MPLX LP Profile
MPLX LP (MPLX) owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services. MPLX GP LLC acts as the general partner of MPLX. The company operates as a subsidiary of Marathon Petroleum Corporation.
The company’s assets include a network of crude oil and refined product pipelines; an inland marine business; light-product, asphalt, heavy oil and marine terminals; storage caverns; refinery tanks, docks, loading racks, and associated piping; crude oil and natural gas gathering systems and pipelines; and natural gas and NGL processing and fractionation facilities. The business consists of two segments based on the nature of services it offers: Logistics and Storage (‘L&S’) and Gathering and Processing (‘G&P’).
The company’s assets are positioned throughout the United States. The L&S segment primarily engages in the gathering, transportation, storage and distribution of crude oil, refined products, other hydrocarbon-based products, and renewables. The L&S segment also includes the operation of the company’s refining logistics, fuels distribution and inland marine businesses, terminals, rail facilities and storage caverns. The G&P segment provides gathering, processing and transportation of natural gas, as well as the transportation, fractionation, storage and marketing of NGLs.
The company continues to have a strategic relationship with MPC, which is a large source of the company’s revenues. As of December 31, 2022, MPC (Marathon Petroleum Corporation) owned the company’s general partner and approximately 65 percent of the company’s outstanding common units. The company also has long-term relationships with a diverse set of producer customers in many crude oil and natural gas resource plays, including the Marcellus Shale, Permian Basin, Utica Shale, STACK Shale and Bakken Shale, among others.
Business Strategies
The company’s business strategies include maintaining safe and reliable operations; focusing on low-cost culture; and commitment to sustainability.
Operating Segments
The company conducts its operations in two reportable segments, which include L&S and G&P.
L&S
The L&S segment includes gathering, transportation, storage and distribution of crude oil, refined products, other hydrocarbon-based products and renewables. These assets consist of a network of 15,105 miles of wholly and jointly-owned common carrier pipelines and associated storage assets, refining logistics assets at 13 refineries, 89 terminals, including one export terminal, storage caverns, tank farm assets, including rail and truck racks, an inland marine business and a fuels distribution business. The company’s L&S assets are integral to the success of MPC’s operations. The company continues to evaluate projects and opportunities that will further enhance the company’s existing operations and provide valuable services to MPC and third parties.
The company generates revenue in the L&S segment primarily by charging tariffs for gathering and transporting crude oil, refined products, other hydrocarbon-based products and renewables through the company’s pipelines and at the company’s barge docks delivering to domestic and international destinations, and fees for storing crude oil, refined products and renewables at the company’s storage facilities. The company’s marine business generates revenue under a fee-for-capacity contract with MPC. The company’s fuels distribution business provides services related to the scheduling and marketing of products on behalf of MPC, for which it generates revenue based on the volume of MPC’s products sold each month. The company is also the operator of additional crude oil and refined product pipelines owned by MPC and third parties for which the company is paid operating fees.
G&P
The G&P segment gathers, processes and transports natural gas; and transports, fractionates, stores and markets NGLs. As of December 31, 2022, gathering and processing assets available to MPLX included approximately 10.4 Bcf/d of gathering capacity, 12.0 Bcf/d of natural gas processing capacity and 829 mbpd of fractionation and de-ethanization capacity.
Relationship with MPC
MPC owns and operates 13 refineries in the Gulf Coast, Mid-Continent and West Coast regions of the United States; and distributes refined products, including renewable diesel, through transportation, storage, distribution and marketing services provided by its midstream segment, which primarily consists of MPLX. MPLX, through its fuels distribution services, distributes refined products under the Marathon brand through an extensive network of retail locations owned or operated by independent entrepreneurs across the United States.
L&S Contracts with MPC and Third Parties
Transportation Services Agreements, Storage Services Agreements, Terminal Services Agreements and Fuels Distribution Services Agreement with MPC
The company’s L&S assets are strategically located within, and integral to, MPC’s operations. The company has entered into multiple transportation, terminal and storage services agreements with MPC. Under these long-term, fee-based agreements, the company provides transportation, terminal and storage services to MPC and, other than under the company’s marine transportation services agreement, most of these agreements include minimum committed volumes from MPC. MPC has also committed to pay a fixed fee for 100 percent of available capacity for boats, barges and third-party chartered equipment under the marine transportation services agreement. The company also has a fuels distribution agreement with MPC under which the company provides scheduling and other services of MPC’s products.
The company has a trucking transportation services agreement with MPC. Under this trucking transportation services agreement, the company receives a service fee per barrel for gathering barrels and providing trucking, dispatch, delivery and data services. The company has a fuels distribution service agreement with MPC.
