10-K 1 mpc-20161231x10k.htm 10-K Document

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2016
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-35054
Marathon Petroleum Corporation
(Exact name of registrant as specified in its charter)
Delaware
 
27-1284632
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
539 South Main Street, Findlay, OH 45840-3229
(Address of principal executive offices)
(419) 422-2121
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Title of Each Class
 
Name of Each Exchange on Which Registered
Common Stock, par value $.01
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    þ
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ    Accelerated filer ¨    Non-accelerated filer ¨    Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  þ
The aggregate market value of Common Stock held by non-affiliates as of June 30, 2016 was approximately $20.0 billion. This amount is based on the closing price of the registrant’s Common Stock on the New York Stock Exchange on June 30, 2016. Shares of Common Stock held by executive officers and directors of the registrant are not included in the computation. The registrant, solely for the purpose of this required presentation, has deemed its directors and executive officers to be affiliates.
There were 527,782,929 shares of Marathon Petroleum Corporation Common Stock outstanding as of February 13, 2017.
Documents Incorporated By Reference
Portions of the registrant’s proxy statement relating to its 2017 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, are incorporated by reference to the extent set forth in Part III, Items 10-14 of this Report.



MARATHON PETROLEUM CORPORATION
Unless otherwise stated or the context otherwise indicates, all references in this Annual Report on Form 10-K to “MPC,” “us,” “our,” “we” or “the Company” mean Marathon Petroleum Corporation and its consolidated subsidiaries.
Table of Contents
 
 
 
Page
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 1B.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
 
 
 
 
 
 
 
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
 
 
 
 
Item 6.
 
 
 
 
 
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
 
 
Item 7A.
 
 
 
 
 
Item 8.
 
 
 
 
 
Item 9.
 
 
 
 
 
Item 9A.
 
 
 
 
 
Item 9B.
 
 
 
 
 
 
 
 
 
 
 
 
Item 10.
 
 
 
 
 
Item 11.
 
 
 
 
 
Item 12.
 
 
 
 
 
Item 13.
 
 
 
 
 
Item 14.
 
 
 
 
 
 
 
 
 
 
 
 
Item 15.
 
 
 
 
 
Item 16.
Form 10-K Summary
 
 
 
 
 
 



GLOSSARY OF TERMS
Throughout this report, the following company or industry specific terms and abbreviations are used:
ASC
Accounting Standards Codification
ASR
Accelerated share repurchase
ATB
Articulated tug barges
barrel
One stock tank barrel, or 42 United States gallons liquid volume, used in reference to crude oil or other liquid hydrocarbons.
DEI
Designated Environmental Incidents
EBITDA (a non-GAAP financial measure)
Earnings Before Interest, Tax, Depreciation and Amortization
EIA
United States Energy Information Administration
EPA
United States Environmental Protection Agency
FASB
Financial Accounting Standards Board
FCC
Fluid Catalytic Cracking
FERC
Federal Energy Regulatory Commission
IDR
Incentive Distribution Rights
LCM
Lower of cost or market
LIBO Rate
London Interbank Offered Rate
LIFO
Last in, first out
LLS
Louisiana Light Sweet crude oil, an oil index benchmark price
mbpd
Thousand barrels per day
mbpcd
Thousand barrels per calender day
Mcf
One thousand cubic feet of natural gas
mmbpcd
Million barrels per calender day
MMcf/d
One million cubic feet of natural gas per day
MMBtu
One million British thermal units per day
NYMEX
New York Mercantile Exchange
NYSE
New York Stock Exchange
NGL
Natural gas liquids, such as ethane, propane, butanes and natural gasoline
PADD
Petroleum Administration for Defense District
OPEC
Organization of Petroleum Exporting Countries
OSHA
United States Occupational Safety and Health Administration
OTC
Over-the-Counter
ppb
Parts per billion
ppm
Parts per million
RFS2
Revised Renewable Fuel Standard program, as required by the Energy Independence and Security Act of 2007
RIN
Renewable Identification Number
ROUX
Residual Oil Upgrader Expansion
SEC
Securities and Exchange Commission
STAR
South Texas Asset Repositioning
ULSD
Ultra-low sulfur diesel
US GAAP
Accounting principles generally accepted in the United States
USGC
U.S. Gulf Coast
UST
Underground storage tank
VIE
Variable interest entity
VPP
Voluntary Protection Program
WTI
West Texas Intermediate crude oil, an oil index benchmark price

1



Disclosures Regarding Forward-Looking Statements
This Annual Report on Form 10-K, particularly Item 1. Business, Item 1A. Risk Factors, Item 3. Legal Proceedings, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 7A. Quantitative and Qualitative Disclosures about Market Risk, includes forward-looking statements. You can identify our forward-looking statements by words such as “anticipate,” “believe,” “design,” “estimate,” “objective,” “expect,” “forecast,” “outlook,” “goal,” “guidance,” “imply,” “intend,” “plan,” “predict,” “prospective,” “project,” “opportunity,” “potential,” “position,” “pursue,” “strategy,” “seek,” “target,” “could,” “may,” “should,” “would,” “will” or other similar expressions that convey the uncertainty of future events or outcomes. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements.
Forward-looking statements include, but are not limited to, statements that relate to, or statements that are subject to risks, contingencies or uncertainties that relate to:
future levels of revenues, refining and marketing gross margins, operating costs, retail gasoline and distillate gross margins, merchandise margins, income from operations, net income or earnings per share;
anticipated volumes of feedstock, throughput, sales or shipments of refined products;
anticipated levels of regional, national and worldwide prices of crude oil, natural gas, NGLs and refined products;
anticipated levels of crude oil and refined product inventories;
future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses;
the success or timing of completion of ongoing or anticipated capital or maintenance projects;
business strategies, growth opportunities and expected investments, including strategic initiatives and actions, as well as planned equity investments in pipeline projects;
expectations regarding the acquisition or divestiture of assets as well as the strategic initiatives discussed herein, such as the proposed accelerated dropdown of assets to MPLX LP and plans to exchange our economic interest in the general partner, including IDRs, for newly issued MPLX LP common units;
our share repurchase authorizations, including the timing and amounts of any common stock repurchases;
the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan;
the effect of restructuring or reorganization of business components;
the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; and
the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation.
We have based our forward-looking statements on our current expectations, estimates and projections about our industry and our company. We caution that these statements are not guarantees of future performance, and you should not rely unduly on them, as they involve risks, uncertainties and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. Differences between actual results and any future performance suggested in our forward-looking statements could result from a variety of factors, including the following:
volatility or degradation in general economic, market, industry or business conditions;
availability and pricing of domestic and foreign supplies of natural gas, NGLs and crude oil and other feedstocks;
the ability of the members of the OPEC to agree on and to influence crude oil price and production controls;
availability and pricing of domestic and foreign supplies of refined products such as gasoline, diesel fuel, jet fuel, home heating oil and petrochemicals;
foreign imports and exports of crude oil, refined products, natural gas and NGLs;
refining industry overcapacity or under capacity;
changes in producer customers’ drilling plans or in volumes of throughput of crude oil, natural gas, NGLs, refined products or other hydrocarbon-based products;

2


changes in the cost or availability of third-party vessels, pipelines, railcars and other means of transportation for crude oil, natural gas, NGLs, feedstocks and refined products;
changes to the expected construction costs and timing of projects;
the price, availability and acceptance of alternative fuels and alternative-fuel vehicles and laws mandating such fuels or vehicles;
fluctuations in consumer demand for refined products, natural gas and NGLs, including seasonal fluctuations;
political and economic conditions in nations that consume refined products, natural gas and NGLs, including the United States, and in crude oil producing regions, including the Middle East, Africa, Canada and South America;
actions taken by our competitors, including pricing adjustments, expansion of retail activities, the expansion and retirement of refining capacity and the expansion and retirement of pipeline capacity, processing, fractionation and treating facilities in response to market conditions;
completion of pipeline projects within the United States;
changes in fuel and utility costs for our facilities;
failure to realize the benefits projected for capital projects, or cost overruns associated with such projects;
modifications to MPLX LP earnings and distribution growth objectives;
the ability to successfully implement growth opportunities, including strategic initiatives and actions;
the time, costs and ability to obtain regulatory or other approvals, waivers or consents required to consummate strategic actions discussed herein, such as the proposed accelerated dropdown of assets to MPLX LP;
the risk that the synergies from the MarkWest Merger (defined below) may not be fully realized or may take longer to realize than expected;
risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges;
the ability to realize the strategic benefits of joint venture opportunities;
accidents or other unscheduled shutdowns affecting our refineries, machinery, pipelines, processing, fractionation and treating facilities or equipment, or those of our suppliers or customers;
unusual weather conditions and natural disasters, which can unforeseeably affect the price or availability of crude oil and other feedstocks and refined products;
acts of war, terrorism or civil unrest that could impair our ability to produce refined products, receive feedstocks or to gather, process, fractionate or transport crude oil, natural gas, NGLs or refined products;
state and federal environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the renewable fuel standard program;
adverse changes in laws including with respect to tax and regulatory matters;
rulings, judgments or settlements and related expenses in litigation or other legal, tax or regulatory matters, including unexpected environmental remediation costs, in excess of any reserves or insurance coverage;
political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and marketing of crude oil or other feedstocks, refined products, natural gas, NGLs or other hydrocarbon-based products;
labor and material shortages;
the maintenance of satisfactory relationships with labor unions and joint venture partners;
the ability and willingness of parties with whom we have material relationships to perform their obligations to us;
the market price of our common stock and its impact on our share repurchase authorizations;
changes in the credit ratings assigned to our debt securities and trade credit, changes in the availability of unsecured credit and changes affecting the credit markets generally;
capital market conditions and our ability to raise adequate capital to execute our business plan, including our recently announced strategic actions;
the costs, disruption and diversion of management’s attention associated with campaigns commenced by activist investors; and
the other factors described in Item 1A. Risk Factors.
We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

3


PART I

Item 1. Business
Overview
Marathon Petroleum Corporation (“MPC”) has 129 years of experience in the energy business with roots tracing back to the formation of the Ohio Oil Company in 1887. We are one of the largest independent petroleum product refining, marketing, retail and transportation businesses in the United States and the largest east of the Mississippi. With the merger of MPLX LP (“MPLX”), the midstream master limited partnership sponsored by MPC, and MarkWest Energy Partners, L.P. (“MarkWest”) effective December 4, 2015 (the “MarkWest Merger”), we are one of the largest natural gas processors in the United States and the largest processor and fractionator in the Marcellus and Utica shale regions.
Our operations consist of three reportable operating segments: Refining & Marketing; Speedway; and Midstream. Each of these segments is organized and managed based upon the nature of the products and services it offers.
Refining & Marketing – refines crude oil and other feedstocks at our seven refineries in the Gulf Coast and Midwest regions of the United States, purchases refined products and ethanol for resale and distributes refined products through various means, including terminals and trucks that we own or operate. We sell refined products to wholesale marketing customers domestically and internationally, buyers on the spot market, our Speedway® business segment and to independent entrepreneurs who operate Marathon® retail outlets.
Speedway – sells transportation fuels and convenience products in the retail market in the Midwest, East Coast and Southeast regions of the United States.
Midstream – includes the operations of MPLX and certain other related operations. The Midstream segment gathers, processes and transports natural gas; gathers, transports, fractionates, stores and markets NGLs and transports and stores crude oil and refined products.
See Item 8. Financial Statements and Supplementary Data – Note 10 for operating segment and geographic financial information, which is incorporated herein by reference.
Corporate History and Structure
MPC was incorporated in Delaware on November 9, 2009 in connection with an internal restructuring of Marathon Oil Corporation (“Marathon Oil”). On May 25, 2011, the Marathon Oil board of directors approved the spinoff of its Refining, Marketing & Transportation Business (“RM&T Business”) into an independent, publicly traded company, MPC, through the distribution of MPC common stock to the stockholders of Marathon Oil common stock on June 30, 2011 (the “Spinoff”). Following the Spinoff, Marathon Oil retained no ownership interest in MPC, and each company has separate public ownership, boards of directors and management. All subsidiaries and equity method investments not contributed by Marathon Oil to MPC remained with Marathon Oil and, together with Marathon Oil, are referred to as the “Marathon Oil Companies.” On July 1, 2011, our common stock began trading “regular-way” on the NYSE under the ticker symbol “MPC.”
Recent Developments
Strategic Actions to Enhance Shareholder Value
On January 3, 2017, we announced plans to significantly accelerate the dropdown of assets with an estimated $1.4 billion of MLP-eligible annual EBITDA to MPLX now expected to be completed in 2017, subject to requisite approvals and regulatory clearances, including tax clearance, and market and other conditions. In conjunction with the completion of the dropdowns, we also expect to exchange our economic interests in the general partner of MPLX, including incentive distribution rights, for newly issued MPLX common units. Additionally, a special committee of our board of directors, with the assistance of an independent financial advisor, will conduct a full and thorough review of Speedway to ensure optimum value is being delivered to shareholders over the long term. We expect to provide an update on the review by mid-2017. This significant acceleration of dropdowns and other announced strategic actions are designed to further highlight the substantial value embedded in our integrated businesses.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information on our strategic actions to enhance shareholder value.

4


Acquisitions and Investments
Pipeline Investments
On September 1, 2016, Enbridge Energy Partners L.P. (“Enbridge Energy Partners”) announced that its affiliate, North Dakota Pipeline LLC (“North Dakota Pipeline”), would withdraw certain pending regulatory applications for its Sandpiper pipeline project and that the project would be deferred indefinitely. These decisions were considered to indicate an impairment of the costs capitalized to date on the project. As the operator of North Dakota Pipeline and the entity responsible for maintaining its financial records, Enbridge Energy Partners completed a fixed asset impairment analysis as of August 31, 2016, in accordance with ASC Topic 360. Based on the estimated liquidation value of the fixed assets, an impairment charge was recorded by North Dakota Pipeline. Based on our 37.5 percent ownership of North Dakota Pipeline, we recognized approximately $267 million of this charge in the third quarter of 2016 through “Income (loss) from equity method investments” on the accompanying consolidated statements of income which impaired virtually all of our $301 million investment in the project. See Item 8. Financial Statements and Supplementary Data – Note 17 for information regarding the charge.
On February 15, 2017, MPLX closed on the previously announced transaction to acquire a partial, indirect equity interest in the Dakota Access Pipeline (“DAPL”) and Energy Transfer Crude Oil Company Pipeline (“ETCOP”) projects, collectively referred to as the Bakken Pipeline system, through a joint venture with Enbridge Energy Partners. MPLX contributed $500 million of the $2 billion purchase price paid by the joint venture to acquire a 36.75 percent indirect equity interest in the Bakken Pipeline system from Energy Transfer Partners, L.P. (“ETP”) and Sunoco Logistics Partners, L.P. (“SXL”). MPLX holds, through a subsidiary, a 25 percent interest in the joint venture, which equates to an approximate 9.2 percent indirect equity interest in the Bakken Pipeline system. The Bakken Pipeline system is currently expected to deliver in excess of 470 mbpd of crude oil from the Bakken/Three Forks production area in North Dakota to the Midwest through Patoka, Illinois and ultimately to the Gulf Coast. Furthermore, MPC expects to become a committed shipper on the Bakken Pipeline system under terms of an on-going open season.
In connection with closing the transaction with ETP and SXL, Enbridge Energy Partners canceled MPC’s transportation services agreement with respect to the Sandpiper pipeline project and released MPC from paying any termination fee per that agreement.
In July 2014, we exercised our option to acquire a 35 percent ownership interest in Enbridge Inc.’s Southern Access Extension (“SAX”) pipeline which runs from Flanagan, Illinois to Patoka, Illinois. This option resulted from our agreement to be the anchor shipper on the SAX pipeline. We have contributed $299 million since project inception. The pipeline became operational in December 2015. Our investment in the pipeline is included in our Midstream segment.
Marine Investments
We currently have indirect ownership interests in two ocean vessel joint ventures with Crowley Maritime Corporation (“Crowley”), which were established to own and operate Jones Act vessels in petroleum product service. We have invested a total of $189 million in these two ventures as described further below.
In September 2015, we acquired a 50 percent ownership interest in a joint venture, Crowley Ocean Partners LLC (“Crowley Ocean Partners”), with Crowley. The joint venture owns and operates four new Jones Act product tankers, three of which are leased to MPC. Two of the vessels were delivered in 2015 and the remaining two were delivered in 2016. We contributed a total of $141 million for the four vessels.
In May 2016, MPC and Crowley formed a new ocean vessel joint venture, Crowley Coastal Partners LLC (“Crowley Coastal Partners”), in which MPC has a 50 percent ownership interest. MPC and Crowley each contributed their 50 percent ownership in Crowley Ocean Partners, discussed above, into Crowley Coastal Partners. In addition, we contributed $48 million in cash and Crowley contributed its 100 percent ownership interest in Crowley Blue Water Partners LLC (“Crowley Blue Water Partners”) to Crowley Coastal Partners. Crowley Blue Water Partners is an entity that owns and operates three 750 Series ATB vessels that are leased to MPC. We account for our 50 percent interest in Crowley Coastal Partners as part of our Midstream segment using the equity method of accounting.
See Item 8. Financial Statements and Supplementary Data – Note 6 for additional information on Crowley Coastal Partners as a VIE and Note 25 for information on our conditional guarantee of the indebtedness of Crowley Ocean Partners and Crowley Blue Water Partners.

