Energy Transfer LP (ET): Business Model Canvas [11-2024 Updated]

Energy Transfer LP (ET) is a key player in the energy sector, known for its vast pipeline network and comprehensive midstream solutions. This blog post delves into ET's business model canvas, highlighting its strategic partnerships with oil and gas producers, robust customer relationships, and diverse revenue streams. Discover how ET efficiently navigates the complexities of energy logistics and its commitment to delivering value across the industry.

Energy Transfer LP (ET) - Business Model: Key Partnerships

Collaborations with Oil and Gas Producers

Energy Transfer LP collaborates with various oil and gas producers to enhance its operations and expand its service offerings. The partnerships allow Energy Transfer to secure a consistent supply of crude oil and natural gas, essential for its transportation and storage services. For instance, the company has agreements in place with major producers operating in the Permian Basin.

Joint Ventures, e.g., with Sunoco LP

Energy Transfer has established significant joint ventures, notably with Sunoco LP. Together, they operate a joint venture focused on crude oil and produced water gathering assets in the Permian Basin. This venture encompasses over 5,000 miles of pipelines and has a crude oil storage capacity exceeding 11 million barrels. Energy Transfer holds a 67.5% stake in this joint venture, while Sunoco LP owns the remaining 32.5%.

Joint Venture	Energy Transfer Stake (%)	Sunoco LP Stake (%)	Pipelines Operated (miles)	Storage Capacity (million barrels)
Permian Joint Venture	67.5	32.5	5,000	11

Partnerships with Local and Interstate Pipeline Companies

Energy Transfer has formed strategic partnerships with several local and interstate pipeline companies, enhancing its ability to transport crude oil and natural gas across various regions. This network of partnerships allows for greater flexibility and efficiency in meeting customer demands. The company’s extensive pipeline network includes approximately 38,000 miles of pipelines, which are vital for its operations.

Additionally, these partnerships help to mitigate risks associated with regulatory changes and market fluctuations, providing Energy Transfer with a robust framework for operational stability. The collaborations also facilitate the sharing of resources and technology, further optimizing operational efficiency.

Energy Transfer LP (ET) - Business Model: Key Activities

Transportation of Natural Gas, NGLs, and Crude Oil

Energy Transfer LP is heavily involved in the transportation of natural gas, natural gas liquids (NGLs), and crude oil. For the three months ended September 30, 2024, the company reported the following transportation volumes:

• Natural gas transported: 16,616 BBtu/d
• NGL transportation volumes: 2,237 MBbls/d
• Crude oil transportation volumes: 7,025 MBbls/d

The revenues from crude oil transportation amounted to $7.309 billion, while NGL and refined products transportation generated $5.853 billion in revenues for the same period.

Storage and Terminal Operations

Energy Transfer operates a variety of storage and terminal facilities for natural gas, NGLs, and crude oil. As of September 30, 2024, the terminal operations recorded the following volumes:

• Crude oil terminal volumes: 3,533 MBbls/d
• NGL and refined products terminal volumes: 1,505 MBbls/d

The segment margin for terminal services increased by $54 million in the three months ended September 30, 2024, compared to the same period in 2023, due to higher throughput and contractual rate escalations.

Fractionation and Processing of NGLs

Energy Transfer's NGL fractionation capacity is a critical part of its operations. The company operates fractionation plants that process NGLs into various products. During the third quarter of 2024, the fractionation volumes were reported as:

• NGL fractionation volumes: 1,152 MBbls/d

The revenues from NGL fractionation and services contributed to a segment margin increase of $100 million year-over-year.

Activity	Volume (BBtu/d or MBbls/d)	Revenue ($ billion)	Segment Margin ($ million)
Natural Gas Transportation	16,616 BBtu/d	0.505	572
NGL Transportation	2,237 MBbls/d	4.707	1,326
Crude Oil Transportation	7,025 MBbls/d	7.309	1,012
NGL Fractionation	1,152 MBbls/d	N/A	239
Terminal Operations	1,505 MBbls/d	N/A	260

Energy Transfer LP (ET) - Business Model: Key Resources

Extensive pipeline network across the U.S.

