10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 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: 001-36011

Phillips 66 Partners LP

(Exact name of registrant as specified in its charter)

Delaware	38-3899432
(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)

(855) 283-9237

(Registrant’s telephone number, including area code)

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.     Yes  [ X ]    No  [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).     Yes  [ X ]    No  [    ]

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 Exchange Act).  Yes  [    ]    No  [ X ]

The registrant had 122,912,893 common units outstanding as of June 30, 2018.

PHILLIPS 66 PARTNERS LP

TABLE OF CONTENTS

	Page
Part I – Financial Information	1
Item 1. Financial Statements	1
Consolidated Statement of Income	1
Consolidated Statement of Comprehensive Income	2
Consolidated Balance Sheet	3
Consolidated Statement of Cash Flows	4
Consolidated Statement of Changes in Equity	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	36
Part II – Other Information	37
Item 1. Legal Proceedings	37
Item 1A. Risk Factors	37
Item 6. Exhibits	38
Signatures	39

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Consolidated Statement of Income Phillips 66 Partners LP

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017*	2018	2017*
Revenues and Other Income
Operating revenues—related parties	$	244	216	493	426
Operating revenues—third parties	10		11	17	21
Equity in earnings of affiliates	100		48	198	81
Other income	—		2	1	11
Total revenues and other income	354		277	709	539
Costs and Expenses
Operating and maintenance expenses	85		79	182	153
Depreciation	29		28	57	56
General and administrative expenses	16		18	32	35
Taxes other than income taxes	9		8	19	17
Interest and debt expense	29		24	59	48
Total costs and expenses	168		157	349	309
Income before income taxes	186		120	360	230
Income tax expense	—		1	2	1
Net income	186		119	358	229
Less: Net income attributable to Predecessors	—		16	—	29
Net income attributable to the Partnership	186		103	358	200
Less: Preferred unitholders’ interest in net income attributable to the Partnership	10		—	19	—
Less: General partner’s interest in net income attributable to the Partnership	55		37	108	69
Limited partners’ interest in net income attributable to the Partnership	$	121	66	231	131
Net Income Attributable to the Partnership Per Limited Partner Unit (dollars)
Common units—basic	$	0.99	0.61	1.89	1.21
Common units—diluted	0.94		0.61	1.80	1.21
Cash Distributions Paid Per Common Unit (dollars)	$	0.714	0.586	1.392	1.144
Weighted-Average Limited Partner Units Outstanding (thousands)
Common units—basic	122,189		109,189	121,901	108,300
Common units—diluted	136,008		109,189	135,720	108,300

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

See Notes to Consolidated Financial Statements.

1

Consolidated Statement of Comprehensive Income Phillips 66 Partners LP

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017*	2018	2017*
Net Income	$	186	119	358	229
Defined benefit plans
Plan sponsored by equity affiliate, net of tax	—		—	—	—
Other comprehensive income	—		—	—	—
Comprehensive Income	$	186	119	358	229

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

See Notes to Consolidated Financial Statements.

2

Consolidated Balance Sheet Phillips 66 Partners LP

	Millions of Dollars
	June 30 2018			December 31 2017
Assets
Cash and cash equivalents	$	151		185
Accounts receivable—related parties	83			83
Accounts receivable—third parties	6			3
Materials and supplies	13			12
Prepaid expenses and other current assets	10			9
Total current assets	263			292
Equity investments	2,104			1,932
Net properties, plants and equipment	2,948			2,918
Goodwill	185			185
Deferred rentals and other assets	6			7
Total Assets	$	5,506		5,334
Liabilities
Accounts payable—related parties	$	21		21
Accounts payable—third parties	49			39
Accrued property and other taxes	16			15
Accrued interest	36			34
Short-term debt	25			25
Deferred revenues	61			35
Other current liabilities	2			2
Total current liabilities	210			171
Long-term debt	2,921			2,920
Asset retirement obligations and accrued environmental costs	12			11
Deferred income taxes	7			5
Deferred revenues and other liabilities	23			66
Total Liabilities	3,173			3,173
Equity
Preferred unitholders (2018 and 2017—13,819,791 units issued and outstanding)	747			746
Common unitholders—public (2018—54,152,756 units issued and outstanding; 2017—52,811,822 units issued and outstanding)	2,381			2,274
Common unitholder—Phillips 66 (2018 and 2017—68,760,137 units issued and outstanding)	538			487
General partner—Phillips 66 (2018 and 2017—2,480,051 units issued and outstanding)	(1,332		)	(1,345	)
Accumulated other comprehensive loss	(1		)	(1	)
Total Equity	2,333			2,161
Total Liabilities and Equity	$	5,506		5,334

See Notes to Consolidated Financial Statements.

3

Consolidated Statement of Cash Flows Phillips 66 Partners LP

	Millions of Dollars
	Six Months Ended June 30
	2018			2017*
Cash Flows From Operating Activities
Net income	$	358		229
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	57			56
Undistributed equity earnings	(7		)	(9	)
Deferred revenues and other liabilities	(43		)	—
Other	5			4
Working capital adjustments
Decrease (increase) in accounts receivable	(3		)	6
Decrease (increase) in materials and supplies	—			(1	)
Increase (decrease) in accounts payable	(3		)	(2	)
Increase (decrease) in accrued interest	2			—
Increase (decrease) in deferred revenues	30			10
Increase (decrease) in other accruals	1			(2	)
Net Cash Provided by Operating Activities	397			291
Cash Flows From Investing Activities
Restricted cash received from combination of business	—			318
Collection of loan receivable	—			7
Cash capital expenditures and investments	(234		)	(188	)
Return of investment from equity affiliates	22			17
Net Cash Provided by (Used in) Investing Activities	(212		)	154
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors	—			(151	)
Issuance of debt	—			1,103
Repayment of debt	—			(1,398	)
Issuance of common units	67			171
Quarterly distributions to preferred unitholders	(18		)	—
Quarterly distributions to common unitholders—public	(74		)	(50	)
Quarterly distributions to common unitholder—Phillips 66	(96		)	(73	)
Quarterly distributions to General Partner—Phillips 66	(98		)	(60	)
Other cash contributions from Phillips 66	—			12
Net Cash Used in Financing Activities	(219		)	(446	)
Net Change in Cash, Cash Equivalents and Restricted Cash	(34		)	(1	)
Cash, cash equivalents and restricted cash at beginning of period	185			2
Cash, Cash Equivalents and Restricted Cash at End of Period	$	151		1

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

See Notes to Consolidated Financial Statements.

4

Consolidated Statement of Changes in Equity Phillips 66 Partners LP

	Millions of Dollars
	Partnership
	Preferred Unitholders Public			Common Unitholders Public		Common Unitholder Phillips 66		General Partner Phillips 66		Accum. Other Comprehensive Loss		Net Investment— Predecessors*	Total
December 31, 2016	$	—		1,795		476		(704	)	(1	)	—	1,566
Net income attributable to Predecessors	—			—		—		—		—		29	29
Net contributions from Phillips 66—Predecessors	—			—		—		—		—		751	751
Issuance of common units	—			171		—		—		—		—	171
Net income attributable to the Partnership	—			54		77		69		—		—	200
Quarterly cash distributions to unitholders and General Partner	—			(50	)	(73	)	(60	)	—		—	(183	)
Other contributions from Phillips 66	—			—		—		17		—		—	17
June 30, 2017*	$	—		1,970		480		(678	)	(1	)	780	2,551
December 31, 2017	$	746		2,274		487		(1,345	)	(1	)	—	2,161
Cumulative effect of accounting change	—			13		17		1		—		—	31
Issuance of common units	—			67		—		—		—		—	67
Net income attributable to the Partnership	19			101		130		108		—		—	358
Quarterly cash distributions to unitholders and General Partner	(18		)	(74	)	(96	)	(98	)	—		—	(286	)
Other contributions from Phillips 66	—			—		—		2		—		—	2
June 30, 2018	$	747		2,381		538		(1,332	)	(1	)	—	2,333

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

	Preferred Units Public	Common Units Public	Common Units Phillips 66	General Partner Units Phillips 66	Total Units
December 31, 2016	—	43,134,902	64,047,024	2,187,386	109,369,312
Units issued in public equity offerings	—	3,323,576	—	—	3,323,576
June 30, 2017	—	46,458,478	64,047,024	2,187,386	112,692,888
December 31, 2017	13,819,791	52,811,822	68,760,137	2,480,051	137,871,801
Units issued in public equity offerings	—	1,340,934	—	—	1,340,934
June 30, 2018	13,819,791	54,152,756	68,760,137	2,480,051	139,212,735

See Notes to Consolidated Financial Statements.

5

Notes to Consolidated Financial Statements Phillips 66 Partners LP

Note 1—Business and Basis of Presentation

Unless otherwise stated or the context otherwise indicates, all references to “Phillips 66 Partners,” “the Partnership,” “us,” “our,” “we,” or similar expressions refer to Phillips 66 Partners LP, including its consolidated subsidiaries. References to Phillips 66 may refer to Phillips 66 and/or its subsidiaries, depending on the context. References to our “General Partner” refer to Phillips 66 Partners GP LLC, and references to Phillips 66 PDI refer to Phillips 66 Project Development Inc., the Phillips 66 subsidiary that holds a limited partner interest in us and wholly owns our General Partner.

Description of the Business

We are a growth-oriented master limited partnership formed to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids (NGL) pipelines, terminals and other midstream assets. Our common units trade on the New York Stock Exchange under the symbol PSXP.

Our operations consist of crude oil, refined petroleum products and NGL transportation, processing, terminaling and storage assets. We conduct our operations through both wholly owned and joint venture operations. The majority of our wholly owned assets are associated with, and are integral to the operation of, nine of Phillips 66’s owned or joint venture refineries.

We primarily generate revenue by providing fee-based transportation, terminaling, processing, storage and NGL fractionation services to Phillips 66 and other customers. Our equity affiliates primarily generate revenue from transporting and terminaling NGL, refined petroleum products and crude oil. Since we do not own any of the NGL, crude oil and refined petroleum products we handle and do not engage in the trading of NGL, crude oil and refined petroleum products, we have limited direct exposure to risks associated with fluctuating commodity prices, although these risks indirectly influence our activities and results of operations over the long term.

Basis of Presentation

We have acquired assets from Phillips 66 that were considered transfers of businesses between entities under common control. This required the transactions to be accounted for as if the transfers had occurred at the beginning of the transfer period, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, the accompanying financial statements and related notes have been retrospectively adjusted to include the historical results and financial position of the acquired businesses prior to the effective date of each acquisition. We refer to these pre-acquisition operations as those of our “Predecessors.”

The combined financial statements of our Predecessors were derived from the accounting records of Phillips 66 and reflect the combined historical results of operations, financial position and cash flows of our Predecessors as if such businesses had been combined for all periods presented.

All intercompany transactions and accounts within our Predecessors have been eliminated. The assets and liabilities of our Predecessors in these financial statements have been reflected on a historical cost basis because the transfer of the Predecessors to us occurred within the Phillips 66 consolidated group. The consolidated statement of income also includes expense allocations for certain functions performed by Phillips 66, including operational support services such as engineering and logistics and allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, information technology and procurement. These allocations were based primarily on the relative carrying values of properties, plants and equipment and equity-method investments, or number of terminals and pipeline miles, and secondarily on activity-based cost allocations. Our management believes the assumptions underlying the allocation of expenses from Phillips 66 are reasonable. Nevertheless, the financial results of our Predecessors may not include all of the actual expenses that would have been incurred had our Predecessors been a stand-alone publicly traded partnership during the periods presented.

6

Note 2—Interim Financial Information

The interim financial information presented in the financial statements included in this report is unaudited and includes all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of our financial position, results of operations and cash flows for the periods presented. Unless otherwise specified, all such adjustments are of a normal and recurring nature. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our 2017 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2018, are not necessarily indicative of the results to be expected for the full year.

Note 3—Changes in Accounting Principles

Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides a screen for determining when a transaction involves an acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or a group of similar identifiable assets, then the screen is met and the transaction is not considered an acquisition of a business. If the screen is not met, the amendment requires that to be considered a business, the operation must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of future transactions accounted for as business acquisitions. At the time of adoption, this ASU had no impact on our consolidated financial statements.

Effective January 1, 2018, we adopted ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The majority of this ASU’s provisions amend only the presentation or disclosures of financial instruments; however, one provision can affect net income. Equity investments reported under the cost method or the lower of cost or fair value method of accounting, in accordance with previous U.S. generally accepted accounting principles (GAAP), are now reported at fair value with changes in fair value recognized in net income. For equity investments that do not have readily determinable fair values, we elected to carry such investments at cost less impairments, if any, adjusted up or down for price changes in similar financial instruments issued by the investee, when and if observed. At the time of adoption, this ASU had no material impact on our consolidated financial statements.

Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” using the modified retrospective transition method applied to all contracts. Under the new revenue recognition guidance, recognition of revenue involves a multiple step approach including: (i) identifying the contract with the customer, (ii) identifying the separate performance obligations, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations and (v) recognizing the revenue as the performance obligations are satisfied. Additional disclosures are required to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, all but one of our equity-method investees adopted ASU No. 2014-09 as of January 1, 2018. The remaining equity method investee will adopt this ASU in 2019.

We recorded a noncash cumulative effect adjustment of $31 million to increase the opening balance of our equity as of January 1, 2018. This adjustment reflected amounts recorded by us and our equity-method investees related to the acceleration of revenue recognition on certain minimum volume commitment contracts with recovery provisions. Certain agreements for transportation, terminaling and fractionation services with Phillips 66 are considered operating leases under FASB Accounting Standards Codification (ASC) 840, “Leases.” We identified the separate lease and service elements of our revenue under these operating leases and applied ASU No. 2014-09 only to the service element, while the lease element continued to be accounted for under ASC 840. See Note 9—Operating Revenues, for additional information.

7

Note 4—Acquisitions

Gray Oak Pipeline Project Acquisition

On April 20, 2018, we entered into a Purchase and Sale Agreement with Phillips 66 PDI to acquire its 100 percent interest in Gray Oak Holdings LLC, a limited liability company that, at that time, owned a 100 percent interest in Gray Oak Pipeline, LLC (Gray Oak LLC), an entity formed to develop and construct the Gray Oak Pipeline system. Under common control accounting, we considered the cash consideration paid of approximately $3 million to be a reimbursement of Phillips 66 PDI’s previously incurred costs, and expensed this amount to “General and administrative expenses” in the second quarter of 2018. Another party has the right, but not the obligation, to acquire up to a 35 percent interest in Gray Oak Holdings LLC. Subject to certain conditions, the option expires on November 30, 2018. At June 30, 2018, the option had not been exercised. See Note 5—Equity Investments, for additional information on Gray Oak LLC, including our variable interest entity assessment.

Bakken Pipeline/MSLP Acquisition

In September 2017, we entered into a Contribution, Conveyance and Assumption Agreement with subsidiaries of Phillips 66 to acquire a 25 percent interest in each of Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO), together referred to as the Bakken Pipeline, and a 100 percent interest in Merey Sweeny, L.P. (MSLP). Collectively, the assets acquired in the acquisition are referred to as the Bakken Pipeline/MSLP Acquisition. We paid Phillips 66 total consideration of $1.65 billion, consisting of $372 million in cash, the assumption of $588 million of promissory notes payable to Phillips 66 and a $450 million term loan under which Phillips 66 was the obligor, and the issuance of 4,713,113 common units to Phillips 66 PDI and 292,665 general partner units to our General Partner to maintain its 2 percent general partner interest. The Bakken Pipeline/MSLP Acquisition closed in October 2017.

In connection with the Bakken Pipeline/MSLP Acquisition, we entered into commercial agreements with Phillips 66 and amended the omnibus and operational services agreements with Phillips 66. See Note 13—Related Party Transactions for additional information on our commercial and other agreements with Phillips 66. Pursuant to the tolling services agreement entered into with Phillips 66 and related to MSLP operations, we received $53 million from Phillips 66 for the prepayment of services related to MSLP’s next scheduled maintenance turnaround, which was recorded as deferred revenue in our consolidated balance sheet as of the acquisition date.

Common Control Transactions

The Bakken Pipeline/MSLP Acquisition was considered a transfer of businesses between entities under common control, and therefore the related acquired assets were transferred at historical carrying value. The aggregate net book value of the underlying acquired assets in the Bakken Pipeline/MSLP Acquisition, at the time of acquisition, was $729 million. Because the Bakken Pipeline/MSLP Acquisition was a common control transaction in which we acquired a business, our historical financial statements were retrospectively adjusted to reflect the results of operations, financial position, and cash flows of the acquired assets as if we owned the acquired assets for the period from February 1, 2017, through October 5, 2017. For periods prior to February 1, 2017, both the Bakken Pipeline and MSLP investments were accounted for under the equity method of accounting by Phillips 66 and, thus, were not subject to retrospective adjustments.

The following tables present our results of operations and cash flows giving effect to the Bakken Pipeline/MSLP Acquisition. The second column in both tables presents the retrospective adjustments made to our historical financial information for the acquired assets prior to the effective date of the acquisition. The third column in both tables presents our consolidated financial information as retrospectively adjusted.

8

	Millions of Dollars
	Three Months Ended June 30, 2017
Consolidated Statement of Income	Phillips 66 Partners LP (As previously reported)		Acquired Bakken Pipeline/MSLP Predecessor	Consolidated Results
Revenues and Other Income
Operating revenues—related parties	$	186	30	216
Operating revenues—third parties	11		—	11
Equity in earnings of affiliates	37		11	48
Other income	—		2	2
Total revenues and other income	234		43	277
Costs and Expenses
Operating and maintenance expenses	57		22	79
Depreciation	26		2	28
General and administrative expenses	16		2	18
Taxes other than income taxes	7		1	8
Interest and debt expense	24		—	24
Total costs and expenses	130		27	157
Income before income taxes	104		16	120
Income tax expense	1		—	1
Net income	103		16	119
Less: Net income attributable to Predecessors	—		16	16
Net income attributable to the Partnership	103		—	103
Less: General partner’s interest in net income attributable to the Partnership	37		—	37
Limited partners’ interest in net income attributable to the Partnership	$	66	—	66

9

	Millions of Dollars
	Six Months Ended June 30, 2017
Consolidated Statement of Income	Phillips 66 Partners LP (As previously reported)		Acquired Bakken Pipeline/MSLP Predecessor	Consolidated Results
Revenues and Other Income
Operating revenues—related parties	$	370	56	426
Operating revenues—third parties	21		—	21
Equity in earnings of affiliates	70		11	81
Other income	7		4	11
Total revenues and other income	468		71	539
Costs and Expenses
Operating and maintenance expenses	119		34	153
Depreciation	52		4	56
General and administrative expenses	32		3	35
Taxes other than income taxes	16		1	17
Interest and debt expense	48		—	48
Total costs and expenses	267		42	309
Income before income taxes	201		29	230
Income tax expense	1		—	1
Net income	200		29	229
Less: Net income attributable to Predecessors	—		29	29
Net income attributable to the Partnership	200		—	200
Less: General partner’s interest in net income attributable to the Partnership	69		—	69
Limited partners’ interest in net income attributable to the Partnership	$	131	—	131

10

	Millions of Dollars
	Six Months Ended June 30, 2017
	Phillips 66 Partners LP (As previously reported)			Acquired Bakken Pipeline/MSLP Predecessor		Consolidated Results
Cash Flows From Operating Activities
Net income	$	200		29		229
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	52			4		56
Undistributed equity earnings	2			(11	)	(9	)
Other	5			(1	)	4
Working capital adjustments
Decrease (increase) in other current assets
Decrease (increase) in accounts receivable	6			—		6
Decrease (increase) in materials and supplies	(1		)	—		(1	)
Decrease (increase) in prepaid expenses and other current assets	(1		)	1		—
Increase (decrease) in accounts payable	(2		)	—		(2	)
Increase (decrease) in accrued interest	1			(1	)	—
Increase (decrease) in deferred revenues	10			—		10
Increase (decrease) in other accruals	(2		)	—		(2	)
Net Cash Provided by Operating Activities	270			21		291
Cash Flows From Investing Activities
Restricted cash received from combination of business	—			318		318
Collection of loan receivable	—			7		7
Cash capital expenditures and investments	(128		)	(60	)	(188	)
Return of investment from equity affiliates	17			—		17
Net Cash Provided by (Used in) Investing Activities	(111		)	265		154
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors	—			(151	)	(151	)
Issuance of debt	1,103			—		1,103
Repayment of debt	(1,263		)	(135	)	(1,398	)
Issuance of common units	171			—		171
Quarterly distributions to common unitholders—public	(50		)	—		(50	)
Quarterly distributions to common unitholder—Phillips 66	(73		)	—		(73	)
Quarterly distributions to General Partner—Phillips 66	(60		)	—		(60	)
Other cash contributions from Phillips 66	12			—		12
Net Cash Used in Financing Activities	(160		)	(286	)	(446	)
Net Change in Cash, Cash Equivalents and Restricted Cash	(1		)	—		(1	)
Cash, cash equivalents and restricted cash at beginning of period	2			—		2
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1		—		1

11

Note 5—Equity Investments

Gray Oak Pipeline

As discussed in Note 4—Acquisitions, on April 20, 2018, we acquired Phillips 66 PDI’s then 100 percent interest in Gray Oak LLC. Gray Oak LLC is developing and constructing the Gray Oak Pipeline system which, upon completion, will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Sweeny/Freeport markets on the Texas Gulf Coast. The pipeline is expected to be placed in service by the end of 2019.

On April 23, 2018, a co-venturer acquired a 25 percent interest in Gray Oak LLC, along with sufficient voting rights over key governance provisions such that we no longer could assert control over Gray Oak LLC. At that time, we began using the equity method of accounting for our investment in Gray Oak LLC. Gray Oak LLC is considered a variable interest entity because it does not have sufficient equity at risk to fully fund the construction of all assets required for principal operations. We have determined we are not the primary beneficiary because we and our co-venturer jointly direct the activities of the Gray Oak Pipeline that most significantly impact economic performance. At June 30, 2018, our maximum exposure to loss was $28 million, which represented the aggregate book value of our equity investment in Gray Oak LLC. Another party has the option to acquire a 10 percent interest in Gray Oak LLC. Subject to certain conditions, the option expires on July 29, 2018. At June 30, 2018, the option had not been exercised.