5


MarkWest Merger
On December 4, 2015, a wholly-owned subsidiary of MPLX, the midstream master limited partnership sponsored by MPC, merged with MarkWest, whereby MarkWest became a wholly-owned subsidiary of MPLX. Each common unit of MarkWest issued and outstanding immediately prior to the effective time of the MarkWest Merger was converted into a right to receive 1.09 common units of MPLX representing limited partner interests in MPLX, plus a one-time cash payment of $6.20 per unit. Each Class B unit of MarkWest outstanding immediately prior to the merger was converted into the right to receive one Class B unit of MPLX having substantially similar rights, including conversion and registration rights, and obligations that the Class B units of MarkWest had immediately prior to the merger. At closing, we contributed $1.23 billion in cash to MPLX to pay the cash consideration to MarkWest common unitholders. We agreed to contribute an additional total of $50 million in cash to MPLX for the cash consideration to be paid upon the conversion of the MPLX Class B Units to MPLX common units in equal installments, the first $25 million of which was paid in July 2016 and the second $25 million of which will be paid in July 2017. These contributions are with respect to MPC’s existing interests in MPLX (including IDRs) and not in consideration of new units or other equity interest in MPLX. We assigned the total consideration transferred of $8.61 billion, including the $7.33 billion fair value of the equity consideration and the $1.28 billion of cash contributions, to the fair value of the assets acquired and liabilities and noncontrolling interest assumed in the MarkWest Merger, with the excess recorded as goodwill. During the first quarter of 2016, the preliminary fair value measurements of assets acquired and liabilities assumed recorded in the 2015 year-end financial statements were revised based on additional analysis. These adjustments to the fair values of property, plant and equipment, intangibles and equity investments, among other items, resulted in an offsetting reduction to goodwill of approximately $241 million. As a result, we recognized total assets acquired of $11.91 billion, including $8.52 billion of property plant and equipment and $2.60 billion of equity investments, and total liabilities assumed and noncontrolling interests of $5.51 billion, including $4.57 billion of assumed debt. Goodwill is not amortized, but rather is tested for impairment annually or more frequently if warranted due to events or changes in circumstances. MPLX recorded an impairment charge of approximately $129 million in the first quarter of 2016 to impair a portion of the $2.21 billion of goodwill, as adjusted, recorded in connection with the MarkWest Merger. In the second quarter of 2016, MPLX completed its purchase price allocation, which resulted in an additional $1 million of impairment expense that would have been recorded in the first quarter of 2016 had the purchase price allocation been completed as of that date. This adjustment to the impairment expense was the result of completing an evaluation of the deferred tax liabilities associated with the MarkWest Merger and their impact on the resulting goodwill that was recognized. Our financial results and operating statistics reflect the results of MarkWest from the date of the acquisition.
Consistent with our strategy to grow our midstream business, the MarkWest Merger combines one of the nation’s largest processors of natural gas and the largest processor and fractionator in the Marcellus and Utica shale regions with a rapidly growing crude oil and refined products logistics partnership sponsored by MPC. The complementary aspects of the highly diverse asset base of MarkWest, MPLX and MPC provide significant additional opportunities across multiple segments of the hydrocarbon value chain. The combined entity furthers MarkWest's leading midstream presence in the Marcellus and Utica shales by allowing it to pursue additional midstream projects, allowing producer customers to achieve superior value for their growing production in these important shale regions.
Hess Retail Acquisition
On September 30, 2014, we acquired from Hess Corporation (“Hess”) all of its retail locations, transport operations and shipper history on various pipelines, including approximately 40 mbpd on Colonial Pipeline, for $2.82 billion. We refer to these assets as “Hess’ Retail Operations and Related Assets” and substantially all of these assets are part of our Speedway segment. This acquisition significantly expanded our Speedway presence from nine to 22 states throughout the East Coast and Southeast and is aligned with our strategy to grow our retail business. This acquisition also enables us to further leverage our integrated refining and transportation operations, providing an assured outlet for incremental sales from our refining system. The transaction was funded with a combination of debt and available cash. Our financial results and operating statistics reflect the results of Hess’ Retail Operations and Related Assets from the date of the acquisition.
See Item 8. Financial Statements and Supplementary Data – Note 5 for additional information on these acquisitions and investments.
MPLX LP
Overview
MPLX is a diversified, growth-oriented publicly traded master limited partnership formed by us to own, operate, develop and acquire midstream energy infrastructure assets. MPLX is engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of NGLs; and the gathering, transportation and storage of crude oil and refined petroleum products. On December 4, 2015, we completed the MarkWest Merger, whereby MarkWest became a wholly-owned subsidiary of MPLX.

6


As of December 31, 2016, we owned a 25.5 percent interest in MPLX, including a two percent general partner interest. This ownership percentage reflects the conversion of the MPLX Class B Units in July 2017 at 1.09 to 1.00. MPLX is a VIE because the limited partners of MPLX do not have substantive kick-out or substantive participating rights over the general partner. We are the primary beneficiary of MPLX because in addition to significant economic interest, we also have the power, through our 100 percent ownership of the general partner, to control the decisions that most significantly impact MPLX. We therefore consolidate MPLX and record a noncontrolling interest for the 74.5 percent interest owned by the public. The components of our noncontrolling interest consist of equity-based noncontrolling interest and redeemable noncontrolling interest. The redeemable noncontrolling interest relates to MPLX’s preferred units, discussed below.
The creditors of MPLX do not have recourse to MPC’s general credit through guarantees or other financial arrangements. The assets of MPLX are the property of MPLX and cannot be used to satisfy the obligations of MPC.
Reorganization Transactions
On September 1, 2016, MPC, MPLX and various affiliates initiated a series of reorganization transactions in order to simplify MPLX’s ownership structure and its financial and tax reporting. In connection with these transactions, MPC contributed $225 million to MPLX, and all of the issued and outstanding MPLX Class A Units, all of which were held by MarkWest Hydrocarbon L.L.C. (“MarkWest Hydrocarbon”), a wholly-owned subsidiary of MPLX, were exchanged for newly issued common units representing limited partner interests in MPLX. The simple average of the closing prices of MPLX common units for the last 10 trading days prior to September 1, 2016 was used for purposes of these transactions. As a result of these transactions, MPC increased its ownership interest in MPLX by 7 million MPLX common units, or approximately 1 percent.
Private Placement of Preferred Units
On May 13, 2016, MPLX completed the private placement of approximately 30.8 million 6.5 percent Series A Convertible Preferred Units (the “MPLX Preferred Units”) at a cash price of $32.50 per unit. The aggregate net proceeds of approximately $984 million from the sale of the MPLX Preferred Units was used for capital expenditures, repayment of debt and general partnership purposes.
The MPLX Preferred Units rank senior to all MPLX common units with respect to distributions and rights upon liquidation. The holders of the MPLX Preferred Units are entitled to receive quarterly distributions equal to $0.528125 per unit commencing for the quarter ended June 30, 2016, with a prorated amount from the date of issuance. Following the second anniversary of the issuance of the MPLX Preferred Units, the holders of the MPLX Preferred Units will receive as a distribution the greater of $0.528125 per unit or the amount of per unit distributions paid to common unitholders. The MPLX Preferred Units are convertible into MPLX common units on a one for one basis after three years, at the purchasers’ option, and after four years at MPLX’s option, subject to certain conditions.
The MPLX Preferred Units are considered redeemable securities due to the existence of redemption provisions upon a deemed liquidation event which is considered outside MPLX’s control. Therefore they are presented as temporary equity in the mezzanine section of the consolidated balance sheets. We have recorded the MPLX Preferred Units at their issuance date fair value, net of issuance costs. Since the MPLX Preferred Units are not currently redeemable and not probable of becoming redeemable in the future, adjustment to the initial carrying amount is not necessary and would only be required if it becomes probable that the security would become redeemable.
Contribution of Inland Marine Business to MPLX
On March 31, 2016, we contributed our inland marine business to MPLX in exchange for 23 million MPLX common units and 460 thousand MPLX general partner units. The number of units we received from MPLX was determined by dividing $600 million by the volume weighted average NYSE price of MPLX common units for the 10 trading days preceding March 14, 2016, pursuant to the Membership Interests Contribution Agreement. We also agreed to waive first-quarter 2016 common unit distributions, IDRs and general partner distributions with respect to the common units issued in this transaction. The contribution of our inland marine business was accounted for as a transaction between entities under common control and therefore, we did not record a gain or loss.
Public Offering
On February 10, 2017, MPLX completed a public offering of $1.25 billion aggregate principal amount of 4.125% unsecured senior notes due March 2027 (the “MPLX 2027 Senior Notes”) and $1.0 billion aggregate principal amount of 5.200% unsecured senior notes due March 2047 (the “MPLX 2047 Senior Notes”). MPLX intends to use the net proceeds from this offering for general partnership purposes, which may include, from time to time, acquisitions (including the previously announced planned dropdown of assets from MPC) and capital expenditures.

7


ATM Program
On August 4, 2016, MPLX entered into a Second Amended and Restated Distribution Agreement (the “Distribution Agreement”) providing for the continuous issuance of MPLX common units, in amounts, at prices and on terms to be determined by market conditions and other factors at the time of any offerings (such continuous offering program, or at-the-market program, referred to as the “ATM Program”). MPLX expects to use the net proceeds from sales under the ATM Program for general partnership purposes including repayment of debt and funding for acquisitions, working capital requirements and capital expenditures.
During 2016, MPLX issued an aggregate of 26 million MPLX common units under the ATM Program, generating net proceeds of approximately $776 million. As of December 31, 2016, $717 million of MPLX common units remains available for issuance through the ATM Program under the Distribution Agreement.
See Item 8. Financial Statements and Supplementary Data – Note 4 for additional information on MPLX.
Our Competitive Strengths

Extensive Integrated Platform of Midstream, Retail and Refining Assets
We believe the relative scale of our integrated midstream, retail and refining assets distinguishes us from other refining companies. We currently own, lease or have ownership interests in approximately 8,400 miles of crude oil and products pipelines. Additionally, we have over 5,600 miles of natural gas and NGL pipelines. We also own or have ownerships interests in one of the largest private domestic fleets of inland petroleum product barges and one of the largest terminal operations in the United States, as well as trucking and rail assets. We operate this transportation and distribution system in coordination with our refining and marketing network enabling us to optimize raw material supplies and refined product distribution, and deliver important economies of scale across our platform. Our Speedway segment, one of our largest distribution channels, is also our most ratable.
We believe our distribution system allows us to maximize the sales value of our products and minimize cost. We also believe our integrated platform of assets gives us extensive flexibility and optionality to respond promptly to dynamic market conditions, including weather-related and marketplace disruptions.
Competitively Positioned Marketing Operations Provide Assured Product Sales
We are one of the largest wholesale suppliers of gasoline and distillates to resellers within our market area. We have two strong retail brands: Speedway® and Marathon®. We believe Speedway LLC, a wholly-owned subsidiary, operates the second largest chain of company-owned and operated retail gasoline and convenience stores in the United States, with approximately 2,730 convenience stores in 21 states throughout the Midwest, East Coast and Southeast regions of the United States. In addition, our highly successful Speedy Rewards® customer loyalty program, which averaged more than 5.7 million active members in 2016, provides us with a unique competitive advantage and opportunity to increase our Speedway customer base at existing and new Speedway locations. The Marathon brand is an established motor fuel brand primarily in the Midwest and Southeast regions of the United States, comprised of approximately 5,500 retail outlets operated by independent entrepreneurs in 19 states as of December 31, 2016. The Marathon brand has been a vehicle for sales volume growth in existing and contiguous markets.
We consider assured sales as those sales we make to Marathon brand customers, our Speedway operations and to our wholesale customers with whom we have required minimum volume sales contracts. Our assured sales currently account for approximately 70% of our gasoline production. We believe having assured sales brings ratability to our distribution systems, provides a solid base to enhance our overall supply reliability and allows us to efficiently and effectively optimize our operations between our refineries, pipelines and terminals.
High Quality Network of Strategically Located Assets
We believe we are the largest crude oil refiner in the Midwest and the third largest in the United States based on crude oil refining capacity. We own a seven-plant refinery network, with approximately 1.8 mmbpcd of crude oil throughput capacity. Our refineries process a wide range of crude oils, feedstocks and condensate, including heavy and sour crude oils, which can generally be purchased at a discount to sweet crude oil, and produce transportation fuels such as gasoline and distillates, specialty chemicals and other refined products. While we have historically processed significant quantities of heavy and sour crude oils, our refineries have the ability to process approximately 65 percent to 70 percent light sweet crude oils.

8


The geographic locations of our refineries provide us with strategic advantages. Located in PADD II and PADD III, which consist of states in the Midwest and the Gulf Coast regions of the United States, our refineries have the ability to procure crude oil from a variety of supply sources, including domestic, Canadian and other foreign sources, which provides us with flexibility to optimize crude supply costs. For example, geographic proximity to various United States shale oil regions and Canadian crude oil supply sources allows our refineries access to price-advantaged crude oils and lower transportation costs than certain of our competitors. Our refinery locations and midstream distribution system also allow us to access refined product export markets and to serve a broad range of key end-user markets across the United States quickly and cost-effectively.
Our Midstream segment assets are similarly located in the Midwest and Gulf Coast regions of the United States, which collectively comprised approximately 81 percent of total United States crude distillation capacity and approximately 81 percent of total United States finished products demand for the year ended December 31, 2016, according to the EIA. MPLX, through MarkWest, its wholly-owned subsidiary, is the largest processor and fractionator in the Marcellus and Utica shale regions. This significantly complements and creates strategic opportunities for our Refining & Marketing segment and MPLX’s logistic assets in the same geographic footprint. Our integrated midstream energy asset network links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States to domestic and international markets. Our midstream gathering and processing operations include approximately 7,500 MMcf/d of natural gas processing capacity, 500 mbpd of fractionation capacity and more than 5,600 miles of gas gathering and NGL pipelines as of December 31, 2016.
Our Speedway segment, which operates in the Midwest, East Coast and Southeast, complements our refining and midstream assets providing a significant and ratable outlet for our refinery production. Our Speedway operations have also enabled us to further leverage our integrated refining and transportation operations with its expansion from nine to 21 states throughout the East Coast and Southeast. Speedway is a top tier performer in the convenience store industry with the highest EBITDA per store per month of its public peers and leading positions with respect to other comparisons based on light product volume, merchandise sales and total gross margin on a per store per month basis.
mastermpcoperationmap022217.jpg*    As of December 31, 2016

9


General Partner and Sponsor of MPLX
Our investment in MPLX provides us an efficient vehicle to invest in organic projects and pursue acquisitions of midstream assets; all with the focus of enhancing our share price through our limited partner and general partner interests in MPLX which tend to receive higher market multiples. MPLX’s liquidity, size, scale and access to the capital markets should provide us a strong foundation to execute our strategy for growing our midstream business.
We have an extensive portfolio of MLP-qualifying midstream assets. We plan to offer assets from this portfolio, which are estimated to generate annual EBITDA of approximately $1.4 billion, to MPLX as soon as practicable in 2017, subject to regulatory clearances, including tax clearance, and market and other conditions. In conjunction with the completion of the dropdowns, we expect to pursue an exchange of our economic interests in the general partner, including incentive distribution rights, for newly issued MPLX common units. Following the exchange, we would continue to retain control of the general partner so that we can continue to optimize our refinery feedstock and distribution networks.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information on these midstream assets, including the timing of these strategic actions.
Established Track Record of Profitability and Growing our Midstream and Retail Businesses
We have demonstrated an ability to achieve positive financial results throughout all stages of the refining cycle. We believe our business mix and strategies position us well to continue to achieve competitive financial results. Income generated by our Speedway segment is less sensitive to business cycles. Similarly, income from our Midstream segment, which was significantly expanded through the MarkWest Merger, is more stable over business cycles due to its long-term fee based contracts, while our Refining & Marketing segment enables us to generate significant income and cash flow when market conditions are more favorable.
Strong Financial Position
As of December 31, 2016, we had $653 million in cash and cash equivalents and $4.18 billion in unused committed borrowing facilities, excluding MPLX’s cash and cash equivalents of $234 million and its credit facilities. We had $10.57 billion of debt at year-end, which represented 33 percent of our total capitalization. This combination of strong liquidity and manageable leverage provides financial flexibility to fund our growth projects and to pursue our business strategies.
Our Business Strategies
Maintain Top-Tier Safety and Environmental Performance
We remain committed to operating our assets in a safe and reliable manner and targeting continual improvement in our safety record across all of our operations. We have a history of safe and reliable operations, which was demonstrated again in 2016 with a strong process safety performance compared to the industry average. In addition, our corporate headquarters, four of our refineries and eight additional facilities have earned designations as an OSHA VPP Star site. We also remain committed to environmental stewardship by continuing to improve the efficiency and reliability of our operations. We have earned 75 percent of the EPA’s Energy Star recognitions awarded to refineries despite owning and operating just 10 percent of total U.S. refining capacity. We proactively address our regulatory requirements and encourage our operations to improve their environmental performance through our DEI program, which establishes goals and measures environmental performance. In 2016, we achieved our best performance since the current program began in 2010 with a third straight year of improving performance. MarkWest will be incorporated into our DEI program in 2017.
Grow Higher Valued, Stable Cash Flow Businesses
We intend to continue to allocate significant portions of our capital to investments intended to grow our midstream and retail businesses. These businesses typically have more predictable and stable income and cash flows compared to our refining operations and we believe investors assign a higher value to such businesses.
MPLX is an important part of this strategy and the MarkWest Merger significantly expanded its midstream activities. MPLX will consider organic growth projects that provide attractive returns and cash flows both within its geographic footprint as well as in new regions. MPLX may pursue these opportunities as standalone projects, with MPC or with other parties. MPLX has identified a number of potential projects over the next several years. These primarily include projects to expand gathering, processing and fractionation infrastructure in the Marcellus region.