Pipeline Operating Agreements with MPC
The company operates various pipelines owned by MPC under operating services agreements. Under these operating services agreements, the company receives an operating fee for operating the assets, which include certain MPC wholly owned or partially owned crude oil, natural gas, and refined product pipelines, and for providing various operational services with respect to those assets.
Pipeline Operating Agreements with Third Parties
The company maintains and operates six pipelines in which either MPC or MPLX has a joint interest.
Transportation, Terminal and Storage Services Agreements with Third Parties
The company has multiple transportation and terminal services agreements with third parties under which the company provides use of pipelines and tank storage, and provide services, facilities and other infrastructure related to the receipt, storage, throughput, blending and delivery of commodities.
Marine Services Agreements with MPC
MPLX has an agreement with MPC under which it provides management services to assist MPC in the oversight and management of the marine business.
G&P Contracts with MPC and Third Parties
The majority of the company’s revenues in the G&P segment are generated from natural gas gathering, transportation and processing; and NGL transportation, fractionation, exchange, marketing and storage. MPLX enters into a variety of contract types, including fee-based, percent-of-proceeds, keep-whole and purchase arrangements in order to generate revenues.
Seasonality
The volume of crude oil and refined products transported and stored utilizing the company’s assets is affected by the level of supply and demand for crude oil and refined products in the markets served directly or indirectly by the company’s assets.
In the company’s G&P segment, the company experiences minimal impacts from seasonal fluctuations, which impact the demand for natural gas and NGLs and the related commodity prices caused by various factors, including variations in weather patterns from year to year. The company is able to manage the seasonality impacts through the execution of the company’s marketing strategy. Overall, the company’s exposure to the seasonality fluctuations is limited due to the nature of the company’s fee-based business.
Regulatory Matters
The company’s operations are subject to numerous laws and regulations, including those relating to the protection of the environment. Such laws and regulations include, among others, the Interstate Commerce Act (‘ICA’), the Natural Gas Act (‘NGA’), the Clean Water Act (‘CWA’) with respect to water discharges, the Clean Air Act (‘CAA’) with respect to air emissions, the Resource Conservation and Recovery Act (‘RCRA’) with respect to solid and hazardous waste treatment, storage and disposal, the Comprehensive Environmental Response, Compensation, and Liability Act (‘CERCLA’) with respect to releases and remediation of hazardous substances and the Oil Pollution Act of 1990 (‘OPA-90’) with respect to oil pollution and response.
Pipeline Regulations
Liquids Pipelines
Some of the company’s existing pipelines are considered interstate common carrier pipelines subject to regulation by the Federal Energy Regulatory Commission (‘FERC’) under the ICA, Energy Policy Act of 1992 (‘EPAct 1992’) and the rules and regulations promulgated under those laws.
PHMSA Regulation
The company is subject to regulation by the DOT under the Hazardous Liquid Pipeline Safety Act of 1979 (‘HLPSA’).
The company is also subject to the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, which increased penalties for safety violations, established additional safety requirements for newly constructed pipelines and required studies of certain safety issues that could result in the adoption of new regulatory requirements for existing pipelines. Additionally, the company is subject to the Protecting the company’s Infrastructure of Pipelines and Enhancing Safety Act of 2016, which required PHMSA to develop underground gas storage standards within two years and provided PHMSA with significant new authority to issue industry-wide emergency orders if an unsafe condition or practices results in an imminent hazard.
Environmental and Other Regulations
The company maintains numerous discharge permits as required under the National Pollutant Discharge Elimination System program of the CWA and have implemented systems to oversee the company’s compliance with these permits. In addition, the company is regulated under OPA-90, which, among other things, requires the owner or operator of a tank vessel or a facility to maintain an emergency plan to respond to releases of oil or hazardous substances.
The company has implemented emergency oil response plans for all of the company’s components and facilities covered by OPA-90 and the company has established Spill Prevention, Control and Countermeasures plans for all facilities subject to such requirements. the company is in substantial compliance with the CWA and analogous state laws.
The company is subject to oversight pursuant to the federal Occupational Safety and Health Act (‘OSH Act’), as amended, as well as comparable state statutes that regulate the protection of the health and safety of workers. The company has conducted its operations in substantial compliance with regulations promulgated pursuant to the OSH Act, including general industry standards, record-keeping requirements and monitoring of occupational exposure to regulated substances.
The company is also subject at regulated facilities to the Occupational Safety and Health Administration’s Process Safety Management and the EPA’s Risk Management Program requirements, which are intended to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals.
The DOT has adopted safety regulations with respect to the design, construction, operation, maintenance, inspection and management of the company’s pipeline assets.
The company’s marine transportation business is subject to regulation by the USCG, federal laws, including the Jones Act, state laws and certain international conventions, as well as numerous environmental regulations. The majority of the company’s vessels are subject to inspection by the USCG and carry certificates of inspection.