South Texas Gateway Terminal

On April 23, 2018, we acquired a 25 percent interest in the South Texas Gateway Terminal under development by Buckeye Partners, L.P. This marine terminal will connect to the Gray Oak Pipeline in Corpus Christi, Texas, and will have an initial storage capacity of 3.4 million barrels. The terminal is expected to begin operations by the end of 2019.

South Texas Gateway Terminal LLC is considered a variable interest entity because it does not have sufficient equity at risk to fully fund the construction of all assets required for principal operations. We have determined we are not the primary beneficiary because we and our co-venturers jointly direct the activities of the terminal that most significantly impact economic performance. At June 30, 2018, our maximum exposure to loss was $14 million, which represented the aggregate book value of our equity investment in South Texas Gateway Terminal LLC.

The following table summarizes the carrying value of our equity investments.

			Millions of Dollars
	Percentage Ownership		June 30 2018		December 31 2017
Bakken Pipeline	25.00	%	$	609	621
Bayou Bridge Pipeline, LLC (Bayou Bridge)	40.00		231		173
DCP Sand Hills Pipeline, LLC (Sand Hills)	33.34		567		515
DCP Southern Hills Pipeline, LLC (Southern Hills)	33.34		208		209
Explorer Pipeline Company (Explorer)	21.94		121		118
Gray Oak Pipeline, LLC (Gray Oak)	75.00		28		—
Paradigm Pipeline LLC (Paradigm)	50.00		142		131
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal)	70.00		72		53
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)	25.00		14		—
STACK Pipeline LLC (STACK)	50.00		112		112
Total equity investments			$	2,104	1,932

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Earnings (losses) from our equity investments were as follows:

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017	2018	2017
Bakken Pipeline	$	39	11	71	11
Bayou Bridge	3		2	8	4
Explorer	8		6	24	11
Gray Oak	—		—	—	—
Paradigm	2		—	4	(1	)
Phillips 66 Partners Terminal	6		1	15	3
Sand Hills	31		20	56	37
South Texas Gateway Terminal	—		—	—	—
Southern Hills	9		7	16	14
STACK	2		1	4	2
Total equity in earnings of affiliates	$	100	48	198	81

Note 6—Properties, Plants and Equipment

Our investment in properties, plants and equipment (PP&E), with the associated accumulated depreciation, was:

	Millions of Dollars
	June 30 2018		December 31 2017
Land	$	19	19
Buildings and improvements	88		88
Pipelines and related assets*	1,382		1,372
Terminals and related assets*	691		671
Rail racks and related assets*	137		137
Processing and related assets*	842		837
Caverns and related assets*	584		583
Construction-in-progress	97		47
Gross PP&E	3,840		3,754
Less: Accumulated depreciation	892		836
Net PP&E	$	2,948	2,918

*Assets for which we are the lessor.

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Note 7—Debt

	Millions of Dollars
	June 30 2018			December 31 2017
2.646% Senior Notes due 2020	$	300		300
3.605% Senior Notes due 2025	500			500
3.550% Senior Notes due 2026	500			500
3.750% Senior Notes due 2028	500			500
4.680% Senior Notes due 2045	450			450
4.900% Senior Notes due 2046	625			625
Tax-exempt bonds at 1.75% and 1.94% at June 30, 2018, and December 31, 2017, respectively	100			100
Total	2,975			2,975
Net unamortized discounts and debt issuance costs	(29		)	(30	)
Total debt	2,946			2,945
Less: Short-term debt	25			25
Long-term debt	$	2,921		2,920

The fair value of our fixed-rate and floating-rate debt is estimated based on observable market prices and is classified in level 2 of the fair value hierarchy. The fair value of our fixed-rate debt amounted to $2,723 million and $2,918 million at June 30, 2018, and December 31, 2017, respectively. The fair value of our floating-rate debt approximated carrying value of $100 million at both June 30, 2018, and December 31, 2017.

Note 8—Equity

Our initial $250 million continuous offering of common units, or at-the-market (ATM) program, was completed during the three months ended June 30, 2018. At that time, we commenced issuing common units under our second $250 million ATM program. For the three and six months ended June 30, 2018, on a settlement date basis, we had issued an aggregate of 1,152,119 and 1,340,934 common units under our ATM programs, generating net proceeds of $58 million and $67 million, respectively. For the three and six months ended June 30, 2017, on a settlement date basis, we had issued an aggregate of 2,578,608 and 3,323,576 common units under our ATM programs, generating net proceeds of $131 million and $171 million, respectively. Since inception through June 30, 2018, we had issued an aggregate of 5,059,802 common units under our ATM programs, generating net proceeds of $259 million. The net proceeds from sales under the ATM programs are used for general partnership purposes, which may include debt repayment, acquisitions, capital expenditures and additions to working capital.

Note 9—Operating Revenues

Revenues are primarily recognized for pipeline transportation, terminaling, storage, processing and fractionation services generated under long-term agreements. A significant portion of our revenues are derived from Phillips 66. The majority of our agreements for transportation, terminaling, storage, processing and fractionation services with Phillips 66 are considered operating leases under GAAP. As part of our adoption of ASU No. 2014-09, we applied the new revenue recognition standard only to the service element of these operating leases. The separation of the lease and service elements was based on an analysis of service-related and lease-related costs for each contract, adjusted for representative profit margins. The lease element continues to be accounted for under lease accounting standards.

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Revenues from fixed minimum volume commitments are recognized over the performance obligation period for stand-ready service contracts. Revenues from the variable element of these stand-ready contracts and other contracts without fixed elements are recognized based on the actual volumes transported, stored, processed and fractionated at contractual rates because the actual volumes specifically relate to our efforts to transfer the distinct services. Generally, our services are billed and payments are received on a monthly basis.

Disaggregated Revenues

Total operating revenues disaggregated by type of service were as follows:

	Millions of Dollars
	Three Months Ended June 30, 2018		Six Months Ended June 30, 2018
Pipelines	$	111	213
Terminals	38		77
Storage, processing and other revenues	105		220
Total operating revenues	$	254	510

During the three and six months ended June 30, 2018, lease revenues were $143 million and $287 million, respectively, and service revenues were $111 million and $223 million, respectively. Lease and service revenues were recorded in the “Operating revenues—related parties” and “Operating revenues—third parties” lines on our consolidated statement of income.  

Contract-Related Assets and Liabilities

At June 30, 2018 and January 1, 2018, lease receivables were $49 million for both periods, and service receivables were $40 million and $37 million, respectively.

Our contract liabilities primarily represent payments from our customers, mainly Phillips 66, for volume throughput less than the contractually required minimum throughput volumes. These deficiency payments are deferred and recognized at the earlier of the period in which our customers make up the shortfall volumes or when it is probable our customers will not make up the shortfall volumes prior to the expiration of the contractual make-up period. Our contract liabilities are included in the “Deferred revenues” and “Deferred revenues and other liabilities” lines on our consolidated balance sheet. At June 30, 2018, and January 1, 2018, total deferred revenues were $80 million and $93 million, respectively, of which $9 million and $13 million, respectively, are contract liabilities related to the service element. Service-related revenues recognized during the three and six months ended June 30, 2018, that were included in the contract liability balance at January 1, 2018, were $5 million and $9 million, respectively. For the three and six months ended June 30, 2018, there were no material differences between the amount that we recognized as revenues relating to minimum throughput deficiency payments compared to the amount that would have been recognized prior to the adoption of the new revenue recognition standard.

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Remaining Performance Obligations

We typically have long-term contracts with our customers, most of which have original durations of up to 15 years. The average remaining duration of these contracts is eight years. As of June 30, 2018, future revenues expected to be recognized for the fixed component of the transaction price of our remaining performance obligations from contracts with our customers with an original expected duration of greater than one year were:

	Millions of Dollars
Remainder of 2018	$	359
2019	699
2020	696
2021	685
2022	673
Remaining years	2,964
Total future operating revenues*	$	6,076
*Includes $3.4 billion of future lease revenues from agreements with Phillips 66.

For the remaining performance obligation, we applied the exemption for variable prices allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer distinct goods or service as part of a performance obligation.

Note 10—Net Income Per Limited Partner Unit

Net income per limited partner unit applicable to common units is computed by dividing the limited partners’ interest in net income attributable to the Partnership by the weighted-average number of common units outstanding for the period. Because we have more than one class of participating securities, we use the two-class method to calculate the net income per unit applicable to the limited partners. As of June 30, 2018, the classes of participating securities included common units, general partner units and incentive distribution rights (IDRs). For the three and six months ended June 30, 2018, our preferred units are potentially dilutive securities and were dilutive to net income per limited partner unit. For the three and six months ended June 30, 2017, basic and diluted net income per limited partner unit are the same because we did not have potentially dilutive common units outstanding.

Net income earned by the Partnership is allocated between the limited partners and the General Partner (including the General Partner’s IDRs) in accordance with our partnership agreement, after giving effect to priority income allocations to the holders of the preferred units. First, earnings are allocated based on actual cash distributions declared to our unitholders, including those attributable to the General Partner’s IDRs. To the extent net income attributable to the Partnership exceeds or is less than cash distributions, this difference is allocated based on the unitholders’ respective ownership percentages, after consideration of any priority allocations of earnings. For the diluted net income per limited partner unit calculation, the preferred units are assumed to be converted at the beginning of the period into common limited partner units on a one-for-one basis, and the distribution formula for available cash in our partnership agreement is recalculated, using the original available cash amount increased only for the preferred distributions which would not have been paid after conversion. 

When our financial statements are retrospectively adjusted after a dropdown transaction, the earnings of the acquired business, prior to the closing of the transaction, are allocated entirely to our General Partner and presented as net income (loss) attributable to Predecessors. The earnings per unit of our limited partners prior to the close of the transaction do not change as a result of a dropdown transaction. After the closing of a dropdown transaction, the earnings of the acquired business are allocated in accordance with our partnership agreement as previously described.

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	Millions of Dollars
	Three Months Ended June 30				Six Months Ended June 30
	2018		2017		2018	2017
Net income attributable to the Partnership	$	186	103		358	200
Less: General partner’s distribution declared (including IDRs)*	57		36		108	68
Limited partners’ distributions declared on preferred units*	10		—		19	—
Limited partners’ distribution declared on common units*	91		68		179	131
Distributions less than (more than) net income attributable to the Partnership	$	28	(1	)	52	1

*Distribution declared attributable to the indicated periods.

	Limited Partners’ Common Units			General Partner (including IDRs)		Limited Partners’ Preferred Units	Total
Three Months Ended June 30, 2018
Net income attributable to the Partnership (millions):
Distribution declared	$	91		57		10	158
Distributions less than (more than) net income attributable to the Partnership	30			(2	)	—	28
Net income attributable to the Partnership (basic)	121			55		10	186
Dilutive effect of preferred units*	7
Net income attributable to the Partnership (diluted)	$	128
Weighted-average units outstanding—basic	122,188,646
Dilutive effect of preferred units*	13,819,791
Weighted-average units outstanding—diluted	136,008,437
Net income attributable to the Partnership per limited partner unit—basic (dollars)	$	0.99
Net income attributable to the Partnership per limited partner unit—diluted (dollars)	0.94
Three Months Ended June 30, 2017
Net income attributable to the Partnership (millions):
Distribution declared	$	68		36		—	104
Distributions less than (more than) net income attributable to the Partnership	(2		)	1		—	(1	)
Net income attributable to the Partnership	$	66		37		—	103
Weighted-average units outstanding—basic and diluted	109,189,217
Net income per limited partner unit—basic and diluted (dollars)	$	0.61

* The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.

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	Limited Partners’ Common Units		General Partner (including IDRs)	Limited Partners’ Preferred Units	Total
Six Months Ended June 30, 2018
Net income attributable to the Partnership (millions):
Distribution declared	$	179	108	19	306
Distributions less than net income attributable to the Partnership	52		—	—	52
Net income attributable to the Partnership (basic)	231		108	19	358
Dilutive effect of preferred units*	14
Net income attributable to the Partnership (diluted)	$	245
Weighted-average units outstanding—basic	121,900,683
Dilutive effect of preferred units*	13,819,791
Weighted-average units outstanding—diluted	135,720,474
Net income attributable to the Partnership per limited partner unit—basic (dollars)	$	1.89
Net income attributable to the Partnership per limited partner unit—diluted (dollars)	1.80
Six Months Ended June 30, 2017
Net income attributable to the Partnership (millions):
Distribution declared	$	131	68	—	199
Distributions less than net income attributable to the Partnership	—		1	—	1
Net income attributable to the Partnership	$	131	69	—	200
Weighted-average units outstanding—basic and diluted	108,299,570
Net income attributable to the Partnership per limited partner unit—basic and dilutive (dollars)	$	1.21

* The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.

On July 18, 2018, the Board of Directors of our General Partner declared a quarterly cash distribution of $0.752 per common unit attributable to the second quarter of 2018. This distribution is payable August 13, 2018, to unitholders of record as of July 31, 2018.

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Note 11—Contingencies

From time to time, lawsuits involving a variety of claims that arise in the ordinary course of business are filed against us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include any contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Environmental

We are subject to federal, state and local environmental laws and regulations. We record accruals for contingent environmental liabilities based on management’s best estimates, using all information that is available at the time. We measure estimates and base liabilities on currently available facts, existing technology, and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the U.S. Environmental Protection Agency or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.

In the future, we may be involved in additional environmental assessments, cleanups and proceedings.

Legal Proceedings

Under our amended omnibus agreement, Phillips 66 provides certain services for our benefit, including legal support services, and we pay an operational and administrative support fee for these services. Phillips 66’s legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. The process facilitates the early evaluation and quantification of potential exposures in individual cases and enables tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, Phillips 66’s legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required. As of June 30, 2018, and December 31, 2017, we did not have any material accrued contingent liabilities associated with litigation matters.

Indemnification and Excluded Liabilities

Under our amended omnibus agreement and pursuant to the terms of various agreements under which we acquired assets from Phillips 66, Phillips 66 will indemnify us, or assume responsibility, for certain environmental liabilities, tax liabilities, litigation and any other liabilities attributable to the ownership or operation of the assets contributed to us and that arose prior to the effective date of each acquisition. These indemnifications and exclusions from liability have, in some cases, time limits, dollar limits and deductibles. When Phillips 66 performs under any of these indemnifications or exclusions from liability, we recognize noncash expenses and associated noncash capital contributions from our General Partner, as these are considered liabilities paid for by a principal unitholder.

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Note 12—Cash Flow Information

Capital Expenditures and Investments

Our capital expenditures and investments consisted of:

	Millions of Dollars
	Six Months Ended June 30
	2018		2017*
Cash capital expenditures and investments	$	234	188
Change in capital expenditure accruals	14		—
Total capital expenditures and investments	$	248	188

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

	Millions of Dollars
	Six Months Ended June 30
	2018		2017
Capital expenditures and investments attributable to the Partnership	$	248	128
Capital expenditures and investments attributable to Predecessors*	—		60
Total capital expenditures and investments*	$	248	188

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

Restricted Cash

At June 30, 2018, and December 31, 2017, the Partnership did not have any restricted cash. The restrictions on the cash received in February 2017, as a result of the retrospective adjustment for the Bakken Pipeline/MSLP Acquisition, were fully removed in the second quarter of 2017 when MSLP’s outstanding debt that contained lender restrictions on the use of cash was paid in full.

Note 13—Related Party Transactions

Commercial Agreements

We have entered into multiple commercial agreements with Phillips 66, including transportation services agreements, terminal services agreements, storage services agreements, stevedoring services agreements, a fractionation service agreement, tolling services agreements, and rail terminal services agreements. Under these long-term, fee-based agreements, we provide transportation, terminaling, storage, stevedoring, fractionation, processing, and rail terminal services to Phillips 66, and Phillips 66 commits to provide us with minimum volume commitments of crude oil, NGL, feedstock, and refined petroleum products or minimum monthly service fees. Under our transportation, processing, and terminaling services agreements, if Phillips 66 fails to transport, throughput or store its minimum throughput volume, then Phillips 66 will pay us a deficiency payment based on the calculation described in the agreement.

Amended and Restated Operational Services Agreement

Under our amended and restated operational services agreement, we reimburse Phillips 66 for providing certain operational services to us in support of our pipelines, terminaling, processing, and storage facilities. These services include routine and emergency maintenance and repair services, routine operational activities, routine administrative services, construction and related services and such other services as we and Phillips 66 may mutually agree upon from time to time.

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Amended Omnibus Agreement

The amended omnibus agreement addresses our payment of an operating and administrative support fee and our obligation to reimburse Phillips 66 for all other direct or allocated costs and expenses incurred by Phillips 66 in providing general and administrative services. Additionally, the omnibus agreement addresses Phillips 66’s indemnification to us and our indemnification to Phillips 66 for certain environmental and other liabilities. Further, it addresses the granting of a license from Phillips 66 to us with respect to the use of certain Phillips 66 trademarks.

Tax Sharing Agreement

Under our tax sharing agreement, we reimburse Phillips 66 for our share of state and local income and other taxes incurred by Phillips 66 due to our results of operations being included in a combined or consolidated tax return filed by Phillips 66. Any reimbursement is limited to the tax that we (and our subsidiaries) would have paid had we not been included in a combined group with Phillips 66. Phillips 66 may use its tax attributes to cause its combined or consolidated group to owe no tax; however, we would nevertheless reimburse Phillips 66 for the tax we would have owed, even though Phillips 66 had no cash expense for that period.

Related Party Transactions

Significant related party transactions included in our total costs and expenses were:

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017*	2018	2017*
Operating and maintenance expenses	$	50	50	115	90
General and administrative expenses	15		17	30	33
Total	$	65	67	145	123

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

We pay Phillips 66 a monthly operational and administrative support fee under the terms of our amended omnibus agreement in the amount of $8 million. The operational and administrative support fee is for the provision of certain services, including: logistical services; asset oversight, such as operational management and supervision; corporate engineering services, including asset integrity and regulatory services; business development services; executive services; financial and administrative services (including treasury and accounting); information technology; legal services; corporate health, safety and environmental services; facility services; human resources services; procurement services; investor relations; tax matters; and public company reporting services. We also reimburse Phillips 66 for all other direct or allocated costs incurred on behalf of us, pursuant to the terms of our amended omnibus agreement. The classification of these charges between operating and maintenance expenses and general and administrative expenses is based on the functional nature of the services performed for our operations. Under our amended and restated operational services agreement, we reimburse Phillips 66 for the provision of certain operational services to us in support of our pipeline, rail rack, processing, terminaling, and storage facilities. Additionally, we pay Phillips 66 for insurance services provided to us. Operating and maintenance expenses also include volumetric gains and losses associated with volumes transported by Phillips 66.

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Other related party balances in our consolidated balance sheet consisted of the following, all of which were related to Phillips 66:

	Millions of Dollars
	June 30 2018		December 31 2017
Deferred rentals and other assets	$	5	5
Deferred revenues	60		33
Deferred revenues and other liabilities	17		61

Equity Affiliate Guarantee

Dakota Access and ETCO are parties to a $2.5 billion project financing transaction entered into in August 2016 to fund the construction of the Bakken Pipeline. In July 2017, as an owner of Dakota Access and ETCO, Phillips 66 and its co-venturers each issued a guarantee intended to cover their pro rata shares of interest expense for rolling six-month periods after the calculation date.  In October 2017, as part of the Bakken Pipeline/MSLP Acquisition, Phillips 66 Partners substituted its guarantee for that of Phillips 66.  Each co-venturer’s guarantee has a maximum guarantee amount which changes over time. Our maximum exposure under the guarantee amounted to $16 million at June 30, 2018.

Note 14—New Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  Leases will continue to be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement.  Similarly, lessors will be required to classify leases as sales-type, financing or operating, with classification affecting the pattern of income recognition in the income statement.  Classification for both lessees and lessors will be based on an assessment of whether risks and rewards, as well as substantive control have been transferred through a lease contract.  Public business entities should apply the guidance in ASU No. 2016-02 for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. Entities are required to adopt the ASU using a modified retrospective approach, subject to certain optional practical expedients, and apply its provisions to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. We are currently evaluating the provisions of ASU No. 2016-02 and assessing its impact on our consolidated financial statements. As part of our assessment to-date, we have formed an implementation team, selected a software package, and completed software design and configuration within a test environment.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise stated or the context otherwise indicates, all references to “Phillips 66 Partners,” “the Partnership,” “us,” “our,” “we” or similar expressions refer to Phillips 66 Partners LP, including its consolidated subsidiaries. References to Phillips 66 may refer to Phillips 66 and/or its subsidiaries, depending on the context. References to our “General Partner” refer to Phillips 66 Partners GP LLC, and references to Phillips 66 PDI refer to Phillips 66 Project Development Inc., the Phillips 66 subsidiary that holds a limited partner interest in us and wholly owns our General Partner.

Management’s Discussion and Analysis is the Partnership’s analysis of its financial performance and of significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report. It contains forward-looking statements including, without limitation, statements relating to the Partnership’s plans, strategies, objectives, expectations and intentions. 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 Partnership does not undertake to update, revise or correct any of the 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 Partnership’s disclosures under the heading: “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.”

BUSINESS ENVIRONMENT AND EXECUTIVE OVERVIEW

Partnership Overview

We are a growth-oriented master limited partnership formed to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids (NGL) pipelines and terminals, and other midstream assets. Our common units trade on the New York Stock Exchange under the symbol PSXP.

Our operations consist of crude oil, refined petroleum products and NGL transportation, processing, terminaling and storage assets. We conduct our operations through both wholly owned and joint venture operations. The majority of our wholly owned assets are associated with, and are integral to the operation of, nine of Phillips 66’s owned or joint venture refineries.

We primarily generate revenue by providing fee-based transportation, processing, terminaling, storage and NGL fractionation services to Phillips 66 and other customers. Our equity affiliates primarily generate revenue from transporting and terminaling NGL, refined petroleum products and crude oil.

Basis of Presentation

We have acquired assets from Phillips 66 that were considered transfers of businesses between entities under common control. This required the transactions to be accounted for as if the transfers had occurred at the beginning of the transfer period, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, the accompanying financial statements and related notes have been retrospectively adjusted to include the historical results and financial position of the acquired businesses prior to the effective date of each acquisition. We refer to these pre-acquisition operations as those of our “Predecessors.”

See the “Basis of Presentation” section of Note 1—Business and Basis of Presentation, in the Notes to Consolidated Financial Statements, for additional information on the content and comparability of our historical financial statements.