10


Our Speedway segment is also an important part of this strategy. We significantly expanded Speedway’s presence along the East Coast and Southeast through the acquisition of Hess’ Retail Operations and Related Assets in September 2014. We intend to continue growing Speedway’s sales and profitability by focusing on organic growth through filling in voids in our existing markets by building new locations and by rebuilding or remodeling existing stores. We will also look to expand our presence by opportunistically acquiring high quality stores in new and existing markets. We have identified numerous opportunities for new convenience stores or store rebuilds in our existing market, with a continued focus in Pennsylvania and Tennessee, as well as opportunities for growth in new markets including Georgia, South Carolina and the Florida panhandle. We also plan to capitalize on diesel demand growth by building out our network of commercial fueling lane locations within our core market which cater to local and regional transport fleets.
In keeping with our practice of evaluating shareholder value creation, a special committee of our board of directors, with the assistance of an independent financial advisor, will conduct a full and thorough review of strategic and financial alternatives for Speedway. We expect to provide an update on the review by mid-2017.
Maintain Long-Term Integrated Relationships with Our Producer Customers
MPLX’s MarkWest subsidiary has developed long-term integrated relationships with its producer customers. These relationships are characterized by an intense focus on customer service and a deep understanding of producer customers’ requirements coupled with the ability to increase the level of our midstream services in response to their midstream requirements. Through collaborative planning with these producer customers, MPLX’s MarkWest subsidiary continues to construct high-quality midstream infrastructure and provide unique solutions that are critical to the ongoing success of producer customers’ development plans. As a result of these efforts, MarkWest has been a top-rated midstream service provider in customer satisfaction since 2006, as determined by an independent research provider.
Pursue Margin Enhancing Investments in Refining to Deliver Top Quartile Refining Performance
Our refineries are well positioned to benefit from the growing crude oil and condensate production in North America, including the Bakken, Eagle Ford and Utica shale regions, along with the Canadian oil sands. We are also well positioned to export distillates, gasoline and other products.
We intend to enhance margins in our Refining & Marketing segment by realizing benefits from continuous process improvements and targeted investments in our refining operations. Over the next five years, we intend to create a world-class refining complex by investing approximately $1.5 billion in our Galveston Bay refinery through the STAR project. This investment will fully integrate our Galveston Bay and Texas City refineries and enable us to upgrade low value residual oil into higher value refined products and lower the refinery complex’s cost of production. The project scope increases crude processing capacity, increases distillate and gas oil recovery and improves the refinery’s overall reliability. We are also planning to expand the Galveston Bay refinery’s product export capacity to reach high value markets. In addition, we are investing at our Garyville refinery to increase ULSD production due to strong long-term distillate demand expectations.
Sustain Focus on Disciplined Capital Allocation and Shareholder Returns
We intend to maintain our focus on a disciplined and balanced approach to capital allocation, including return of capital to shareholders, in a manner consistent with maintaining an investment-grade credit profile. Since becoming a stand-alone company in June 2011, our dividend has increased by a 28 percent compound annual growth rate and our board of directors has authorized share repurchases totaling $10 billion. Through open market purchases and two ASR programs, we repurchased 202 million shares of our common stock for approximately $7.44 billion, representing approximately 28 percent of our outstanding common shares when we became a stand-alone company in June 2011. After the effects of these repurchases, $2.56 billion of the $10 billion total authorization was available for future repurchases as of December 31, 2016. We achieved these shareholder returns while also investing in the business and maintaining an investment-grade credit profile.
Cash proceeds from the planned dropdowns and ongoing MPLX common unit distributions resulting from the dropdowns and other strategic actions are expected to fund the substantial ongoing return of capital to our shareholders in a manner consistent with maintaining an investment-grade credit profile.
Utilize and Enhance our High Quality Employee Workforce
We utilize our high quality employee workforce by continuing to leverage our commercial skills. In addition, we continue to enhance our workforce through selective hiring practices and effective training programs on safety, environmental stewardship and other professional and technical skills.

11


The above discussion contains forward-looking statements with respect to the business and operations of MPC, including our proposed strategic actions to enhance shareholder value, the ATM Program, our competitive strengths and business strategies, including our expected investments and the adequacy of our capital resources and liquidity. Factors that could impact our proposed strategic actions include, but are not limited to, the time, costs and ability to obtain regulatory or other approvals and consents and otherwise consummate the strategic actions discussed herein; the satisfaction or waiver of conditions in the agreements governing the strategic actions discussed herein; our ability to achieve the strategic and other objectives related to the strategic actions discussed herein; the impact of adverse market conditions affecting MPC’s and MPLX’s midstream businesses; adverse changes in laws including with respect to tax and regulatory matters and our inability to agree with the MPLX conflicts committee with respect to the timing of and value attributed to assets identified for dropdown. Factors that could affect the ATM Program and the timing of any issuances under the ATM Program include, but are not limited to, market conditions, availability of liquidity and the market price of MPLX’s common units. Factors that could impact our competitive strengths and business strategies, including the adequacy of our capital resources and liquidity include, but are not limited to, changes to the expected construction costs and timing of projects; continued/further volatility in and/or degradation of market and industry conditions; the availability and pricing of crude oil and other feedstocks; slower growth in domestic and Canadian crude supply; completion of pipeline capacity to areas outside the U.S. Midwest; consumer demand for refined products; transportation logistics; the reliability of processing units and other equipment; MPC's ability to successfully implement growth opportunities; modifications to MPLX earnings and distribution growth objectives; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; changes to MPC's capital budget; other risk factors inherent to MPC's industry. These factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements. For additional information on forward-looking statements and risks that can affect our business, see “Disclosures Regarding Forward-Looking Statements” and Item 1A. Risk Factors in this Annual Report on Form 10-K.
Refining & Marketing
Refineries
We currently own and operate seven refineries in the Gulf Coast and Midwest regions of the United States with an aggregate crude oil refining capacity of 1,817 mbpcd. During 2016, our refineries processed 1,699 mbpd of crude oil and 151 mbpd of other charge and blendstocks. During 2015, our refineries processed 1,711 mbpd of crude oil and 177 mbpd of other charge and blendstocks. The table below sets forth the location, crude oil refining capacity, tank storage capacity and number of tanks for each of our refineries as of December 31, 2016.
Refinery
 
Crude Oil Refining Capacity (mbpcd)(a)
 
Tank Storage Capacity (million barrels)
 
Number
of Tanks
Garyville, Louisiana
543

 
16.9

 
83

Galveston Bay, Texas City, Texas
459

 
16.2

 
157

Catlettsburg, Kentucky
273

 
5.2

 
120

Robinson, Illinois
231

 
6.0

 
92

Detroit, Michigan
132

 
6.7

 
87

Canton, Ohio
93

 
2.9

 
75

Texas City, Texas
86

 
3.9

 
56

Total
 
1,817

 
57.8

 
670

(a) 
Refining throughput can exceed crude oil capacity due to the processing of other charge and blendstocks in addition to crude oil and the timing of planned turnaround and major maintenance activity.
Our refineries include crude oil atmospheric and vacuum distillation, fluid catalytic cracking, hydrocracking, catalytic reforming, coking, desulfurization and sulfur recovery units. The refineries process a wide variety of condensate, light and heavy crude oils purchased from various domestic and foreign suppliers. We produce numerous refined products, ranging from transportation fuels, such as reformulated gasolines, blend-grade gasolines intended for blending with ethanol and ULSD fuel, to heavy fuel oil and asphalt. Additionally, we manufacture aromatics, propane, propylene and sulfur. See the Refined Product Marketing section for further information about the products we produce.

12


Our refineries are integrated with each other via pipelines, terminals and barges to maximize operating efficiency. The transportation links that connect our refineries allow the movement of intermediate products between refineries to optimize operations, produce higher margin products and efficiently utilize our processing capacity. For example, naphtha may be moved from Texas City to Robinson where excess reforming capacity is available. Also, shipping intermediate products between facilities during partial refinery shutdowns allows us to utilize processing capacity that is not directly affected by the shutdown work.
Garyville, Louisiana Refinery. Our Garyville, Louisiana refinery is located along the Mississippi River in southeastern Louisiana between New Orleans, Louisiana and Baton Rouge, Louisiana. The Garyville refinery is configured to process a wide variety of crude oils into gasoline, distillates, fuel-grade coke, asphalt, propane, polymer-grade propylene, heavy fuel oil, dry gas, slurry and sulfur. The refinery has access to the export market and multiple options to sell refined products. A major expansion project was completed in 2009 that increased Garyville’s crude oil refining capacity, making it one of the largest refineries in the U.S. Our Garyville refinery has earned designation as an OSHA VPP Star site.
Galveston Bay, Texas City, Texas Refinery. Our Galveston Bay refinery, which we acquired on February 1, 2013, is located on the Texas Gulf Coast approximately 30 miles southeast of Houston, Texas. The refinery can process a wide variety of crude oils into gasoline, distillates, aromatics, heavy fuel oil, refinery-grade propylene, fuel-grade coke, dry gas and sulfur. The refinery has access to the export market and multiple options to sell refined products. Our cogeneration facility, which supplies the Galveston Bay refinery, currently has 1,055 megawatts of electrical production capacity and can produce 4.3 million pounds of steam per hour. Approximately 46 percent of the power generated in 2016 was used at the refinery, with the remaining electricity being sold into the electricity grid.
Catlettsburg, Kentucky Refinery. Our Catlettsburg, Kentucky refinery is located in northeastern Kentucky on the western bank of the Big Sandy River, near the confluence with the Ohio River. The Catlettsburg refinery processes sweet and sour crude oils into gasoline, distillates, asphalt, aromatics, refinery-grade propylene and propane. In the second quarter of 2015, we completed construction of a condensate splitter at our Catlettsburg refinery, which increased our capacity to process condensate from the Utica shale region.
Robinson, Illinois Refinery. Our Robinson, Illinois refinery is located in southeastern Illinois. The Robinson refinery processes sweet and sour crude oils into gasoline, distillates, propane, anode-grade coke, aromatics, fuel-grade coke and slurry. The Robinson refinery has earned designation as an OSHA VPP Star site.
Detroit, Michigan Refinery. Our Detroit, Michigan refinery is located in southwest Detroit. It is the only petroleum refinery currently operating in Michigan. The Detroit refinery processes sweet and heavy sour crude oils into gasoline, distillates, asphalt, fuel-grade coke, chemical-grade propylene, propane, slurry and sulfur. Our Detroit refinery earned designation as a OSHA VPP Star site in 2010. In the fourth quarter of 2012, we completed a heavy oil upgrading and expansion project that enabled the refinery to process up to an additional 80 mbpd of heavy sour crude oils, including Canadian crude oils.
Canton, Ohio Refinery. Our Canton, Ohio refinery is located approximately 60 miles south of Cleveland, Ohio. The Canton refinery processes sweet and sour crude oils, including production from the nearby Utica Shale, into gasoline, distillates, asphalt, roofing flux, propane, refinery-grade propylene and slurry. In December 2014, we completed construction of a condensate splitter at our Canton refinery, which increased our capacity to process condensate from the Utica shale region.
Texas City, Texas Refinery. Our Texas City, Texas refinery is located on the Texas Gulf Coast adjacent to our Galveston Bay refinery, approximately 30 miles southeast of Houston, Texas. The refinery processes light sweet crude oils into gasoline, chemical-grade propylene, propane, aromatics, dry gas and slurry. Our Texas City refinery earned designation as an OSHA VPP Star site in 2012.
As of December 31, 2016, our refineries had 22 rail loading racks and 28 truck loading racks and four of our refineries had a total of seven owned and 11 non-owned docks. Total throughput in 2016 was 91 mbpd for the refinery loading racks and 928 mbpd for the refinery docks.
Planned maintenance activities, or turnarounds, requiring temporary shutdown of certain refinery operating units, are periodically performed at each refinery. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional detail.

13


Refined Product Yields
The following table sets forth our refinery production by product group for each of the last three years.
Refined Product Yields (mbpd)
 
2016
 
2015
 
2014
Gasoline
 
900

 
913

 
869

Distillates
 
617

 
603

 
580

Propane
 
35

 
36

 
35

Feedstocks and special products
 
241

 
281

 
276

Heavy fuel oil
 
32

 
31

 
25

Asphalt
 
58

 
55

 
54

Total
 
1,883

 
1,919

 
1,839

Crude Oil Supply
We obtain the crude oil we refine through negotiated term contracts and purchases or exchanges on the spot market. Our term contracts generally have market-related pricing provisions. The following table provides information on our sources of crude oil for each of the last three years. The crude oil sourced outside of North America was acquired from various foreign national oil companies, production companies and trading companies.
Sources of Crude Oil Refined (mbpd)
 
2016
 
2015
 
2014
United States
 
986

 
1,138

 
1,120

Canada
 
326

 
244

 
223

Middle East and other international
 
387

 
329

 
279

Total
 
1,699

 
1,711

 
1,622

Our refineries receive crude oil and other feedstocks and distribute our refined products through a variety of channels, including pipelines, trucks, railcars, ships and barges.
Renewable Fuels
We currently own a biofuel production facility in Cincinnati, Ohio that produces biodiesel, glycerin and other by-products. The capacity of the plant is approximately 60 million gallons per year.
We hold interests in ethanol production facilities in Albion, Michigan; Clymers, Indiana and Greenville, Ohio. These plants have a combined ethanol production capacity of 275 million gallons per year (18 mbpd) and are managed by a co-owner.
Refined Product Marketing
We believe we are one of the largest wholesale suppliers of gasoline and distillates to resellers and consumers within our 26-state market area. Independent retailers, wholesale customers, our Marathon brand jobbers and Speedway brand convenience stores, airlines, transportation companies and utilities comprise the core of our customer base. In addition, we sell gasoline, distillates and asphalt for export, primarily out of our Garyville and Galveston Bay refineries. The following table sets forth our refined product sales destined for export by product group for the past three years.
Refined Product Sales Destined for Export (mbpd)
 
2016
 
2015
 
2014
Gasoline
 
91

 
101

 
79

Distillates
 
199

 
214

 
191

Asphalt
 
6

 
4

 
5

Total
 
296

 
319

 
275


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The following table sets forth, as a percentage of total refined product sales volume, the sales of refined products to our different customer types for the past three years.
Refined Product Sales by Customer Type
 
2016
 
2015
 
2014
Private-brand marketers, commercial and industrial customers, including spot market
69
%
 
69
%
 
73
%
Marathon-branded independent entrepreneurs
14
%
 
14
%
 
15
%
Speedway® convenience stores
17
%
 
17
%
 
12
%
The following table sets forth the approximate number of retail outlets by state where independent entrepreneurs maintain Marathon-branded retail outlets, as of December 31, 2016.
State
 
Approximate Number of
Marathon® Retail Outlets
Alabama
227

Florida
606

Georgia
281

Illinois
292

Indiana
640

Kentucky
583

Louisiana
2

Maryland
1

Michigan
761

Minnesota
47

Mississippi
79

North Carolina
220

Ohio
859

Pennsylvania
66

South Carolina
101

Tennessee
404

Virginia
121

West Virginia
117

Wisconsin
48

Total
5,455

The following table sets forth our refined product sales volumes by product group for each of the last three years.
Refined Product Sales by Product Group (mbpd)
 
2016
 
2015
 
2014
Gasoline
 
1,219

 
1,241

 
1,116

Distillates
 
676

 
667

 
623

Propane
 
35

 
36

 
34

Feedstocks and special products
 
231

 
258

 
268

Heavy fuel oil
 
35

 
30

 
28

Asphalt
 
63

 
57

 
56

Total
 
2,259

 
2,289

 
2,125

Gasoline and Distillates. We sell gasoline, gasoline blendstocks and distillates (including No. 1 and No. 2 fuel oils, jet fuel, kerosene and diesel fuel) to wholesale customers, Marathon-branded independent entrepreneurs and our Speedway® convenience stores and on the spot market. In addition, we sell diesel fuel and gasoline for export to international customers. We sold 50 percent of our gasoline sales volumes and 87 percent of our distillates sales volumes on a wholesale or spot market basis in 2016. The demand for gasoline and distillates is seasonal in many of our markets, with demand typically at its highest levels during the summer months.

