Genesis Energy’s Onshore Pipeline Transportation segment
Genesis Energy’s (GEL) Onshore Pipeline Transportation segment is involved in crude oil and CO2 transportation and supply. Enterprise Products Partners (EPD), Plains All American Pipeline (PAA), and Shell Midstream Partners (SHLX) are among the other midstream MLPs that are involved in onshore crude oil transportation.
GEL, EPD, and PAA are among the 23 holdings of the Global X MLP ETF (MLPA). Genesis Energy alone constitutes 3.3% of MLPA.
Crude oil pipelines
Genesis Energy owns and operates ~500 miles of onshore crude oil pipelines scattered across four pipeline systems.
- Texas System: Transports crude oil from West Columbia to several delivery points near Houston, Texas. Tariffs under this system are regulated by the RRC (Railroad Commission of Texas). Tariffs for the remaining three systems are regulated by the FERC (Federal Energy Regulatory Commission).
- Jay System: Provides crude oil producers access to pipelines, storage, and refineries near Mobile, Alabama. Jay System’s utilization for 2Q15 was 12%.
- Mississippi System: The Mississippi system provides crude oil producers access to pipelines, storage, and refineries in the Midwest region. Mississippi system’s utilization for 2Q15 was 37.8%.
- Louisiana System: In 2Q15, Genesis Energy’s Louisiana System’s total utilization was just 2.85% of the total design capacity. The system transports crude oil to Anchorage Tank Farm, which services ExxonMobil’s (XOM) Baton Rouge refinery.
Genesis Energy’s Onshore Pipeline segment also includes ~270 miles of CO2 pipelines spread across the Free State Pipeline and the NEJD (Northeast Jackson Dome Pipeline System). These systems are used by Denbury Resources (DNR) to transport CO2 for its EOR (enhanced oil recovery) projects under long-term contracts with Genesis Energy.
Segment value drivers
The segment’s revenues are driven primarily by crude oil and CO2 throughput volumes. The segment’s performance might be negatively impacted by lower throughput volumes in the coming quarters as shippers cut production due to market oversupply and lower refinery demand.