Energy Transfer LP operates an extensive pipeline network, comprising approximately 120,000 miles of pipelines across the United States as of 2024. This network supports the transportation of natural gas, crude oil, NGLs (natural gas liquids), and refined products. The company reported transportation volumes of 2,237 MBbls/d for NGLs and 574 MBbls/d for refined products in Q3 2024. The company's infrastructure is designed to facilitate efficient movement and storage of energy products, significantly enhancing its operational capability and market reach.

Terminal facilities for storage and distribution

Energy Transfer maintains a diverse portfolio of terminal facilities crucial for the storage and distribution of energy products. The company operates 12 major terminals along the Gulf Coast and Northeast regions, with capacity for over 80 million barrels of product. In 2024, terminal services margins increased by $54 million, primarily due to higher export volumes and contractual rate escalations. This strategic positioning allows for effective distribution logistics, supporting both domestic and international markets.

Skilled workforce in operations and management

The success of Energy Transfer is underpinned by its skilled workforce, comprising over 7,000 employees across various operational and management roles. The company invests significantly in training and development, ensuring that its workforce is equipped with the necessary skills to operate complex pipeline systems and terminal facilities. In 2024, total operating expenses, excluding non-cash compensation, increased to $3.72 billion, reflecting the company's commitment to maintaining a high-performance workforce.

Key Resource	Details	Financial Impact
Pipelines	120,000 miles of pipelines across the U.S.	Transportation volumes: NGLs - 2,237 MBbls/d; Refined products - 574 MBbls/d
Terminal Facilities	12 major terminals; capacity over 80 million barrels	Increased terminal services margin by $54 million in 2024
Workforce	Over 7,000 skilled employees	Total operating expenses: $3.72 billion in 2024

Energy Transfer LP (ET) - Business Model: Value Propositions

Reliable and efficient transportation services

Energy Transfer LP (ET) provides reliable transportation services for natural gas, crude oil, and refined products. As of September 30, 2024, the company reported an increase in NGL transportation volumes to 2,237 MBbls/d compared to 2,161 MBbls/d for the same period in 2023, reflecting a growth of 76 MBbls/d. Additionally, refined products transportation volumes rose to 574 MBbls/d from 551 MBbls/d, marking an increase of 23 MBbls/d.

Comprehensive midstream solutions

ET offers a wide range of midstream services, including gathering, processing, and transporting natural gas and liquids. For the nine months ended September 30, 2024, the company reported revenues of $18.17 billion, an increase from $15.86 billion in the same period of 2023. The segment adjusted EBITDA for midstream operations reached $2.205 billion, up from $1.851 billion year-over-year.

Service Type	Volume (MBbls/d)	Segment Adjusted EBITDA (in billions)	Revenue (in billions)
NGL Transportation	2,237	$2.205	$18.17
Refined Products Transportation	574	$1.076	$5.853
Crude Oil Transportation	Not specified	$2.417	Not specified

Strong market presence and expertise in energy logistics

Energy Transfer has established a strong market presence with extensive pipeline networks across the United States. As of September 30, 2024, the company's total consolidated indebtedness was $59.26 billion, reflecting its capability to finance large-scale operations and acquisitions. The company has also demonstrated its market expertise through strategic acquisitions, including the recent acquisition of WTG Midstream for $2.174 billion. This acquisition is expected to enhance ET's operational capabilities and market share in the energy logistics sector.

In terms of profitability, ET reported a net income of $5.118 billion for the nine months ended September 30, 2024, compared to $3.727 billion in the same period of 2023, indicating a significant increase in overall profitability.

Energy Transfer LP (ET) - Business Model: Customer Relationships

Long-term contracts with producers and consumers

Energy Transfer LP (ET) engages in long-term contracts, which are a cornerstone of its business model. These contracts ensure a stable revenue stream and help manage market volatility. In 2024, the company reported NGL transportation volumes at approximately 2,237 MBbls/d, a significant increase from 2,161 MBbls/d in 2023, largely attributed to these long-term agreements.

Additionally, ET's refined products transportation volumes rose to 574 MBbls/d in 2024, up from 551 MBbls/d in the previous year. Such growth underscores the effectiveness of ET's contract strategy in securing reliable service commitments from both producers and consumers.