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We have blended ethanol into gasoline for more than 25 years and began expanding our blending program in 2007, in part due to federal regulations that require us to use specified volumes of renewable fuels. Ethanol volumes sold in blended gasoline were 84 mbpd in 2016, 85 mbpd in 2015 and 78 mbpd in 2014. We sell reformulated gasoline, which is also blended with ethanol, in 12 states in our marketing area. We also sell biodiesel-blended diesel fuel in 18 states in our marketing area. The future expansion or contraction of our ethanol and biodiesel blending programs will be driven by market economics and government regulations.
Propane. We produce propane at most of our refineries. Propane is primarily used for home heating and cooking, as a feedstock within the petrochemical industry, for grain drying and as a fuel for trucks and other vehicles. Our propane sales are typically split evenly between the home heating market and petrochemical consumers.
Feedstocks and Petrochemicals. We are a producer and marketer of feedstocks and petrochemicals. Product availability varies by refinery and includes platformate, alkylate, FCC unit gas, naptha, dry gas, propylene, raffinate, butane, benzene, xylene, molten sulfur, cumene and toluene. We market these products domestically to customers in the chemical, agricultural and fuel-blending industries. In addition, we produce fuel-grade coke at our Garyville, Detroit and Galveston Bay refineries, which is used for power generation and in miscellaneous industrial applications, and anode-grade coke at our Robinson refinery, which is used to make carbon anodes for the aluminum smelting industry. Our feedstocks and petrochemical sales decreased to 231 mbpd in 2016 from 258 mbpd in 2015 and decreased in 2015 from 268 mbpd in 2014. The decrease in 2016 was primarily due to more feedstocks used in production versus selling them on the spot market. The decrease in 2015 was primarily due to higher turnaround activity in 2014 resulting in more available feedstocks, more feedstocks used in production versus selling them on the spot market and market conditions in 2015.
Heavy Fuel Oil. We produce and market heavy residual fuel oil or related components, including slurry, at all of our refineries. Heavy residual fuel oil is primarily used in the utility and ship bunkering (fuel) industries, though there are other more specialized uses of the product.
Asphalt. We have refinery-based asphalt production capacity of up to 102 mbpcd, which includes asphalt cements, polymer-modified asphalt, emulsified asphalt, industrial asphalts and roofing flux. We have a broad customer base, including asphalt-paving contractors, government entities (states, counties, cities and townships) and asphalt roofing shingle manufacturers. We sell asphalt in the domestic and export wholesale markets via rail, barge and vessel.

16


Terminals
As of December 31, 2016, we owned and operated 61 light product and 18 asphalt terminals. Our light product and asphalt terminals averaged 1,429 mbpd and 31 mbpd of throughput in 2016, respectively. In addition, we distribute refined products through one leased light product terminal, two light product terminals in which we have partial ownership interests but do not operate and approximately 121 third-party light product and two third-party asphalt terminals in our market area. We have offered 62 of these light product terminals, which include virtually all of our owned and operated light product terminals as well as the one leased terminal and the two partially-owned terminals, to MPLX and expect this dropdown transaction to be completed in the first quarter of 2017. The following table sets forth additional details about our owned and operated terminals at December 31, 2016.
Owned and Operated Terminals
 
Number of
Terminals
 
Tank Storage
Capacity
(million barrels)
 
Number
of Tanks
 
Number of
Loading
Lanes
Light Product Terminals:
 
 
 
 
 
 
 
Alabama
2

 
0.4

 
19

 
4

Florida
4

 
3.0

 
85

 
22

Georgia
4

 
0.9

 
39

 
9

Illinois
4

 
1.2

 
44

 
14

Indiana
6

 
2.9

 
76

 
17

Kentucky
6

 
2.3

 
69

 
25

Louisiana
1

 
0.1

 
9

 
2

Michigan
8

 
2.2

 
93

 
26

North Carolina
4

 
1.3

 
54

 
13

Ohio
13

 
3.8

 
148

 
32

Pennsylvania
1

 
0.3

 
13

 
2

South Carolina
1

 
0.3

 
9

 
3

Tennessee
4

 
1.0

 
43

 
12

West Virginia
2

 
0.1

 
9

 
2

Wisconsin
1

 
0.2

 
9

 
4

Subtotal light product terminals
61

 
20.0

 
719

 
187

Asphalt Terminals:
 
 
 
 
 
 
 
Florida
1

 
0.2

 
4

 
3

Illinois
2

 
0.1

 
34

 
6

Indiana
2

 
0.4

 
23

 
6

Kentucky
4

 
0.5

 
57

 
14

Louisiana
1

 
0.1

 
11

 
2

Michigan
1

 

 
2

 
8

Ohio
4

 
2.0

 
69

 
13

Pennsylvania
1

 
0.5

 
16

 
8

Tennessee
2

 
0.5

 
44

 
8

Subtotal asphalt terminals
18

 
4.3

 
260

 
68

Total owned and operated terminals
79

 
24.3

 
979

 
255


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Transportation - Truck and Rail
As of December 31, 2016, we owned 163 transport trucks and 180 trailers with an aggregate capacity of 1.6 million gallons for the movement of refined products and crude oil. In addition, we had 2,059 leased and 15 owned railcars of various sizes and capacities for movement and storage of refined products. The following table sets forth additional details about our railcars.
 
 
Number of Railcars
 
 
Class of Equipment
 
Owned
 
Leased
 
Total
 
Capacity per Railcar
General service tank cars

 
781

 
781

 
20,000-30,000 gallons
High pressure tank cars

 
984

 
984

 
33,500 gallons
Open-top hoppers
15

 
294

 
309

 
4,000 cubic feet
 
15

 
2,059

 
2,074

 
 
Speedway
Our Speedway segment sells gasoline, diesel and merchandise through convenience stores that it owns and operates under the Speedway brand. Speedway convenience stores offer a wide variety of merchandise, including prepared foods, beverages and non-food items. Speedway’s Speedy Rewards® loyalty program has been a highly successful loyalty program since its inception in 2004, with a consistently growing base which averaged more than 5.7 million active members in 2016. Due to Speedway’s ability to capture and analyze member-specific transactional data, Speedway is able to offer the Speedy Rewards® members discounts and promotions specific to their buying behavior. We believe Speedy Rewards® is a key reason customers choose Speedway over competitors and it continues to drive significant value for both Speedway and our Speedy Rewards® members.
The demand for gasoline is seasonal, with the highest demand usually occurring during the summer driving season. Margins from the sale of merchandise tend to be less volatile than margins from the retail sale of gasoline and diesel fuel. Merchandise margin as a percent of total gross margin for Speedway increased in 2016, primarily due to lower light product margins during the year. The following table sets forth Speedway merchandise statistics for the past three years.
Speedway Merchandise Statistics
 
2016
 
2015
 
2014
Merchandise sales (in millions)
$
5,007

 
$
4,879

 
$
3,611

Merchandise gross margin (in millions)
1,435

 
1,368

 
975

Merchandise as a percent of total gross margin
56
%
 
54
%
 
57
%

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As of December 31, 2016, Speedway had 2,733 convenience stores in 21 states. The following table sets forth the number of convenience stores by state owned by our Speedway segment as of December 31, 2016.
State
 
Number of
Convenience Stores(a)
Connecticut
1

Delaware
4

Florida
241

Georgia
1

Illinois
115

Indiana
309

Kentucky
147

Massachusetts
114

Michigan
303

New Hampshire
12

New Jersey
72

New York
238

North Carolina
278

Ohio
488

Pennsylvania
113

Rhode Island
20

South Carolina
52

Tennessee
38

Virginia
62

West Virginia
61

Wisconsin
64

Total
2,733

(a) Includes stores with commercial fueling lanes.
Speedway also owns a 29 percent interest in PFJ Southeast LLC (“PFJ Southeast”), which is a joint venture between Speedway and Pilot with 123 travel center locations primarily in the Southeast United States as of December 31, 2016.
As of December 31, 2016, Speedway owned 90 transport trucks and 83 trailers for the movement of gasoline and distillate.
Midstream
Following the MarkWest Merger, we changed the name of our Pipeline Transportation segment to the Midstream segment to reflect its expanded business activities. The Midstream segment includes the operations of MPLX and certain other related operations.
MPLX
MPLX is a diversified, growth-oriented publicly traded master limited partnership formed by us to own, operate, develop and acquire midstream energy infrastructure assets. On December 4, 2015, MPLX merged with MarkWest, whereby MarkWest became a wholly-owned subsidiary of MPLX. As of December 31, 2016, our ownership interest in MPLX was 25.5 percent, including our two percent general partner interest. This ownership percentage reflects the conversion of the MPLX Class B Units in July 2017 at 1.09 to 1.00.
As of December 31, 2016, MPLX assets, through its combination with MarkWest, included approximately 7,500 MMcf/d of natural gas processing capacity and 500 mbpd of NGL fractionation capacity and more than 5,600 miles of gas gathering and NGL pipelines.

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MPLX assets as of December 31, 2016 also included 100 percent ownership of common carrier pipeline systems through Marathon Pipe Line LLC (“MPL”) and Ohio River Pipe Line LLC (“ORPL”), and a one million barrel butane storage cavern in West Virginia. MPLX, through MPL and ORPL, owned or leased and operated 1,008 miles of common carrier crude oil lines and 1,958 miles of common carrier products lines located in nine states and five tank farms in Illinois and Indiana with available storage capacity of approximately five million barrels that is committed to MPC. In 2016, third parties generated 16 percent of the crude oil and refined product shipments on MPLX’s common carrier pipelines, excluding volumes shipped by MPC under joint tariffs with third parties. These common carrier pipelines transported the volumes shown in the MPLX Pipeline Throughput information in the Midstream Operating Statistics table below for each of the last three years.
As of December 31, 2016, MPLX’s marine transportation operations included 18 owned towboats, as well as 204 owned and 18 leased barges that transport refined products and crude oil on the Ohio, Mississippi and Illinois rivers and their tributaries and inter-coastal waterways. The following table sets forth additional details about MPLX’s barges and towboats.
Class of Equipment
 
Number
in Class
 
Capacity
(thousand barrels)
Inland tank barges:(a)
 
 
 
Less than 25,000 barrels
64

 
963

25,000 barrels and over
158

 
4,631

Total
222

 
5,594

 
 
 
 
Inland towboats:
 
 
 
Less than 2,000 horsepower
2

 
 
2,000 horsepower and over
16

 
 
Total
18

 
 
(a) 
All of our barges are double-hulled.

MPC-Retained Midstream Assets and Investments
We have ownership interests in several crude oil and products pipeline systems and pipeline companies which we retained at the formation of MPLX. We have offered certain of these assets to MPLX in a dropdown transaction we expect to be completed in the first quarter of 2017. MPC consolidated volumes transported through our common carrier pipelines, which include MPLX’s pipelines and our undivided joint interests, are shown in the MPC Consolidated Pipeline Throughput information in the following table for each of the last three years.
The following table shows operating statistics for our Midstream segment.
Midstream Operating Statistics
 
2016
 
2015
 
2014
MPC Consolidated Pipeline Throughput (mbpd)
 
 
 
 
 
 
Crude oil pipelines
 
1,402

 
1,277

 
1,241

Refined products pipelines
909

 
914

 
878

Total
2,311

 
2,191

 
2,119

MPLX Pipeline Throughput (mbpd) (included in volumes above)(a)(b)
 
 
 
 
 
 
Crude oil pipelines
1,088

 
1,061

 
1,041

Refined products pipelines
908

 
914

 
878

Total
1,996

 
1,975

 
1,919

Gathering system throughput (MMcf/d)(c)
3,275

 
3,075

 

Natural gas processed (MMcf/d)(c)
5,761

 
5,468

 

C2 (ethane) + NGLs fractionated (mbpd)(c)
335

 
307

 

(a) 
MPLX predecessor volumes reported in MPLX’s filings include our undivided joint interest crude oil pipeline systems for periods prior to MPLX’s initial public offering, which were not contributed to MPLX. The undivided joint interest volumes are not included above.
(b) 
Volumes represent 100 percent of the throughput through these pipelines.
(c) 
Beginning December 4, 2015, which was the effective date of the MarkWest Merger.

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As of December 31, 2016, we have indirect ownership interests in two ocean vessel joint ventures with Crowley through our investment in Crowley Coastal Partners. These joint ventures operate and charter four Jones Act product tankers, most of which are leased to MPC, and own and operate three 750 Series ATB vessels that are leased to MPC. The following table sets forth additional details about our product tankers and ATB vessels.
Class of Equipment
 
Number
in Class
 
Capacity
(thousand barrels)
Jones Act product tankers(a)
4

 
1,320

 
 
 
 
 
750 Series ATB vessels(b)
3

 
990

(a) 
Represents ownership through our indirect noncontrolling interest in Crowley Ocean Partners.
(b) 
Represents ownership through our indirect noncontrolling interest in Crowley Blue Water Partners.
The locations and detailed information about our midstream assets are included under Item 2. Properties and are incorporated herein by reference.
Competition, Market Conditions and Seasonality
The downstream petroleum business is highly competitive, particularly with regard to accessing crude oil and other feedstock supply and the marketing of refined products. We compete with a large number of other companies to acquire crude oil for refinery processing and in the distribution and marketing of a full array of petroleum products. Based upon the “The Oil & Gas Journal 2016 Worldwide Refinery Survey,” we ranked third among U.S. petroleum companies on the basis of U.S. crude oil refining capacity as of December 31, 2016.
We compete in four distinct markets for the sale of refined products—wholesale, spot, branded and retail distribution. We believe we compete with about 50 companies in the sale of refined products to wholesale marketing customers, including private-brand marketers and large commercial and industrial consumers; about 100 companies in the sale of refined products in the spot market; 12 refiners or marketers in the supply of refined products to refiner-branded independent entrepreneurs; and approximately 850 retailers in the retail sale of refined products. In addition, we compete with producers and marketers in other industries that supply alternative forms of energy and fuels to satisfy the requirements of our industrial, commercial and retail consumers. We do not produce any of the crude oil we refine.
We also face strong competition for sales of retail gasoline, diesel fuel and merchandise. Our competitors include service stations and convenience stores operated by fully integrated major oil companies and their independent entrepreneurs and other well-recognized national or regional convenience stores and travel centers, often selling gasoline, diesel fuel and merchandise at competitive prices. Non-traditional retailers, such as supermarkets, club stores and mass merchants, have affected the convenience store industry with their entrance into sales of retail gasoline and diesel fuel. Energy Analysts International, Inc. estimated such retailers had approximately 15 percent of the U.S. gasoline market in mid-2016.
Our Midstream operations face competition for natural gas gathering, crude oil transportation and in obtaining natural gas supplies for our processing and related services; in obtaining unprocessed NGLs for gathering and fractionation; and in marketing our products and services. Competition for natural gas supplies is based primarily on the location of gas gathering facilities and gas processing plants, operating efficiency and reliability and the ability to obtain a satisfactory price for products recovered. Competitive factors affecting our fractionation services include availability of capacity, proximity to supply and industry marketing centers and cost efficiency and reliability of service. Competition for customers to purchase our natural gas and NGLs is based primarily on price, delivery capabilities, flexibility and maintenance of high-quality customer relationships. In addition, certain of our Midstream operations are highly regulated, which affects the rates that our common carrier pipelines can charge for transportation services and the return we obtain from such pipelines.
Market conditions in the oil and gas industry are cyclical and subject to global economic and political events and new and changing governmental regulations. Our operating results are affected by price changes in crude oil, natural gas and refined products, as well as changes in competitive conditions in the markets we serve. Price differentials between sweet and sour crude oils, WTI and LLS crude oils and other market structure differentials also affect our operating results.
Demand for gasoline, diesel fuel and asphalt is higher during the spring and summer months than during the winter months in most of our markets, primarily due to seasonal increases in highway traffic and construction. As a result, the operating results for each of our segments for the first and fourth quarters may be lower than for those in the second and third quarters of each calendar year.

