Martin Midstream Partners L.P. Profile
Martin Midstream Partners L.P. provides specialty services to major and independent oil and gas companies, independent refiners, large chemical companies, and other wholesale purchasers of certain petroleum products and by-products, with significant business concentrated around the United States (U.S.) Gulf Coast refinery complex, which is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry. The petroleum products and by-products the company gathers, transports, stores and markets are produced primarily by major and independent oil and gas companies who often rely on third parties, such as the company, for the transportation and disposition of these products.
The company’s four primary business lines include:
Terminalling, processing, storage and packaging services for petroleum products and by-products, including the refining of naphthenic crude oil;
Land and marine transportation services for petroleum products and by-products, chemicals, and specialty products;
Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and
Natural gas liquids (‘NGL’) marketing, distribution, and transportation services.
The company’s vertically integrated services have created long-standing relationships with a diversified customer base that includes major and independent oil and gas companies, independent refiners, chemical companies, and other wholesale purchasers of certain petroleum products and by-products, with significant business concentrated around the U.S. Gulf Coast refinery complex, which is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry.
Martin Midstream GP LLC serves as the general partner of the company. Martin Resource Management Corporation directs the company’s business operations through its ownership of the company’s general partner.
Primary Business Segments
The company’s primary business segments can be generally described as follows:
Terminalling and Storage
The company owns or operates 14 marine shore-based terminal facilities and 13 specialty terminal facilities located primarily in the Gulf Coast region of the U.S. with aggregate storage capacity of 2.7 million barrels. The company provides storage, refining, blending, packaging, and handling services for producers and suppliers of petroleum products and by-products, including the refining of naphthenic crude oil and the blending and packaging of various grades and quantities of industrial, commercial, and automotive lubricants and greases. The company’s facilities and resources provide the company with the ability to handle various products that require specialized treatment, such as molten sulfur and asphalt. The company also provides land rental to oil and gas companies along with storage and handling services for lubricants and fuels through the company’s shore-based terminals. The company provides these terminalling and storage services on a fixed-fee basis and a significant portion of the contracts in this segment provide for minimum fee arrangements that are not based on the volumes handled. The company’s terminalling, processing, storage and packaging services for petroleum products and by-products would be difficult for the company’s customers or competitors to replicate.
Transportation
The company operates a fleet of both land transportation and marine transportation assets that transport petroleum products and by-products, petrochemicals, and chemicals. The company’s land transportation assets include approximately 700 trucks and 1,200 tank trailers which are based across 25 terminals strategically located throughout the U.S. Gulf Coast and southeastern U.S. The company’s marine transportation assets include 27 inland marine tank barges, 15 inland push boats and one articulated offshore tug and barge unit that primarily operate coastwise along the Gulf of Mexico and on the U.S. inland waterway system, primarily between domestic ports along the Gulf of Mexico, the Intracoastal Waterway, the Mississippi River system and the Tennessee-Tombigbee Waterway system. The company’s ‘refinery and petrochemical services’ model is focused on transportation of heavy tank bottoms (by-products) and other petroleum products, hauling NGLs, molten sulfur, sulfuric acid, paper mill liquids, chemicals, and numerous other bulk liquid commodities from refineries and petrochemical production locations to end markets. The company provides these transportation services on a fee basis, and many of the company’s customers have long standing contractual relationships with the company. The company’s modernized asset base is attractive both to the company’s existing customers, as well as potential new customers. In addition, the company’s marine fleet contains several vessels that reflect the company’s focus on specialty products.
Sulfur Services
The company has developed an integrated system of transportation assets and facilities relating to sulfur services. The company processes and distributes sulfur produced by oil refineries primarily located in the Gulf Coast region of the U.S. The company purchases and sells molten sulfur on contracts that are tied to sulfur indices to minimize margin fluctuations. The company processes molten sulfur into prilled or pelletized sulfur at the company’s facility in Beaumont, Texas on contracts that traditionally provide guaranteed minimum fees. The sulfur the company processes and handles is primarily used in the production of fertilizers and industrial chemicals. The company owns and operates five sulfur-based fertilizer production plants and one emulsified sulfur blending plant. These plants are located in Texas and Illinois and manufacture primarily sulfur-based fertilizer products for wholesale distributors and industrial users. Demand for the company’s sulfur products exists across the globe, and the company’s asset base provides additional opportunities to handle increases in the U.S. supply and access to foreign demand.
Natural Gas Liquids
The company sells and distributes NGLs that it primarily purchases from refineries and natural gas processors. The company stores and transports NGLs for wholesale deliveries to refineries, industrial NGL users and propane retailers in the southeastern U.S. The company owns approximately 2.2 million barrels of underground storage capacity for NGLs. This segment has historically been driven primarily by the purchase of butane in the summer months, when demand is typically low, and sale in the winter months, when demand is typically higher (‘butane optimization business’).
