in the U.S.
• This integrated model is becoming an industry standard, with competitors like Shell and BP also developing large-scale CCUS hubs that combine capture with dedicated transport and storage infrastructure, confirming the strategic importance of value chain control.

Carbon Capture Market Poised for Explosive 500%+ Growth by 2035
The global Carbon Capture and Storage (CCS) market is projected to experience robust growth, escalating from $8.92 billion in 2025 to an estimated $54.73 billion by 2035. This represents a significant 513% increase over the decade, highlighting accelerating investment and adoption.

(Source: Precedence Research — via Carbon Capture And Storage Market Size to Hit USD 54.73 Bn by 2035)

$5.2 B in Capital Moves, Phillips 66 Prioritizes CCUS Infrastructure and Asset Consolidation

Phillips 66’s capital allocation in 2025 shows a clear and decisive strategy to channel funds toward securing CCUS-enabling infrastructure and consolidating control over core refinery assets, preparing them for future decarbonization. The company committed over $5 billion in strategic transactions aimed at building a resilient, low-carbon platform, moving funds away from legacy assets and toward long-term growth initiatives. This financial maneuvering positions the company to capitalize on federal incentives and the growing carbon management market.

Phillips 66 Strategic Asset Reshuffling

The company’s major investments were complemented by the divestment of older, less efficient facilities, sharpening its portfolio for the energy transition.

• The largest investment was the US$3.8 billion acquisition of all publicly held units of DCP Midstream. This transaction was not for direct emissions reduction but to secure a critical position in the CO 2 midstream sector, which is essential for scaling CCUS operations in the United States.
• Phillips 66 also spent $1.4 billion to acquire the remaining 50% stake in its WRB Refining joint venture from Cenovus Energy. This gives the company full ownership of the Wood River and Borger refineries, providing the autonomy needed to approve and execute large-scale decarbonization projects like CCUS retrofits at these sites.
• These investments are supported by a forward-looking 2026 capital budget that allocates $1.1 billion to the Refining business, with $520 million specifically designated for growth capital to advance low-carbon projects.
• This strategic spending is balanced by the planned closure of the company’s century-old Los Angeles refinery by the end of 2025, demonstrating a disciplined approach to shedding assets that do not fit its long-term, low-carbon strategy.

Table: Phillips 66 Strategic Investments and Divestments (2025)

US vs. UK, Phillips 66 Deploys a Bifurcated Geographic CCUS Strategy

Phillips 66’s geographic strategy for CCUS in 2025 is distinctly bifurcated, with direct technology deployment in the United Kingdom driven by specific government programs and strategic infrastructure acquisition in the United States motivated by powerful federal tax incentives. This dual approach allows the company to tailor its investments to the unique policy and market environments of each region, maximizing returns while advancing its decarbonization goals. The activities in each country serve different strategic purposes: the UK as a technology proving ground and the US as the target for scalable, incentive-driven growth.

United Kingdom: Proving Ground for Refinery CCUS

In the UK, Phillips 66 is focused on a landmark project to establish its technical leadership in refinery decarbonization.

• The company’s primary effort is the Humber Zero project at its Humber Refinery, where it is implementing Shell’s CANSOLV post-combustion capture technology. This project, shortlisted by the UK government, positions the facility to be the first UK refinery with this type of CCUS system.
• The project’s advancement is directly tied to the UK’s industrial decarbonization cluster strategy and associated government support mechanisms, making it a policy-enabled initiative aimed at decarbonizing a critical industrial hub.

United States: Building for Scale with Policy Support

In the U.S., the strategy is centered on acquiring the infrastructure necessary to capitalize on the lucrative Section 45 Q tax credit.

• The $3.8 billion DCP Midstream acquisition is the centerpiece of the US strategy. It provides access to CO 2 pipeline networks in the country’s heartland, a prerequisite for developing future CCUS projects that can claim the enhanced $85 per metric ton tax credit.
• Unlike the UK’s project-specific approach, the US strategy is about enabling a future portfolio of projects. By securing transportation capacity now, Phillips 66 mitigates midstream risk for potential CCUS retrofits at its wholly-owned refineries like Wood River and Borger. This positions it ahead of competitors like Conoco Phillips and Occidental Petroleum who are also aggressively pursuing 45 Q-driven projects.