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Our Midstream segment can be affected by seasonal fluctuations in the demand for natural gas and NGLs and the related fluctuations in commodity prices caused by various factors such as changes in transportation and travel patterns and variations in weather patterns from year to year. In the northeast region, we could be particularly impacted by seasonality as the majority of its revenues are generated by NGL sales. However, we manage the seasonality impact through the execution of our marketing strategy. We have access to up to 50 million gallons of propane storage capacity in the northeast region provided by an arrangement with a third-party which provides us with flexibility to manage the seasonality impact. Overall, our exposure to the seasonal fluctuations in the commodity markets is declining due to our growth in fee-based business.
Environmental Matters
Our management is responsible for ensuring that our operating organizations maintain environmental compliance systems that support and foster our compliance with applicable laws and regulations, and for reviewing our overall environmental performance. We also have a Corporate Emergency Response Team that oversees our response to any major environmental or other emergency incident involving us or any of our facilities.
We believe it is likely that the scientific and political attention to issues concerning the extent and causes of climate change will continue, with the potential for further regulations that could affect our operations. Currently, legislative and regulatory measures to address greenhouse gases are in various phases of review, discussion or implementation. The cost to comply with these laws and regulations cannot be estimated at this time, but could be significant. For additional information, see Item 1A. Risk Factors. We estimate and publicly report greenhouse gas emissions from our operations and products. Additionally, we continuously strive to improve operational and energy efficiencies through resource and energy conservation where practicable.
Our operations are subject to numerous other laws and regulations relating to the protection of the environment. Such laws and regulations include, among others, the Clean Air Act (“CAA”) with respect to air emissions, the Clean Water Act (“CWA”) with respect to water discharges, 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. In addition, many states where we operate have similar laws. New laws are being enacted and regulations are being adopted on a continuing basis, and the costs of compliance with such new laws and regulations are very difficult to estimate until finalized.
For a discussion of environmental capital expenditures and costs of compliance for air, water, solid waste and remediation, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Environmental Matters and Compliance Costs.
Air
We are subject to many requirements in connection with air emissions from our operations. Internationally and domestically, emphasis has been placed on reducing greenhouse gas emissions. The U.S. pledge in 2009, as part of the Copenhagen Accord, to reduce greenhouse gas emissions 17 percent below 2005 levels by 2020 remains in effect and was reaffirmed in President Obama’s 2013 Climate Action Plan. Although the United States signed the 2015 Paris Agreement on Climate Change, it does not legally require parties to the Agreement to reduce greenhouse gas emissions, and the United States’ future activities in response to the Paris Agreement are unknown. In November 2016, the Obama administration released its strategy for “deep de-carbonization,” which aims to reduce greenhouse gas emissions to 80 percent below 2005 levels by 2050. The U.S. climate change strategy and implementation of that strategy through legislation and regulation may change under President Trump’s administration; therefore, the impact to our industry and operations due to greenhouse gas regulation is unknown at this time.
In 2009, the EPA issued an “endangerment finding” that greenhouse gas emissions contribute to air pollution that endangers public health and welfare. Related to the endangerment finding, in April 2010, the EPA finalized a greenhouse gas emission standard for mobile sources (cars and other light duty vehicles). The endangerment finding, the mobile source standard and the EPA’s determination that greenhouse gases are subject to regulation under the Clean Air Act resulted in permitting of greenhouse gas emissions at stationary sources, but as a result of the EPA’s “tailoring rule,” permit applicability was limited to larger sources such as refineries. Legal challenges were filed against these EPA actions. In June 2014, the United States Supreme Court ruled that the Clean Air Act Prevention of Significant Deterioration program for new and modified major stationary sources is not triggered by greenhouse gas emissions alone. The United States Supreme Court did, however, uphold the requirement for new or modified stationary sources that will also emit a criteria pollutant to control greenhouse gas emissions through Best Available Control Technology. Implementing Best Available Control Technology may result in increased costs to our operations. A few MPC projects may trigger greenhouse gas permitting requirements but any additional capital spending will likely not be significant.

22


The EPA has finalized Source Performance Standards for greenhouse gas emissions for new and existing electric utility generating units. These standards could impact electric and natural gas rates for all our operations. Legal challenges have been filed by several states and by industry groups seeking to overturn the final rules. In February 2016, the United States Supreme Court stayed implementation of the standards for existing utility generating units (also known as the Clean Power Plan) until complete disposition of the litigation. Congress may again also consider legislation on greenhouse gas emissions or a carbon tax. In the absence of federal legislation or regulation of greenhouse gas emissions, states may become more active in regulating greenhouse gas emissions. These measures include state actions to develop statewide or regional programs to impose emission reductions. These measures may also include low carbon fuel standards, such as the California program. In addition, private parties have sued utilities and other emitters of greenhouse gas emissions, but such suits have been largely unsuccessful. We have not been named in any of those lawsuits. Private parties have also sued federal and certain state governmental entities seeking additional greenhouse gas emission reductions beyond those currently being undertaken. In sum, requiring reductions in greenhouse gas emissions could result in increased costs to (i) operate and maintain our facilities, (ii) install new emission controls at our facilities and (iii) administer and manage any greenhouse gas emissions programs, including acquiring emission credits or allotments. These requirements may also significantly affect MPC’s refinery operations and may have an indirect effect on our business, financial condition and results of operations. The extent and magnitude of the impact from greenhouse gas regulation or legislation cannot be reasonably estimated due to the uncertainty regarding the additional measures and how they will be implemented.
In 2013, the Obama administration made changes to the social cost of carbon (“SCC”) estimate. The SCC was first issued in 2010. The SCC is to be used by the EPA and other federal agencies in regulatory cost-benefit analyses to take into account alleged broad economic consequences associated with changes to emissions of greenhouse gases. In 2013, the Obama administration significantly increased the estimate to $36 per ton. In response to the regulated community and Congress’ critiques of how the SCC was developed, the Office of Management and Budget provided an opportunity to comment on the SCC, but ultimately did not make any significant revisions. In August 2016, the White House Council on Environmental Quality issued its final guidance to federal agencies on assessing a project’s impact to climate change under the National Environmental Policy Act, by requiring an estimation of the greenhouse gas emissions from the project, including using the SCC when analyzing costs and benefits of a project. While the impact of a higher SCC in future regulations is not known at this time, it may result in increased costs to our operations. The EPA has also used an estimate of the social cost of methane in its regulatory impact analysis to justify regulating methane as a pollutant for new and modified sources in the oil and natural gas sector.
In 2015, the EPA finalized a revision to the National Ambient Air Quality Standards (“NAAQS”) for ozone. The EPA lowered the primary ozone NAAQS from 75 ppb to 70 ppb. This revision initiates a multi-year process in which nonattainment designations will be made based on more recent ozone measurements that includes data from 2016. States will then propose and adopt, as necessary, new rules reducing emissions to meet the new standard. Currently, the EPA is in the process of implementing the 75 ppb ozone standard that the EPA had promulgated in March 2008. The impact of a stricter standard cannot be accurately estimated due to the present uncertainty regarding area nonattainment designations and the additional requirements that states may impose. Additionally, legal petitions challenging the revised ozone standard have been filed, adding uncertainty to the revised standard.
On September 29, 2015, the EPA signed the final regulations revising existing refinery air emissions standards. The revised regulations were published in the Federal Register on December 1, 2015. The revised rule requires additional controls, lower emission standards and ambient air monitoring. We do not anticipate that MPC’s costs to comply with the revised regulations will be material to our results of operations or cash flows.
Water
We maintain numerous discharge permits as required under the National Pollutant Discharge Elimination System program of the CWA and have implemented systems to oversee our compliance with these permits. In addition, we are 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. OPA-90 also requires the responsible company to pay resulting removal costs and damages and provides for civil penalties and criminal sanctions for violations of its provisions. We operate tank vessels and facilities from which spills of oil and hazardous substances could occur. We have implemented emergency oil response plans for all of our components and facilities covered by OPA-90 and we have established Spill Prevention, Control and Countermeasures plans for all facilities subject to such requirements.
Additionally, OPA-90 requires that new tank vessels entering or operating in U.S. waters be double-hulled and that existing tank vessels that are not double-hulled be retrofitted or removed from U.S. service. All barges used for river transport of our raw materials and refined products meet the double-hulled requirements of OPA-90. Some coastal states in which we operate have passed state laws similar to OPA-90, but with expanded liability provisions, that include provisions for cargo owner responsibility as well as ship owner and operator responsibility.

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In June 2015, the EPA and the United States Army Corps of Engineers finalized significant changes to the definition of the term “waters of the United States” (“WOTUS”) used in numerous programs under the CWA. This final rulemaking is referred to as the Clean Water Rule. The Clean Water Rule has been challenged in multiple federal courts by many states, trade groups, and other interested parties, and in October 2015, a United States Court of Appeals issued a nationwide stay of the Clean Water Rule. The Clean Water Rule, as written, expands permitting, planning and reporting obligations and may extend the timing to secure permits for pipeline and fixed asset construction and maintenance activities. The Clean Water Rule does contain new language intended to address concerns that the proposed rule included storm water conveyances and storage structures as WOTUS, and we continue to review how that new language will apply under specific circumstances. Court challenges of the Clean Water Rule will continue through 2017.
In 2015, the EPA issued its intent to review the CWA categorical effluent limitation guidelines (“ELG”) for the petroleum refining sector. During 2016, the EPA prepared a draft information request (“ICR”) requesting significant wastewater and treatment process details and may perform sampling of effluent at one or more of our refineries. The ICR is expected to issue in 2017. The EPA has indicated they believe there have been significant changes in the characteristics of wastewaters generated within refining operations that warrant the review. Specific targets for the review are the impacts of processing heavier crude oils and the transfer of air pollutants to wastewater when air pollution abatement devices are in use. A similar project, initiated in 2007 for steam power generation with similar attributes, resulted in a significant change in the treatment requirements for coal-fired power plants. The refining sector ELG review has the potential to result in a similar impact. We are actively engaged in the planning process for the 2017 information request and effluent sampling campaign and engaged with The American Petroleum Institute and the American Fuel & Petrochemical Manufacturers associations on this matter. The typical life-cycle for an ELG review from the intent to review to issuance of a final rule that would require upgrades is seven years. The impact of an ELG review cannot be accurately estimated at this time.
Solid Waste
We continue to seek methods to minimize the generation of hazardous wastes in our operations. RCRA establishes standards for the management of solid and hazardous wastes. Besides affecting waste disposal practices, RCRA also addresses the environmental effects of certain past waste disposal operations, the recycling of wastes and the regulation of USTs containing regulated substances. We have ongoing RCRA treatment and disposal operations at two of our facilities and primarily utilize offsite third-party treatment and disposal facilities. Ongoing RCRA-related costs, however, are not expected to be material to our results of operations or cash flows.
Remediation
We own or operate, or have owned or operated, certain convenience stores and other locations where, during the normal course of operations, releases of refined products from USTs have occurred. Federal and state laws require that contamination caused by such releases at these sites be assessed and remediated to meet applicable standards. The enforcement of the UST regulations under RCRA has been delegated to the states, which administer their own UST programs. Our obligation to remediate such contamination varies, depending on the extent of the releases and the stringency of the applicable state laws and regulations. A portion of these remediation costs may be recoverable from the appropriate state UST reimbursement funds once the applicable deductibles have been satisfied. We also have ongoing remediation projects at a number of our current and former refinery, terminal and pipeline locations. Penalties or other sanctions may be imposed for noncompliance.
Claims under CERCLA and similar state acts have been raised with respect to the clean-up of various waste disposal and other sites. CERCLA is intended to facilitate the clean-up of hazardous substances without regard to fault. Potentially responsible parties for each site include present and former owners and operators of, transporters to and generators of the hazardous substances at the site. Liability is strict and can be joint and several. Because of various factors including the difficulty of identifying the responsible parties for any particular site, the complexity of determining the relative liability among them, the uncertainty as to the most desirable remediation techniques and the amount of damages and clean-up costs and the time period during which such costs may be incurred, we are unable to reasonably estimate our ultimate cost of compliance with CERCLA; however, we do not believe such costs will be material to our business, financial condition, results of operations or cash flows.
Mileage Standards, Renewable Fuels and Other Fuels Requirements
In 2007, the U.S. Congress passed the Energy Independence and Security Act (“EISA”), which, among other things, set a target of 35 miles per gallon for the combined fleet of cars and light trucks in the United States by model year 2020, and contains the RFS2. In August 2012, the EPA and the National Highway Traffic Safety Administration (“NHTSA”) jointly adopted regulations that establish average industry fleet fuel economy standards for passenger cars and light trucks of up to 41 miles per gallon by model year 2021 and average fleet fuel economy standards of up to 49.7 miles per gallon by model year 2025. The standards from 2022 to 2025 are the government’s current estimate but will require further rulemaking by the NHTSA. The EPA in the fourth quarter of 2016 determined that its proposed targets for GHG reduction are achievable and did not adjust its

24


2022 to 2025 estimated standards. New or alternative transportation fuels such as compressed natural gas could also pose a competitive threat to our operations.
The RFS2 required the total volume of renewable transportation fuels sold or introduced annually in the U.S. to reach 22.25 billion gallons in 2016, 24.0 billion gallons in 2017 and increase to 36.0 billion gallons by 2022. Within the total volume of renewable fuel, EISA established an advanced biofuel volume of 7.25 billion gallons in 2016, 9.0 billion gallons in 2017 and increasing to 21.0 billion gallons in 2022. Subsets within the advanced biofuel volume include biomass-based diesel, which was set as at least 1.0 billion gallons in 2014 through 2022 (to be determined by the EPA through rulemaking), and cellulosic biofuel, which was set at 4.25 billion gallons in 2016, 5.5 billion gallons in 2017 and increasing to 16.0 billion gallons in 2022.
On November 30, 2015, the EPA finalized the renewable fuel standards for the years of 2014, 2015 and 2016 as well as the biomass-based diesel standard for 2017. Because the EPA missed the statutory deadlines for establishing the standards for 2014 and 2015, the EPA used its waiver authority under EISA to set the standards using actual consumption data obtained from EPA’s tracking system, EMTS. The EPA’s use of its general waiver authority to reduce the statutory volumes has been challenged in court. A court decision vacating the 2014-2016 renewable fuel standards on the basis that the EPA unreasonably exercised its general waiver authority could increase our cost of compliance with the Renewable Fuels Standards and be detrimental to the RIN market.
On November 23, 2016, the EPA finalized the renewable fuel standards for the year 2017 and the biomass based diesel standard for 2018. The EPA used its cellulosic waiver authority to reduce the standards from the statutory amounts to the following: 19.28 billion gallons total renewable fuel; 4.28 billion gallons advanced biofuel; and 311 million gallons cellulosic ethanol. The EPA increased the biomass based diesel standard for 2018 to 2.0 billion gallons. In the near term, the RFS2 will be satisfied primarily with ethanol blended into gasoline. Vehicle, regulatory and infrastructure constraints limit the blending of significantly more than 10 percent ethanol into gasoline (“E10”). The volumes for 2016 and 2017 result in the ethanol content of gasoline exceeding the E10 blendwall, which will require obligated parties to either sell E15 or FlexFuel at levels that exceed historical levels or retire carryover RINs that had been generated in prior years. On October 13, 2016, the EPA issued a partial waver decision under the CAA to allow for an increase in the amount of ethanol permitted to be blended into gasoline from E10 to E15 for 2007 and newer light-duty motor vehicles. On January 21, 2011, the EPA issued a second waver for the use of E15 in vehicles model year 2001-2006. There are numerous issues, including state and federal regulatory issues, which need to be addressed before E15 can be marketed for use in traditional gasoline engines. Additionally, there are infrastructure compatibility issues and vehicle manufacturer warranty concerns related to E15 usage. Neither E15 nor FlexFuel has been readily accepted by the consumer.
With potentially uncertain supplies, the advanced biofuels programs may present specific challenges in that we may have to enter into arrangements with other parties or purchase credits from the EPA to meet our obligations to use advanced biofuels, including biomass-based diesel and cellulosic biofuel.
We made investments in infrastructure capable of expanding biodiesel blending capability to help comply with the biodiesel RFS2 requirement by buying and blending biodiesel into our refined diesel product, and by buying needed biodiesel RINs in the EPA-created biodiesel RINs market. On April 1, 2014, we purchased a facility in Cincinnati, Ohio, which currently produces biodiesel, glycerin and other by-products. The capacity of the plant is approximately 60 million gallons per year. As a producer of biodiesel, we now generate RINs, thereby reducing our reliance on the external RIN market.
On November 10, 2016, the EPA proposed to deny petitions requesting that the point of obligation for the RFS be moved to the terminal rack. The EPA is accepting comments on its proposed denial. Should the EPA decide that its proposal was incorrect and move the point of obligation, we could be subject to increased costs and compliance uncertainties
The RFS2 has required, and may in the future continue to require, additional capital expenditures or expenses by us to accommodate increased renewable fuels use. We may experience a decrease in demand for refined petroleum products due to an increase in combined fleet mileage or due to refined petroleum products being replaced by renewable fuels.
On March 3, 2014, the EPA signed the final Tier 3 fuel standards. The final Tier 3 fuel standards require, among other things, a lower annual average sulfur level in gasoline to no more than 10 ppm beginning in calendar year 2017. In addition, gasoline refiners and importers may not exceed a maximum per-gallon sulfur standard of 80 ppm while retailers may not exceed a maximum per-gallon sulfur standard of 95 ppm. We anticipate that we will spend approximately $650 million between 2014 and 2019 to comply with these standards, which includes estimated capital expenditures of approximately $200 million in 2017.