Growth Strategy
The key components of the company’s growth strategy are to establish strategic commercial alliances; spur internal organic growth by attracting new customers and expanding services provided to existing customers; and pursue organic growth projects.
Terminalling and Storage Segment
Specialty Petroleum Terminals
The company owns or operates 13 terminalling facilities providing storage, handling and transportation of various petroleum products and by-products as well as the blending and packaging of naphthenic lubricants and automotive, commercial, industrial, and post-tension greases. The locations and capabilities of the company’s terminals are structured to complement the company’s other businesses and reflect the company’s strategy to provide a broad range of integrated services in the storage, handling and transportation of products. The company developed its terminalling and storage assets by acquisition and upgrades of existing facilities, as well as developing the company’s own properties strategically located near rail, waterways and pipelines. The company anticipates further expansion of its terminalling facilities primarily through organic growth.
At the Neches, Stanolind, and Tampa terminals, the company’s customers are primarily energy and petrochemical companies. In addition, Martin Resource Management Corporation pays the company for terminalling and storage of asphalt at these facilities through a terminalling service agreement that includes a provision for minimum volume throughput requirements. The company conducts a substantial portion of its terminalling and storage operations under long-term contracts, which enhances the stability and predictability of the company’s operations.
In Smackover, Arkansas, the company owns a refinery where the company processes naphthenic crude oil into finished products that include naphthenic lubricants, distillates, asphalt and other intermediates. The refinery's capacity is dedicated to a subsidiary of Martin Resource Management Corporation through a long-term tolling agreement based on throughput rates and a monthly reservation fee.
In Smackover, Arkansas, the company owns and operates a terminal used for lubricant blending, processing, packaging, marketing and distribution. This terminal is used as the company’s central hub for branded and private label packaged lubricants where the company receives, packages and ships heavy-duty, passenger car, and industrial lubricants to a network of retailers and distributors.
In Kansas City, Missouri, the company leases and operates a plant that specializes in the production, packaging and distribution of automotive, commercial and industrial greases. In Houston, Texas, the company owns and operates a plant that specializes in the production and distribution of commercial and industrial greases. In Phoenix, Arizona, the company leases and operates a plant that specializes in the production and distribution of commercial and industrial greases.
The company owns asphalt terminals in each of Hondo, South Houston, and Port Neches, Texas and Omaha, Nebraska, each dedicated to a subsidiary of Martin Resource Management Corporation through a terminalling service agreement based on throughput rates.
In Beaumont, Texas, the company owns a terminal (‘Spindletop Terminal’) where the company receives natural gasoline via pipeline, store the natural gasoline in above ground tanks, and then ship the product to the company’s customers via other pipelines to which the facility is connected, referred to as the ‘Spindletop Terminal.’ The company’s fees for the use of this facility are based on the volume of barrels shipped from the terminal under an arrangement that includes a provision for minimum volume throughput requirements.
Marine Shore-Based Terminals. The company owns or operates 14 marine shore-based terminals along the U.S. Gulf Coast from Theodore, Alabama to Corpus Christi, Texas. The company’s terminalling assets are located at strategic distribution points for the products the company handles and is in close proximity to the company’s customers. The company is one of the largest operators of marine shore-based terminals in the Gulf Coast region of the U.S. These terminals are used to distribute and market fuel and lubricants. Additionally, full service terminals also provide shore bases for companies that are operating in the offshore exploration and production industry. Customers are primarily oil and gas exploration and production companies and oilfield service companies, such as drilling fluid companies, marine transportation companies and offshore construction companies. Shore bases typically provide logistical support, including the storage and handling of tubular goods, loading and unloading bulk materials, providing facilities from which major and independent oil companies can communicate with and control offshore operations and leasing dockside facilities to companies, which provide complementary products and services, such as drilling fluids and cementing services. These contracts generally provide the company a fixed land rental fee and additional rental fees that are determined based on a percentage of the sales value of the products and services delivered from the shore base. In addition, Martin Resource Management Corporation, through terminalling service agreements, pays the company for terminalling and storage of fuels and lubricants at these terminal facilities and includes a provision for minimum volume throughput requirements.
The company’s marine shore-based terminals are divided into two classes of terminals: full service terminals and fuel and lubricant terminals.
Full Service Terminals
The company owns or operates three full service terminals. These facilities provide logistical support services and storage and handling services for fuel and lubricants. The significant difference between the company’s full service terminals and the company’s fuel and lubricant terminals is that the company’s full service terminals generate additional revenues by providing shore bases to support the company’s customer’s operating activities related to the offshore exploration and production industry. One typical use for the company’s shore bases is for drilling fluids manufacturers to manufacture and sell drilling fluids to the offshore drilling industry. Offshore drilling companies may also set up service facilities at these terminals to support their offshore operations. Customers of the company’s full service terminals are primarily oil and gas exploration and production companies, oilfield service companies such as drilling fluids companies, marine transportation companies and offshore construction companies.
