Genesis Energy Lp's Business Segments

We are a growth-oriented master limited partnership formed in Delaware in 1996 and focused on the midstream segment of the crude oil and natural gas industry in the Gulf Coast region of the United States, Wyoming and in the Gulf of Mexico. Our common units are traded on the New York Stock Exchange under the ticker symbol “GEL.” Our principal executive offices are located at 919 Milam, Suite 2100, Houston, Texas 77002 and our telephone number is (713) 860-2500. Except to the extent otherwise provided, the information contained in this annual report is as of December 31, 2016.

Genesis Energy LP: Comprehensive Overview of Segments, Products, and Services

Genesis Energy LP operates in diverse segments that facilitate various aspects of the energy value chain, effectively catering to an extensive array of clients, including integrated major oil companies, independent refiners, and industrial customers. Below is an extensive description of the company’s primary segments, products, and services.

1. Offshore Pipeline Transportation Segment

Genesis Energy focuses on offshore crude oil and natural gas pipeline transportation, with its operations primarily centered in the Gulf of Mexico. This segment caters to large energy companies that invest heavily in developing extensive oil and gas reserves. The segments significance is amplified by the Gulf of Mexicos status as a vital contributing region, representing approximately 18% of U.S. crude oil production.

Key Features:
- Pipeline Infrastructure:
- The company owns interests in around 1,437 miles of crude oil pipelines with a design capacity of approximately 1,810 MBbls per day.
- Significant assets include the Poseidon pipeline (64% interest) and the Cameron Highway Oil Pipeline System (CHOPS), one of the largest in the Gulf.

- Natural Gas Transportation:
- The offshore natural gas pipeline infrastructure comprises approximately 1,157 miles of pipelines, capitalizing on a design capacity of around 4,863 MMcf per day.
- Ownership includes six offshore hub platforms with significant processing capabilities for both natural gas and crude oil.

- Revenue Model:
- Revenue is generated through fee structures linked to customer contracts rather than direct exposure to fluctuating commodity prices, allowing for stable cash flows.

Refinery Services Segment

Genesis Energy’s refinery services are tailored to meet the needs of refining operations mainly located in Texas, Louisiana, Arkansas, Oklahoma, Montana, and Utah.

Key Features:
- Sulfur Removal Process:
- They specialize in processing sour gas streams from refiners to extract sulfur and produce sodium hydrosulfide (NaHS), a key by-product of this process.

- Product Distribution:
- The company markets NaHS and caustic soda to various industrial sectors, particularly focusing on mining and pulp and paper production, confirming its position as a leading supplier in North and South America.

- Long-term Contracts:
- The business model often involves long-term contracts, which brings stability and predictability to revenue streams with an average contract duration of three years.

Marine Transportation Segment

Genesis Energy has established a significant marine transportation segment dedicated to the movement of refined petroleum products and crude oil.

Key Features:
- Fleet Overview:
- The company operates a fleet of 83 barges and 43 push/tow boats, providing a combined transportation capacity of approximately9 million barrels.

- Vessel Ownership:
- Notably, they own the M/T American Phoenix, an ocean-going tanker with a capacity of 330,000 barrels, facilitating the transportation of refined products.

- Contractual Structure:
- Services are generally provided without taking ownership of the transported products, conducted under long-term contracts that enhance customer loyalty and operational stability.

Supply and Logistics Segment

The supply and logistics segment integrates various transportation and storage solutions, reinforcing Genesis Energy’s position in the oil and refined products market.

Key Features:
- Infrastructure Assets:
- Ownership and lease agreements cover onshore pipelines, trucks, terminals, railcars, and an extensive storage capacity of around6 million barrels.

- Pipeline Network:
- With five onshore crude oil pipelines spanning approximately 580 miles, they offer robust transportation solutions across several states, mainly in the Southeast U.S.

- CO2 Pipelines:
- The company operates two CO2 pipelines near the Jackson Dome, Mississippi, generating consistent revenue through fixed quarterly payments and incentive-based tariffs.

- Crude-by-Rail Operations:
- A network of loading and unloading facilities positions Genesis Energy to efficiently transport crude oil by rail, catering primarily to local markets.

- Hedging Strategy:
- The segment employs a hedging approach via NYMEX derivatives to mitigate price risk for unsold products, ensuring stability in operations.

Conclusion

Genesis Energy LPs multifaceted operational structure ensures comprehensive coverage throughout the energy sector, from transportation and storage to refined product distribution and processing. With strategic assets in pipeline infrastructure and strong contractual agreements across its segments, Genesis Energy is well-positioned to meet industry demands and sustain operational growth.