Customer support and service teams for queries

Energy Transfer maintains dedicated customer support and service teams to address client inquiries and operational needs. This commitment to customer service is reflected in their operational metrics, with segment Adjusted EBITDA reaching $3,071 million for the nine months ending September 30, 2024, up from $2,852 million in the same period of 2023. The focus on customer support has facilitated smoother operations and enhanced client satisfaction.

ET's operational efficiency is further demonstrated by a decrease in operating expenses, which amounted to $703 million for the nine months ending September 30, 2024, compared to $667 million in 2023. This indicates effective management of resources, which supports customer service initiatives.

Engagement through regular updates and communication

Energy Transfer engages its customers through regular updates and transparent communication. In 2024, the company has emphasized the importance of keeping clients informed about operational changes and market conditions. This approach has contributed to improved customer relations, as evidenced by a $1,326 million segment margin in NGL and refined products transportation, reflecting a $100 million increase from the previous year.

Moreover, ET’s cash distributions to partners have also increased, with $3.43 billion distributed in 2024, compared to $3.12 billion in 2023. This financial stability allows Energy Transfer to maintain frequent communication with customers, thereby fostering long-term relationships and trust.

Metric	2024	2023	Change
NGL Transportation Volumes (MBbls/d)	2,237	2,161	+76
Refined Products Transportation Volumes (MBbls/d)	574	551	+23
Segment Adjusted EBITDA ($ millions)	3,071	2,852	+219
Operating Expenses ($ millions)	703	667	+36
Distributions to Partners ($ billions)	3.43	3.12	+0.31

Energy Transfer LP (ET) - Business Model: Channels

Direct sales to energy producers and refiners

Energy Transfer LP (ET) primarily engages in direct sales to energy producers and refiners, focusing on the transportation and logistics of natural gas, crude oil, and other liquids. In 2024, the company reported revenues of approximately $17.4 billion from its transportation and storage segments. This revenue stream is bolstered by long-term contracts with producers, ensuring stable cash flows and operational efficiency.

Online platforms for service requests and information

Energy Transfer utilizes online platforms for service requests, information dissemination, and customer engagement. Their digital infrastructure allows customers to track shipments, manage contracts, and access real-time data on pipeline operations. In 2024, the company invested heavily in enhancing its digital capabilities, with a focus on user experience and operational transparency, which is critical for maintaining customer relationships in a competitive market.

Industry trade shows and conferences for networking

Participation in industry trade shows and conferences is a key channel for Energy Transfer to network with potential clients and partners. In 2024, the company attended major events such as the North American Gas Forum and the International Petroleum Technology Conference, which are pivotal for showcasing their services and technological innovations. These events facilitate direct interactions with industry stakeholders, enhancing brand visibility and fostering new business opportunities.

Channel Type	Description	Key Metrics
Direct Sales	Sales to energy producers and refiners	Revenues: $17.4 billion (2024)
Online Platforms	Digital services for customer engagement and information	Investment in digital capabilities: Significant in 2024
Trade Shows	Networking and showcasing services	Major events attended: North American Gas Forum, IPTC (2024)

Energy Transfer LP (ET) - Business Model: Customer Segments

Oil and gas exploration and production companies

Energy Transfer LP serves a variety of oil and gas exploration and production companies, providing transportation and storage services for crude oil, natural gas, and natural gas liquids (NGLs). In 2024, the company reported an increase in crude oil transportation volumes, driven by growth in gathering systems and contributions from recently acquired assets. The segment generated revenues of approximately $22.3 billion for the nine months ended September 30, 2024, compared to $19.3 billion in the same period in 2023.

Refineries and petrochemical plants

Energy Transfer supplies refineries and petrochemical plants with essential feedstocks and transportation services. The segment revenues from NGL and refined products transportation and services reached $18.2 billion for the nine months ended September 30, 2024, up from $15.9 billion in the prior year. The company’s extensive pipeline network facilitates the efficient movement of refined products, contributing to operational efficiencies for its refinery clients.

Large-scale industrial consumers of energy

Large-scale industrial consumers of energy, including power plants and manufacturing facilities, represent a key customer segment for Energy Transfer. The company’s services include the provision of reliable natural gas supply and transportation. The average daily transportation volume for NGLs in 2024 reached 2,237 MBbls/d, reflecting increased demand from industrial consumers.