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Trademarks, Patents and Licenses
Our Marathon trademark is material to the conduct of our refining and marketing operations, and our Speedway trademark is material to the conduct of our retail marketing operations. We currently hold a number of U.S. and foreign patents and have various pending patent applications. Although in the aggregate our patents and licenses are important to us, we do not regard any single patent or license or group of related patents or licenses as critical or essential to our business as a whole. In general, we depend on our technological capabilities and the application of know-how rather than patents and licenses in the conduct of our operations.
Employees
We had approximately 44,460 regular full-time and part-time employees as of December 31, 2016, which includes approximately 32,880 employees of Speedway.
Certain hourly employees at our Canton, Catlettsburg, Galveston Bay and Texas City refineries are represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union under labor agreements that are due to expire in 2019. The International Brotherhood of Teamsters represents certain hourly employees at our Detroit refinery under a labor agreement that is also scheduled to expire in 2019. In addition, they represent certain hourly employees at Speedway under agreements that cover certain outlets in New York and New Jersey that expire on March 14, 2019 and June 30, 2019, respectively.
Executive and Corporate Officers of the Registrant
The executive and corporate officers of MPC are as follows:
Name
 
Age as of
January 31, 2017
 
Position with MPC
Gary R. Heminger
 
63
 
Chairman, President and Chief Executive Officer
Molly R. Benson(a)
 
50
 
Vice President, Corporate Secretary and Chief Compliance Officer
Raymond L. Brooks
 
56
 
Senior Vice President, Refining
Suzanne Gagle
 
51
 
Vice President, General Counsel
Timothy T. Griffith
 
47
 
Senior Vice President and Chief Financial Officer
John R. Haley(a)
 
60
 
Vice President, Tax
Thomas Kaczynski
 
55
 
Vice President, Finance and Treasurer
Thomas M. Kelley
 
57
 
Senior Vice President, Marketing
Anthony R. Kenney
 
63
 
President, Speedway LLC
Rodney P. Nichols
 
64
 
Senior Vice President, Human Resources and Administrative Services
Randy S. Nickerson
 
55
 
Executive Vice President, Corporate Strategy
C. Michael Palmer
 
63
 
Senior Vice President, Supply, Distribution and Planning
John J. Quaid
 
45
 
Vice President and Controller
David R. Sauber(a)
 
53
 
Vice President, Human Resources and Labor Relations
John S. Swearingen
 
57
 
Senior Vice President, Transportation and Logistics
Donald C. Templin
 
53
 
Executive Vice President
Donald W. Wehrly(a)
 
57
 
Vice President and Chief Information Officer
David L. Whikehart(a)
 
57
 
Vice President, Environment, Safety and Corporate Affairs
(a) 
Corporate officer.
Mr. Heminger was appointed president and chief executive officer effective June 30, 2011, and to his current position in 2016. Prior to this appointment, Mr. Heminger was president of Marathon Petroleum Company LP (formerly known as Marathon Ashland Petroleum LLC and Marathon Petroleum Company LLC), currently a wholly-owned subsidiary of MPC and prior to the Spinoff, a wholly-owned subsidiary of Marathon Oil. He assumed responsibility as president of Marathon Petroleum Company LP in September 2001.
Ms. Benson was appointed vice president, corporate secretary and chief compliance officer effective March 1, 2016. Prior to this appointment, Ms. Benson was assistant general counsel, corporate and finance beginning in April 2012, group counsel, corporate and finance beginning in 2011, group counsel, North American production for Marathon Oil Company beginning in 2010 and senior attorney, downstream business beginning in 2006.

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Mr. Brooks was appointed senior vice president, Refining effective March 1, 2016. Prior to this appointment, Mr. Brooks was general manager, Galveston Bay refinery beginning in February 2013, general manager, Robinson refinery beginning in 2010 and general manager, St. Paul Park, Minnesota refinery (no longer owned by MPC) beginning in 2006.
Ms. Gagle was appointed vice president and general counsel effective March 1, 2016. Prior to this appointment, Ms. Gagle was assistant general counsel, litigation and Human Resources beginning in April 2011, senior group counsel, downstream operations beginning in 2010 and group counsel, litigation, beginning in 2003.
Mr. Griffith was appointed senior vice president and chief financial officer effective March 3, 2015. Prior to this appointment, Mr. Griffith served as vice president, Finance and Investor Relations, and treasurer beginning in January 2014. He was vice president of Finance and treasurer beginning in August 2011. Previously, Mr. Griffith was vice president Investor Relations and treasurer of Smurfit-Stone Container Corporation, a packaging manufacturer, in St. Louis, Missouri, from 2008 to 2011.
Mr. Haley was appointed vice president, Tax effective June 1, 2013. Prior to this appointment, Mr. Haley served as director of Tax beginning in July 2011 and as a tax manager for Marathon Oil Company beginning in 1996.
Mr. Kaczynski was appointed vice president, Finance and treasurer effective August 31, 2015. Prior to this appointment, Mr. Kaczynski was vice president and treasurer of Goodyear Tire and Rubber Company beginning in 2014. Previously, he served as vice president, Investor Relations, of Goodyear Tire and Rubber Company beginning in 2013, vice president and corporate treasurer of Affinia Group Inc. beginning in 2005, and director of affiliate finance and of capital markets and bank relations of Visteon Corporation beginning in 2000.
Mr. Kelley was appointed senior vice president, Marketing effective June 30, 2011. Prior to this appointment, Mr. Kelley served in the same capacity for Marathon Petroleum Company LP beginning in January 2010. Previously, he served as director of Crude Supply and Logistics for Marathon Petroleum Company LP beginning in January 2008, and as a Brand Marketing manager for eight years prior to that.
Mr. Kenney has served as president of Speedway LLC since August 2005. Prior to this appointment, Mr. Kenney served as vice president, Business Development of Marathon Ashland Petroleum LLC beginning in 2001.
Mr. Nichols was appointed senior vice president, Human Resources and Administrative Services effective March 1, 2012. Prior to this appointment, Mr. Nichols served as vice president, Human Resources and Administrative Services beginning on June 30, 2011 and served in the same capacity for Marathon Petroleum Company LP beginning in April 1998.
Mr. Nickerson was appointed executive vice president, Corporate Strategy effective December 4, 2015 at the time of the MarkWest Merger. Prior to this appointment, Mr. Nickerson served as chief commercial officer of MarkWest beginning in 2006 and senior vice president, Corporate Development beginning in 2003.
Mr. Palmer was appointed senior vice president, Supply, Distribution and Planning effective June 30, 2011. Prior to this appointment, Mr. Palmer served as vice president, Supply, Distribution and Planning for Marathon Petroleum Company LP beginning in June 2010. He served as Crude Supply and Logistics director for Marathon Petroleum Company LP beginning in February 2010, and as senior vice president, Oil Sands Operations and Commercial Activities for Marathon Oil Canada Corporation beginning in 2007.
Mr. Quaid was appointed vice president and controller effective June 23, 2014. Prior to this appointment, Mr. Quaid was vice president of Iron Ore at United States Steel Corporation (“U. S. Steel”), an integrated steel producer, beginning in January 2014. Previously, Mr. Quaid served in various leadership positions at U. S. Steel since February 2002, including vice president and treasurer beginning in August 2011, controller, North American Flat-Rolled Operations beginning in July 2010 and assistant corporate controller beginning in 2008.
Mr. Sauber was appointed vice president, Human Resources and Labor Relations effective February 1, 2017. Prior to this appointment, Mr. Sauber served as vice president, Human Resources Policy, Benefits and Services of Shell Oil Company beginning in 2013. Previously, Mr. Sauber served in various leadership positions at Shell Oil Company since 2000 including regional Human Resources manager for U.S. manufacturing in 2009.
Mr. Swearingen was appointed senior vice president, Transportation and Logistics effective March 3, 2015. Prior to this appointment, Mr. Swearingen served as vice president of Health, Environmental, Safety & Security beginning June 30, 2011. Previously, he was president of Marathon Pipe Line LLC beginning in 2009 and the Illinois Refining Division manager beginning in November 2001.

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Mr. Templin was appointed executive vice president effective January 1, 2016. Prior to this appointment, Mr. Templin served as executive vice president, Supply, Transportation and Marketing beginning March 3, 2015 and senior vice president and chief financial officer beginning on June 30, 2011. Previously, he was a partner at PricewaterhouseCoopers LLP, an audit, tax and advisory services provider, with various audit and management responsibilities beginning in 1996.
Mr. Wehrly was appointed vice president and chief information officer effective June 30, 2011. Prior to this appointment, Mr. Wehrly was the manager of Information Technology Services for Marathon Petroleum Company LP beginning in 2003.
Mr. Whikehart was appointed vice president, Environmental, Safety and Corporate Affairs effective February 29, 2016. Prior to this appointment, Mr. Whikehart served as vice president, Corporate Planning, Government & Public Affairs effective January 1, 2016 and director, Product Supply and Optimization beginning in March 2011. Previously, Mr. Whikehart served as director, Climate Change and Carbon Management beginning in 2010 and director, Business Development beginning in 2008.
Available Information
General information about MPC, including Corporate Governance Principles and Charters for the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee, can be found at
http://ir.marathonpetroleum.com. In addition, our Code of Business Conduct and Code of Ethics for Senior Financial Officers are also available in this same location.
MPC uses its website, www.marathonpetroleum.com, as a channel for routine distribution of important information, including news releases, analyst presentations, financial information and market data. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after the reports are filed or furnished with the SEC. These documents are also available in hard copy, free of charge, by contacting our Investor Relations office. In addition, our website allows investors and other interested persons to sign up to automatically receive email alerts when we post news releases and financial information on our website. Information contained on our website is not incorporated into this Annual Report on Form 10-K or other securities filings.

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Item 1A. Risk Factors
You should carefully consider each of the following risks and all of the other information contained in this Annual Report on Form 10-K in evaluating us and our common stock. Some of these risks relate principally to our business and the industry in which we operate, while others relate to the ownership of our common stock.
Our business, financial condition, results of operations or cash flows could be materially and adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline.
Risks Relating to our Business
A substantial or extended decline in refining and marketing gross margins would reduce our operating results and cash flows and could materially and adversely impact our future rate of growth, the carrying value of our assets and our ability to execute share repurchases and continue the payment of our base dividend.
Our operating results, cash flows, future rate of growth, the carrying value of our assets and our ability to execute share repurchases and continue the payment of our base dividend are highly dependent on the margins we realize on our refined products. The measure of the difference between market prices for refined products and crude oil, or crack spread, is commonly used by the industry as a proxy for refining and marketing gross margins. Historically, refining and marketing gross margins have been volatile, and we believe they will continue to be volatile. Our margins from the sale of gasoline and other refined products are influenced by a number of conditions, including the price of crude oil. We do not produce crude oil and must purchase all of the crude oil we refine. The price of crude oil and the price at which we can sell our refined products may fluctuate independently due to a variety of regional and global market conditions. Any overall change in crack spreads will impact our refining and marketing gross margins. Many of the factors influencing a change in crack spreads and refining and marketing gross margins are beyond our control. These factors include:
worldwide and domestic supplies of and demand for crude oil and refined products;
the cost of crude oil and other feedstocks to be manufactured into refined products;
the prices realized for refined products;
utilization rates of refineries;
natural gas and electricity supply costs incurred by refineries;
the ability of the members of OPEC to agree to and maintain production controls;
political instability or armed conflict in oil and natural gas producing regions;
local weather conditions;
seasonality of demand in our marketing area due to increased highway traffic in the spring and summer months;
natural disasters such as hurricanes and tornadoes;
the price and availability of alternative and competing forms of energy;
domestic and foreign governmental regulations and taxes; and
local, regional, national and worldwide economic conditions.
Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The longer-term effects of these and other factors on refining and marketing gross margins are uncertain. We purchase our crude oil and other refinery feedstocks weeks before we refine them and sell the refined products. Price level changes during the period between purchasing feedstocks and selling the refined products from these feedstocks could have a significant effect on our financial results. We also purchase refined products manufactured by others for resale to our customers. Price changes during the periods between purchasing and reselling those refined products also could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Lower refining and marketing gross margins may reduce the amount of refined products we produce, which may reduce our revenues, income from operations and cash flows. Significant reductions in refining and marketing gross margins could require us to reduce our capital expenditures, impair the carrying value of our assets (such as property, plant and equipment, inventory or goodwill), decrease or eliminate our share repurchase activity and our base dividend.

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Our operations are subject to business interruptions and casualty losses. Failure to manage risks associated with business interruptions could adversely impact our operations, financial condition, results of operations and cash flows.
Our operations are subject to business interruptions due to scheduled refinery turnarounds, unplanned maintenance or unplanned events such as explosions, fires, refinery or pipeline releases or other incidents, power outages, severe weather, labor disputes, or other natural or man-made disasters, such as acts of terrorism. For example, pipelines provide a nearly-exclusive form of transportation of crude oil to, or refined products from, some of our refineries. In such instances, a prolonged interruption in service of such a pipeline could materially and adversely affect the operations, profitability and cash flows of the impacted refinery.
Explosions, fires, refinery or pipeline releases or other incidents involving our assets or operations could result in serious personal injury or loss of human life, significant damage to property and equipment, environmental pollution, impairment of operations and substantial losses to us. Damages resulting from an incident involving any of our assets or operations may result in our being named as a defendant in one or more lawsuits asserting potentially substantial claims or in our being assessed potentially substantial fines by governmental authorities.
We do not insure against all potential losses, and, therefore, our business, financial condition, results of operations and cash flows could be adversely affected by unexpected liabilities and increased costs.
We maintain insurance coverage in amounts we believe to be prudent against many, but not all, potential liabilities arising from operating hazards. Uninsured liabilities arising from operating hazards, including but not limited to, explosions, fires, refinery or pipeline releases or other incidents involving our assets or operations, could reduce the funds available to us for capital and investment spending and could have a material adverse effect on our business, financial condition, results of operations and cash flows. Historically, we also have maintained insurance coverage for physical damage and resulting business interruption to our major facilities, with significant self-insured retentions. In the future, we may not be able to maintain insurance of the types and amounts we desire at reasonable rates.
We rely on the performance of our information technology systems, the failure of which could have an adverse effect on our business, financial condition, results of operations and cash flows.
We are heavily dependent on our information technology systems and network infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business. These information systems involve data network and telecommunications, Internet access and website functionality, and various computer hardware equipment and software applications, including those that are critical to the safe operation of our business. These systems and infrastructure are subject to damage or interruption from a number of potential sources including natural disasters, software viruses or other malware, power failures, cyber-attacks and other events. We also face various other cyber-security threats, including threats to gain unauthorized access to sensitive information or to render data or systems unusable. To protect against such attempts of unauthorized access or attack, we have implemented infrastructure protection technologies and disaster recovery plans. There can be no guarantee such plans, to the extent they are in place, will be effective.
The retail market is diverse and highly competitive, and very aggressive competition could adversely impact our business.
We face strong competition in the market for the sale of retail gasoline, diesel fuel and merchandise. Our competitors include outlets owned or operated by fully integrated major oil companies or their dealers or jobbers, and other well-recognized national or regional retail outlets, often selling gasoline or merchandise at very competitive prices. Several non-traditional retailers such as supermarkets, club stores and mass merchants are in the retail business. These non-traditional gasoline retailers have obtained a significant share of the transportation fuels market and we expect their market share to grow. Because of their diversity, integration of operations, experienced management and greater financial resources, these companies may be better able to withstand volatile market conditions or levels of low or no profitability in the retail segment of the market. In addition, these retailers may use promotional pricing or discounts, both at the pump and in the store, to encourage in-store merchandise sales. These activities by our competitors could pressure us to offer similar discounts, adversely affecting our profit margins. Additionally, the loss of market share by our convenience stores to these and other retailers relating to either gasoline or merchandise could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The development, availability and marketing of alternative and competing fuels in the retail market could adversely impact our business. We compete with other industries that provide alternative means to satisfy the energy and fuel needs of our consumers. Increased competition from these alternatives as a result of governmental regulations, technological advances and consumer demand could have an impact on pricing and demand for our products and our profitability.