How We Evaluate Our Operations

Our management uses a variety of financial and operating metrics to analyze our performance, including: (1) volumes handled (including pipeline throughput, terminaling throughput and storage volumes); (2) operating and maintenance expenses; (3) net income (loss) before net interest expense, income taxes, depreciation and amortization (EBITDA); (4) adjusted EBITDA; and (5) distributable cash flow.

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Volumes Handled

The amount of revenues we generate primarily depends on the volumes of crude oil, refined petroleum products and NGL that we handle in our pipeline, terminal, rail rack, processing, storage and NGL fractionator systems. In addition, our equity affiliates generate revenues from transporting and terminaling NGL, crude oil and refined petroleum products. These volumes are primarily affected by the supply of, and demand for, NGL, crude oil and refined petroleum products in the markets served directly or indirectly by our assets, as well as the operational status of the refineries served by our assets. Phillips 66 has committed to minimum throughput volumes under many of our commercial agreements.

Operating and Maintenance Expenses

Our management seeks to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses primarily consist of labor expenses (including contractor services), utility costs, and repair and maintenance expenses. Operating and maintenance expenses generally remain relatively stable across broad ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities, particularly maintenance activities, performed during the period.

Our operating and maintenance expenses are also affected by volumetric gains/losses resulting from variances in meter readings and other measurement methods, as well as volume fluctuations due to pressure and temperature changes. Under certain commercial agreements with Phillips 66, the value of any NGL, crude oil, or refined petroleum product volumetric gains and losses are determined by reference to the monthly average reference price for the applicable commodity. Any gains and losses under these provisions decrease or increase, respectively, our operating and maintenance expenses in the period in which they are realized. These contractual volumetric gain/loss provisions could increase variability in our operating and maintenance expenses.

EBITDA, Adjusted EBITDA and Distributable Cash Flow

We define EBITDA as net income (loss) plus net interest expense, income taxes, and depreciation and amortization attributable to both the Partnership and our Predecessors.

Adjusted EBITDA is the EBITDA directly attributable to the Partnership after deducting the EBITDA attributable to our Predecessors, further adjusted for:

• The proportional share of equity affiliates’ net interest expense, income taxes and depreciation and amortization.

• Transaction costs associated with acquisitions.

• Certain other noncash items, including expenses indemnified by Phillips 66.

Distributable cash flow is defined as adjusted EBITDA less (i) the difference between equity affiliate distributions and proportional EBITDA, (ii) maintenance capital expenditures, (iii) net interest expense, (iv) income taxes paid and (v) preferred unit distributions; plus adjustments for deferred revenue impacts.

EBITDA, adjusted EBITDA, and distributable cash flow are not presentations made in accordance with U.S. generally accepted accounting principles (GAAP). EBITDA, adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management believes external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may find useful to assess:

• Our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA and adjusted EBITDA, financing methods.

• The ability of our business to generate sufficient cash to support our decision to make distributions to our unitholders.

• Our ability to incur and service debt and fund capital expenditures.

• The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

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The GAAP performance measure most directly comparable to EBITDA and adjusted EBITDA is net income. The GAAP liquidity measure most directly comparable to EBITDA and distributable cash flow is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income or net cash provided by operating activities. They have important limitations as analytical tools because they exclude some items that affect net income and net cash provided by operating activities. Additionally, because EBITDA, adjusted EBITDA, and distributable cash flow may be defined differently by other companies in our industry, our definition of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Business Environment

Since we do not own any of the NGL, crude oil and refined petroleum products we handle and do not engage in the trading of NGL, crude oil and refined petroleum products, we have limited direct exposure to risks associated with fluctuating commodity prices, although these risks indirectly influence our activities and results of operations over the long term.

Our throughput volumes primarily depend on the volume of crude oil processed and refined petroleum products produced at Phillips 66’s owned or operated refineries with which our assets are integrated, which in turn are primarily dependent on Phillips 66’s refining margins and maintenance schedules. Refining margins depend on the cost of crude oil or other feedstocks and the price of refined petroleum products. These prices are affected by numerous factors beyond our or Phillips 66’s control, including the domestic and global supply of and demand for crude oil and refined petroleum products. Throughput volumes of our equity affiliates primarily depend on upstream drilling activities, refinery performance and product supply and demand.

While we believe we have substantially mitigated our indirect exposure to commodity price fluctuations through the minimum volume commitments in our commercial agreements with Phillips 66 during the respective terms of those agreements, our ability to execute our growth strategy in our areas of operation will depend, in part, on the availability of attractively priced crude oil in the areas served by our crude oil pipelines and rail racks, demand for refined petroleum products in the markets served by our refined petroleum product pipelines and terminals, and the general demand for midstream services, including NGL transportation and fractionation.

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RESULTS OF OPERATIONS

Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2018, is based on a comparison with the respective corresponding periods of 2017.

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017*	2018	2017*
Revenues and Other Income
Operating revenues—related parties	$	244	216	493	426
Operating revenues—third parties	10		11	17	21
Equity in earnings of affiliates	100		48	198	81
Other income	—		2	1	11
Total revenues and other income	354		277	709	539
Costs and Expenses
Operating and maintenance expenses	85		79	182	153
Depreciation	29		28	57	56
General and administrative expenses	16		18	32	35
Taxes other than income taxes	9		8	19	17
Interest and debt expense	29		24	59	48
Total costs and expenses	168		157	349	309
Income before income taxes	186		120	360	230
Income tax expense	—		1	2	1
Net income	186		119	358	229
Less: Net income attributable to Predecessors	—		16	—	29
Net income attributable to the Partnership	186		103	358	200
Less: Preferred unitholders’ interest in net income attributable to the Partnership	10		—	19	—
Less: General partner’s interest in net income attributable to the Partnership	55		37	108	69
Limited partners’ interest in net income attributable to the Partnership	$	121	66	231	131
Net cash provided by operating activities	$	226	136	397	291
Adjusted EBITDA	$	276	166	523	329
Distributable cash flow	$	204	140	398	264

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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	Three Months Ended June 30			Six Months Ended June 30
	2018		2017	2018	2017
Wholly Owned Operating Data
Pipelines
Pipeline revenues (millions of dollars)	$	111	103	213	205
Pipeline volumes(1)(thousands of barrels daily)
Crude oil	1,020		871	984	873
Refined products and NGL	920		973	859	953
Total	1,940		1,844	1,843	1,826
Average pipeline revenue per barrel (dollars)	$	0.63	0.61	0.64	0.62
Terminals
Terminal revenues (millions of dollars)	$	38	37	77	74
Terminal throughput (thousands of barrels daily)
Crude oil(2)	471		374	477	369
Refined products	806		742	763	772
Total	1,277		1,116	1,240	1,141
Average terminaling revenue per barrel (dollars)	$	0.33	0.36	0.34	0.36
Storage, processing and other revenues (millions of dollars)	$	105	87	220	168
Total operating revenues (millions of dollars)	$	254	227	510	447
Joint Venture Operating Data(3)
Crude oil, refined products and NGL (thousands of barrels daily)	638		443	621	397

⁽¹⁾ Represents the sum of volumes transported through each separately tariffed pipeline segment.

⁽²⁾ Bayway and Ferndale rail rack volumes included in crude oil terminals.

⁽³⁾ Proportional share of total pipeline and terminal volumes of joint ventures consistent with recognized equity in earnings of affiliates.

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The following tables present reconciliations of EBITDA and adjusted EBITDA to net income and EBITDA and distributable cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

	Millions of Dollars
	Three Months Ended June 30					Six Months Ended June 30
	2018			2017*		2018	2017*
Reconciliation to Net Income Attributable to the Partnership
Net income attributable to the Partnership	$	186		103		358	200
Plus:
Net income attributable to the Predecessors	—			16		—	29
Net income	186			119		358	229
Plus:
Depreciation	29			28		57	56
Net interest expense	29			23		58	46
Income tax expense	—			1		2	1
EBITDA	244			171		475	332
Plus:
Proportional share of equity affiliates’ net interest, taxes and depreciation	28			12		43	24
Expenses indemnified or prefunded by Phillips 66	1			—		1	3
Transaction costs associated with acquisitions	3			—		4	1
Less:
EBITDA attributable to Predecessors	—			17		—	31
Adjusted EBITDA	276			166		523	329
Plus:
Deferred revenue impacts**†	(5		)	4		—	8
Less:
Equity affiliate distributions less than (more than) proportional EBITDA	18			(4	)	28	4
Maintenance capital expenditures†	10			10		20	21
Net interest expense	29			24		58	48
Preferred unit distributions	10			—		19	—
Distributable cash flow	$	204		140		398	264

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

**Difference between cash receipts and revenue recognition.

†Excludes MSLP capital reimbursements and turnaround impacts.

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	Millions of Dollars
	Three Months Ended June 30					Six Months Ended June 30
	2018			2017*		2018		2017*
Reconciliation to Net Cash Provided by Operating Activities
Net cash provided by operating activities	$	226		136		397		291
Plus:
Net interest expense	29			23		58		46
Income tax expense	—			1		2		1
Changes in working capital	(10		)	8		(27	)	(11	)
Undistributed equity earnings	(1		)	5		7		9
Deferred revenues and other liabilities	5			—		43		—
Other	(5		)	(2	)	(5	)	(4	)
EBITDA	244			171		475		332
Plus:
Proportional share of equity affiliates’ net interest, taxes and depreciation	28			12		43		24
Expenses indemnified or prefunded by Phillips 66	1			—		1		3
Transaction costs associated with acquisitions	3			—		4		1
Less:
EBITDA attributable to Predecessors	—			17		—		31
Adjusted EBITDA	276			166		523		329
Plus:
Deferred revenue impacts**†	(5		)	4		—		8
Less:
Equity affiliate distributions less than (more than) proportional EBITDA	18			(4	)	28		4
Maintenance capital expenditures†	10			10		20		21
Net interest expense	29			24		58		48
Preferred unit distributions	10			—		19		—
Distributable cash flow	$	204		140		398		264

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

**Difference between cash receipts and revenue recognition.

^†Excludes MSLP capital reimbursements and turnaround impacts.

Statement of Income Analysis

Operating revenuesincreased$27 million, or 12 percent, and $63 million, or 14 percent, in the second quarter and six-month period of 2018, respectively. The increases were primarily related to additional revenues from the acquisition of Merey Sweeny, L.P. (MSLP) in 2017 and higher pipeline and terminal volumes.

Equity in earnings of affiliatesincreased$52 million and $117 million in the second quarter and six-month period of 2018, respectively. The increases were primarily attributable to Dakota Access, LLC and Energy Transfer Crude Oil Company, LLC (together, the Bakken Pipeline), which began operations in June 2017. The increases also reflected higher earnings from Sand Hills Pipeline, LLC (Sand Hills) and Phillips 66 Partners Terminal LLC due to higher volumes, and Explorer Pipeline Company due to a one-time benefit from U.S. tax reform.

Other Incomedecreased$10 million in the six-month period of 2018. The decrease was primarily due to the receipt of tax-related contractual make-whole payments in the first quarter of 2017, associated with the transfer of a co-venturer’s interests in Sand Hills and DCP Southern Hills Pipeline, LLC to DCP Midstream, LP.

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Operating and maintenance expensesincreased by $6 million, or 8 percent, and $29 million, or 19 percent, in the second quarter and six-month period of 2018, respectively. The increases were primarily due to operating expenses associated with the acquisition of MSLP in 2017, as well as increased maintenance expense for the River Parish NGL system.

Interest and debt expenseincreased$5 million, or 21 percent, and $11 million, or 23 percent in the second quarter and six-month period of 2018, respectively, primarily due to higher average debt principal balances as a result of the issuance of $650 million in aggregate principal amount of senior notes in October 2017.

CAPITAL RESOURCES AND LIQUIDITY

Significant Sources of Capital

Our sources of liquidity include cash generated from operations, borrowings from related parties and under our revolving credit facility, and issuances of additional debt and equity securities. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements, long-term capital expenditure requirements and our quarterly cash distributions.

Operating Activities

We generated $397 million in cash from operations during the first six months of 2018, an improvement over cash from operations of $291 million for the corresponding period of 2017. The improvement was primarily driven by higher distributions from equity affiliates, partially offset by higher operating and maintenance expenses.

ATM Programs

Our initial $250 million continuous offering of common units, or at-the-market (ATM) program, was completed during the three months ended June 30, 2018. At that time, we commenced issuing common units under our second $250 million ATM program. For the three and six months ended June 30, 2018, on a settlement date basis, we had issued an aggregate of 1,152,119 and 1,340,934 common units under our ATM programs, generating net proceeds of $58 million and $67 million, respectively. For the three and six months ended June 30, 2017, on a settlement date basis, we had issued an aggregate of 2,578,608 and 3,323,576 common units under our ATM programs, generating net proceeds of $131 million and $171 million, respectively. Since inception through June 30, 2018, we had issued an aggregate of 5,059,802 common units under our ATM programs, generating net proceeds of $259 million, after broker commissions of $3 million. The net proceeds from sales under the ATM programs are used for general partnership purposes, which may include debt repayment, acquisitions, capital expenditures and additions to working capital.

Revolving Credit Facility

At June 30, 2018, and December 31, 2017, we had no borrowings outstanding under our $750 million revolving credit facility.

Shelf Registration

We have a universal shelf registration statement on file with the U.S. Securities and Exchange Commission (SEC) under which we, as a well-known seasoned issuer, have the ability to issue and sell an indeterminate amount of common units representing limited partner interests, preferred units representing limited partner interests, and debt securities.

Off-Balance Sheet Arrangements

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO) are parties to a $2.5 billion project financing transaction entered into in August 2016. In July 2017, as an owner of Dakota Access and ETCO, Phillips 66 and its co-venturers each issued a guarantee intended to cover their pro rata shares of interest expense for rolling six-month periods after the calculation date.  In October 2017, as part of the Bakken Pipeline/MSLP Acquisition, Phillips 66 Partners substituted its guarantee for that of Phillips 66.  Each co-venturer’s guarantee has a maximum guarantee amount which changes over time. Our maximum exposure under the guarantee amounted to $16 million at June 30, 2018.

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Capital Requirements

Capital Expenditures and Investments

Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational requirements of our wholly owned and joint venture entities. Our capital requirements consist of maintenance and expansion capital expenditures, as well as contributions to our joint ventures. Examples of maintenance capital expenditures are those made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives, or to maintain existing system volumes and related cash flows. In contrast, expansion capital expenditures are those made to expand and upgrade our systems and facilities and to construct or acquire new systems or facilities to grow our business, including contributions to joint ventures that are using the contributed funds for such purposes.

Our capital expenditures and investments were:

	Millions of Dollars
	Six Months Ended June 30
	2018		2017
Capital expenditures and investments attributable to the Partnership
Expansion	$	226	107
Maintenance	22		21
Total	248		128
Capital expenditures attributable to Predecessors*	—		60
Total capital expenditures and investments*	$	248	188

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

Our capital expenditures and investments for the first six months of 2018 were $248 million, primarily associated with the following activities:

• Contributions to Bayou Bridge Pipeline, LLC to continue progress on its pipeline segment from Lake Charles, Louisiana, to St. James, Louisiana.

• Contributions to Sand Hills to increase capacity on its NGL pipeline system.

• Construction of a new isomerization unit at the Phillips 66 Lake Charles Refinery.

• Contributions to Gray Oak to begin construction of the pipeline to transport crude oil from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Sweeny/Freeport markets on the Texas Gulf Coast.

• Acquisition of a 25 percent interest in South Texas Gateway Terminal, which is under development by Buckeye Partners, L.P.

• Increasing storage capacity at Clemens Caverns.

• Spending associated with reliability and maintenance projects at MSLP.

In April 2018, the Board of Directors of our General Partner approved an increase in our capital expenditures and investments budget for the year ending December 31, 2018, from $595 million to $750 million.

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In April 2018, we announced that we have received sufficient binding commitments to proceed with construction of the Gray Oak Pipeline. The pipeline will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Sweeny/Freeport markets on the Texas Gulf Coast, including the Phillips 66 Sweeny Refinery. In July 2018, we completed the expansion open season to determine the scope and capacity of the pipeline system. The pipeline will have an initial capacity of 800,000 barrels per day (BPD) based on shipper commitments of 700,000 BPD and the reservation of capacity for walk-up shippers. The pipeline is expandable to approximately 1 million BPD subject to additional shipper commitments. We currently own a 75 percent interest in the pipeline system, and other third parties have options to acquire up to a 32.75 percent interest. If all options are exercised, we would own 42.25 percent. The pipeline is expected to be in service by the end of 2019, with total cost of approximately $2 billion on a 100 percent basis.

In Corpus Christi, Texas, the Gray Oak Pipeline will connect to the new South Texas Gateway Terminal under development by Buckeye Partners, L.P. The marine terminal will have an initial storage capacity of 3.4 million barrels and is expected to begin operations by the end of 2019. We own a 25 percent interest in the joint venture that is constructing the terminal.

Cash Distributions

On July 18, 2018, the Board of Directors of our General Partner declared a quarterly cash distribution of $0.752 per common unit payable on August 13, 2018, to unitholders of record as of July 31, 2018. The Board also approved the quarterly distribution to our preferred unitholders, to be paid in cash on August 13, 2018, to preferred unitholders of record as of July 31, 2018.  Total cash distributions to be paid on August 13, 2018, to all unitholders and our General Partner (including its incentive distribution rights (IDRs)) will be $158 million.

Cash distributions are made to our General Partner in respect of its general partner interest and its ownership of all IDRs, which entitle our General Partner to receive increasing percentages, up to 50 percent, of quarterly cash distributions in excess of $0.244375 per unit. Accordingly, based on the per-unit distribution declared on July 18, 2018, our General Partner will receive 39 percent of the second-quarter2018 cash distribution, excluding preferred unit distributions, in respect of its general partner interest and its ownership of all IDRs.

The holders of our preferred units are entitled to receive cumulative quarterly distributions equal to $0.678375 per preferred unit. Preferred unitholders received $9 million of distributions in the second quarter of 2018 that were attributable to the first quarter of 2018.

Contingencies

From time to time, lawsuits involving a variety of claims that arise in the ordinary course of business are filed against us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include any contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

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Regulatory Matters

Our interstate common carrier crude oil and refined petroleum products pipeline operations are subject to rate regulation by the Federal Energy Regulatory Commission under the Interstate Commerce Act and Energy Policy Act of 1992, and certain of our pipeline systems providing intrastate service are subject to rate regulation by applicable state authorities under their respective laws and regulations. Our pipeline, rail rack and terminal operations are also subject to safety regulations adopted by the Department of Transportation, as well as to state regulations.

Legal and Tax Matters

Under our amended omnibus agreement, Phillips 66 provides certain services for our benefit, including legal and tax support services, and we pay an operational and administrative support fee for these services. Phillips 66’s legal and tax organizations apply their knowledge, experience and professional judgment to the specific characteristics of our cases and uncertain tax positions. Phillips 66’s legal organization employs a litigation management process to manage and monitor the legal proceedings against us. The process facilitates the early evaluation and quantification of potential exposures in individual cases and enables tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, Phillips 66’s legal organization regularly assesses the adequacy of current accruals and recommends if adjustment of existing accruals, or establishment of new accruals, is required. As of June 30, 2018, and December 31, 2017, we did not have any material accrued contingent liabilities associated with litigation matters.

Environmental

We are subject to extensive federal, state and local environmental laws and regulations. These requirements, which frequently change, regulate the discharge of materials into the environment or otherwise relate to protection of the environment. Compliance with these laws and regulations may require us to remediate environmental damage from any discharge of petroleum or chemical substances from our facilities or require us to install additional pollution control equipment at or on our facilities. Our failure to comply with these or any other environmental or safety-related regulations could result in the assessment of administrative, civil, or criminal penalties, the imposition of investigatory and remedial liabilities, and the issuance of governmental orders that may subject us to additional operational constraints. Future expenditures may be required to comply with the Federal Clean Air Act and other federal, state and local requirements in respect of our various sites, including our pipelines and storage assets. The impact of legislative and regulatory developments, if enacted or adopted, could result in increased compliance costs and additional operating restrictions on our business, each of which could have an adverse impact on our financial position, results of operations and liquidity.

As with all costs, if these expenditures are not ultimately reflected in the tariffs and other fees we receive for our services, our operating results will be adversely affected. We believe that substantially all similarly situated parties and holders of comparable assets must comply with similar environmental laws and regulations. However, the specific impact on each may vary depending on a number of factors, including, but not limited to, the age and location of its operating facilities.

We accrue for environmental remediation activities when the responsibility to remediate is probable and the amount of associated costs can be reasonably estimated. As environmental remediation matters proceed toward ultimate resolution or as additional remediation obligations arise, charges in excess of those previously accrued may be required. New or expanded environmental requirements, which could increase our environmental costs, may arise in the future. We believe we are in substantial compliance with all legal obligations regarding the environment and have established the environmental accruals that are currently required; however, it is not possible to predict all of the ultimate costs of compliance, including remediation costs that may be incurred and penalties that may be imposed, because not all of the costs are fixed or presently determinable (even under existing legislation) and the costs may be affected by future legislation or regulations.

Paradis Pipeline Station Incident

On February 9, 2017, a fire occurred at the Paradis Pipeline Station on the River Parish NGL System. There was one Phillips 66 employee fatality and three contractors were injured. All regulatory agency investigations have been completed, except one outstanding item with the Louisiana Department of Environmental Quality. We do not currently expect claims related to this incident, individually or in the aggregate, to have a material impact on our results of operations.

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Indemnification and Excluded Liabilities

Under our amended omnibus agreement and pursuant to the terms of various agreements under which we acquired assets from Phillips 66, Phillips 66 will indemnify us, or assume responsibility, for certain environmental liabilities, tax liabilities, litigation and any other liabilities attributable to the ownership or operation of the assets contributed to us and that arose prior to the effective date of each acquisition. These indemnifications and exclusions from liability have, in some cases, time limits, dollar limits and deductibles. When Phillips 66 performs under any of these indemnifications or exclusions from liability, we recognize noncash expenses and associated noncash capital contributions from our General Partner, as these are considered liabilities paid for by a principal unitholder.

