March 5, 2021 [TWST] Robert D. Bondurant serves as President and Chief Executive Officer of Martin Midstream Partners L.P. and is a member of the board of directors of its general partner.

Mr. Bondurant joined Martin Resource Management Corporation in 1983 as Controller and subsequently as Chief Financial Officer from 1990 through 2020 and continues as a member of its board of directors. Mr. Bondurant served in the audit department of Peat Marwick, Mitchell and Co. from 1980 to 1983.

He holds a bachelor of business administration degree in accounting from Texas A&M University and is a Certified Public Accountant, licensed in the state of Texas.

In this 2,889 word interview, exclusively in the Wall Street Transcript, Mr. Bondurant details his strategy for Martin Midstream Partners.

“From the IPO date of November 2002 through 2014, we had substantial growth through access to capital.

Some of this growth was in areas that had upstream energy exposure, such as gas processing and fractionation in East Texas, and investment in West Texas LPG, which is an NGL pipeline, a crude storage terminal in Corpus Christi, and natural gas storage in North Louisiana and Mississippi.

These investments were large and had nice early returns, but with the energy commodity price collapse that began in late 2014, we made strategic decisions in 2015 to sell assets that had volatile upstream exposure and refocus on what we do best — providing services to refineries, including logistics through land and marine transportation, as well as terminal services.

We also provide marketing services for the byproducts that refiners produce, such as sulfur and natural gas liquids.

As a result, we have four segments: terminalling and storage, sulfur services, transportation, and natural gas liquids. Although these four segments are different, they have a common thread — all of these segments are servicing refiners in some form or fashion.”

This emphasis by Martin Midstream on refinery servicing has lead to a focus on several businesses.

“Let me begin with the terminalling and storage segment. First, we have approximately 30 terminal facilities, mostly located along the Gulf Coast, with storage capacity of approximately 2.8 million barrels.

Our specialty terminals receive hard-to-handle products from refineries and natural gas processing facilities, storing them for delivery to our customers. These specialty products include asphalt, natural gasoline, sulfuric acid, and ammonia, just to name a few.

Also within this segment, we own and operate a small naphthenic lubricant refinery located in southern Arkansas that includes a lubricant packaging facility, where we blend and package private label lubricants for use in the automotive and commercial industries.

Finally, within this segment we operate facilities in Kansas City, Missouri, in Houston, Texas and Phoenix, Arizona, to process and package specialty grease products, such as post-tension grease.

Next is our sulfur services segment. Within this segment we have two business lines.

First, in what I like to refer to as the pure sulfur segment, we aggregate, store and transport molten sulfur from Gulf Coast refineries to our terminals in Beaumont, Texas. The molten sulfur is shipped by our own barge to Tampa, Florida, where it is used in domestic fertilizer production.

We also convert molten into prilled sulfur, which we store for our refinery customers.

Basically, the molten sulfur goes through a water bath process that converts the liquid to a small solid pellet. This prilled sulfur is eventually loaded onto dry bulk vessels for international delivery, where it is remelted for use in fertilizer production.

Based on a five-year average, approximately 70% of prilled sulfur exports from the U.S. Gulf Coast originate at our terminal in Beaumont.

The second business line within our sulfur segment is the production of sulfur-based fertilizers, which are marketed to wholesale fertilizer distributors and industrial users. Here we purchase molten sulfur from refineries and use it as a feedstock to convert to fertilizer. These sulfur-based fertilizers are used in corn crop production, making corn acres planted a key driver of this business.

Moving to our transportation segment, we own both land and marine assets. Our fleet of tank trucks service the petroleum, petrochemical and chemical industries. We deliver hard-to-handle products for refineries and chemical companies across the U.S. with our fleet of specialty trailers.

In addition, our land assets are utilized by our other business segments. For example, land transportation delivers sulfur from refineries to our sulfur terminals; NGLs for the natural gas liquids segment; and lubricants for the terminalling and storage segment.

On the marine side, we utilize both inland and offshore tows to provide transportation of petroleum products and petroleum byproducts. As within the land group, we handle specialty products for oil refiners and international and domestic trading partners.

Finally, our natural gas liquids segment purchases and stores NGLs, both from and for delivery to refineries, as well as industrial users and propane retailers.

Within this segment, we have approximately 2.1 million barrels of underground storage. Of that, approximately 400,000 barrels are used in our seasonal propane business.

The other 1.7 million barrels are dedicated to our butane optimization business. Refineries excess butane during the summer months, but require butane during the winter months for gasoline blending purposes.

This supply/demand imbalance creates opportunities for us to utilize our underground storage assets in service to the refineries.

Lastly within the NGL segment, we deliver natural gasoline from refiners and natural gas processors to our Spindletop terminal in Beaumont, Texas. This terminal then supplies the local petrochemical industry with natural gasoline for use as a feedstock.”

The Martin Midstream CEO sees a long term value for his company, despite recent trends toward renewable energy sources:

“Regarding the movement towards decarbonization, first, I believe this will take a considerable amount of time to implement.

Second, I believe our assets and the majority of our operations around the Gulf Coast refinery corridor are strategic longer term. Refineries in our area of operations are the largest and some of the most sophisticated refiners in the U.S.

There’s adequate crude supply to them by pipeline and by VLCCs. In fact, some of these Gulf Coast refineries have made investment decisions to expand over the next two to three years.

Because of these investment decisions, it appears they plan to operate the assets long term.

So my point is this: If there is a time in the future where there will no longer be any need for gasoline, diesel, jet fuel, marine fuels, or even asphalt, my view is that refineries we service in the Gulf Coast will be the last refineries to cease operation.”

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