Genesis to expand footprint in deepwater Gulf of Mexico with pipelines (updated)

Genesis Energy

04/05/2022 12:57

(Adds detail)
    By Stephanie Kelly
    NEW YORK, May 4 (Reuters) - Genesis Energy  GEL.N  will
increase its footprint in the deepwater Gulf of Mexico with
expansion of an existing pipeline system and construction of a
new line, it said in its first-quarter earnings report on
Wednesday. 
    Genesis will spend about $500 million over the next three
years expanding the capacity of its CHOPs system, which
transports oil from deepwater oilfields to markets on the Texas
Gulf Coast, as well as building a new 105-mile pipeline called
"SYNC".
    The move comes as the company has entered into definitive
agreements to transport the crude from two deepwater
developments representing a combined production handling
capacity of around 160,000 barrels of oil per day, CEO Grant
Sims said. 
    First oil from both deepwater developments is expected in
late 2024 or 2025, Sims said. 
    The company also has entered into an agreement to sell its
idled offshore Independence Hub platform for gross proceeds of
$40 million, Sims said. 
    In its first quarter, the company's offshore pipeline
transportation segment performed below expectations because of
unplanned producer downtime and mechanical operational
disruptions that have largely been remedied, Sims said. 
    Genesis expects its 2022 financial performance to come in
toward the high end of its previously announced adjusted EBITDA
range of $565 million to $585 million, Sims said.
    Demand to move clean refined products from the Gulf Coast to
the East Coast has increased because of geopolitical events,
which have kept up strong demand for Genesis's larger blue water
vessels, the company said. 
    Utilization of the company's inland marine vessels is
nearing 100%, as refinery utilization rates recover. 

 (Reporting by Stephanie Kelly; editing by Jason Neely and
Bernadette Baum)
 ((Stephanie.Kelly@thomsonreuters.com; 646-223-4471; Reuters
Messaging: stephanie.kelly.thomsonreuters.com@reuters.net))