OREANDA-NEWS. US midstream projects will stay closer to core assets in the near future as oil field activity continues to cool, Phillips 66 said this week.

Construction will start this month on the Dakota Access Pipeline, a line connecting North Dakota crude to Patoka, Illinois, and to additional capacity heading down to the US Gulf coast. Phillips 66 is an anchor shipper on the line, which should begin operating by the end of this year.

But investment in long-haul projects has dropped off with oil production, chief executive Greg Garland said this week. The US independent refiner, chemicals company and midstream operator was shifting attention to projects immediately around those businesses.

"There's no question that if you're investing around infrastructure that requires the drill bit to turn, those opportunities have slowed way down," Garland said.

Phillips 66 would instead focus on adding tanks to increase blending and storage at terminals and constructing support infrastructure for chemicals projects, he said on the sidelines of the company's annual shareholder meeting.

"We have those opportunities that almost self-create because of the breadth of our portfolio and our ability to see across that portfolio and find those investable opportunities," Garland said.

The slowdown was just another part of the energy cycle, he said, adding it was his fourth time to live through a more than 50pc drop in crude prices. Production would come back into balance over the next two years. The US is next in line after Opec when the next call on crude comes, he said.

"Once that happens, you're going to see infrastructure opportunities and the long-haul and all that come back," Garland said. "We don't think the rest of the decade is going to look like 2015."