NEW ACCOUNTING STANDARDS

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02, “Leases (Topic 842).” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  Leases will continue to be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement.  Similarly, lessors will be required to classify leases as sales-type, financing or operating, with classification affecting the pattern of income recognition in the income statement.  Classification for both lessees and lessors will be based on an assessment of whether risks and rewards, as well as substantive control have been transferred through a lease contract.  Public business entities should apply the guidance in ASU No. 2016-02 for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. Entities are required to adopt the ASU using a modified retrospective approach, subject to certain optional practical expedients, and apply its provisions to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. We are currently evaluating the provisions of ASU No. 2016-02 and assessing its impact on our consolidated financial statements. As part of our assessment to-date, we have formed an implementation team, selected a software package, and completed software design and configuration within a test environment.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements. You can identify our forward-looking statements by 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.

We based the forward-looking statements on our current expectations, estimates and projections about us and the industries in which we operate in general. We caution you these statements are not guarantees of future performance as they involve assumptions that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors, including the following:

• The continued ability of Phillips 66 to satisfy its obligations under our commercial and other agreements.

• Reductions in the volume of crude oil, NGL and refined petroleum products we transport, fractionate, process, terminal and store.

• Changes to the tariff rates with respect to volumes that we transport through our regulated assets, which rates are subject to review and possible adjustment by federal and state regulators.

• Changes in revenue we realize under the loss allowance provisions of our regulated tariffs resulting from changes in underlying commodity prices.

• Fluctuations in the prices and demand for crude oil, NGL and refined petroleum products.

• Changes in global economic conditions and the effects of a global economic downturn on the business of Phillips 66 and the business of its suppliers, customers, business partners and credit lenders.

• Potential liabilities associated with the risks and operational hazards inherent in transporting, fractionating, processing, terminaling and storing crude oil, NGL and refined petroleum products.

• Curtailment of operations due to severe weather disruption or natural disasters; riots, strikes, lockouts or other industrial disturbances; or failure of information technology systems due to various causes, including unauthorized access or attack.

• Accidents or other unscheduled shutdowns affecting our pipelines, processing, fractionating, terminaling, and storage facilities or equipment, or those of our suppliers or customers.

• Our inability to obtain or maintain permits in a timely manner, if at all, including those necessary for capital projects, or the revocation or modification of existing permits.

• Our inability to comply with government regulations or make capital expenditures required to maintain compliance.

• The failure to complete construction of announced and future capital projects in a timely manner and any cost overruns associated with such projects.

• Our ability to successfully execute growth strategies, whether through organic growth or acquisitions.

• The operation, financing and distribution decisions of our joint ventures.

• Costs or liabilities associated with federal, state, and local laws and regulations relating to environmental protection and safety, including spills, releases and pipeline integrity.

• Costs associated with compliance with evolving environmental laws and regulations on climate change.

• Costs associated with compliance with safety regulations, including pipeline integrity management program testing and related repairs.

• Changes in the cost or availability of third-party vessels, pipelines, railcars and other means of delivering and transporting crude oil, NGL and refined petroleum products.

• Direct or indirect effects on our business resulting from actual or threatened terrorist incidents or acts of war.

• Our ability to comply with the terms of our credit facility, indebtedness and other financing arrangements, which, if accelerated, we may not be able to repay.

• Our ability to incur additional indebtedness or our ability to obtain financing on terms that we deem acceptable, including the refinancing of our current obligations; higher interest rates and costs of financing would increase our expenses.

• Changes in tax, environmental and other laws and regulations.

• The factors generally described in “Item 1A. Risk Factors” in our 2017 Annual Report on Form 10-K filed with the SEC on February 23, 2018.

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Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our commodity price risk and interest rate risk at June 30, 2018, did not differ materially from that disclosed under Item 7A of our 2017 Annual Report on Form 10-K.

Item 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934, as amended (the Act), is recorded, processed, summarized and reported within the time periods specified in U.S. Securities and Exchange Commission (SEC) rules and forms, and that such information is accumulated and communicated to our General Partner’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. As of June 30, 2018, our General Partner’s Chairman and Chief Executive Officer and its Vice President and Chief Financial Officer, with the participation of the General Partner’s management, carried out an evaluation, pursuant to Rule 13a-15(b) of the Act, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Act). Based upon that evaluation, our General Partner’s Chairman and Chief Executive Officer and its Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were operating effectively as of June 30, 2018.

There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) of the Act, in the quarterly period ended June 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

Under our amended omnibus agreement, and pursuant to the terms of various agreements under which we acquired assets from Phillips 66, Phillips 66 indemnifies us or assumes responsibility for certain liabilities relating to litigation and environmental matters attributable to the ownership or operation of our assets prior to their contribution to us from Phillips 66. See Note 11—Contingencies, in the Notes to Consolidated Financial Statements, for additional information.

The following is a description of reportable legal proceedings attributable to the ownership or operation of our assets, including those involving governmental authorities under federal, state and local laws regulating the discharge of materials into the environment, for this reporting period. There were material developments that occurred with respect to the matter previously reported in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018. No such matters were previously reported in our 2017 Annual Report on Form 10-K.

New Matters

There are no new matters to report.

Matters Previously Reported

In March 2018, Phillips 66 Partners received notification from the Illinois Attorney General’s office of a proposed penalty arising from the April 2015 release of approximately 800 barrels of diesel fuel from our pipeline that transports products from a terminal in Hartford, Illinois, to a dock on the Mississippi River.  This matter has been resolved with a penalty payment of $120,000.

Item 1A.  RISK FACTORS

There have been no material changes from the risk factors disclosed under Item 1A of our 2017 Annual Report on Form 10-K.

37

Item 6. EXHIBITS

Exhibit Number	Exhibit Description
10.1*	First Amendment to the Amended and Restated Operational Services Agreement, dated as of May 30, 2018, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC, and Phillips 66 Pipeline LLC.
12*	Computation of Ratio of Earnings to Fixed Charges.
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32*	Certifications pursuant to 18 U.S.C. Section 1350.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.
* Filed herewith

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PHILLIPS 66 PARTNERS LP

By: Phillips 66 Partners GP LLC, its general partner

/s/ Chukwuemeka A. Oyolu

Chukwuemeka A. Oyolu

Vice President and Controller

(Chief Accounting and Duly Authorized Officer)

Date: July 27, 2018

39

EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO THE AMENDED AND RESTATED

OPERATIONAL SERVICES AGREEMENT

This First Amendment to the Amended and Restated Operational Services Agreement(“First Amendment”) is made and entered into as of the 30th day of May, 2018, by and between PHILLIPS 66 CARRIER LLC, a Delaware limited liability company (“Carrier”), PHILLIPS 66 PARTNERS HOLDINGS LLC, a Delaware limited liability company (“Holdings”) and PHILLIPS 66 PIPELINE LLC, a Delaware limited liability company (“Operator”). Carrier and Holdings are collectively referred to herein as “Company.”

WITNESSETH:

WHEREAS, Company and Operator are parties to that certain Amended and Restated Operational Services Agreement dated as of October 1, 2017 (the “Operational Services Agreement”);

WHEREAS, Company is developing certain additional assets; and

WHEREAS, Company and Operator desire that Operator maintain, operate, manage and administer such assets for Company, and the parties hereto wish to amend the Operational Services Agreement accordingly.

NOW, THEREFORE, for and in consideration of the foregoing, the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Company and Operator, Company and Operator agree as follows:

1. Unless otherwise noted, the capitalized terms used herein shall have the definitions set forth in the Operational Services Agreement.

2. Exhibit A to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit A attached hereto.

3. This First Amendment shall be effective as of January 17, 2018.

4. Except as expressly set forth herein, all other terms and conditions of the Operational Services Agreement (including the exhibits attached thereto) shall remain in full force and effect.

[Signature pages follow.]

1

US-DOCS\70746790.1

IN WITNESS WHEREOF, the Parties have caused this First Amendment to be signed by their duly authorized officers as of the date first set forth above.

PHILLIPS 66 PIPELINE LLC
By:	/s/ Todd Denton
	Todd Denton
	President

PHILLIPS 66 CARRIER LLC
By:	Phillips 66 Partners Holdings LLC, Sole Member of Phillips 66 Carrier LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer

PHILLIPS 66 PARTNERS HOLDINGS LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T.Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer

Signature Page to

First Amendment to the Amended and Restated Operational Services Agreement

Exhibit ADescription of Operated Assets

Attached to and made a part of that certain Amended and Restated Operational Services Agreement dated as of October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC.

Crude Oil Pipelines

Clifton Ridge to Lake Charles Refinery – a 20” crude oil pipeline extending from the Clifton Ridge marine terminal to the Lake Charles Refinery in Calcasieu Parish, Louisiana.

Pecan Grove to Clifton Ridge – a 12” crude oil pipeline extending from the Pecan Grove marine terminal to the Clifton Ridge marine terminal in Calcasieu Parish, Louisiana.

Shell to Clifton Ridge – a 20” crude oil pipeline extending from Shell’s Houma to Houston pipeline to the Clifton Ridge marine terminal in Calcasieu Parish Louisiana.

CushPo – a 18” crude oil pipeline extending from Phillips 66 Carrier LLC’s, Cushing Crude Terminal in Cushing, Oklahoma to Phillips 66 Carrier LLC’s Ponca Crude Terminal in Ponca City, Oklahoma.

Glacier Pipeline System – a multi-diameter crude oil pipeline system extending from the United States-Canadian border near Carway, Alberta to the Billings ExxonMobil Refinery in Billings, Montana.

Line O – a 10” crude oil pipeline extending from Phillips 66 Partners Holdings LLC’s Buxton Crude Terminal in Cushing, Oklahoma to the Borger Refinery located in Borger, Texas

Line WA – a multi-diameter crude oil pipeline extending from the Odessa Station near Goldsmith, Texas to the Borger Refinery located in Borger, Texas.

Line 80 – a 8” crude oil pipeline extending from Gains Station near Hobbs, New Mexico to the Borger Refinery located in Borger, Texas.

North Texas Gathering Pipeline System – a multi-diameter crude oil pipeline system that gathers products in the various fields of North Texas and transports products to the Wichita Falls Station in Wichita Falls, Texas.

Oklahoma Mainline Pipeline System - a 12” crude oil pipeline extending from the Wichita Falls Station in Wichita Falls, Texas to Phillips 66 Carrier LLC’s Ponca Crude Terminal in Ponca City Oklahoma.

West Texas Gathering –a multi-diameter crude oil pipeline system that gathers crude oil in the various fields of West Texas to supply Line WA and Line 80.

Refined Product Pipelines

Sweeny to Pasadena – a 12” refined products pipeline extending from the Sweeny Refinery in Brazoria County, Texas to the Pasadena terminal in Harris County, Texas.

Sweeny to Pasadena – a 18” refined products pipeline extending from the Sweeny Refinery in Brazoria County, Texas to the Pasadena terminal in Harris County, Texas.

Wood River to Hartford – a 12” refined products pipeline extending from the Wood River Refinery in Madison County, Illinois to the Hartford terminal in Madison County, Illinois.

Hartford to Explorer – a 24” refined products pipeline extending from the Hartford terminal in Madison County, Illinois to the Explorer Pipeline system in Madison County, Illinois.

Gold Line – a multi-diameter refined products pipeline system extending from the Rocky Station fence line at Phillips 66 Pipeline LLC’s Borger Products Terminal in Borger, Texas to terminal facilities located in Wichita, Kansas; Paola, Kansas; Kansas City, Kansas; Jefferson City, Missouri; and Cahokia, Illinois.

Cross Channel Connector – a 20” refined products pipeline extending from the Pasadena Terminal in Pasadena, Texas to terminal facilities located at Kinder Morgan’s Pasadena Terminal and the Galena Park Station in Galena Park, Texas, and terminating at the Holland Avenue Junction in Galena Park, Texas.

Standish Pipeline – a 18” refined products pipeline extending from the Ponca City Refinery in Ponca City, Oklahoma to the Wichita North Terminal in Wichita, Kansas.

ATA Pipeline – a multi-diameter refined products pipeline extending from the Amarillo Terminal in Amarillo, Texas to the Albuquerque Terminal in Albuquerque, New Mexico.

BAM Pipeline – a multi-diameter refined products pipeline extending from the Borger Refinery in Borger, Texas to the Amarillo Terminal in Amarillo, Texas.

Cherokee East – a multi-diameter refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to terminal facilities in Jenks, Oklahoma and Mount Vernon, Missouri.

Cherokee North – a multi-diameter, two-leg refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to the Arkansas City Junction in Arkansas City, Oklahoma and the 21^st Street Junction in Wichita, Kansas.

Cherokee South – a 8”, multi-leg refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to the Oklahoma City Terminal in Oklahoma City, Oklahoma, the Will Rogers Airport in Oklahoma City, Oklahoma and Tinker Air Force Base in Oklahoma City, Oklahoma.

Medford Triangle – a multi-diameter, multi-leg refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to the Medford Storage Spheres in Medford, Oklahoma and the Oneok Terminal in Medford, Oklahoma.

SAAL Pipeline – a 6” refined products pipeline extending from the Amarillo Terminal in Amarillo, Texas to the Lubbock Terminal in Lubbock, Texas.

Seminoe Pipeline – a 8” refined products pipeline extending from the Billings Refinery in Billings, Montana to terminal facilities in Sheridan, Wyoming and Casper, Wyoming and to the Tisdale Junction and Sinclair Junction in Wyoming.

Other Pipelines

River Parish Pipeline System – a refined products pipeline system and associated facilities located in any one or more of the following nine (9) parishes: Ascension, Assumption, Iberville, Jefferson, Lafourche, Plaquemines, St. Charles, St. James, and St. John the Baptist, and including approximately 300 miles of multi-diameter pipeline (formerly the “Texaco Expanded NGL Distribution System” or “TENDS”), approximately eighty-six (86) miles of regulated pipeline comprised of one 8-inch to 20-inch diameter pipeline (formerly the “VP Pipeline”), and approximately one hundred thirteen (113) miles of regulated pipeline comprised of one 6-inch to 8-inch diameter pipeline (formerly the “EP Pipeline”). The system includes approximately fifteen (15) miles of idled pipeline and segments of approximately ten (10) miles of 8-inch abandoned pipeline.

2

Terminals

Hartford Terminal. Hartford Terminal is located at or near Hartford, Illinois. The facility consists of a two-bay truck rack with 17,000 barrels of active terminal ling capacity, 13 above-ground storage tanks with approximately 1.1 million barrels of total storage capacity. The Hartford barge dock consists of a single-berth barge loading facility, approximately 0.8 miles of 8-inch pipeline and approximately 0.8 miles of 14-inch pipeline from the Hartford terminal to the Hartford barge dock for delivery.

Pasadena Terminal. Pasadena Terminal is located at or near Pasadena, Texas and consists of a five-bay truck rack and tankage with 65,000 barrels per day of active terminal ling capacity, 22 above ground storage tanks with approximately 3.2 million barrels of total storage capacity and a vapor combustion unit.

Clifton Ridge Terminal. Clifton Ridge Terminal is located at or near Sulphur, Louisiana and consists of a single-berth ship dock, 12 above-ground storage tanks with approximately 3.4 million barrels of total storage capacity and a truck offloading facility.

Pecan Grove Terminal. Pecan Grove terminal is adjacent to the Clifton Ridge Terminal. The facility consists of a single-berth barge dock and three above-ground storage tanks with 142,000 barrels of total storage capacity.

Wichita North Terminal. Wichita North Terminal is located in Wichita, Kansas adjacent to the Gold Line pipeline system. It consists of a two bay truck rack with 12,000 barrels of total storage capacity.

Paola Terminal. Paola Terminal is located in Paola, Kansas adjacent to the Gold Line pipeline system. It consists of 98,000 barrels of total storage capacity.

Kansas City Terminal. Kansas City Terminal is located in Kansas City, Kansas adjacent to the Gold Line pipeline system. It consists of a five bay truck rack with 66,000 barrels of total storage capacity.

Jeff City Terminal. Jeff City Terminal is located in Jefferson City, Missouri adjacent to the Gold Line pipeline system. It consists of a two bay truck rack with 16,000 barrels of total storage capacity.

East St. Louis Terminal. East St. Louis Terminal is located in Cahokia, Illinois adjacent to the Gold Line pipeline system. It consists of a six bay truck rack with 78,000 barrels of total storage capacity.

Bayway Terminal. Bayway Terminal is located in Linden, New Jersey adjacent to the Bayway Refinery. It consists of a four-track, 120 rail car crude oil receiving facility with a planned unloading capacity of 75,000 barrels per day that delivers crude oil to storage tanks at the adjacent refinery.

Ferndale Terminal. Ferndale Terminal is located in Ferndale, Washington adjacent to the Ferndale Refinery. It consists of a two-track, 54 rail car crude oil receiving facility with a planned unloading capacity of 30,000 barrels per day that delivers crude oil to storage tanks at the adjacent refinery.

Albuquerque Terminal. Albuquerque Terminal is located in Albuquerque, New Mexico, adjacent to the ATA Pipeline. It consists of a three-bay truck rack with 232,000 barrels of total storage capacity.

Amarillo Terminal. Amarillo Terminal is located in Amarillo, Texas, adjacent to the BAM Pipeline, the SAAL Pipeline and the ATA Pipeline. It consists of a five-bay truck rack with 268,000 barrels of total storage capacity.

Billings Crude Terminal. Billings Crude Terminal is located in Billings, Montana, at the Phillips 66 Company Billings Refinery. It consists of 245,000 barrels of total storage capacity.

3

Buffalo Terminal. Buffalo Terminal is located near Buffalo Montana. It consists of two meter skid units, three injection pumps and two crude tanks with approximately 300,000 barrels of total storage capacity.

Buxton Terminal. Buxton Terminal is located in Cushing, Oklahoma. It consists of two crude storage tanks with a total capacity of 400,000 barrels.

Casper Terminal. Casper Terminal is located in Casper, Wyoming adjacent to the Seminoe Pipeline. It consists of a two bay-truck rack with 300,000 barrels of total storage capacity.

Cushing Terminal. Cushing Terminal is located in Cushing, Oklahoma. It consists of one tank with a lease automatic custody transfer unit and two storage tanks with a total storage capacity of 220,000 barrels.

Glenpool Terminal. Glenpool Terminal is located in Jenks, Oklahoma adjacent to the Cherokee East pipeline system. It consists of a two-bay truck rack with 514,000 barrels of total storage capacity.

Linden Terminal. Linden Terminal is located Linden, New Jersey. It consists of a nine-bay refined products truck rack and a three-bay NGL truck rack with 331,000 barrels of refined products storage.

Lubbock Terminal. Lubbock Terminal is located in Lubbock, Texas adjacent to the SAAL Pipeline. It consists of a three-bay truck rack with 176,000 barrels of total storage capacity.

Mount Vernon Terminal. Mount Vernon Terminal is located in Mount Vernon, Missouri, adjacent to the Cherokee East pipeline system. It consists of a four-bay refined products truck rack and a two-bay NGL truck rack with 359,000 barrels of refined products storage capacity and 118,000 barrels of NGL storage capacity.

Oklahoma City Terminal. Oklahoma City Terminal is located in Oklahoma City, Oklahoma adjacent to the Cherokee South pipeline system. It consists of a four-bay truck rack with 290,000 barrels of total storage capacity.

Ponca City Terminal. Ponca City Terminal is located in Ponca City, Oklahoma adjacent to the Ponca City Refinery. It consists of a two-bay refined products truck rack and a two-bay NGL truck rack with 2,500 barrels of refined products storage capacity.

Ponca Crude Terminal. Ponca Crude Terminal is located in Ponca City, Oklahoma. It consists of three lease automatic custody transfer units and 15 above-ground crude oil storage tanks with approximately 1.2 million barrels of total storage capacity.

Sheridan Terminal. Sheridan Terminal is located in Sheridan, Wyoming adjacent to the Seminoe Pipeline. It consists of a two-bay truck rack with 94,000 barrels of total storage capacity.

Tremley Point Terminal. Tremley Point Terminal is located in Linden, New Jersey. It consists of a three-bay refined products truck rack, 1,400,000 barrels of total storage capacity and a dock facility consisting of two vessel berths.

Wichita South Terminal. Wichita South Terminal is located in Wichita, Kansas adjacent to the Cherokee North pipeline system. It consists of 230,000 barrels of total storage capacity.

Storage Facilities

Medford Storage Spheres. Medford Storage Spheres are two above ground storage facilities located at the Central Division pipeline facility in Medford, Oklahoma. The working capacity of each sphere is 35,000 barrels, and the spheres are capable of receiving and storing natural gas liquids and petrochemicals, including refinery grade propylene.

Storage Tank Nos. 1001, 1002 and 1004 at the Wichita North Terminal. These storage tanks have a nominal shell capacity of 107,000 barrels, 107,000 barrels, and 108,000 barrels, respectively.

4

Storage Tank Nos. 8005 and 8010 at the Kansas City Terminal. These storage tanks have a nominal shell capacity of 80,000 barrels and 101,000 barrels, respectively.

Storage Tank Nos. 1503, 2001, 1302 at the East St. Louis Terminal. These storage tanks have a nominal shell capacity of 172,000 barrels, two hundred thousand 200,000 barrels and 135,000 barrels, respectively.

Storage Tank No. 4901 at the Paola Terminal. This storage tank has a nominal shell capacity of 98,000 barrels.

Storage Tank Nos. 6813 and 6818 at the East St. Louis Terminal. Each of these storage tanks has a nominal shell storage capacity of 80,000 barrels.

Clemens Facility. The Clemens Facility includes underground salt dome storage caverns for LPG storage, brine ponds, a leach plant, multiple buildings, associated pipes/pumps, water supply wells, associated properties, and off-site disposal wells. These facilities are located near Brazoria, Texas. Products produced at the Sweeny Fractionator are stored in the underground caverns and then transported via pipeline to the Freeport LPG Export Terminal or the Mount Belvieu market hub.

Sorrento Storage Facility. The Sorrento Storage Facility includes the Sorrento underground salt dome storage caverns, all pumps, topside facilities, and an out-of-service brine pit located in Ascension Parish, Louisiana. The caverns consist of one cavern in active LPG storage service, two inactive caverns, and one plugged and abandoned cavern.