CCUS Technology Maturity, Phillips 66 Bets on Proven Post-Combustion Solutions

In 2025, Phillips 66 is deliberately avoiding high-risk, low-TRL technologies, instead focusing its capital on commercially mature, post-combustion capture solutions to ensure project bankability and operational reliability. This conservative technology strategy mitigates the technical and financial risks associated with emerging methods like Direct Air Capture (DAC), which have significantly higher cost profiles. By selecting proven systems, the company can align project economics with existing policy incentives and achieve predictable emissions reductions at its industrial facilities.

Focus on Commercially Ready Technology

The choice of technology for the company’s flagship project reflects a pragmatic approach focused on immediate, scalable results.

• The implementation of Shell’s CANSOLV CO 2 capture technology at the Humber Refinery is the key data point. This is a solvent-based, post-combustion capture system with a high Technology Readiness Level (TRL 9), meaning it is a proven, commercially available solution.
• This choice is framed by the current economics of carbon capture. Mature post-combustion technologies for industrial facilities have costs in the range of $50 to $150 per ton of CO 2, which aligns well with the $85 per ton incentive offered by the U.S. 45 Q tax credit.
• In contrast, more nascent technologies like DAC remain far more expensive, with 2025 costs estimated between $700 and $1, 000 per metric ton. By sticking to mature technology, Phillips 66 avoids the economic uncertainty of these higher-cost pathways.
• The company’s major infrastructure investment in the DCP Midstream network further signals its intent to deploy these proven technologies at scale, rather than using its capital for early-stage technology research and development.

SWOT Analysis, Phillips 66 Focuses on Infrastructure and Proven Tech

The strategic actions of Phillips 66 in 2025 reveal a decisive pivot toward a focused, execution-oriented CCUS strategy. The company is leveraging its financial discipline to acquire critical infrastructure and consolidate assets, positioning itself to capitalize on strong policy incentives. However, this infrastructure-led approach brings significant integration and execution risks, and the company faces intense competition from other energy majors like Total Energies and Equinor who are pursuing similar integrated CCUS hub models.

Table: SWOT Analysis for Phillips 66’s CCUS Strategy

Scenario Modelling, Phillips 66’s Next Move After the $3.8 B DCP Deal

Following the strategic acquisition of DCP Midstream, the key signal to watch is the announcement of a specific, large-scale CCUS project in the United States that directly leverages this new infrastructure and the lucrative 45 Q tax credit. The $3.8 billion investment in midstream assets is a preparatory move; the market now anticipates the follow-through, which would be a major capital project to capture CO 2 from one of its wholly-owned refineries.

• If this happens: Phillips 66 announces a final investment decision (FID) for a CCUS retrofit at either the Wood River, Illinois, or Borger, Texas, refinery. These sites are now fully controlled by the company and are located in regions where CO 2 transport infrastructure is viable.
• Watch this: The company’s next capital budget allocation, specifically looking for funds earmarked for Front-End Engineering and Design (FEED) studies for a refinery retrofit. Also, monitor for applications filed with the EPA for Class VI injection well permits, which are required for permanent CO 2 sequestration.
• This could be happening: Phillips 66 is actively using the operational data from the Humber project to de-risk the technical and economic models for a U.S.-based project. The company is likely positioning itself not just to decarbonize its own assets, but to become a major CO 2 midstream service provider in the central U.S., leveraging the DCP Midstream network to transport third-party CO 2 and create a new revenue stream.

The questions your competitors are already asking

This report covers one angle of Phillips 66’s carbon capture strategy. The questions that matter most depend on your work.

• Phillips 66 new carbon capture projects US
• Carbon dioxide pipeline projects US
• Humber refinery carbon capture project status
• US carbon capture tax credit changes

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