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We are subject to interruptions of supply and increased costs as a result of our reliance on third-party transportation of crude oil and refined products.
We utilize the services of third parties to transport crude oil and refined products to and from our refineries. In addition to our own operational risks discussed above, we could experience interruptions of supply or increases in costs to deliver refined products to market if the ability of the pipelines, railways or vessels to transport crude oil or refined products is disrupted because of weather events, accidents, governmental regulations or third-party actions. A prolonged disruption of the ability of the pipelines, railways or vessels to transport crude oil or refined products to or from one or more of our refineries could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We may incur losses to our business as a result of our forward-contract activities and derivative transactions.
We currently use commodity derivative instruments, and we expect to enter into these types of transactions in the future. A failure of a futures commission merchant or counterparty to perform would affect these transactions. To the extent the instruments we utilize to manage these exposures are not effective, we may incur losses related to the ineffective portion of the derivative transaction or costs related to moving the derivative positions to another futures commission merchant or counterparty once a failure has occurred.
We have significant debt obligations; therefore, our business, financial condition, results of operations and cash flows could be harmed by a deterioration of our credit profile, a decrease in debt capacity or unsecured commercial credit available to us, or by factors adversely affecting credit markets generally.
At December 31, 2016, our total debt obligations for borrowed money and capital lease obligations were $11.1 billion, including $4.9 billion of obligations of MPLX. We may incur substantial additional debt obligations in the future.
Our indebtedness may impose various restrictions and covenants on us that could have material adverse consequences, including:
increasing our vulnerability to changing economic, regulatory and industry conditions;
limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry;
limiting our ability to pay dividends to our shareholders;
limiting our ability to borrow additional funds; and
requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for working capital, capital expenditures, acquisitions, share repurchases, dividends and other purposes.
A decrease in our debt or commercial credit capacity, including unsecured credit extended by third-party suppliers, or a deterioration in our credit profile could increase our costs of borrowing money and/or limit our access to the capital markets and commercial credit, which could materially and adversely affect our business, financial condition, results of operations and cash flows.
We have a trade receivables securitization facility that provides liquidity of up to $750 million depending on the amount of eligible domestic trade accounts receivables. In periods of lower prices, we may not have sufficient eligible accounts receivables to support full availability of this facility.
Historic or current operations could subject us to significant legal liability or restrict our ability to operate.
We currently are defending litigation and anticipate we will be required to defend new litigation in the future. Our operations, including those of MPLX, and those of our predecessors could expose us to litigation and civil claims by private plaintiffs for alleged damages related to contamination of the environment or personal injuries caused by releases of hazardous substances from our facilities, products liability, consumer credit or privacy laws, product pricing or antitrust laws or any other laws or regulations that apply to our operations. While an adverse outcome in most litigation matters would not be expected to be material to us, in class-action litigation, large classes of plaintiffs may allege damages relating to extended periods of time or other alleged facts and circumstances that could increase the amount of potential damages. Attorneys general and other government officials may pursue litigation in which they seek to recover civil damages from companies on behalf of a state or its citizens for a variety of claims, including violation of consumer protection and product pricing laws or natural resources damages. We are defending litigation of that type and anticipate that we will be required to defend new litigation of that type in the future. If we are not able to successfully defend such litigation, it may result in liability to our company that could materially and adversely affect our business, financial condition, results of operations and cash flows. We do not have insurance covering all of these potential liabilities. In addition to substantial liability, plaintiffs in litigation may also seek injunctive relief

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which, if imposed, could have a material adverse effect on our future business, financial condition, results of operations and cash flows.
A portion of our workforce is unionized, and we may face labor disruptions that could materially and adversely affect our business, financial condition, results of operations and cash flows.
Approximately 36 percent of our refining employees are covered by collective bargaining agreements. Certain hourly employees at our Canton, Catlettsburg, Galveston Bay and Texas City refineries are represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union under labor agreements that are due to expire in 2019. The International Brotherhood of Teamsters represents certain hourly employees at our Detroit refinery under a labor agreement that is also scheduled to expire in 2019. In addition, they represent certain hourly employees at Speedway under agreements that cover certain outlets in New York and New Jersey that expire on March 14, 2019 and June 30, 2019, respectively. These contracts may be renewed at an increased cost to us. In addition, we have experienced, or may experience, work stoppages as a result of labor disagreements. Any prolonged work stoppages disrupting operations could have a material adverse effect on our business, financial condition, results of operations and cash flows.
One of our subsidiaries acts as the general partner of a publicly traded master limited partnership, MPLX, which may involve a greater exposure to certain legal liabilities than existed under our historic business operations.
One of our subsidiaries acts as the general partner of MPLX, a publicly traded master limited partnership. Our control of the general partner of MPLX may increase the possibility of claims of breach of fiduciary duties including claims of conflicts of interest related to MPLX. Any liability resulting from such claims could have a material adverse effect on our future business, financial condition, results of operations and cash flows.
If foreign investment in us or MPLX exceeds certain levels, MPLX could be prohibited from operating inland river vessels, which could materially and adversely affect our business, financial condition, results of operations and cash flows.
The Shipping Act of 1916 and Merchant Marine Act of 1920, which we refer to collectively as the Maritime Laws, generally require that vessels engaged in U.S. coastwise trade be owned by U.S. citizens. Among other requirements to establish citizenship, entities that own such vessels must be owned at least 75 percent by U.S. citizens. If we fail to maintain compliance with the Maritime Laws, MPLX would be prohibited from operating vessels in the U.S. inland waters. Such a prohibition could materially and adversely affect our business, financial condition, results of operations and cash flows.
We are subject to certain continuing contingent liabilities of Marathon Oil relating to taxes and other matters and to potential liabilities pursuant to the tax sharing agreement and separation and distribution agreement we entered into with Marathon Oil that could materially and adversely affect our business, financial condition, results of operations and cash flows.
Although the Spinoff occurred in mid-2011, certain liabilities of Marathon Oil could become our obligations. For example, under the Internal Revenue Code of 1986 (the “Code”) and related rules and regulations, each corporation that was a member of the Marathon Oil consolidated tax reporting group during any taxable period or portion of any taxable period ending on or before the effective time of the Spinoff is jointly and severally liable for the federal income tax liability of the entire Marathon Oil consolidated tax reporting group for that taxable period. In connection with the Spinoff, we entered into a tax sharing agreement with Marathon Oil that allocates the responsibility for prior period taxes of the Marathon Oil consolidated tax reporting group between us and Marathon Oil. However, if Marathon Oil is unable to pay any prior period taxes for which it is responsible, we could be required to pay the entire amount of such taxes. Other provisions of federal law establish similar liability for other matters, including laws governing tax-qualified pension plans as well as other contingent liabilities.
Also pursuant to the tax sharing agreement, following the Spinoff we are responsible generally for all taxes attributable to us or any of our subsidiaries, whether accruing before, on or after the Spinoff. We also agreed to be responsible for, and indemnify Marathon Oil with respect to, all taxes arising as a result of the Spinoff (or certain internal restructuring transactions) failing to qualify as transactions under Sections 368(a) and 355 of the Code for U.S. federal income tax purposes to the extent such tax liability arises as a result of any breach of any representation, warranty, covenant or other obligation by us or certain affiliates made in connection with the issuance of the private letter ruling relating to the Spinoff or in the tax sharing agreement. In addition, we agreed to indemnify Marathon Oil for specified tax-related liabilities associated with our 2005 acquisition of the minority interest in our refining joint venture from Ashland Inc. Our indemnification obligations to Marathon Oil and its subsidiaries, officers and directors are not limited or subject to any cap. If we are required to indemnify Marathon Oil and its subsidiaries and their respective officers and directors under the tax sharing agreement, we may be subject to substantial liabilities. At this time, we cannot precisely quantify the amount of these liabilities that have been assumed pursuant to the tax sharing agreement, and there can be no assurances as to their final amounts.

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Also, in connection with the Spinoff, we entered into a separation and distribution agreement with Marathon Oil that provides for, among other things, the principal corporate transactions that were required to affect the Spinoff, certain conditions to the Spinoff and provisions governing the relationship between our company and Marathon Oil with respect to and resulting from the Spinoff. Among other things, the separation and distribution agreement provides for indemnification obligations designed to make us financially responsible for substantially all liabilities that may exist relating to our downstream business activities, whether incurred prior to or after the Spinoff, as well as certain obligations of Marathon Oil assumed by us. Our obligations to indemnify Marathon Oil under the circumstances set forth in the separation and distribution agreement could subject us to substantial liabilities. Marathon Oil also agreed to indemnify us for certain liabilities. However, third parties could seek to hold us responsible for any of the liabilities retained by Marathon Oil, and there can be no assurance that the indemnity from Marathon Oil will be sufficient to protect us against the full amount of such liabilities, that Marathon Oil will be able to fully satisfy its indemnification obligations or that Marathon Oil’s insurers will cover us for liabilities associated with occurrences prior to the Spinoff. Moreover, even if we ultimately succeed in recovering from Marathon Oil or its insurers any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. The tax liabilities and underlying liabilities in the event Marathon Oil is unable to satisfy its indemnification obligations described in this paragraph could have a material adverse effect on our business, financial condition, results of operation and cash flows.
We may not realize the growth opportunities and commercial synergies that are anticipated from the MarkWest Merger.
The benefits that are expected to result from the MarkWest Merger will depend, in part, on MPLX’s ability to realize the anticipated growth opportunities and commercial synergies as a result of the MarkWest Merger. MPLX’s success in realizing these growth opportunities and commercial synergies, and the timing of this realization, depends on the successful integration of MPLX and MarkWest. There is a significant degree of difficulty and management distraction inherent in the process of integrating an acquisition as sizable as MarkWest. The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of MPLX and MarkWest. Members of our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our company, maintain relationships with employees, customers or suppliers, attract new customers and develop new strategies. If senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer. There can be no assurance that MPLX will successfully or cost-effectively integrate MarkWest. The failure to do so could have a material adverse effect on our business, financial condition, and results of operations.
Even if MPLX is able to integrate MarkWest successfully, this integration may not result in the realization of the full benefits of the growth opportunities and commercial synergies that we currently expect from this integration, and we cannot guarantee that these benefits will be achieved within anticipated time frames or at all. For example, MPLX may not be able to eliminate duplicative costs. Moreover, MPLX may incur substantial expenses in connection with the integration of MarkWest. While it is anticipated that certain expenses will be incurred to achieve commercial synergies, such expenses are difficult to estimate accurately, and may exceed current estimates. Accordingly, the benefits from the MarkWest Merger may be offset by costs incurred to, or delays in, integrating the businesses.
Significant acquisitions in the future will involve the integration of new assets or businesses and present substantial risks that could adversely affect our business, financial conditions, results of operations and cash flows.
Significant future transactions involving the addition of new assets or businesses will present potential risks, which may include, among others:
Inaccurate assumptions about future synergies, revenues, capital expenditures and operating costs;
An inability to successfully integrate assets or businesses we acquire;
A decrease in our liquidity resulting from using a portion of our available cash or borrowing capacity under our revolving credit agreement to finance transactions;
A significant increase in our interest expense or financial leverage if we incur additional debt to finance transactions;
The assumption of unknown environmental and other liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate;
The diversion of management’s attention from other business concerns; and
The incurrence of other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

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A significant decrease or delay in oil and natural gas production in MPLX’s areas of operation, whether due to sustained declines in oil, natural gas and NGL prices, natural declines in well production, or otherwise, may adversely affect MPLX’s business, results of operations and financial condition, and could reduce MPLX’s ability to make distributions to us.
A significant portion of MPLX’s operations are dependent upon production from oil and natural gas reserves and wells, which will naturally decline over time, which means that MPLX’s cash flows associated with these wells will also decline over time. To maintain or increase throughput levels and the utilization rate of MPLX’s facilities, MPLX must continually obtain new oil, natural gas, NGL and refined product supplies, which depends in part on the level of successful drilling activity near its facilities.
We have no control over the level of drilling activity in the areas of MPLX’s operations, the amount of reserves associated with the wells or the rate at which production from a well will decline. In addition, we have no control over producers or their production decisions, which are affected by, among other things, prevailing and projected energy prices, drilling costs per Mcf or barrel, demand for hydrocarbons, operational challenges, access to downstream markets, the level of reserves, geological considerations, governmental regulations and the availability and cost of capital. Because of these factors, even if new oil or natural gas reserves are discovered in areas served by MPLX assets, producers may choose not to develop those reserves. If MPLX is not able to obtain new supplies of oil or natural gas to replace the natural decline in volumes from existing wells, throughput on MPLX pipelines and the utilization rates of MPLX facilities would decline, which could have a material adverse effect on MPLX’s business, results of operations and financial condition and could reduce MPLX’s ability to make distributions to us.
Decreases in energy prices can decrease drilling activity, production rates and investments by third parties in the development of new oil and natural gas reserves. The prices for oil, natural gas and NGLs depend upon factors beyond our control, including global and local demand, production levels, changes in interstate pipeline gas quality specifications, imports and exports, seasonality and weather conditions, economic and political conditions domestically and internationally and governmental regulations. Sustained periods of low prices could result in producers also significantly curtailing or limiting their oil and gas drilling operations which could substantially delay the production and delivery of volumes of oil, gas and NGLs to MPLX’s facilities and adversely affect MPLX’s revenues and cash available for distribution to us. This impact may also be exacerbated due to the extent of MPLX’s commodity-based contracts, which are more directly impacted by changes in gas and NGL prices than its fee-based contracts due to frac spread exposure and may result in operating losses when natural gas becomes more expensive on a Btu equivalent basis than NGL products. In addition, MPLX’s purchase and resale of gas and NGLs in the ordinary course exposes MPLX to significant risk of volatility in gas or NGL prices due to the potential difference in the time of the purchases and sales and the potential difference in the price associated with each transaction, and direct exposure may also occur naturally as a result of MPLX’s production processes. The significant fluctuation and decline in natural gas, NGL and oil prices currently occurring has adversely impacted MPLX’s unit price, thereby increasing its distribution yield and cost of capital. Such impacts could adversely impact MPLX’s ability to execute its long‑term organic growth projects, satisfy obligations to its customers and make distributions to unitholders at intended levels, and may also result in non-cash impairments of long-lived assets or goodwill or other-than-temporary non-cash impairments of our equity method investments.
Our recently announced strategic actions designed to enhance shareholder value may not deliver the anticipated benefits.
In January 2017, we announced updates to our previously announced strategic actions designed to enhance shareholder value, including the significant acceleration of dropdowns of midstream assets into MPLX and the expected exchange of our economic interests in the general partner, including incentive distribution rights, for newly issued MPLX common units in conjunction with the completion of such dropdowns. We may not be able to achieve the anticipated benefits of these actions as we may not be able to implement the announced strategic actions due to: the inability to agree with the MPLX conflicts committee with respect to the value attributed to assets identified for dropdown; the adequacy of MPLX’s capital and liquidity, including, but not limited to, MPLX’s access to debt to fund the anticipated dropdowns on commercially reasonable terms; and the time, cost and ability to obtain requisite approvals and regulatory clearances, including tax clearance. In addition, the market price of our common stock could decline if securities or industry analysts or our investors disagree with these strategic actions or the way we implement such actions. Accordingly, even if we are able to implement some or all of the strategic actions successfully, there is no assurance that these actions will be reflected in the market price of our stock to the extent currently anticipated by management.