Refinery and Natural Gas Liquid Facilities

Sweeny Fractionator. The Sweeny Fractionator is a Natural Gas Liquid fractionation facility located in Old Ocean, Texas, close to the Sweeny Refinery. The Sweeny Fractionator includes the associated cooling tower (G0054022) and flare (G0056044), the substation (G006010), and the offplots (G0068044). It processes y-grade (mixed natural gas liquids) and produces purity ethane, propane, isobutane, normal butane and natural gasoline (C5+) for sale in local petrochemical markets or to supply the Freeport LPG Export Terminal.

Merey Sweeny Coker Facility. The Merey Sweeny Coker Facility is comprised of a petroleum coke producing facility comprised of a vacuum dilation unit, a 58,000 bpd, two (2) train, four (4) coke drum delayed coker unit, flare, cooling tower with five (5) bays, instrument air skid with two compressors, certain underground facilities for firewater and sewer services, and tanks for intermediate storage of vacuum resid at the solid waste disposal facility, each located within the Sweeny Refinery Complex near Old Ocean, Texas. Incoming atmospheric resid feed is processed through heaters and coke drums to produce coke for sale in local markets. Other products separated from the resid during the coke producing process are sent for further processing in other facilities in the Sweeny Complex.

ISOM Facility. The ISOM Facility is a gasoline isomerization process unit located within the Lake Charles Manufacturing Complex in Westlake, Louisiana. It is comprised of a 25,000 bpd UOP licensed Par-Isom Unit containing; a two-reactor system with hydrogen recycle compressor, driers and regeneration; a make-up hydrogen treatment section (chloride removal and methanation); and a product stabilizer section. Also included are a steam boiler and electrical substation. Incoming light paraffinic gasoline streams are isomerized in the presence of hydrogen to produce a higher octane isoparaffinic product stream for gasoline blending or sales. Other products produced are sent for further processing in the Lake Charles Manufacturing Complex.

5

EX-12

Exhibit 12

PHILLIPS 66 PARTNERS LP

Computation of Ratio of Earnings to Fixed Charges

	Millions of Dollars
	Six Months Ended June 30
				Years Ended December 31
	2018			2017		2016	2015	2014	2013
Earnings Available for Fixed Charges
Income before income taxes	$	360		528		410	306	246	176
Distributions in excess of (less than) equity in earnings of affiliates	(5		)	(1	)	1	—	—	—
Fixed charges, excluding capitalized interest	59			102		53	35	5	—
Amortization of capitalized interest	1			2		2	—	—	—
	$	415		631		466	341	251	176
Fixed Charges
Interest and expense on indebtedness, excluding capitalized interest	$	59		101		52	34	5	—
Capitalized interest	1			1		5	32	7	—
Interest portion of rental expense	—			1		1	1	—	—
	$	60		103		58	67	12	—
Ratio of Earnings to Fixed Charges	6.9			6.1		8.0	5.1	20.9	N/A

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Greg C. Garland, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Phillips 66 Partners LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 27, 2018

/s/ Greg C. Garland

Greg C. Garland

Chairman of the Board of Directors and

Chief Executive Officer

Phillips 66 Partners GP LLC

(the general partner of Phillips 66 Partners LP)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kevin J. Mitchell, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Phillips 66 Partners LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 27, 2018

/s/ Kevin J. Mitchell

Kevin J. Mitchell

Director, Vice President and

Chief Financial Officer

Phillips 66 Partners GP LLC

(the general partner of Phillips 66 Partners LP)

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Phillips 66 Partners LP (the Partnership) on Form 10-Q for the quarterly period ended June 30, 2018, as filed with the U.S. Securities and Exchange Commission on the date hereof (the Report), each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

(1) The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date: July 27, 2018

/s/ Greg C. Garland

Greg C. Garland

Chairman of the Board of Directors and

 Chief Executive Officer

Phillips 66 Partners GP LLC

(the general partner of Phillips 66 Partners LP)

/s/ Kevin J. Mitchell

Kevin J. Mitchell

Director, Vice President and

Chief Financial Officer

Phillips 66 Partners GP LLC

(the general partner of Phillips 66 Partners LP)

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2018 shares
Document and Entity Information [Abstract]
Entity Registrant Name	Phillips 66 Partners LP
Entity Central Index Key	0001572910
Trading Symbol	PSXP
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding	122,912,893

XML

Consolidated Statement of Income - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	[1]	Jun. 30, 2018	Jun. 30, 2017	[1]
Revenues and Other Income
Operating revenues	$ 254			$ 510
Equity in earnings of affiliates	100	$ 48		198	$ 81
Other income	0	2		1	11
Total revenues and other income	354	277		709	539
Costs and Expenses
Operating and maintenance expenses	85	79		182	153
Depreciation	29	28		57	56
General and administrative expenses	16	18		32	35
Taxes other than income taxes	9	8		19	17
Interest and debt expense	29	24		59	48
Total costs and expenses	168	157		349	309
Income before income taxes	186	120		360	230
Income tax expense	0	1		2	1
Net Income	186	119		358	229
Less: Net income attributable to Predecessors	0	16		0	29
Net income attributable to the Partnership	186	103		358	200
Less: Preferred unitholders’ interest in net income attributable to the Partnership	10	0		19	0
Less: General partner’s interest in net income attributable to the Partnership	55	37		108	69
Limited partners’ interest in net income attributable to the Partnership	$ 121	$ 66		$ 231	$ 131
Net Income Attributable to the Partnership Per Limited Partner Unit
Cash Distributions Paid Per Limited Partner Unit (in dollars per share)	$ 0.714	$ 0.586		$ 1.392	$ 1.144
Common Units
Net Income Attributable to the Partnership Per Limited Partner Unit
Common units—basic (in dollars per share)	0.99	0.61		1.89	1.21
Common units—diluted (in dollars per share)	$ 0.94	$ 0.61		$ 1.80	$ 1.21
Weighted-Average Limited Partner Units Outstanding
Common units—basic (in shares)	122,188,646	109,189,000		121,900,683	108,300,000
Common units—diluted (in shares)	136,008,000	109,189,000		135,720,000	108,300,000
Service
Revenues and Other Income
Operating revenues	$ 10	$ 11		$ 17	$ 21
Affiliated Entity | Service
Revenues and Other Income
Operating revenues	$ 244	$ 216		$ 493	$ 426

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Consolidated Statement of Comprehensive Income - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	[1]	Jun. 30, 2018	Jun. 30, 2017	[1]
Statement of Comprehensive Income [Abstract]
Net Income	$ 186	$ 119		$ 358	$ 229
Defined benefit plans
Plan sponsored by equity affiliate, net of tax	0	0		0	0
Other comprehensive income	0	0		0	0
Comprehensive Income	$ 186	$ 119		$ 358	$ 229

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Consolidated Balance Sheet - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	$ 151	$ 185
Accounts receivable—related parties	83	83
Accounts receivable—third parties	6	3
Materials and supplies	13	12
Prepaid expenses and other current assets	10	9
Total current assets	263	292
Equity investments	2,104	1,932
Net properties, plants and equipment	2,948	2,918
Goodwill	185	185
Deferred rentals and other assets	6	7
Total Assets	5,506	5,334
Liabilities
Accounts payable—related parties	21	21
Accounts payable—third parties	49	39
Accrued property and other taxes	16	15
Accrued interest	36	34
Short-term debt	25	25
Deferred revenues	61	35
Other current liabilities	2	2
Total current liabilities	210	171
Long-term debt	2,921	2,920
Asset retirement obligations and accrued environmental costs	12	11
Deferred income taxes	7	5
Deferred revenues and other liabilities	23	66
Total Liabilities	3,173	3,173
Equity
General partner—Phillips 66 (2018 and 2017—2,480,051 units issued and outstanding)	(1,332)	(1,345)
Accumulated other comprehensive loss	(1)	(1)
Total Equity	2,333	2,161
Total Liabilities and Equity	5,506	5,334
Public | Preferred Units
Equity
Preferred unitholders (2018 and 2017—13,819,791 units issued and outstanding)	747	746
Total Equity	747	746
Public | Common Units
Equity
Unitholders	2,381	2,274
Total Equity	2,381	2,274
Non-public | Common Units | Phillips 66
Equity
Unitholders	538	487
Total Equity	$ 538	$ 487

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Consolidated Balance Sheet (Parenthetical) - shares	Jun. 30, 2018	Dec. 31, 2017
General partner—Phillips 66 units issued (in shares)	2,480,051	2,480,051
General partner—Phillips 66 units outstanding (in shares)	2,480,051	2,480,051
Public
Preferred units, issued (in shares)	13,819,791	13,819,791
Preferred units, outstanding (in shares)	13,819,791	13,819,791
Common Units | Public
Units issued (in shares)	54,152,756	52,811,822
Units outstanding (in shares)	54,152,756	52,811,822
Common Units | Non-public | Phillips 66
Units issued (in shares)	68,760,137	68,760,137
Units outstanding (in shares)	68,760,137	68,760,137

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Consolidated Statement of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	[1]
Decrease in Restricted Cash	$ 0	$ 318
Cash Flows From Operating Activities
Net income	358	229
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	57	56
Undistributed equity earnings	(7)	(9)
Deferred revenues and other liabilities	(43)	0
Other	5	4
Working capital adjustments
Decrease (increase) in accounts receivable	(3)	6
Decrease (increase) in materials and supplies	0	(1)
Increase (decrease) in accounts payable	(3)	(2)
Increase (decrease) in accrued interest	2	0
Increase (decrease) in deferred revenues	30	10
Increase (decrease) in other accruals	1	(2)
Net Cash Provided by Operating Activities	397	291
Cash Flows From Investing Activities
Collection of loan receivable	0	7
Cash capital expenditures and investments	(234)	(188)
Return of investment from equity affiliates	22	17
Net Cash Provided by (Used in) Investing Activities	(212)	154
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors	0	(151)
Issuance of debt	0	1,103
Repayment of debt	0	(1,398)
Issuance of common units	67	171
Other cash contributions from Phillips 66	0	12
Net Cash Used in Financing Activities	(219)	(446)
Net Change in Cash, Cash Equivalents and Restricted Cash	(34)	(1)
Cash, cash equivalents and restricted cash at beginning of period	185	2
Cash, Cash Equivalents and Restricted Cash at End of Period	151	1
Public | Preferred Units
Cash Flows From Financing Activities
Quarterly distributions to unitholders	(18)	0
Public | Common Units
Cash Flows From Financing Activities
Quarterly distributions to unitholders	(74)	(50)
General Partner
Cash Flows From Financing Activities
Quarterly distributions to unitholders	(98)	(60)
Phillips 66 | Non-public | Common Units
Cash Flows From Financing Activities
Quarterly distributions to unitholders	$ (96)	$ (73)

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Consolidated Statement of Changes in Equity - USD ($) $ in Millions		Total		General Partner	Preferred Units Public	Common Units Public	Common Units Non-public Phillips 66	Accum. Other Comprehensive Loss	Net Investment— Predecessors
Beginning Balance at Dec. 31, 2016		$ 1,566		$ (704)	$ 0	$ 1,795	$ 476	$ (1)	$ 0	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to Predecessors	[1]	29							29
Net contributions from Phillips 66—Predecessors		751							751	[1]
Issuance of common units		171			0	171
Net income attributable to the Partnership		200	[1]	69		54	77
Quarterly cash distributions to unitholders and General Partner		(183)		(60)		(50)	(73)
Other contributions from Phillips 66		17		17
Ending Balance at Jun. 30, 2017	[1]	$ 2,551		$ (678)	$ 0	$ 1,970	$ 480	(1)	780
Beginning balance, Units (in shares) at Dec. 31, 2016		109,369,312		2,187,386	0	43,134,902	64,047,024
Units Outstanding [Roll Forward]
Units issued in public equity offerings (in shares)		3,323,576				3,323,576
Ending balance, Units (in shares) at Jun. 30, 2017		112,692,888		2,187,386	0	46,458,478	64,047,024
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of accounting change		$ 31		$ 1		$ 13	$ 17
Beginning Balance at Dec. 31, 2017		2,161		(1,345)	$ 746	2,274	487	(1)	0	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to Predecessors		0
Issuance of common units		67				67
Net income attributable to the Partnership		358		108	19	101	130
Quarterly cash distributions to unitholders and General Partner		(286)		(98)	(18)	(74)	(96)		0	[1]
Other contributions from Phillips 66		2		2
Ending Balance at Jun. 30, 2018		$ 2,333		$ (1,332)	$ 747	$ 2,381	$ 538	$ (1)	$ 0	[1]
Beginning balance, Units (in shares) at Dec. 31, 2017		137,871,801		2,480,051	13,819,791	52,811,822	68,760,137
Units Outstanding [Roll Forward]
Units issued in public equity offerings (in shares)		1,340,934				1,340,934
Ending balance, Units (in shares) at Jun. 30, 2018		139,212,735		2,480,051	13,819,791	54,152,756	68,760,137

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Business and Basis of Presentation

6 Months Ended

Jun. 30, 2018

Business and Basis of Presentation [Abstract]

Business and Basis of Presentation

Business and Basis of Presentation

Unless otherwise stated or the context otherwise indicates, all references to “Phillips 66 Partners,” “the Partnership,” “us,” “our,” “we,” or similar expressions refer to Phillips 66 Partners LP, including its consolidated subsidiaries. References to Phillips 66 may refer to Phillips 66 and/or its subsidiaries, depending on the context. References to our “General Partner” refer to Phillips 66 Partners GP LLC, and references to Phillips 66 PDI refer to Phillips 66 Project Development Inc., the Phillips 66 subsidiary that holds a limited partner interest in us and wholly owns our General Partner.

Description of the Business

We are a growth-oriented master limited partnership formed to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids (NGL) pipelines, terminals and other midstream assets. Our common units trade on the New York Stock Exchange under the symbol PSXP.

Our operations consist of crude oil, refined petroleum products and NGL transportation, processing, terminaling and storage assets. We conduct our operations through both wholly owned and joint venture operations. The majority of our wholly owned assets are associated with, and are integral to the operation of, nine of Phillips 66’s owned or joint venture refineries.

We primarily generate revenue by providing fee-based transportation, terminaling, processing, storage and NGL fractionation services to Phillips 66 and other customers. Our equity affiliates primarily generate revenue from transporting and terminaling NGL, refined petroleum products and crude oil. Since we do not own any of the NGL, crude oil and refined petroleum products we handle and do not engage in the trading of NGL, crude oil and refined petroleum products, we have limited direct exposure to risks associated with fluctuating commodity prices, although these risks indirectly influence our activities and results of operations over the long term.

Basis of Presentation

We have acquired assets from Phillips 66 that were considered transfers of businesses between entities under common control. This required the transactions to be accounted for as if the transfers had occurred at the beginning of the transfer period, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, the accompanying financial statements and related notes have been retrospectively adjusted to include the historical results and financial position of the acquired businesses prior to the effective date of each acquisition. We refer to these pre-acquisition operations as those of our “Predecessors.”

The combined financial statements of our Predecessors were derived from the accounting records of Phillips 66 and reflect the combined historical results of operations, financial position and cash flows of our Predecessors as if such businesses had been combined for all periods presented.

All intercompany transactions and accounts within our Predecessors have been eliminated. The assets and liabilities of our Predecessors in these financial statements have been reflected on a historical cost basis because the transfer of the Predecessors to us occurred within the Phillips 66 consolidated group. The consolidated statement of income also includes expense allocations for certain functions performed by Phillips 66, including operational support services such as engineering and logistics and allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, information technology and procurement. These allocations were based primarily on the relative carrying values of properties, plants and equipment and equity-method investments, or number of terminals and pipeline miles, and secondarily on activity-based cost allocations. Our management believes the assumptions underlying the allocation of expenses from Phillips 66 are reasonable. Nevertheless, the financial results of our Predecessors may not include all of the actual expenses that would have been incurred had our Predecessors been a stand-alone publicly traded partnership during the periods presented.

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Interim Financial Information

6 Months Ended

Jun. 30, 2018

Interim Financial Information [Abstract]

Interim Financial Information

Interim Financial Information

The interim financial information presented in the financial statements included in this report is unaudited and includes all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of our financial position, results of operations and cash flows for the periods presented. Unless otherwise specified, all such adjustments are of a normal and recurring nature. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our 2017 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2018, are not necessarily indicative of the results to be expected for the full year.

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Changes in Accounting Principles

6 Months Ended

Jun. 30, 2018

Changes in Accounting Principles [Abstract]

Changes in Accounting Principles

Changes in Accounting Principles

Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides a screen for determining when a transaction involves an acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or a group of similar identifiable assets, then the screen is met and the transaction is not considered an acquisition of a business. If the screen is not met, the amendment requires that to be considered a business, the operation must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of future transactions accounted for as business acquisitions. At the time of adoption, this ASU had no impact on our consolidated financial statements.

Effective January 1, 2018, we adopted ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The majority of this ASU’s provisions amend only the presentation or disclosures of financial instruments; however, one provision can affect net income. Equity investments reported under the cost method or the lower of cost or fair value method of accounting, in accordance with previous U.S. generally accepted accounting principles (GAAP), are now reported at fair value with changes in fair value recognized in net income. For equity investments that do not have readily determinable fair values, we elected to carry such investments at cost less impairments, if any, adjusted up or down for price changes in similar financial instruments issued by the investee, when and if observed. At the time of adoption, this ASU had no material impact on our consolidated financial statements.

Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” using the modified retrospective transition method applied to all contracts. Under the new revenue recognition guidance, recognition of revenue involves a multiple step approach including: (i) identifying the contract with the customer, (ii) identifying the separate performance obligations, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations and (v) recognizing the revenue as the performance obligations are satisfied. Additional disclosures are required to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, all but one of our equity-method investees adopted ASU No. 2014-09 as of January 1, 2018. The remaining equity method investee will adopt this ASU in 2019.

We recorded a noncash cumulative effect adjustment of $31 million to increase the opening balance of our equity as of January 1, 2018. This adjustment reflected amounts recorded by us and our equity-method investees related to the acceleration of revenue recognition on certain minimum volume commitment contracts with recovery provisions. Certain agreements for transportation, terminaling and fractionation services with Phillips 66 are considered operating leases under FASB Accounting Standards Codification (ASC) 840, “Leases.” We identified the separate lease and service elements of our revenue under these operating leases and applied ASU No. 2014-09 only to the service element, while the lease element continued to be accounted for under ASC 840. See Note 9—Operating Revenues, for additional information.

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Acquisitions

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Acquisitions

Acquisitions

Gray Oak Pipeline Project Acquisition

On April 20, 2018, we entered into a Purchase and Sale Agreement with Phillips 66 PDI to acquire its 100 percent interest in Gray Oak Holdings LLC, a limited liability company that, at that time, owned a 100 percent interest in Gray Oak Pipeline, LLC (Gray Oak LLC), an entity formed to develop and construct the Gray Oak Pipeline system. Under common control accounting, we considered the cash consideration paid of approximately $3 million to be a reimbursement of Phillips 66 PDI’s previously incurred costs, and expensed this amount to “General and administrative expenses” in the second quarter of 2018. Another party has the right, but not the obligation, to acquire up to a 35 percent interest in Gray Oak Holdings LLC. Subject to certain conditions, the option expires on November 30, 2018. At June 30, 2018, the option had not been exercised. See Note 5—Equity Investments, for additional information on Gray Oak LLC, including our variable interest entity assessment.

Bakken Pipeline/MSLP Acquisition

In September 2017, we entered into a Contribution, Conveyance and Assumption Agreement with subsidiaries of Phillips 66 to acquire a 25 percent interest in each of Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO), together referred to as the Bakken Pipeline, and a 100 percent interest in Merey Sweeny, L.P. (MSLP). Collectively, the assets acquired in the acquisition are referred to as the Bakken Pipeline/MSLP Acquisition. We paid Phillips 66 total consideration of $1.65 billion, consisting of $372 million in cash, the assumption of $588 million of promissory notes payable to Phillips 66 and a $450 million term loan under which Phillips 66 was the obligor, and the issuance of 4,713,113 common units to Phillips 66 PDI and 292,665 general partner units to our General Partner to maintain its 2 percent general partner interest. The Bakken Pipeline/MSLP Acquisition closed in October 2017.

In connection with the Bakken Pipeline/MSLP Acquisition, we entered into commercial agreements with Phillips 66 and amended the omnibus and operational services agreements with Phillips 66. See Note 13—Related Party Transactions for additional information on our commercial and other agreements with Phillips 66. Pursuant to the tolling services agreement entered into with Phillips 66 and related to MSLP operations, we received $53 million from Phillips 66 for the prepayment of services related to MSLP’s next scheduled maintenance turnaround, which was recorded as deferred revenue in our consolidated balance sheet as of the acquisition date.

Common Control Transactions

The Bakken Pipeline/MSLP Acquisition was considered a transfer of businesses between entities under common control, and therefore the related acquired assets were transferred at historical carrying value. The aggregate net book value of the underlying acquired assets in the Bakken Pipeline/MSLP Acquisition, at the time of acquisition, was $729 million. Because the Bakken Pipeline/MSLP Acquisition was a common control transaction in which we acquired a business, our historical financial statements were retrospectively adjusted to reflect the results of operations, financial position, and cash flows of the acquired assets as if we owned the acquired assets for the period from February 1, 2017, through October 5, 2017. For periods prior to February 1, 2017, both the Bakken Pipeline and MSLP investments were accounted for under the equity method of accounting by Phillips 66 and, thus, were not subject to retrospective adjustments.

The following tables present our results of operations and cash flows giving effect to the Bakken Pipeline/MSLP Acquisition. The second column in both tables presents the retrospective adjustments made to our historical financial information for the acquired assets prior to the effective date of the acquisition. The third column in both tables presents our consolidated financial information as retrospectively adjusted.