Fuel and Lubricant Terminals
The company owns or operates 11 fuel and lubricant terminals located in the Gulf Coast region of the U.S. that provide storage and handling services for lubricants and fuel oil.
Transportation segment
Land Transportation
Land Fleet
The company operates a fleet of land transportation assets comprising approximately 700 trucks and 1,200 tank trailers that transport petroleum products and by-products, petrochemicals, and chemicals. The company’s land transportation assets operate out of 25 strategically located terminals throughout the U.S. Gulf Coast and Southeastern U.S.
The company’s major land transportation customers include energy, petrochemical, and chemical companies and Martin Resource Management Corporation. The company conducts its land transportation services under fee-based transportation agreements with customers in which the company has long term relationships.
The company is party to a master transportation services agreement under which the company provides land transportation services to Martin Resource Management Corporation on a demand basis at applicable market rates.
Marine Transportation
Marine Fleet
The company utilizes a fleet of inland and offshore tows that provide marine transportation of petroleum products and by-products produced in oil refining. The company’s marine transportation business operates coastwise along the Gulf of Mexico and east coast of the U.S., as well as on the U.S. inland waterway system, primarily between domestic ports along the Gulf of Mexico, Intracoastal Waterway, the Mississippi River system and the Tennessee-Tombigbee Waterway system. The company’s inland tows generally consist of one push boat and one to three tank barges, depending upon the horsepower of the push boat, the river or canal capacity and conditions, and customer requirements. The company’s offshore tow consists of one tugboat, with much greater horsepower than an inland push boat, and one large tank barge. The company transports asphalt, fuel oil, gasoline, sulfur and other bulk liquids.
The company’s largest marine transportation customers include major and independent oil and gas refining companies, petroleum marketing companies and Martin Resource Management Corporation. The company conducts its marine transportation services on a fee basis primarily under spot contracts.
The company is a party to a marine transportation agreement under which the company provides marine transportation services to Martin Resource Management Corporation on a spot contract basis at applicable market rates.
Sulfur Services segment
Operations and Products
The company maintains an integrated system of transportation assets and facilities relating to the company’s sulfur services. The company gathers molten sulfur from refiners, primarily located on the U.S. Gulf Coast. The company transports sulfur by inland and offshore barges, railcars and trucks. The company has the necessary assets and expertise to handle the unique requirements for transportation and storage of molten sulfur.
The company also provides barge transportation and tank storage services to large producers and consumers of sulfur under contracts with remaining terms from one to five years in duration.
The company operates a sulfur forming facility in Beaumont, Texas, which is used to convert molten sulfur into solid form (prills/granules). The Beaumont facility is equipped with two wet prill units and one granulation unit capable of processing a combined 5,500 metric tons of molten sulfur per day. Formed sulfur is stored in bulk until sold into local or international agricultural markets. The company’s forming services contracts are fee based and typically include minimum fee guarantees.
Fertilizer and related sulfur products are a natural extension of the company’s molten sulfur business because of its access to sulfur and the company’s distribution capabilities.
In the U.S., fertilizer is generally sold to farmers through local dealers. These dealers are typically owned and supplied by much larger wholesale distributors. The company sells to these wholesale distributors. The company’s industrial sulfur products are marketed primarily in the southern U.S., where many paper manufacturers and power plants are located. The company’s products are sold in accordance with price lists that vary from state to state. The company transports its fertilizer and industrial sulfur products to the company’s customers using third-party common carriers. The company utilizes barge and rail shipments for large volume and long distance shipments where available.
The company manufactures and markets the following sulfur-based fertilizer and related sulfur products:
Ammonium Sulfate Products
The company produces various grades of ammonium sulfate, including granular, coarse, standard, and 40% ammonium sulfate solution. These products primarily serve direct application agricultural markets. The company packages these custom grade products under both proprietary and private labels and sell them to major retail distributors and other retail customers. The company’s ammonium sulfate plant produces approximately 400 tons per day of quality ammonium sulfate and is marketed to the company’s customers throughout the U.S.
Liquid Sulfur Products
The company produces ammonium thiosulfate at its Neches terminal facility in Beaumont, Texas. The company’s market is predominantly the Mid-South U.S. and Coastal Bend area of Texas.
Plant Nutrient Sulfur Products
The company produces plant nutrient and agricultural ground sulfur products at the company’s facilities in Odessa, Texas, Seneca, Illinois and Cactus, Texas. The company’s plant nutrient sulfur product is a 90% degradable sulfur product marketed under the Disper-Sul trade name and sold throughout the U.S. to direct application agricultural markets.