The company’s marine transportation business competes principally in markets subject to the Jones Act, a federal cabotage law that restricts domestic marine transportation in the United States to vessels built and registered in the United States, and manned and owned by United States citizens. The company presently meets all of the requirements of the Jones Act for the company’s vessels.
Certain of the company’s facilities are subject to the Department of Homeland Security Chemical Facility Anti-Terrorism Standards. In addition, the company has several facilities that are subject to the United States Coast Guard’s Maritime Transportation Security Act, and a number of other facilities that are subject to the Transportation Security Administration’s Pipeline Security Guidelines and are designated as ‘Critical Facilities.’
Various federal agencies, including the EPA and the Department of the Interior, along with certain Native American tribes, promulgate and enforce regulations pertaining to oil and gas operations on Native American tribal lands where the company operate.
Logistics and Storage
Crude Oil and Refined Product Pipelines
The company’s crude oil pipeline and related assets are strategically positioned to support diverse and flexible crude oil supply options for MPC’s refineries, which receive imported and domestic crude oil through a variety of sources. Imported and domestic crude oil is transported to supply hubs from a variety of regions, including Cushing, Oklahoma; Western Canada; Wyoming; North Dakota; the Gulf Coast and Patoka, Illinois. Crude oil pipelines from the Delaware and Midland Basins, as well as from the Bakken region transport crude oil into major regional takeaway pipelines and refining centers. The company’s major crude oil pipelines are connected to these supply hubs and transport crude oil to refineries owned by MPC and third parties.
The company’s pipelines are strategically positioned to supply feedstocks to MPC refineries and transport products from certain MPC refineries to MPC and MPLX operations, as well as those of third parties. The company’s refined product pipelines are integrated with MPC’s and MPLX’s expansive network of refined product terminals, which support MPC’s integrated business.
Marine Assets
The company’s fleet of boats and barges transport light products, heavy oils, crude oil, renewable fuels, chemicals and feedstocks to and from refineries and terminals owned by MPC in the Mid-Continent and Gulf Coast regions. The company also have a marine repair facility (‘MRF’), which is a full-service marine shipyard, located on the Ohio River, adjacent to MPC’s Catlettsburg, Kentucky refinery. The MRF is responsible for the preventive routine and unplanned maintenance of towing vessels, barges and local terminal facilities.
Refining Logistics Assets
The company also owns and operates rail and truck racks and docks at certain of these refineries.
During 2022, MPC formed the Martinez Renewables joint venture and is in the process of converting the Martinez refinery to a renewable diesel facility. MPLX owns refining logistics assets with 5,809 mbbls of storage capacity associated with the facility, and has entered into terminalling and storage service agreements with the joint venture and its partners to provide services for the facility.
Other L&S Assets
MPLX owns and operates various other midstream assets, including 31 barge docks with a total capacity of 4,834 mbpd and 12 storage caverns with a storage commitment of 4,209 mbbls. As of December 31, 2022, in addition to the storage tanks at MPC’s refineries, the company operated 32 tank farms, including one leased tank farm, with total available storage capacity of 33,190 mbbls. The company’s operations also include a renewable fuels rail loading hub in North Dakota with 882 mbbls of storage capacity, and more than 100 miles of water pipeline systems in North Dakota and Wyoming dedicated to gathering and handling produced water associated with well completion and production activities. These assets each have associated service agreements with MPC or third parties.
Dakota Access Pipeline
The company holds a 9.19 percent indirect interest in a joint venture (‘Dakota Access’) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL. In 2020, the D.D.C. ordered the Army Corps, which granted permits and an easement for the Bakken Pipeline system, to prepare an environmental impact statement (‘EIS’) relating to an easement under Lake Oahe in North Dakota. The D.D.C. later vacated the easement. The Army Corps expects to release a draft EIS in 2023.
Tesoro High Plains Pipeline
In July 2020, Tesoro High Plains Pipeline Company, LLC (‘THPP’), a subsidiary of MPLX, received a Notification of Trespass Determination from the Bureau of Indian Affairs (‘BIA’) relating to a portion of the Tesoro High Plains Pipeline that crosses the Fort Berthold Reservation in North Dakota.
Gathering and Processing
The company has been negotiating with the EPA with respect to multiple alleged violations of the National Emission Standards for Hazardous Air Pollutants by the Chapita, Coyote Wash, Island, River Bend and Wonsits Valley Compressor Stations in Utah, as well as the Robinson Lake Gas Plant in North Dakota. The company is in the process of finalizing a settlement with the EPA pursuant to which the company expects to incorporate additional remedial measures, mitigate excess emissions associated with events and enter into a consent decree covering MPLX gas plants and compressor stations located in Utah, North Dakota and Wyoming. The company expects to finalize the settlement later in 2023.
History
MPLX LP was founded in 2012. The company was incorporated in 2012.