	Millions of Dollars
	Three Months Ended June 30, 2017
Consolidated Statement of Income	Phillips 66 Partners LP (As previously reported)		Acquired Bakken Pipeline/MSLP Predecessor	Consolidated Results
Revenues and Other Income
Operating revenues—related parties	$	186	30	216
Operating revenues—third parties	11		—	11
Equity in earnings of affiliates	37		11	48
Other income	—		2	2
Total revenues and other income	234		43	277
Costs and Expenses
Operating and maintenance expenses	57		22	79
Depreciation	26		2	28
General and administrative expenses	16		2	18
Taxes other than income taxes	7		1	8
Interest and debt expense	24		—	24
Total costs and expenses	130		27	157
Income before income taxes	104		16	120
Income tax expense	1		—	1
Net income	103		16	119
Less: Net income attributable to Predecessors	—		16	16
Net income attributable to the Partnership	103		—	103
Less: General partner’s interest in net income attributable to the Partnership	37		—	37
Limited partners’ interest in net income attributable to the Partnership	$	66	—	66

	Millions of Dollars
	Six Months Ended June 30, 2017
Consolidated Statement of Income	Phillips 66 Partners LP (As previously reported)		Acquired Bakken Pipeline/MSLP Predecessor	Consolidated Results
Revenues and Other Income
Operating revenues—related parties	$	370	56	426
Operating revenues—third parties	21		—	21
Equity in earnings of affiliates	70		11	81
Other income	7		4	11
Total revenues and other income	468		71	539
Costs and Expenses
Operating and maintenance expenses	119		34	153
Depreciation	52		4	56
General and administrative expenses	32		3	35
Taxes other than income taxes	16		1	17
Interest and debt expense	48		—	48
Total costs and expenses	267		42	309
Income before income taxes	201		29	230
Income tax expense	1		—	1
Net income	200		29	229
Less: Net income attributable to Predecessors	—		29	29
Net income attributable to the Partnership	200		—	200
Less: General partner’s interest in net income attributable to the Partnership	69		—	69
Limited partners’ interest in net income attributable to the Partnership	$	131	—	131

	Millions of Dollars
	Six Months Ended June 30, 2017
	Phillips 66 Partners LP (As previously reported)			Acquired Bakken Pipeline/MSLP Predecessor		Consolidated Results
Cash Flows From Operating Activities
Net income	$	200		29		229
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	52			4		56
Undistributed equity earnings	2			(11	)	(9	)
Other	5			(1	)	4
Working capital adjustments
Decrease (increase) in other current assets
Decrease (increase) in accounts receivable	6			—		6
Decrease (increase) in materials and supplies	(1		)	—		(1	)
Decrease (increase) in prepaid expenses and other current assets	(1		)	1		—
Increase (decrease) in accounts payable	(2		)	—		(2	)
Increase (decrease) in accrued interest	1			(1	)	—
Increase (decrease) in deferred revenues	10			—		10
Increase (decrease) in other accruals	(2		)	—		(2	)
Net Cash Provided by Operating Activities	270			21		291
Cash Flows From Investing Activities
Restricted cash received from combination of business	—			318		318
Collection of loan receivable	—			7		7
Cash capital expenditures and investments	(128		)	(60	)	(188	)
Return of investment from equity affiliates	17			—		17
Net Cash Provided by (Used in) Investing Activities	(111		)	265		154
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors	—			(151	)	(151	)
Issuance of debt	1,103			—		1,103
Repayment of debt	(1,263		)	(135	)	(1,398	)
Issuance of common units	171			—		171
Quarterly distributions to common unitholders—public	(50		)	—		(50	)
Quarterly distributions to common unitholder—Phillips 66	(73		)	—		(73	)
Quarterly distributions to General Partner—Phillips 66	(60		)	—		(60	)
Other cash contributions from Phillips 66	12			—		12
Net Cash Used in Financing Activities	(160		)	(286	)	(446	)
Net Change in Cash, Cash Equivalents and Restricted Cash	(1		)	—		(1	)
Cash, cash equivalents and restricted cash at beginning of period	2			—		2
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1		—		1

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Equity Investments

6 Months Ended

Jun. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Equity Investments

Equity Investments

Gray Oak Pipeline

As discussed in Note 4—Acquisitions, on April 20, 2018, we acquired Phillips 66 PDI’s then 100 percent interest in Gray Oak LLC. Gray Oak LLC is developing and constructing the Gray Oak Pipeline system which, upon completion, will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Sweeny/Freeport markets on the Texas Gulf Coast. The pipeline is expected to be placed in service by the end of 2019.

On April 23, 2018, a co-venturer acquired a 25 percent interest in Gray Oak LLC, along with sufficient voting rights over key governance provisions such that we no longer could assert control over Gray Oak LLC. At that time, we began using the equity method of accounting for our investment in Gray Oak LLC. Gray Oak LLC is considered a variable interest entity because it does not have sufficient equity at risk to fully fund the construction of all assets required for principal operations. We have determined we are not the primary beneficiary because we and our co-venturer jointly direct the activities of the Gray Oak Pipeline that most significantly impact economic performance. At June 30, 2018, our maximum exposure to loss was $28 million, which represented the aggregate book value of our equity investment in Gray Oak LLC. Another party has the option to acquire a 10 percent interest in Gray Oak LLC. Subject to certain conditions, the option expires on July 29, 2018. At June 30, 2018, the option had not been exercised.

South Texas Gateway Terminal

On April 23, 2018, we acquired a 25 percent interest in the South Texas Gateway Terminal under development by Buckeye Partners, L.P. This marine terminal will connect to the Gray Oak Pipeline in Corpus Christi, Texas, and will have an initial storage capacity of 3.4 million barrels. The terminal is expected to begin operations by the end of 2019.

South Texas Gateway Terminal LLC is considered a variable interest entity because it does not have sufficient equity at risk to fully fund the construction of all assets required for principal operations. We have determined we are not the primary beneficiary because we and our co-venturers jointly direct the activities of the terminal that most significantly impact economic performance. At June 30, 2018, our maximum exposure to loss was $14 million, which represented the aggregate book value of our equity investment in South Texas Gateway Terminal LLC.

The following table summarizes the carrying value of our equity investments.

			Millions of Dollars
	Percentage Ownership		June 30 2018		December 31 2017
Bakken Pipeline	25.00	%	$	609	621
Bayou Bridge Pipeline, LLC (Bayou Bridge)	40.00		231		173
DCP Sand Hills Pipeline, LLC (Sand Hills)	33.34		567		515
DCP Southern Hills Pipeline, LLC (Southern Hills)	33.34		208		209
Explorer Pipeline Company (Explorer)	21.94		121		118
Gray Oak Pipeline, LLC (Gray Oak)	75.00		28		—
Paradigm Pipeline LLC (Paradigm)	50.00		142		131
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal)	70.00		72		53
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)	25.00		14		—
STACK Pipeline LLC (STACK)	50.00		112		112
Total equity investments			$	2,104	1,932

Earnings (losses) from our equity investments were as follows:

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017	2018	2017
Bakken Pipeline	$	39	11	71	11
Bayou Bridge	3		2	8	4
Explorer	8		6	24	11
Gray Oak	—		—	—	—
Paradigm	2		—	4	(1	)
Phillips 66 Partners Terminal	6		1	15	3
Sand Hills	31		20	56	37
South Texas Gateway Terminal	—		—	—	—
Southern Hills	9		7	16	14
STACK	2		1	4	2
Total equity in earnings of affiliates	$	100	48	198	81

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Properties, Plants and Equipment

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Properties, Plants and Equipment

Properties, Plants and Equipment

Our investment in properties, plants and equipment (PP&E), with the associated accumulated depreciation, was:

	Millions of Dollars
	June 30 2018		December 31 2017
Land	$	19	19
Buildings and improvements	88		88
Pipelines and related assets*	1,382		1,372
Terminals and related assets*	691		671
Rail racks and related assets*	137		137
Processing and related assets*	842		837
Caverns and related assets*	584		583
Construction-in-progress	97		47
Gross PP&E	3,840		3,754
Less: Accumulated depreciation	892		836
Net PP&E	$	2,948	2,918

*Assets for which we are the lessor.

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

	Millions of Dollars
	June 30 2018			December 31 2017
2.646% Senior Notes due 2020	$	300		300
3.605% Senior Notes due 2025	500			500
3.550% Senior Notes due 2026	500			500
3.750% Senior Notes due 2028	500			500
4.680% Senior Notes due 2045	450			450
4.900% Senior Notes due 2046	625			625
Tax-exempt bonds at 1.75% and 1.94% at June 30, 2018, and December 31, 2017, respectively	100			100
Total	2,975			2,975
Net unamortized discounts and debt issuance costs	(29		)	(30	)
Total debt	2,946			2,945
Less: Short-term debt	25			25
Long-term debt	$	2,921		2,920

The fair value of our fixed-rate and floating-rate debt is estimated based on observable market prices and is classified in level 2 of the fair value hierarchy. The fair value of our fixed-rate debt amounted to $2,723 million and $2,918 million at June 30, 2018, and December 31, 2017, respectively. The fair value of our floating-rate debt approximated carrying value of $100 million at both June 30, 2018, and December 31, 2017.

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Equity

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Equity

Equity

Our initial $250 million continuous offering of common units, or at-the-market (ATM) program, was completed during the three months ended June 30, 2018. At that time, we commenced issuing common units under our second $250 million ATM program. For the three and six months ended June 30, 2018, on a settlement date basis, we had issued an aggregate of 1,152,119 and 1,340,934 common units under our ATM programs, generating net proceeds of $58 million and $67 million, respectively. For the three and six months ended June 30, 2017, on a settlement date basis, we had issued an aggregate of 2,578,608 and 3,323,576 common units under our ATM programs, generating net proceeds of $131 million and $171 million, respectively. Since inception through June 30, 2018, we had issued an aggregate of 5,059,802 common units under our ATM programs, generating net proceeds of $259 million. The net proceeds from sales under the ATM programs are used for general partnership purposes, which may include debt repayment, acquisitions, capital expenditures and additions to working capital.

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Operating Revenues

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Operating Revenues

Operating Revenues

Revenues are primarily recognized for pipeline transportation, terminaling, storage, processing and fractionation services generated under long-term agreements. A significant portion of our revenues are derived from Phillips 66. The majority of our agreements for transportation, terminaling, storage, processing and fractionation services with Phillips 66 are considered operating leases under GAAP. As part of our adoption of ASU No. 2014-09, we applied the new revenue recognition standard only to the service element of these operating leases. The separation of the lease and service elements was based on an analysis of service-related and lease-related costs for each contract, adjusted for representative profit margins. The lease element continues to be accounted for under lease accounting standards.

Revenues from fixed minimum volume commitments are recognized over the performance obligation period for stand-ready service contracts. Revenues from the variable element of these stand-ready contracts and other contracts without fixed elements are recognized based on the actual volumes transported, stored, processed and fractionated at contractual rates because the actual volumes specifically relate to our efforts to transfer the distinct services. Generally, our services are billed and payments are received on a monthly basis.

Disaggregated Revenues

Total operating revenues disaggregated by type of service were as follows:

	Millions of Dollars
	Three Months Ended June 30, 2018		Six Months Ended June 30, 2018
Pipelines	$	111	213
Terminals	38		77
Storage, processing and other revenues	105		220
Total operating revenues	$	254	510

During the three and six months ended June 30, 2018, lease revenues were $143 million and $287 million, respectively, and service revenues were $111 million and $223 million, respectively. Lease and service revenues were recorded in the “Operating revenues—related parties” and “Operating revenues—third parties” lines on our consolidated statement of income.  

Contract-Related Assets and Liabilities

At June 30, 2018 and January 1, 2018, lease receivables were $49 million for both periods, and service receivables were $40 million and $37 million, respectively.

Our contract liabilities primarily represent payments from our customers, mainly Phillips 66, for volume throughput less than the contractually required minimum throughput volumes. These deficiency payments are deferred and recognized at the earlier of the period in which our customers make up the shortfall volumes or when it is probable our customers will not make up the shortfall volumes prior to the expiration of the contractual make-up period. Our contract liabilities are included in the “Deferred revenues” and “Deferred revenues and other liabilities” lines on our consolidated balance sheet. At June 30, 2018, and January 1, 2018, total deferred revenues were $80 million and $93 million, respectively, of which $9 million and $13 million, respectively, are contract liabilities related to the service element. Service-related revenues recognized during the three and six months ended June 30, 2018, that were included in the contract liability balance at January 1, 2018, were $5 million and $9 million, respectively. For the three and six months ended June 30, 2018, there were no material differences between the amount that we recognized as revenues relating to minimum throughput deficiency payments compared to the amount that would have been recognized prior to the adoption of the new revenue recognition standard.

Remaining Performance Obligations

We typically have long-term contracts with our customers, most of which have original durations of up to 15 years. The average remaining duration of these contracts is eight years. As of June 30, 2018, future revenues expected to be recognized for the fixed component of the transaction price of our remaining performance obligations from contracts with our customers with an original expected duration of greater than one year were:

	Millions of Dollars
Remainder of 2018	$	359
2019	699
2020	696
2021	685
2022	673
Remaining years	2,964
Total future operating revenues*	$	6,076
*Includes $3.4 billion of future lease revenues from agreements with Phillips 66.

For the remaining performance obligation, we applied the exemption for variable prices allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer distinct goods or service as part of a performance obligation.

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Net Income Per Limited Partner Unit

6 Months Ended

Jun. 30, 2018

Partners' Capital Notes [Abstract]

Net Income Per Limited Partner Unit

Net Income Per Limited Partner Unit

Net income per limited partner unit applicable to common units is computed by dividing the limited partners’ interest in net income attributable to the Partnership by the weighted-average number of common units outstanding for the period. Because we have more than one class of participating securities, we use the two-class method to calculate the net income per unit applicable to the limited partners. As of June 30, 2018, the classes of participating securities included common units, general partner units and incentive distribution rights (IDRs). For the three and six months ended June 30, 2018, our preferred units are potentially dilutive securities and were dilutive to net income per limited partner unit. For the three and six months ended June 30, 2017, basic and diluted net income per limited partner unit are the same because we did not have potentially dilutive common units outstanding.

Net income earned by the Partnership is allocated between the limited partners and the General Partner (including the General Partner’s IDRs) in accordance with our partnership agreement, after giving effect to priority income allocations to the holders of the preferred units. First, earnings are allocated based on actual cash distributions declared to our unitholders, including those attributable to the General Partner’s IDRs. To the extent net income attributable to the Partnership exceeds or is less than cash distributions, this difference is allocated based on the unitholders’ respective ownership percentages, after consideration of any priority allocations of earnings. For the diluted net income per limited partner unit calculation, the preferred units are assumed to be converted at the beginning of the period into common limited partner units on a one-for-one basis, and the distribution formula for available cash in our partnership agreement is recalculated, using the original available cash amount increased only for the preferred distributions which would not have been paid after conversion. 

When our financial statements are retrospectively adjusted after a dropdown transaction, the earnings of the acquired business, prior to the closing of the transaction, are allocated entirely to our General Partner and presented as net income (loss) attributable to Predecessors. The earnings per unit of our limited partners prior to the close of the transaction do not change as a result of a dropdown transaction. After the closing of a dropdown transaction, the earnings of the acquired business are allocated in accordance with our partnership agreement as previously described.

	Millions of Dollars
	Three Months Ended June 30				Six Months Ended June 30
	2018		2017		2018	2017
Net income attributable to the Partnership	$	186	103		358	200
Less: General partner’s distribution declared (including IDRs)*	57		36		108	68
Limited partners’ distributions declared on preferred units*	10		—		19	—
Limited partners’ distribution declared on common units*	91		68		179	131
Distributions less than (more than) net income attributable to the Partnership	$	28	(1	)	52	1

*Distribution declared attributable to the indicated periods.

	Limited Partners’ Common Units			General Partner (including IDRs)		Limited Partners’ Preferred Units	Total
Three Months Ended June 30, 2018
Net income attributable to the Partnership (millions):
Distribution declared	$	91		57		10	158
Distributions less than (more than) net income attributable to the Partnership	30			(2	)	—	28
Net income attributable to the Partnership (basic)	121			55		10	186
Dilutive effect of preferred units*	7
Net income attributable to the Partnership (diluted)	$	128
Weighted-average units outstanding—basic	122,188,646
Dilutive effect of preferred units*	13,819,791
Weighted-average units outstanding—diluted	136,008,437
Net income attributable to the Partnership per limited partner unit—basic (dollars)	$	0.99
Net income attributable to the Partnership per limited partner unit—diluted (dollars)	0.94
Three Months Ended June 30, 2017
Net income attributable to the Partnership (millions):
Distribution declared	$	68		36		—	104
Distributions less than (more than) net income attributable to the Partnership	(2		)	1		—	(1	)
Net income attributable to the Partnership	$	66		37		—	103
Weighted-average units outstanding—basic and diluted	109,189,217
Net income per limited partner unit—basic and diluted (dollars)	$	0.61

* The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.

	Limited Partners’ Common Units		General Partner (including IDRs)	Limited Partners’ Preferred Units	Total
Six Months Ended June 30, 2018
Net income attributable to the Partnership (millions):
Distribution declared	$	179	108	19	306
Distributions less than net income attributable to the Partnership	52		—	—	52
Net income attributable to the Partnership (basic)	231		108	19	358
Dilutive effect of preferred units*	14
Net income attributable to the Partnership (diluted)	$	245
Weighted-average units outstanding—basic	121,900,683
Dilutive effect of preferred units*	13,819,791
Weighted-average units outstanding—diluted	135,720,474
Net income attributable to the Partnership per limited partner unit—basic (dollars)	$	1.89
Net income attributable to the Partnership per limited partner unit—diluted (dollars)	1.80
Six Months Ended June 30, 2017
Net income attributable to the Partnership (millions):
Distribution declared	$	131	68	—	199
Distributions less than net income attributable to the Partnership	—		1	—	1
Net income attributable to the Partnership	$	131	69	—	200
Weighted-average units outstanding—basic and diluted	108,299,570
Net income attributable to the Partnership per limited partner unit—basic and dilutive (dollars)	$	1.21

* The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.

On July 18, 2018, the Board of Directors of our General Partner declared a quarterly cash distribution of $0.752 per common unit attributable to the second quarter of 2018. This distribution is payable August 13, 2018, to unitholders of record as of July 31, 2018.

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Contingencies

6 Months Ended

Jun. 30, 2018

Contingencies [Abstract]

Contingencies

Contingencies

From time to time, lawsuits involving a variety of claims that arise in the ordinary course of business are filed against us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include any contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Environmental

We are subject to federal, state and local environmental laws and regulations. We record accruals for contingent environmental liabilities based on management’s best estimates, using all information that is available at the time. We measure estimates and base liabilities on currently available facts, existing technology, and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the U.S. Environmental Protection Agency or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.

In the future, we may be involved in additional environmental assessments, cleanups and proceedings.

Legal Proceedings

Under our amended omnibus agreement, Phillips 66 provides certain services for our benefit, including legal support services, and we pay an operational and administrative support fee for these services. Phillips 66’s legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. The process facilitates the early evaluation and quantification of potential exposures in individual cases and enables tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, Phillips 66’s legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required. As of June 30, 2018, and December 31, 2017, we did not have any material accrued contingent liabilities associated with litigation matters.

Indemnification and Excluded Liabilities

Under our amended omnibus agreement and pursuant to the terms of various agreements under which we acquired assets from Phillips 66, Phillips 66 will indemnify us, or assume responsibility, for certain environmental liabilities, tax liabilities, litigation and any other liabilities attributable to the ownership or operation of the assets contributed to us and that arose prior to the effective date of each acquisition. These indemnifications and exclusions from liability have, in some cases, time limits, dollar limits and deductibles. When Phillips 66 performs under any of these indemnifications or exclusions from liability, we recognize noncash expenses and associated noncash capital contributions from our General Partner, as these are considered liabilities paid for by a principal unitholder.

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Cash Flow Information

6 Months Ended

Jun. 30, 2018

Supplemental Cash Flow Information [Abstract]

Cash Flow Information

Cash Flow Information

Capital Expenditures and Investments

Our capital expenditures and investments consisted of:

	Millions of Dollars
	Six Months Ended June 30
	2018		2017*
Cash capital expenditures and investments	$	234	188
Change in capital expenditure accruals	14		—
Total capital expenditures and investments	$	248	188

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

	Millions of Dollars
	Six Months Ended June 30
	2018		2017
Capital expenditures and investments attributable to the Partnership	$	248	128
Capital expenditures and investments attributable to Predecessors*	—		60
Total capital expenditures and investments*	$	248	188

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

Restricted Cash

At June 30, 2018, and December 31, 2017, the Partnership did not have any restricted cash. The restrictions on the cash received in February 2017, as a result of the retrospective adjustment for the Bakken Pipeline/MSLP Acquisition, were fully removed in the second quarter of 2017 when MSLP’s outstanding debt that contained lender restrictions on the use of cash was paid in full.

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Related Party Transactions

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Commercial Agreements

We have entered into multiple commercial agreements with Phillips 66, including transportation services agreements, terminal services agreements, storage services agreements, stevedoring services agreements, a fractionation service agreement, tolling services agreements, and rail terminal services agreements. Under these long-term, fee-based agreements, we provide transportation, terminaling, storage, stevedoring, fractionation, processing, and rail terminal services to Phillips 66, and Phillips 66 commits to provide us with minimum volume commitments of crude oil, NGL, feedstock, and refined petroleum products or minimum monthly service fees. Under our transportation, processing, and terminaling services agreements, if Phillips 66 fails to transport, throughput or store its minimum throughput volume, then Phillips 66 will pay us a deficiency payment based on the calculation described in the agreement.

Amended and Restated Operational Services Agreement

Under our amended and restated operational services agreement, we reimburse Phillips 66 for providing certain operational services to us in support of our pipelines, terminaling, processing, and storage facilities. These services include routine and emergency maintenance and repair services, routine operational activities, routine administrative services, construction and related services and such other services as we and Phillips 66 may mutually agree upon from time to time.

Amended Omnibus Agreement

The amended omnibus agreement addresses our payment of an operating and administrative support fee and our obligation to reimburse Phillips 66 for all other direct or allocated costs and expenses incurred by Phillips 66 in providing general and administrative services. Additionally, the omnibus agreement addresses Phillips 66’s indemnification to us and our indemnification to Phillips 66 for certain environmental and other liabilities. Further, it addresses the granting of a license from Phillips 66 to us with respect to the use of certain Phillips 66 trademarks.

Tax Sharing Agreement

Under our tax sharing agreement, we reimburse Phillips 66 for our share of state and local income and other taxes incurred by Phillips 66 due to our results of operations being included in a combined or consolidated tax return filed by Phillips 66. Any reimbursement is limited to the tax that we (and our subsidiaries) would have paid had we not been included in a combined group with Phillips 66. Phillips 66 may use its tax attributes to cause its combined or consolidated group to owe no tax; however, we would nevertheless reimburse Phillips 66 for the tax we would have owed, even though Phillips 66 had no cash expense for that period.