Customer Segment	Revenue (9M 2024)	Volume (MBbls/d)	Key Services
Oil and gas exploration and production companies	$22.3 billion	Varies by client	Transportation, storage
Refineries and petrochemical plants	$18.2 billion	Varies by client	Feedstock supply, transportation
Large-scale industrial consumers	Not specified	2,237 MBbls/d	Natural gas supply, transportation

Energy Transfer LP (ET) - Business Model: Cost Structure

Operating costs for pipeline maintenance and labor

As of September 30, 2024, Energy Transfer LP reported operating expenses of $616 million, which reflects an increase of $49 million compared to $567 million for the same period in 2023. This increase is largely attributed to heightened maintenance project costs and employee-related expenses.

Capital expenditures for infrastructure development

For the nine months ended September 30, 2024, Energy Transfer's total capital expenditures amounted to $2.64 billion, compared to $2.39 billion for the same period in 2023. A breakdown of the capital expenditures is as follows:

Category	Growth Capital Expenditures (in millions)	Maintenance Capital Expenditures (in millions)	Total (in millions)
Intrastate transportation and storage	9	41	50
Interstate transportation and storage	103	129	232
Midstream	529	296	825
NGL and refined products transportation and services	846	83	929
Crude oil transportation and services	183	100	283
Investment in Sunoco LP	146	66	212
Investment in USAC	206	24	230
All other (including eliminations)	64	48	112
Total	2,086	787	2,873

Regulatory compliance and safety expenditures

In 2024, Energy Transfer LP incurred an increase of $10 million in selling, general, and administrative expenses primarily due to higher professional fees and overhead costs associated with regulatory compliance and safety measures. The company continues to prioritize safety and compliance within its operational framework, which is reflected in these expenditures.

Energy Transfer LP (ET) - Business Model: Revenue Streams

Fees from Transportation and Storage Services

Energy Transfer LP generates substantial revenue from its transportation and storage services. For the three months ending September 30, 2024, the revenues from gathering, transportation, and other fees amounted to $3.105 billion, an increase from $2.824 billion in the same period of 2023. In the nine-month period ending September 30, 2024, this revenue reached $9.031 billion, up from $8.412 billion year-over-year.

Period	Revenues ($ billion)	Change ($ billion)
3 Months Ended September 30, 2024	$3.105	$0.281
3 Months Ended September 30, 2023	$2.824	N/A
9 Months Ended September 30, 2024	$9.031	$0.619
9 Months Ended September 30, 2023	$8.412	N/A

Sales of Processed NGLs and Crude Oil

Sales from processed natural gas liquids (NGLs) and crude oil also significantly contribute to Energy Transfer's revenue streams. For the three months ending September 30, 2024, the company reported crude sales of $6.476 billion and NGL sales of $4.707 billion, compared to $6.587 billion and $3.760 billion in the same period of 2023, respectively. For the nine-month period, crude sales reached $19.872 billion, while NGL sales totaled $14.336 billion.

Category	3 Months Ended September 30, 2024 ($ billion)	3 Months Ended September 30, 2023 ($ billion)	9 Months Ended September 30, 2024 ($ billion)	9 Months Ended September 30, 2023 ($ billion)
Crude Sales	$6.476	$6.587	$19.872	$17.298
NGL Sales	$4.707	$3.760	$14.336	$11.409

Revenue from Joint Ventures and Partnerships

Energy Transfer LP also benefits from its joint ventures and partnerships, which contribute to its overall revenue. The segment adjusted EBITDA from its investment in Sunoco LP for the three months ended September 30, 2024 was reported at $456 million, a significant increase from $257 million during the same period in 2023. For the nine-month period, adjusted EBITDA increased to $1.018 billion from $728 million year-over-year.

Period	Segment Adjusted EBITDA ($ million)	Change ($ million)
3 Months Ended September 30, 2024	$456	$199
3 Months Ended September 30, 2023	$257	N/A
9 Months Ended September 30, 2024	$1,018	$290
9 Months Ended September 30, 2023	$728	N/A

Updated on 16 Nov 2024

Resources:

1. Energy Transfer LP (ET) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Energy Transfer LP (ET)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Energy Transfer LP (ET)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.