Industrial Sulfur Products
The company produces industrial sulfur products such as elemental pastille sulfur, industrial ground sulfur products, and emulsified sulfur. The company produces elemental pastille sulfur at the company’s Odessa, Texas and Seneca, Illinois facilities. Elemental pastille sulfur is used to increase the efficiency of the coal-fired precipitators in the power industry. These industrial ground sulfur products are also used in a variety of dusting and wettable sulfur applications, such as rubber manufacturing, fungicides, sugar and animal feeds. The company produces emulsified sulfur at the company’s Nash, Texas facility. Emulsified sulfur is primarily used to control the sulfur content in the pulp and paper manufacturing processes.
Sulfuric Acid
Sulfuric acid production facility at the company’s Plainview, Texas location processes molten sulfur to produce a dedicated supply of raw material sulfuric acid to the company’s ammonium sulfate production plant. The sulfuric acid produced and not consumed by the captive ammonium sulfate production is sold to third parties.
Sulfur Services Facilities
The company owns various marine assets and uses them to transport molten sulfur between the U.S. Gulf Coast storage terminals (including the company’s terminal in Beaumont, Texas) under third-party marine transportation agreements.
Seasonality
Sales of the company’s agricultural fertilizer products are partly seasonal as a result of increased demand during the growing season.
Natural Gas Liquids segment
Facilities
The company purchases NGLs primarily from major domestic oil refiners and natural gas processors. The company transports NGLs using MTI's land transportation fleet or by contracting with common carriers, owner-operators and railroad tank car transportation companies. The company typically enters into annual contracts with independent retail propane distributors to deliver their estimated annual volume requirements based on prevailing market prices. Dependable delivery is very important to these customers and in some cases may be more important than price. The company ensures adequate supply of NGLs through term purchase contracts; storage of NGLs; the transportation fleet owned by MTI; and product management expertise to obtain supplies when needed.
In addition to the owned NGL facilities above, the company leases underground storage capacity at two locations under short-term lease agreements.
The company’s NGL customers consist of refiners, industrial processors and retail propane distributors. The majority of the company’s NGL volumes are sold to refiners and industrial processors.
Relationship with Martin Resource Management Corporation
Martin Resource Management Corporation is engaged in the following principal business activities: distributing asphalt, marine fuel and other liquids; providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, and Florida; operating a crude oil gathering business in Stephens, Arkansas; providing crude oil gathering, refining, and marketing services of base oils, asphalt, and distillate products in Smackover, Arkansas; providing crude oil marketing and transportation from the well head to the end market; operating an environmental consulting company; supplying employees and services for the operation of the company’s business; and operating, solely for the company’s account, the asphalt facilities in Hondo, South Houston and Port Neches, Texas, and Omaha, Nebraska.
Customers
Martin Resource Management Corporation is one of the company’s significant customers. The company’s sales to Martin Resource Management Corporation accounted for approximately 9%, 9%, and 13% of the company’s total revenues for the year ended December 31, 2022.
Environmental and Regulatory Matters
The company generates both hazardous and nonhazardous solid wastes, which are subject to requirements of the federal Resource Conservation and Recovery Act, as amended (‘RCRA’) and comparable state statutes. From time to time, the U.S. Environmental Protection Agency (‘EPA’) has considered making changes in nonhazardous waste standards that would result in stricter disposal requirements for these wastes.
The company’s operations are subject to the federal Clean Air Act (‘CAA’), as amended, and comparable state statutes. The company’s operations, including its manufacturing, processing and storage facilities and terminals, are in substantial compliance with applicable requirements of the CAA and analogous state laws.
The company is in substantial compliance with Clean Water Act permitting requirements, as well as the conditions imposed thereunder.
The company’s marine transportation operations are subject to regulation by the U.S. Coast Guard, federal laws, state laws and certain international treaties.
The workplaces associated with the company’s manufacturing, processing, terminal and storage facilities are subject to the requirements of the federal Occupational Safety and Health Act (‘OSH Act’) and comparable state statutes. The company has conducted its operations in substantial compliance with OSH Act requirements, including general industry standards, record keeping requirements and monitoring of occupational exposure to regulated substances. The company’s marine vessel operations are also subject to safety and operational standards established and monitored by the U.S. Coast Guard.
The company is responsible for monitoring the ownership of its subsidiaries that engage in maritime transportation and for taking any remedial action necessary to ensure that no violation of the Jones Act ownership restrictions occurs.
The company’s trucking operations are subject to regulation by the U.S. Department of Transportation and by various state agencies under the Federal Motor Carrier Safety Act and the Hazardous Materials Transportation Act and analogous state laws.
History
Martin Midstream Partners L.P. was founded in 2002. The company was incorporated in 2002.