Related Party Transactions

Significant related party transactions included in our total costs and expenses were:

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017*	2018	2017*
Operating and maintenance expenses	$	50	50	115	90
General and administrative expenses	15		17	30	33
Total	$	65	67	145	123

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

We pay Phillips 66 a monthly operational and administrative support fee under the terms of our amended omnibus agreement in the amount of $8 million. The operational and administrative support fee is for the provision of certain services, including: logistical services; asset oversight, such as operational management and supervision; corporate engineering services, including asset integrity and regulatory services; business development services; executive services; financial and administrative services (including treasury and accounting); information technology; legal services; corporate health, safety and environmental services; facility services; human resources services; procurement services; investor relations; tax matters; and public company reporting services. We also reimburse Phillips 66 for all other direct or allocated costs incurred on behalf of us, pursuant to the terms of our amended omnibus agreement. The classification of these charges between operating and maintenance expenses and general and administrative expenses is based on the functional nature of the services performed for our operations. Under our amended and restated operational services agreement, we reimburse Phillips 66 for the provision of certain operational services to us in support of our pipeline, rail rack, processing, terminaling, and storage facilities. Additionally, we pay Phillips 66 for insurance services provided to us. Operating and maintenance expenses also include volumetric gains and losses associated with volumes transported by Phillips 66.

Other related party balances in our consolidated balance sheet consisted of the following, all of which were related to Phillips 66:

	Millions of Dollars
	June 30 2018		December 31 2017
Deferred rentals and other assets	$	5	5
Deferred revenues	60		33
Deferred revenues and other liabilities	17		61

Equity Affiliate Guarantee

Dakota Access and ETCO are parties to a $2.5 billion project financing transaction entered into in August 2016 to fund the construction of the Bakken Pipeline. In July 2017, as an owner of Dakota Access and ETCO, Phillips 66 and its co-venturers each issued a guarantee intended to cover their pro rata shares of interest expense for rolling six-month periods after the calculation date.  In October 2017, as part of the Bakken Pipeline/MSLP Acquisition, Phillips 66 Partners substituted its guarantee for that of Phillips 66.  Each co-venturer’s guarantee has a maximum guarantee amount which changes over time. Our maximum exposure under the guarantee amounted to $16 million at June 30, 2018.

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New Accounting Standards

6 Months Ended

Jun. 30, 2018

New Accounting Standards [Abstract]

New Accounting Standards

New Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  Leases will continue to be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement.  Similarly, lessors will be required to classify leases as sales-type, financing or operating, with classification affecting the pattern of income recognition in the income statement.  Classification for both lessees and lessors will be based on an assessment of whether risks and rewards, as well as substantive control have been transferred through a lease contract.  Public business entities should apply the guidance in ASU No. 2016-02 for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. Entities are required to adopt the ASU using a modified retrospective approach, subject to certain optional practical expedients, and apply its provisions to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. We are currently evaluating the provisions of ASU No. 2016-02 and assessing its impact on our consolidated financial statements. As part of our assessment to-date, we have formed an implementation team, selected a software package, and completed software design and configuration within a test environment.

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Business and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Business and Basis of Presentation [Abstract]

Basis of Presentation

Basis of Presentation

We have acquired assets from Phillips 66 that were considered transfers of businesses between entities under common control. This required the transactions to be accounted for as if the transfers had occurred at the beginning of the transfer period, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, the accompanying financial statements and related notes have been retrospectively adjusted to include the historical results and financial position of the acquired businesses prior to the effective date of each acquisition. We refer to these pre-acquisition operations as those of our “Predecessors.”

The combined financial statements of our Predecessors were derived from the accounting records of Phillips 66 and reflect the combined historical results of operations, financial position and cash flows of our Predecessors as if such businesses had been combined for all periods presented.

All intercompany transactions and accounts within our Predecessors have been eliminated. The assets and liabilities of our Predecessors in these financial statements have been reflected on a historical cost basis because the transfer of the Predecessors to us occurred within the Phillips 66 consolidated group. The consolidated statement of income also includes expense allocations for certain functions performed by Phillips 66, including operational support services such as engineering and logistics and allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, information technology and procurement. These allocations were based primarily on the relative carrying values of properties, plants and equipment and equity-method investments, or number of terminals and pipeline miles, and secondarily on activity-based cost allocations. Our management believes the assumptions underlying the allocation of expenses from Phillips 66 are reasonable. Nevertheless, the financial results of our Predecessors may not include all of the actual expenses that would have been incurred had our Predecessors been a stand-alone publicly traded partnership during the periods presented.

New Accounting Pronouncements

Changes in Accounting Principles

Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides a screen for determining when a transaction involves an acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or a group of similar identifiable assets, then the screen is met and the transaction is not considered an acquisition of a business. If the screen is not met, the amendment requires that to be considered a business, the operation must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of future transactions accounted for as business acquisitions. At the time of adoption, this ASU had no impact on our consolidated financial statements.

Effective January 1, 2018, we adopted ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The majority of this ASU’s provisions amend only the presentation or disclosures of financial instruments; however, one provision can affect net income. Equity investments reported under the cost method or the lower of cost or fair value method of accounting, in accordance with previous U.S. generally accepted accounting principles (GAAP), are now reported at fair value with changes in fair value recognized in net income. For equity investments that do not have readily determinable fair values, we elected to carry such investments at cost less impairments, if any, adjusted up or down for price changes in similar financial instruments issued by the investee, when and if observed. At the time of adoption, this ASU had no material impact on our consolidated financial statements.

Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” using the modified retrospective transition method applied to all contracts. Under the new revenue recognition guidance, recognition of revenue involves a multiple step approach including: (i) identifying the contract with the customer, (ii) identifying the separate performance obligations, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations and (v) recognizing the revenue as the performance obligations are satisfied. Additional disclosures are required to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, all but one of our equity-method investees adopted ASU No. 2014-09 as of January 1, 2018. The remaining equity method investee will adopt this ASU in 2019.

We recorded a noncash cumulative effect adjustment of $31 million to increase the opening balance of our equity as of January 1, 2018. This adjustment reflected amounts recorded by us and our equity-method investees related to the acceleration of revenue recognition on certain minimum volume commitment contracts with recovery provisions. Certain agreements for transportation, terminaling and fractionation services with Phillips 66 are considered operating leases under FASB Accounting Standards Codification (ASC) 840, “Leases.” We identified the separate lease and service elements of our revenue under these operating leases and applied ASU No. 2014-09 only to the service element, while the lease element continued to be accounted for under ASC 840. See Note 9—Operating Revenues, for additional information.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  Leases will continue to be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement.  Similarly, lessors will be required to classify leases as sales-type, financing or operating, with classification affecting the pattern of income recognition in the income statement.  Classification for both lessees and lessors will be based on an assessment of whether risks and rewards, as well as substantive control have been transferred through a lease contract.  Public business entities should apply the guidance in ASU No. 2016-02 for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. Entities are required to adopt the ASU using a modified retrospective approach, subject to certain optional practical expedients, and apply its provisions to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. We are currently evaluating the provisions of ASU No. 2016-02 and assessing its impact on our consolidated financial statements. As part of our assessment to-date, we have formed an implementation team, selected a software package, and completed software design and configuration within a test environment.

Earnings Per Share

Net income per limited partner unit applicable to common units is computed by dividing the limited partners’ interest in net income attributable to the Partnership by the weighted-average number of common units outstanding for the period. Because we have more than one class of participating securities, we use the two-class method to calculate the net income per unit applicable to the limited partners. As of June 30, 2018, the classes of participating securities included common units, general partner units and incentive distribution rights (IDRs). For the three and six months ended June 30, 2018, our preferred units are potentially dilutive securities and were dilutive to net income per limited partner unit. For the three and six months ended June 30, 2017, basic and diluted net income per limited partner unit are the same because we did not have potentially dilutive common units outstanding.

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Schedule of Results of Operations Giving Effect to Acquisitions

The following tables present our results of operations and cash flows giving effect to the Bakken Pipeline/MSLP Acquisition. The second column in both tables presents the retrospective adjustments made to our historical financial information for the acquired assets prior to the effective date of the acquisition. The third column in both tables presents our consolidated financial information as retrospectively adjusted.

	Millions of Dollars
	Three Months Ended June 30, 2017
Consolidated Statement of Income	Phillips 66 Partners LP (As previously reported)		Acquired Bakken Pipeline/MSLP Predecessor	Consolidated Results
Revenues and Other Income
Operating revenues—related parties	$	186	30	216
Operating revenues—third parties	11		—	11
Equity in earnings of affiliates	37		11	48
Other income	—		2	2
Total revenues and other income	234		43	277
Costs and Expenses
Operating and maintenance expenses	57		22	79
Depreciation	26		2	28
General and administrative expenses	16		2	18
Taxes other than income taxes	7		1	8
Interest and debt expense	24		—	24
Total costs and expenses	130		27	157
Income before income taxes	104		16	120
Income tax expense	1		—	1
Net income	103		16	119
Less: Net income attributable to Predecessors	—		16	16
Net income attributable to the Partnership	103		—	103
Less: General partner’s interest in net income attributable to the Partnership	37		—	37
Limited partners’ interest in net income attributable to the Partnership	$	66	—	66

	Millions of Dollars
	Six Months Ended June 30, 2017
Consolidated Statement of Income	Phillips 66 Partners LP (As previously reported)		Acquired Bakken Pipeline/MSLP Predecessor	Consolidated Results
Revenues and Other Income
Operating revenues—related parties	$	370	56	426
Operating revenues—third parties	21		—	21
Equity in earnings of affiliates	70		11	81
Other income	7		4	11
Total revenues and other income	468		71	539
Costs and Expenses
Operating and maintenance expenses	119		34	153
Depreciation	52		4	56
General and administrative expenses	32		3	35
Taxes other than income taxes	16		1	17
Interest and debt expense	48		—	48
Total costs and expenses	267		42	309
Income before income taxes	201		29	230
Income tax expense	1		—	1
Net income	200		29	229
Less: Net income attributable to Predecessors	—		29	29
Net income attributable to the Partnership	200		—	200
Less: General partner’s interest in net income attributable to the Partnership	69		—	69
Limited partners’ interest in net income attributable to the Partnership	$	131	—	131

	Millions of Dollars
	Six Months Ended June 30, 2017
	Phillips 66 Partners LP (As previously reported)			Acquired Bakken Pipeline/MSLP Predecessor		Consolidated Results
Cash Flows From Operating Activities
Net income	$	200		29		229
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	52			4		56
Undistributed equity earnings	2			(11	)	(9	)
Other	5			(1	)	4
Working capital adjustments
Decrease (increase) in other current assets
Decrease (increase) in accounts receivable	6			—		6
Decrease (increase) in materials and supplies	(1		)	—		(1	)
Decrease (increase) in prepaid expenses and other current assets	(1		)	1		—
Increase (decrease) in accounts payable	(2		)	—		(2	)
Increase (decrease) in accrued interest	1			(1	)	—
Increase (decrease) in deferred revenues	10			—		10
Increase (decrease) in other accruals	(2		)	—		(2	)
Net Cash Provided by Operating Activities	270			21		291
Cash Flows From Investing Activities
Restricted cash received from combination of business	—			318		318
Collection of loan receivable	—			7		7
Cash capital expenditures and investments	(128		)	(60	)	(188	)
Return of investment from equity affiliates	17			—		17
Net Cash Provided by (Used in) Investing Activities	(111		)	265		154
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors	—			(151	)	(151	)
Issuance of debt	1,103			—		1,103
Repayment of debt	(1,263		)	(135	)	(1,398	)
Issuance of common units	171			—		171
Quarterly distributions to common unitholders—public	(50		)	—		(50	)
Quarterly distributions to common unitholder—Phillips 66	(73		)	—		(73	)
Quarterly distributions to General Partner—Phillips 66	(60		)	—		(60	)
Other cash contributions from Phillips 66	12			—		12
Net Cash Used in Financing Activities	(160		)	(286	)	(446	)
Net Change in Cash, Cash Equivalents and Restricted Cash	(1		)	—		(1	)
Cash, cash equivalents and restricted cash at beginning of period	2			—		2
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1		—		1

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Equity Investments (Tables)

6 Months Ended

Jun. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Investments

The following table summarizes the carrying value of our equity investments.

			Millions of Dollars
	Percentage Ownership		June 30 2018		December 31 2017
Bakken Pipeline	25.00	%	$	609	621
Bayou Bridge Pipeline, LLC (Bayou Bridge)	40.00		231		173
DCP Sand Hills Pipeline, LLC (Sand Hills)	33.34		567		515
DCP Southern Hills Pipeline, LLC (Southern Hills)	33.34		208		209
Explorer Pipeline Company (Explorer)	21.94		121		118
Gray Oak Pipeline, LLC (Gray Oak)	75.00		28		—
Paradigm Pipeline LLC (Paradigm)	50.00		142		131
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal)	70.00		72		53
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)	25.00		14		—
STACK Pipeline LLC (STACK)	50.00		112		112
Total equity investments			$	2,104	1,932

Earnings (losses) from our equity investments were as follows:

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017	2018	2017
Bakken Pipeline	$	39	11	71	11
Bayou Bridge	3		2	8	4
Explorer	8		6	24	11
Gray Oak	—		—	—	—
Paradigm	2		—	4	(1	)
Phillips 66 Partners Terminal	6		1	15	3
Sand Hills	31		20	56	37
South Texas Gateway Terminal	—		—	—	—
Southern Hills	9		7	16	14
STACK	2		1	4	2
Total equity in earnings of affiliates	$	100	48	198	81

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Properties, Plants and Equipment (Tables)

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Summary of Property, Plant and Equipment

Our investment in properties, plants and equipment (PP&E), with the associated accumulated depreciation, was:

	Millions of Dollars
	June 30 2018		December 31 2017
Land	$	19	19
Buildings and improvements	88		88
Pipelines and related assets*	1,382		1,372
Terminals and related assets*	691		671
Rail racks and related assets*	137		137
Processing and related assets*	842		837
Caverns and related assets*	584		583
Construction-in-progress	97		47
Gross PP&E	3,840		3,754
Less: Accumulated depreciation	892		836
Net PP&E	$	2,948	2,918

*Assets for which we are the lessor.

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Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of Debt

	Millions of Dollars
	June 30 2018			December 31 2017
2.646% Senior Notes due 2020	$	300		300
3.605% Senior Notes due 2025	500			500
3.550% Senior Notes due 2026	500			500
3.750% Senior Notes due 2028	500			500
4.680% Senior Notes due 2045	450			450
4.900% Senior Notes due 2046	625			625
Tax-exempt bonds at 1.75% and 1.94% at June 30, 2018, and December 31, 2017, respectively	100			100
Total	2,975			2,975
Net unamortized discounts and debt issuance costs	(29		)	(30	)
Total debt	2,946			2,945
Less: Short-term debt	25			25
Long-term debt	$	2,921		2,920

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Operating Revenues (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Total operating revenues disaggregated by type of service were as follows:

	Millions of Dollars
	Three Months Ended June 30, 2018		Six Months Ended June 30, 2018
Pipelines	$	111	213
Terminals	38		77
Storage, processing and other revenues	105		220
Total operating revenues	$	254	510

Expected Timing of Satisfaction

As of June 30, 2018, future revenues expected to be recognized for the fixed component of the transaction price of our remaining performance obligations from contracts with our customers with an original expected duration of greater than one year were:

	Millions of Dollars
Remainder of 2018	$	359
2019	699
2020	696
2021	685
2022	673
Remaining years	2,964
Total future operating revenues*	$	6,076
*Includes $3.4 billion of future lease revenues from agreements with Phillips 66.

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Net Income Per Limited Partner Unit (Tables)

6 Months Ended

Jun. 30, 2018

Partners' Capital Notes [Abstract]

Schedule of Distributions Declared, Partners Interest in Partnership Net Income and Net Income per Unit by Class

	Millions of Dollars
	Three Months Ended June 30				Six Months Ended June 30
	2018		2017		2018	2017
Net income attributable to the Partnership	$	186	103		358	200
Less: General partner’s distribution declared (including IDRs)*	57		36		108	68
Limited partners’ distributions declared on preferred units*	10		—		19	—
Limited partners’ distribution declared on common units*	91		68		179	131
Distributions less than (more than) net income attributable to the Partnership	$	28	(1	)	52	1

*Distribution declared attributable to the indicated periods.

	Limited Partners’ Common Units			General Partner (including IDRs)		Limited Partners’ Preferred Units	Total
Three Months Ended June 30, 2018
Net income attributable to the Partnership (millions):
Distribution declared	$	91		57		10	158
Distributions less than (more than) net income attributable to the Partnership	30			(2	)	—	28
Net income attributable to the Partnership (basic)	121			55		10	186
Dilutive effect of preferred units*	7
Net income attributable to the Partnership (diluted)	$	128
Weighted-average units outstanding—basic	122,188,646
Dilutive effect of preferred units*	13,819,791
Weighted-average units outstanding—diluted	136,008,437
Net income attributable to the Partnership per limited partner unit—basic (dollars)	$	0.99
Net income attributable to the Partnership per limited partner unit—diluted (dollars)	0.94
Three Months Ended June 30, 2017
Net income attributable to the Partnership (millions):
Distribution declared	$	68		36		—	104
Distributions less than (more than) net income attributable to the Partnership	(2		)	1		—	(1	)
Net income attributable to the Partnership	$	66		37		—	103
Weighted-average units outstanding—basic and diluted	109,189,217
Net income per limited partner unit—basic and diluted (dollars)	$	0.61

* The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.

	Limited Partners’ Common Units		General Partner (including IDRs)	Limited Partners’ Preferred Units	Total
Six Months Ended June 30, 2018
Net income attributable to the Partnership (millions):
Distribution declared	$	179	108	19	306
Distributions less than net income attributable to the Partnership	52		—	—	52
Net income attributable to the Partnership (basic)	231		108	19	358
Dilutive effect of preferred units*	14
Net income attributable to the Partnership (diluted)	$	245
Weighted-average units outstanding—basic	121,900,683
Dilutive effect of preferred units*	13,819,791
Weighted-average units outstanding—diluted	135,720,474
Net income attributable to the Partnership per limited partner unit—basic (dollars)	$	1.89
Net income attributable to the Partnership per limited partner unit—diluted (dollars)	1.80
Six Months Ended June 30, 2017
Net income attributable to the Partnership (millions):
Distribution declared	$	131	68	—	199
Distributions less than net income attributable to the Partnership	—		1	—	1
Net income attributable to the Partnership	$	131	69	—	200
Weighted-average units outstanding—basic and diluted	108,299,570
Net income attributable to the Partnership per limited partner unit—basic and dilutive (dollars)	$	1.21

* The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.

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Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2018

Supplemental Cash Flow Information [Abstract]

Summary of Capital Expenditures and Noncash Investing and Financing Activities

Our capital expenditures and investments consisted of:

	Millions of Dollars
	Six Months Ended June 30
	2018		2017*
Cash capital expenditures and investments	$	234	188
Change in capital expenditure accruals	14		—
Total capital expenditures and investments	$	248	188

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

	Millions of Dollars
	Six Months Ended June 30
	2018		2017
Capital expenditures and investments attributable to the Partnership	$	248	128
Capital expenditures and investments attributable to Predecessors*	—		60
Total capital expenditures and investments*	$	248	188

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Summary of Related Party Transactions

Other related party balances in our consolidated balance sheet consisted of the following, all of which were related to Phillips 66:

	Millions of Dollars
	June 30 2018		December 31 2017
Deferred rentals and other assets	$	5	5
Deferred revenues	60		33
Deferred revenues and other liabilities	17		61

Significant related party transactions included in our total costs and expenses were:

	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2018		2017*	2018	2017*
Operating and maintenance expenses	$	50	50	115	90
General and administrative expenses	15		17	30	33
Total	$	65	67	145	123

*Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Business and Basis of Presentation (Details)	Jun. 30, 2018 refinery
Phillips 66
Property, Plant and Equipment [Line Items]
Number of refineries	9

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Changes in Accounting Principles (Details) $ in Millions	Dec. 31, 2017 USD ($)
Changes in Accounting Principles [Abstract]
Cumulative effect of accounting change	$ 31

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Acquisitions (Narrative) (Details) - USD ($) $ in Millions		1 Months Ended
	Apr. 20, 2018	Oct. 31, 2017	Jun. 30, 2018	Dec. 31, 2017
Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Business Acquisition [Line Items]
Historical carrying value of assets transferred		$ 729
Common Control Transaction | Phillips 66
Business Acquisition [Line Items]
General partner interest, percent		2.00%
Common Control Transaction | Gray Oak Pipeline LLC (Gray Oak) | Phillips 66 | Phillips 66 PDI
Business Acquisition [Line Items]
Controlling interest acquired, percentage	100.00%
Business combination, consideration transferred	$ 3
Common Control Transaction | Merey Sweeny | Phillips 66 | Phillips 66
Business Acquisition [Line Items]
Controlling interest acquired, percentage		100.00%
Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Common Units
Business Acquisition [Line Items]
Business acquisition, equity interest issued or issuable (in shares)		4,713,113
Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | General Partner Units
Business Acquisition [Line Items]
Business acquisition, equity interest issued or issuable (in shares)		292,665
Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Business Acquisition [Line Items]
Business combination, consideration transferred		$ 1,650
Cash consideration transferred for assets		372
Noncurrent liabilities, other		$ 53
Gray Oak Pipeline LLC (Gray Oak)
Business Acquisition [Line Items]
Percentage Ownership			75.00%
Gray Oak Pipeline LLC (Gray Oak) | Party Two
Business Acquisition [Line Items]
Co-venturer, right to acquire percentage of voting interests			35.00%
Bakken Pipeline
Business Acquisition [Line Items]
Percentage Ownership		25.00%	25.00%	25.00%
Promissory Notes | Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Business Acquisition [Line Items]
Liabilities incurred		$ 588
Loans Payable | Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Business Acquisition [Line Items]
Liabilities incurred		$ 450
Gray Oak Pipeline LLC (Gray Oak) | Common Control Transaction | Gray Oak Pipeline LLC
Business Acquisition [Line Items]
Percentage Of ownership In subsidiary	100.00%

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Acquisitions (Schedule of Results of Operations Giving Effect to Common Control Acquisitions) (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017		Jun. 30, 2018	Jun. 30, 2017
Revenues and Other Income
Equity in earnings of affiliates	$ 100	$ 48	[1]	$ 198	$ 81	[1]
Other income	0	2	[1]	1	11	[1]
Total revenues and other income	354	277	[1]	709	539	[1]
Costs and Expenses
Operating and maintenance expenses	85	79	[1]	182	153	[1]
Depreciation	29	28	[1]	57	56	[1]
General and administrative expenses	16	18	[1]	32	35	[1]
Taxes other than income taxes	9	8	[1]	19	17	[1]
Interest and debt expense	29	24	[1]	59	48	[1]
Total costs and expenses	168	157	[1]	349	309	[1]
Income before income taxes	186	120	[1]	360	230	[1]
Income tax expense	0	1	[1]	2	1	[1]
Net income	186	119	[1]	358	229	[1]
Less: Net income attributable to Predecessors	0	16	[1]	0	29	[1]
Net income attributable to the Partnership	186	103	[1]	358	200	[1]
Less: General partner’s interest in net income attributable to the Partnership	55	37	[1]	108	69	[1]
Limited partners’ interest in net income attributable to the Partnership	$ 121	66	[1]	$ 231	131	[1]
Service
Revenues and Other Income
Operating revenues		11			21
Phillips 66 Partners LP (As previously reported)
Revenues and Other Income
Equity in earnings of affiliates		37			70
Other income		0			7
Total revenues and other income		234			468
Costs and Expenses
Operating and maintenance expenses		57			119
Depreciation		26			52
General and administrative expenses		16			32
Taxes other than income taxes		7			16
Interest and debt expense		24			48
Total costs and expenses		130			267
Income before income taxes		104			201
Income tax expense		1			1
Net income		103			200
Less: Net income attributable to Predecessors		0			0
Net income attributable to the Partnership		103			200
Less: General partner’s interest in net income attributable to the Partnership		37			69
Limited partners’ interest in net income attributable to the Partnership		66			131
Phillips 66 Partners LP (As previously reported) | Service
Revenues and Other Income
Operating revenues		11			21
Acquired Bakken Pipeline/MSLP Predecessor | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Revenues and Other Income
Equity in earnings of affiliates		11			11
Other income		2			4
Total revenues and other income		43			71
Costs and Expenses
Operating and maintenance expenses		22			34
Depreciation		2			4
General and administrative expenses		2			3
Taxes other than income taxes		1			1
Interest and debt expense		0			0
Total costs and expenses		27			42
Income before income taxes		16			29
Income tax expense		0			0
Net income		16			29
Less: Net income attributable to Predecessors		16			29
Net income attributable to the Partnership		0			0
Less: General partner’s interest in net income attributable to the Partnership		0			0
Limited partners’ interest in net income attributable to the Partnership		0			0
Acquired Bakken Pipeline/MSLP Predecessor | Service | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Revenues and Other Income
Operating revenues		0			0
Related Party Sales | Service | Affiliated Entity
Revenues and Other Income
Operating revenues		216			426
Related Party Sales | Phillips 66 Partners LP (As previously reported) | Service | Affiliated Entity
Revenues and Other Income
Operating revenues		186			370
Related Party Sales | Acquired Bakken Pipeline/MSLP Predecessor | Service | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Revenues and Other Income
Operating revenues		$ 30			$ 56

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Acquisitions (Schedule of Cash Flow) (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017		Jun. 30, 2018	Jun. 30, 2017
Cash Flows From Operating Activities
Net income	$ 186	$ 119	[1]	$ 358	$ 229	[1]
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	29	28	[1]	57	56	[1]
Undistributed equity earnings				(7)	(9)	[1]
Other				5	4	[1]
Working capital adjustments
Decrease (increase) in accounts receivable				(3)	6	[1]
Decrease (increase) in materials and supplies				0	(1)	[1]
Decrease (increase) in prepaid expenses and other current assets					0
Increase (decrease) in accounts payable				(3)	(2)	[1]
Increase (decrease) in accrued interest				2	0	[1]
Increase (decrease) in deferred revenues				30	10	[1]
Increase (decrease) in other accruals				1	(2)	[1]
Net Cash Provided by Operating Activities				397	291	[1]
Cash Flows From Investing Activities
Restricted cash received from combination of business					318
Collection of loan receivable				0	7	[1]
Cash capital expenditures and investments				(234)	(188)	[1]
Return of investment from equity affiliates				22	17	[1]
Net Cash Provided by (Used in) Investing Activities				(212)	154	[1]
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors				0	(151)	[1]
Issuance of debt				0	1,103	[1]
Repayment of debt				0	(1,398)	[1]
Issuance of common units				67	171	[1]
Other cash contributions from Phillips 66				0	12	[1]
Net Cash Used in Financing Activities				(219)	(446)	[1]
Net Change in Cash, Cash Equivalents and Restricted Cash				(34)	(1)	[1]
Cash, cash equivalents and restricted cash at beginning of period				185	2	[1]
Cash, Cash Equivalents and Restricted Cash at End of Period	$ 151	1	[1]	151	1	[1]
Common Units | Public
Cash Flows From Financing Activities
Quarterly distributions to unitholders				(74)	(50)	[1]
Common Units | Non-public | Phillips 66
Cash Flows From Financing Activities
Quarterly distributions to unitholders				(96)	(73)	[1]
General Partner
Cash Flows From Financing Activities
Quarterly distributions to unitholders				$ (98)	(60)	[1]
Phillips 66 Partners LP (As previously reported)
Cash Flows From Operating Activities
Net income		103			200
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		26			52
Undistributed equity earnings					2
Other					5
Working capital adjustments
Decrease (increase) in accounts receivable					6
Decrease (increase) in materials and supplies					(1)
Decrease (increase) in prepaid expenses and other current assets					(1)
Increase (decrease) in accounts payable					(2)
Increase (decrease) in accrued interest					1
Increase (decrease) in deferred revenues					10
Increase (decrease) in other accruals					(2)
Net Cash Provided by Operating Activities					270
Cash Flows From Investing Activities
Restricted cash received from combination of business					0
Collection of loan receivable					0
Cash capital expenditures and investments					(128)
Return of investment from equity affiliates					17
Net Cash Provided by (Used in) Investing Activities					(111)
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors					0
Issuance of debt					1,103
Repayment of debt					(1,263)
Issuance of common units					171
Other cash contributions from Phillips 66					12
Net Cash Used in Financing Activities					(160)
Net Change in Cash, Cash Equivalents and Restricted Cash					(1)
Cash, cash equivalents and restricted cash at beginning of period					2
Cash, Cash Equivalents and Restricted Cash at End of Period		1			1
Phillips 66 Partners LP (As previously reported) | Common Units | Public
Cash Flows From Financing Activities
Quarterly distributions to unitholders					(50)
Phillips 66 Partners LP (As previously reported) | Common Units | Non-public | Phillips 66
Cash Flows From Financing Activities
Quarterly distributions to unitholders					(73)
Phillips 66 Partners LP (As previously reported) | General Partner
Cash Flows From Financing Activities
Quarterly distributions to unitholders					(60)
Acquired Bakken Pipeline/MSLP Predecessor | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Cash Flows From Operating Activities
Net income		16			29
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		2			4
Undistributed equity earnings					(11)
Other					(1)
Working capital adjustments
Decrease (increase) in accounts receivable					0
Decrease (increase) in materials and supplies					0
Decrease (increase) in prepaid expenses and other current assets					1
Increase (decrease) in accounts payable					0
Increase (decrease) in accrued interest					(1)
Increase (decrease) in deferred revenues					0
Increase (decrease) in other accruals					0
Net Cash Provided by Operating Activities					21
Cash Flows From Investing Activities
Restricted cash received from combination of business					318
Collection of loan receivable					7
Cash capital expenditures and investments					(60)
Return of investment from equity affiliates					0
Net Cash Provided by (Used in) Investing Activities					265
Cash Flows From Financing Activities
Net contributions to Phillips 66 from Predecessors					(151)
Issuance of debt					0
Repayment of debt					(135)
Issuance of common units					0
Other cash contributions from Phillips 66					0
Net Cash Used in Financing Activities					(286)
Net Change in Cash, Cash Equivalents and Restricted Cash					0
Cash, cash equivalents and restricted cash at beginning of period					0
Cash, Cash Equivalents and Restricted Cash at End of Period		$ 0			0
Acquired Bakken Pipeline/MSLP Predecessor | Common Units | Public | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Cash Flows From Financing Activities
Quarterly distributions to unitholders					0
Acquired Bakken Pipeline/MSLP Predecessor | Common Units | Non-public | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Cash Flows From Financing Activities
Quarterly distributions to unitholders					0
Acquired Bakken Pipeline/MSLP Predecessor | General Partner | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66
Cash Flows From Financing Activities
Quarterly distributions to unitholders					$ 0

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Equity Investments (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Apr. 23, 2018	Apr. 20, 2018	Dec. 31, 2017
Schedule of Equity Method Investments [Line Items]
Equity investments	$ 2,104			$ 1,932
Gray Oak Pipeline LLC (Gray Oak)
Schedule of Equity Method Investments [Line Items]
Co-venture ownership interest		25.00%
Equity investments	$ 28			0
Ownership interest acquired, percentage	75.00%
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)
Schedule of Equity Method Investments [Line Items]
Equity investments	$ 14			$ 0
Ownership interest acquired, percentage	25.00%	25.00%
Party One | Gray Oak Pipeline LLC (Gray Oak)
Schedule of Equity Method Investments [Line Items]
Co-venturer, right to acquire percentage of voting interests	10.00%
Common Control Transaction | Gray Oak Pipeline LLC (Gray Oak) | Phillips 66 PDI | Phillips 66
Schedule of Equity Method Investments [Line Items]
Controlling interest acquired, percentage			100.00%

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Equity Investments (Schedule of Carrying Value Equity Investments) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Apr. 23, 2018	Dec. 31, 2017	Oct. 31, 2017
Schedule of Equity Method Investments [Line Items]
Carrying Value	$ 2,104		$ 1,932
Bakken Pipeline
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	25.00%		25.00%	25.00%
Carrying Value	$ 609		$ 621
Bayou Bridge Pipeline, LLC (Bayou Bridge)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	40.00%		40.00%
Carrying Value	$ 231		$ 173
DCP Sand Hills Pipeline, LLC (Sand Hills)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	33.34%		33.34%
Carrying Value	$ 567		$ 515
DCP Southern Hills Pipeline, LLC (Southern Hills)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	33.34%		33.34%
Carrying Value	$ 208		$ 209
Explorer Pipeline Company (Explorer)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	21.94%		21.94%
Carrying Value	$ 121		$ 118
Gray Oak Pipeline LLC (Gray Oak)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	75.00%
Carrying Value	$ 28		$ 0
Paradigm Pipeline LLC (Paradigm)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	50.00%		50.00%
Carrying Value	$ 142		$ 131
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	70.00%		70.00%
Carrying Value	$ 72		$ 53
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	25.00%	25.00%
Carrying Value	$ 14		$ 0
STACK Pipeline LLC (STACK)
Schedule of Equity Method Investments [Line Items]
Percentage Ownership	50.00%		50.00%
Carrying Value	$ 112		$ 112

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Equity Investments Equity Investments (Schedule of Equity Investment Earnings (Losses)) (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017		Jun. 30, 2018	Jun. 30, 2017
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	$ 100	$ 48	[1]	$ 198	$ 81	[1]
Bakken Pipeline
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	39	11		71	11
Bayou Bridge Pipeline, LLC (Bayou Bridge)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	3	2		8	4
Explorer Pipeline Company (Explorer)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	8	6		24	11
Gray Oak Pipeline LLC (Gray Oak)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	0	0		0	0
Paradigm Pipeline LLC (Paradigm)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	2	0		4	(1)
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	6	1		15	3
DCP Sand Hills Pipeline, LLC (Sand Hills)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	31	20		56	37
South Texas Gateway Terminal LLC (South Texas Gateway Terminal)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	0	0		0	0
DCP Southern Hills Pipeline, LLC (Southern Hills)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	9	7		16	14
STACK Pipeline LLC (STACK)
Schedule of Equity Method Investments [Line Items]
Equity in earnings (losses) of affiliates	$ 2	$ 1		$ 4	$ 2

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Properties, Plants and Equipment (Details) - USD ($) $ in Millions		Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Gross PP&E		$ 3,840	$ 3,754
Less: Accumulated depreciation		892	836
Net PP&E		2,948	2,918
Land
Property, Plant and Equipment [Line Items]
Gross PP&E		19	19
Buildings and improvements
Property, Plant and Equipment [Line Items]
Gross PP&E		88	88
Pipelines and related assets
Property, Plant and Equipment [Line Items]
Gross PP&E	[1]	1,382	1,372
Terminals and related assets
Property, Plant and Equipment [Line Items]
Gross PP&E	[1]	691	671
Rail racks and related assets
Property, Plant and Equipment [Line Items]
Gross PP&E	[1]	137	137
Processing and related assets
Property, Plant and Equipment [Line Items]
Gross PP&E	[1]	842	837
Caverns and related assets
Property, Plant and Equipment [Line Items]
Gross PP&E	[1]	584	583
Construction-in-progress
Property, Plant and Equipment [Line Items]
Gross PP&E		$ 97	$ 47

[1] Assets for which we are the lessor.

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Debt (Summary of Long-Term Debt) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt, gross	$ 2,975	$ 2,975
Net unamortized discounts and debt issuance costs	(29)	(30)
Total Debt	2,946	2,945
Short-term debt	25	25
Long-term debt	2,921	2,920
Tax-exempt bonds
Debt Instrument [Line Items]
Long-term debt, gross	$ 100	$ 100
Interest rate, stated percentage	1.75%	1.94%
Senior Notes | 2.646% Senior Notes due 2020
Debt Instrument [Line Items]
Long-term debt, gross	$ 300	$ 300
Interest rate, stated percentage	2.646%	2.646%
Senior Notes | 3.605% Senior Notes due 2025
Debt Instrument [Line Items]
Long-term debt, gross	$ 500	$ 500
Interest rate, stated percentage	3.605%	3.605%
Senior Notes | 3.550% Senior Notes due 2026
Debt Instrument [Line Items]
Long-term debt, gross	$ 500	$ 500
Interest rate, stated percentage	3.55%	3.55%
Senior Notes | 3.750% Senior Notes due 2028
Debt Instrument [Line Items]
Long-term debt, gross	$ 500	$ 500
Interest rate, stated percentage	3.75%	3.75%
Senior Notes | 4.680% Senior Notes due 2045
Debt Instrument [Line Items]
Long-term debt, gross	$ 450	$ 450
Interest rate, stated percentage	4.68%	4.68%
Senior Notes | 4.900% Senior Notes due 2046
Debt Instrument [Line Items]
Long-term debt, gross	$ 625	$ 625
Interest rate, stated percentage	4.90%	4.90%

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Debt (Narrative) (Details) - Fair Value, Inputs, Level 2 - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Senior Notes
Debt Instrument [Line Items]
Debt instrument, fair value disclosure	$ 2,723	$ 2,918
Tax-exempt bonds
Debt Instrument [Line Items]
Debt instrument, fair value disclosure	$ 100	$ 100

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Equity (Details) - USD ($)	3 Months Ended		6 Months Ended		25 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Limited Partners' Capital Account [Line Items]
Number of common units issued in public offering (in shares)			1,340,934	3,323,576
Issuance of common units			$ 67,000,000	$ 171,000,000
At The Market Offering Program | Common Units
Limited Partners' Capital Account [Line Items]
Number of common units issued in public offering (in shares)	1,152,119	2,578,608	1,340,934	3,323,576	5,059,802
Issuance of common units	$ 58,000,000	$ 131,000,000	$ 67,000,000	$ 171,000,000	$ 259,000,000
Maximum | At The Market Offering Program | Common Units
Limited Partners' Capital Account [Line Items]
Maximum aggregate amount of continuous units issuance authorized	$ 250,000,000		$ 250,000,000		$ 250,000,000

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Operating Revenues (Narrative) (Details) - USD ($) $ in Millions		3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Lease revenue		$ 143	$ 287
Revenue from contract with customer		111	223
Contract with customer, asset	$ 40	40	40	$ 37
Deferred revenue	80	80	80	93
Contract with customer, liability	$ 9	9	9	13
Contract with customer, liability, revenue recognized		5	$ 9
Customer contracts, average remaining duration	8 years
Maximum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Customer contracts, term			15 years
Lease Agreements
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Receivables, net	$ 49	$ 49	$ 49	$ 49

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Operating Revenues (Revenues Disaggregated) (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	$ 254	$ 510
Pipelines
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	111	213
Terminals
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	38	77
Storage, processing and other revenues
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	$ 105	$ 220

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Operating Revenues (Performance Obligations) (Details) $ in Millions	Jun. 30, 2018 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 359
Revenue, remaining performance obligation, expected timing of satisfaction, period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 699
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 696
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 685
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 2,964
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 6,076	[1]
Phillips 66 | Phillips 66 | Lease Agreements | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 3,400

[1] *Includes $3.4 billion of future lease revenues from agreements with Phillips 66.

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Net Income Per Limited Partner Unit (Schedule of Earnings Per unit of our Limited Partners) (Details) - USD ($) $ in Millions		3 Months Ended			6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017		Jun. 30, 2018	Jun. 30, 2017
Limited Partners' Capital Account [Line Items]
Net income attributable to the Partnership		$ 186	$ 103	[1]	$ 358	$ 200	[1]
Distribution declared		158	104		306	199
Distributions less than (more than) net income attributable to the Partnership		28	(1)		52	1
General Partner
Limited Partners' Capital Account [Line Items]
Net income attributable to the Partnership		55	37		108	69
Distribution declared	[2]	57	36		108	68
Preferred Units | Limited Partner
Limited Partners' Capital Account [Line Items]
Net income attributable to the Partnership		10	0		19	0
Distribution declared	[2]	10	0		19	0
Common Units | Limited Partner
Limited Partners' Capital Account [Line Items]
Net income attributable to the Partnership		121	66		231	131
Distribution declared	[2]	$ 91	$ 68		$ 179	$ 131

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

[2] Distribution declared attributable to the indicated periods.

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Net Income Per Limited Partner Unit (Schedule of Net Income By Class of Participating Securities) (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended			6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017		Jun. 30, 2018	Jun. 30, 2017
Partners' Capital [Abstract]
Distribution declared		$ 158	$ 104		$ 306	$ 199
Distributions less than (more than) net income attributable to the Partnership		28	(1)		52	1
Net income attributable to the Partnership		$ 186	$ 103	[1]	$ 358	$ 200	[1]
Dilutive effect of preferred units (in shares)	[2]	13,819,791			13,819,791
Common Units
Partners' Capital [Abstract]
Weighted-average units outstanding—basic (in shares)		122,188,646	109,189,000	[1]	121,900,683	108,300,000	[1]
Weighted-average units outstanding—diluted (in shares)		136,008,437			135,720,474
Net income attributable to the Partnership per limited partner unit—basic (in dollars per share)		$ 0.99	$ 0.61	[1]	$ 1.89	$ 1.21	[1]
Net income attributable to the Partnership per limited partner unit—diluted (in dollars per share)		$ 0.94	$ 0.61	[1]	$ 1.80	$ 1.21	[1]
Weighted-average units outstanding—basic and diluted (in shares)			109,189,217			108,299,570
Net income attributable to the Partnership per limited partner unit—basic and dilutive (in dollars per share)			$ 0.61			$ 1.21
General Partner
Partners' Capital [Abstract]
Distribution declared	[3]	$ 57	$ 36		$ 108	$ 68
Distributions less than (more than) net income attributable to the Partnership		(2)	1			1
Net income attributable to the Partnership		55	37		108	69
Limited Partner
Partners' Capital [Abstract]
Dilutive effect of preferred units	[2]	7			14
Limited Partner | Common Units
Partners' Capital [Abstract]
Distribution declared	[3]	91	68		179	131
Distributions less than (more than) net income attributable to the Partnership		30	(2)		52	0
Net income attributable to the Partnership		121	66		231	131
Net income attributable to the Partnership (diluted)		128			245
Limited Partner | Preferred Units
Partners' Capital [Abstract]
Distribution declared	[3]	10	0		19	0
Distributions less than (more than) net income attributable to the Partnership		0	0		0	0
Net income attributable to the Partnership		$ 10	$ 0		$ 19	$ 0

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

[2] The dilutive effect of preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.

[3] Distribution declared attributable to the indicated periods.

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Net Income Per Limited Partner Unit (Narrative) (Details)	Jul. 18, 2018 $ / shares
Common Units | Cash Distribution | Subsequent Event
Subsequent Events [Abstract]
Quarterly cash distribution declared per limited partner unit (in dollars per share)	$ 0.752

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Cash Flow Information (Capital Expenditures and Investments) (Details) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017
Capital Expenditures And Investments [Abstract]
Cash capital expenditures and investments		$ 234	$ 188	[1]
Change in capital expenditure accruals		14	0	[1]
Total capital expenditures and investments	[1]	248	188
Capital expenditures and investments attributable to the Partnership		248	128
Capital expenditures and investments attributable to Predecessors		$ 0	$ 60	[1]

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Cash Flow Information (Narrative) (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Cash and Cash Equivalents [Abstract]
Restricted cash	$ 0	$ 0

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Related Party Transactions (Summary of Related Party Transactions) (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	[1]	Jun. 30, 2018	Jun. 30, 2017	[1]
Related Party Transactions [Abstract]
Operating and maintenance expenses	$ 50	$ 50		$ 115	$ 90
General and administrative expenses	15	17		30	33
Total	$ 65	$ 67		$ 145	$ 123

[1] Prior-period financial information has been retrospectively adjusted for acquisitions of businesses under common control.

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Related Party Transactions (Narrative) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Aug. 31, 2016
Dakota Access LLC and Energy Transfer Crude Oil Company, LLC
Related party agreements and fees
Maximum exposure	$ 16
Phillips 66 | Amended Omnibus Agreement | Phillips 66
Related party agreements and fees
Monthly operational and administrative support fee	$ 8
Dakota Access LLC and Energy Transfer Crude Oil Company, LLC
Related party agreements and fees
Project financing		$ 2,500

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Related Party Transactions (Other Related Party Balances) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Related Party Transaction [Line Items]
Deferred revenues	$ 61	$ 35
Deferred revenues and other liabilities	23	66
Phillips 66
Related Party Transaction [Line Items]
Deferred rentals and other assets	5	5
Deferred revenues	60	33
Deferred revenues and other liabilities	$ 17	$ 61