34


Significant stockholders may attempt to effect changes at our company or acquire control over our company, which could impact the pursuit of business strategies and adversely affect our results of operations and financial condition.
Our stockholders may from time to time engage in proxy solicitations, advance stockholder proposals or otherwise attempt to affect changes or acquire control over our company. Campaigns by stockholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company. Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming and could divert the attention of our board of directors and senior management from the management of our operations and the pursuit of our business strategies. As a result, stockholder campaigns could adversely affect our results of operations and financial condition.
Risks Relating to Our Industry
Changes in environmental or other laws or regulations may reduce our refining and marketing gross margin and may result in substantial capital expenditures and operating costs that could materially and adversely affect our business, financial condition, results of operations and cash flows.
Various laws and regulations are expected to impose increasingly stringent and costly requirements on our operations, which may reduce our refining and marketing gross margin. Laws and regulations expected to become more stringent relate to the following:
the emission or discharge of materials into the environment,
solid and hazardous waste management,
pollution prevention,
greenhouse gas emissions,
characteristics and composition of gasoline and diesel fuels,
public and employee safety and health, and
facility security.
The specific impact of laws and regulations on us and our competitors may vary depending on a number of factors, including the age and location of operating facilities, marketing areas, crude oil and feedstock sources and production processes. We may be required to make expenditures to modify operations, install pollution control equipment, perform site cleanups or curtail operations that could materially and adversely affect our business, financial condition, results of operations and cash flows.
Because the issue of climate change continues to receive scientific and political attention, there is the potential for further laws and regulations that could affect our operations. The U.S. pledge in 2009, as part of the Copenhagen Accord, to reduce greenhouse gas emissions 17 percent below 2005 levels by 2020 remains in effect and was reaffirmed in the President’s 2013 Climate Action Plan. The 2015 Paris UN Climate Change Conference Agreement aims to hold the increase in the global average temperature to well below two degrees Celsius above pre-industrial levels. In November 2016, the Obama administration released its strategy for “deep de-carbonization,” which aims to reduce greenhouse gas emissions to 80 percent below 2005 levels by 2050. The U.S. climate change strategy and implementation of that strategy through legislation and regulation may change under the new administration; therefore, the impact to our industry and operations due to greenhouse gas regulation is unknown at this time.
In October 2015, the EPA finalized regulations to reduce carbon emissions from new, modified, and reconstructed power plants (new source performance standards) and from existing power plants (existing source performance standards; also known as the Clean Power Plan). Through the regulations, the EPA is requiring a reduction in nationwide carbon emissions from the power generation sector by 32 percent below 2005 levels. These standards could increase our electricity costs and potentially reduce the reliability of our electricity supply. In February 2016, the U.S. Supreme Court stayed implementation of the Clean Power Plan until the legal challenge filed by several states and industry could be heard by the courts.

35


The Obama administration developed the social cost of carbon (“SCC”), which is to be used by the EPA and other federal agencies in regulatory cost-benefit analyses to take into account alleged broad economic consequences associated with changes to emissions of greenhouse gases. The SCC was first issued in 2010. In 2013, the Obama administration significantly increased the estimate to $36 per ton. In response to the regulated community and Congress’ critiques of how the SCC was developed, the Office of Management and Budget (“OMB”) provided an opportunity to comment on the SCC. In July 2015, the OMB issued a response to comments and a revised technical support document explaining adjustments to the SCC calculations. Additionally, in August 2016, the White House Council on Environmental Quality issued its final guidance to federal agencies on assessing a project’s impact to climate change under the National Environmental Policy Act by estimating the greenhouse gas emissions from the project, including using the SCC when analyzing costs and benefits of a project. While the impact of a higher SCC in future regulations is not known at this time, it may result in increased costs to our operations.
An article on the social cost of methane has also been published and was used by the EPA in its regulatory impact analysis of the proposed emission standards for new and modified sources in the oil and natural gas sector. These regulations were proposed pursuant to President Obama’s Strategy to Reduce Methane Emissions as part of the Administration’s efforts to reduce methane emissions from the oil and gas sector by up to 45 percent from 2012 levels by 2025. The finalization of these regulations could directly impact MPLX by creating delays in the construction and installation of new facilities due to more stringent permitting requirements, increasing costs to reduce GHG emissions or requiring aggregation of emissions from separate facilities for permitting purposes. These regulations may also impact us by increasing the costs of domestic crude supplies.
In the absence of federal legislation or regulation of greenhouse gas emissions, states may become more active in regulating greenhouse gas emissions. These measures include state actions to develop statewide or regional programs to impose emission reductions. These measures may also include low carbon fuel standards, such as the California program. In addition, private party litigation is pending against federal and certain state governmental entities seeking additional greenhouse gas emission reductions beyond those currently being undertaken. These actions could result in increased costs to operate and maintain our facilities, capital expenditures to install new emission controls and costs to administer any carbon trading or tax programs implemented. Although uncertain, these developments could increase our costs, reduce the demand for the products we sell and create delays in our obtaining air pollution permits for new or modified facilities.
In October 2015, the EPA reduced the primary (health) ozone National Ambient Air Quality Standards (“NAAQS”) to 70 ppb from the prior ozone level of 75 ppb. The EPA is expected to finalize new ozone attainment and nonattainment designations by late 2017, using 2014-2016 air quality monitor data. The lower primary ozone standard may not by attainable in some areas and could result in the cancellation or delay of capital projects at our facilities or increased costs related to an increase in the production of low Reid vapor pressure (RVP) gasoline.
The EISA establishes increases in fuel mileage standards and contains a second Renewable Fuel Standard commonly referred to as RFS2. Increases in fuel mileage standards and the increased use of renewable fuels (including ethanol and advanced biofuels) may reduce demand for refined products. Governmental regulations encouraging the use of new or alternative fuels could also pose a competitive threat to our operations. Specifically, the RFS2 required the total volume of renewable transportation fuels sold or introduced annually in the U.S. to reach 36.0 billion gallons by 2022. The RFS2 presents production and logistics challenges for both the renewable fuels and petroleum refining industries, and may continue to require additional capital expenditures or expenses by us to accommodate increased renewable fuels use. Gasoline consumption has been lower than forecasted by the EPA, which has led to concerns that the renewable fuel volumes may not be met. The 2017 renewable fuel standards were finalized and published on November 23, 2016. The final standards are lower than the statutory requirements but nevertheless result in volumes that breach the ethanol “blendwall.” The advanced biofuels program, a subset of the RFS2 requirements, creates uncertainties and presents challenges of supply, and may require that we and other refiners and other obligated parties purchase credits from the EPA to meet our obligations.
Tax incentives and other subsidies have also made renewable fuels more competitive with refined products than they otherwise would have been, which may further reduce refined product margins. The tax incentives and subsidies are causing uncertainties because they have expired and been reinstituted retroactively. The biodiesel credit, for example, expired at the end of 2016 and there is uncertainty if it will be reinstituted.
On March 3, 2014, the EPA signed the final Tier 3 fuel standards. The final Tier 3 fuel standards require, among other things, a lower annual average sulfur level in gasoline to no more than 10 parts ppm beginning in calendar year 2017. In addition, gasoline refiners and importers may not exceed a maximum per-gallon sulfur standard of 80 ppm, while retailers may not exceed a maximum per-gallon sulfur standard of 95 ppm. We anticipate that we will spend an estimated $650 million between 2014 and 2019 for capital expenditures necessary to comply with these standards, which includes estimated capital expenditures of approximately $200 million in 2017.

36


Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing could delay or impede producer’s gas production or result in reduced volumes available for MPLX to gather, process and fractionate. MPLX does not conduct hydraulic fracturing operations, but it does provide gathering, processing and fractionation services with respect to natural gas and natural gas liquids produced by its customers as a result of such operations. If federal, state or local laws or regulations that significantly restrict hydraulic fracturing are adopted, such legal requirements could make it more difficult to complete natural gas wells in shale formations and increase producers’ costs of compliance.
Severe weather events may adversely affect our facilities and ongoing operations.
For a variety of reasons, natural and/or anthropogenic, some members of the scientific community believe that climate changes could occur that could have significant physical effects, such as increased frequency and severity of storms, droughts and floods and other climatic events; if any such effects were to occur, they could have an adverse effect on our assets and operations.
Plans we may have to expand existing assets or construct new assets are subject to risks associated with societal and political pressures and other forms of opposition to the future development, transportation and use of carbon-based fuels. Such risks could adversely impact our business and ability to realize certain growth strategies.
Our anticipated growth and planned expenditures are based upon the assumption that societal sentiment will continue to enable and existing regulations will remain intact to allow for the future development, transportation and use of carbon-based fuels. A portion of our growth strategy is dependent on our ability to expand existing assets and to construct additional assets. However, policy decisions relating to the production, refining, transportation and marketing of carbon-based fuels are subject to political pressures and the influence of environmental and other special interest groups. The construction of new refinery processing units or crude oil or refined products pipelines, or the extension or expansion of existing assets, involve numerous political and legal uncertainties, many of which may cause significant delays or cost increases and most of which are beyond our control. Delays or cost increases related to capital spending programs involving engineering, procurement and construction of facilities (including improvements and repairs to our existing facilities) could adversely affect our ability to achieve forecasted internal rates of return and operating results, thereby limiting our ability to grow and generate cash flows.
Large capital projects can take many years to complete, and market conditions could deteriorate significantly between the project approval date and the project startup date, negatively impacting project returns. If we are unable to complete capital projects at their expected costs and in a timely manner, or if the market conditions assumed in our project economics deteriorate, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Delays or cost increases related to capital spending programs involving engineering, procurement and construction of facilities could materially adversely affect our ability to achieve forecasted internal rates of return and operating results. Delays in making required changes or upgrades to our facilities could subject us to fines or penalties as well as affect our ability to supply certain products we produce. Such delays or cost increases may arise as a result of unpredictable factors, many of which are beyond our control, including:
denial of or delay in receiving requisite regulatory approvals and/or permits;
unplanned increases in the cost of construction materials or labor;
disruptions in transportation of components or construction materials;
adverse weather conditions, natural disasters or other events (such as equipment malfunctions, explosions, fires or spills) affecting our facilities, or those of vendors or suppliers;
shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;
market-related increases in a project’s debt or equity financing costs; and
nonperformance by, or disputes with, vendors, suppliers, contractors or subcontractors.
Any one or more of these factors could have a significant impact on our ongoing capital projects. If we were unable to make up the delays associated with such factors or to recover the related costs, or if market conditions change, it could materially and adversely affect our business, financial condition, results of operations and cash flows.

37


The availability of crude oil and increases in crude oil prices may reduce profitability and refining and marketing gross margins.
The profitability of our operations depends largely on the difference between the cost of crude oil and other feedstocks we refine and the selling prices we obtain for refined products. A portion of our crude oil is purchased from various foreign national oil companies, producing companies and trading companies, including suppliers from Canada, the Middle East and various other international locations. The market for crude oil and other feedstocks is largely a world market. We are, therefore, subject to the attendant political, geographic and economic risks of such a market. If one or more major supply sources were temporarily or permanently eliminated, we believe adequate alternative supplies of crude oil would be available, but it is possible we would be unable to find alternative sources of supply. If we are unable to obtain adequate crude oil volumes or are able to obtain such volumes only at unfavorable prices, our operations, sales of refined products and refining and marketing gross margins could be adversely affected, materially and adversely impacting our business, financial condition, results of operations and cash flows.
Worldwide political and economic developments could materially and adversely impact our business, financial condition, results of operations and cash flows.
In addition to impacting crude oil and other feedstock supplies, political and economic factors in global markets could have a material adverse effect on us in other ways. Hostilities in the Middle East or the occurrence or threat of future terrorist attacks could adversely affect the economies of the U.S. and other developed countries. A lower level of economic activity could result in a decline in energy consumption, which could cause our revenues and margins to decline and limit our future growth prospects. These risks could lead to increased volatility in prices for refined products, NGLs and natural gas. Additionally, these risks could increase instability in the financial and insurance markets and make it more difficult and/or costly for us to access capital and to obtain the insurance coverage that we consider adequate. Additionally, tax policy, legislative or regulatory action and commercial restrictions could reduce our operating profitability. For example, the U.S. government could prevent or restrict exports of refined products, NGLs, natural gas or the conduct of business with certain foreign countries.
Compliance with and changes in tax laws could materially and adversely impact our financial condition, results of operations and cash flows.
We are subject to extensive tax liabilities, including federal and state income taxes and transactional taxes such as excise, sales and use, payroll, franchise, withholding and property taxes. New tax laws and regulations and changes in existing tax laws and regulations could result in increased expenditures by us for tax liabilities in the future and could materially and adversely impact our financial condition, results of operations and cash flows. For example, the U.S. House of Representatives Republican leadership released a tax reform Blueprint proposing the replacement of the current corporate income tax with a destination-based cash flow tax. Because the value of our crude oil imports exceed the value of our refined product exports, this proposal could have a material adverse effect on our U.S. income tax liabilities. Additionally, many tax liabilities are subject to periodic audits by taxing authorities, and such audits could subject us to interest and penalties.
Terrorist attacks aimed at our facilities or that impact our customers or the markets we serve could adversely affect our business.
The U.S. government has issued warnings that energy assets in general, including the nation’s refining, pipeline and terminal infrastructure, may be future targets of terrorist organizations. The threat of terrorist attacks has subjected our operations to increased risks. Any future terrorist attacks on our facilities, those of our customers and, in some cases, those of other pipelines, could have a material adverse effect on our business. Similarly, any future terrorist attacks that severely disrupt the markets we serve could materially and adversely affect our results of operations, financial position and cash flows.
Risks Relating to Ownership of Our Common Stock
Provisions in our corporate governance documents could operate to delay or prevent a change in control of our company, dilute the voting power or reduce the value of our capital stock or affect its liquidity.
The existence of some provisions within our restated certificate of incorporation and amended and restated bylaws could discourage, delay or prevent a change in control of us that a stockholder may consider favorable. These include provisions:
providing that our board of directors fixes the number of members of the board;
providing for the division of our board of directors into three classes with staggered terms;
providing that only our board of directors may fill board vacancies;
limiting who may call special meetings of stockholders;
prohibiting stockholder action by written consent, thereby requiring stockholder action to be taken at a meeting of the stockholders;

38


establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings;
establishing supermajority vote requirements for certain amendments to our restated certificate of incorporation and stockholder proposals for amendments to our amended and restated bylaws;
providing that our directors may only be removed for cause;
authorizing a large number of shares of common stock that are not yet issued, which would allow our board of directors to issue shares to persons friendly to current management, thereby protecting the continuity of our management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us; and
authorizing the issuance of “blank check” preferred stock, which could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt.
We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our board of directors and by providing our board of directors time to assess any acquisition proposal, and are not intended to make us immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition.
Our restated certificate of incorporation also authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock respecting dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant holders of preferred stock the right to elect some number of our board of directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of our common stock.
Finally, to facilitate compliance with the Maritime Laws, our restated certificate of incorporation limits the aggregate percentage ownership by non-U.S. citizens of our common stock or any other class of our capital stock to 23 percent of the outstanding shares. We may prohibit transfers that would cause ownership of our common stock or any other class of our capital stock by non-U.S. citizens to exceed 23 percent. Our restated certificate of incorporation also authorizes us to effect any and all measures necessary or desirable to monitor and limit foreign ownership of our common stock or any other class of our capital stock. These limitations could have an adverse impact on the liquidity of the market for our common stock if holders are unable to transfer shares to non-U.S. citizens due to the limitations on ownership by non-U.S. citizens. Any such limitation on the liquidity of the market for our common stock could adversely impact the market price of our common stock.

Item 1B. Unresolved Staff Comments
None.


39


Item 2. Properties
The location and general character of our refineries, convenience stores and other important physical properties have been described by segment under Item 1. Business and are incorporated herein by reference. The plants and facilities have been constructed or acquired over a period of years and vary in age and operating efficiency. In addition, we believe that our properties and facilities are adequate for our operations and that our facilities are adequately maintained. As of December 31, 2016, we were the lessee under a number of cancellable and noncancellable leases for certain properties, including land and building space, office equipment, storage facilities and transportation equipment. See Item 8. Financial Statements and Supplementary Data – Note 24 for additional information regarding our leases.
MPLX
The following tables set forth certain information relating to our crude and products pipeline systems, storage assets, gas processing facilities, fractionation facilities, natural gas gathering systems and NGL pipelines as of December 31, 2016.
Pipeline System or Storage Asset
 
Origin
 
Destination
 
Diameter
(inches)
 
Length
(miles)
 
Capacity(a)
 
Associated MPC refinery
Crude oil pipeline systems (mbpd):
 
 
 
 
 
 
 
 
 
 
 
Patoka, IL to Lima, OH crude system
Patoka, IL
 
Lima, OH
 
20”-22”
 
304

 
267

 
Detroit, Canton
Catlettsburg, KY and Robinson, IL crude system
Patoka, IL
 
Catlettsburg, KY &
Robinson, IL
 
20”-24”
 
484

 
515

 
Catlettsburg, Robinson
Detroit, MI crude system(b)
Samaria &
Romulus, MI
 
Detroit, MI
 
16”
 
61

 
197

 
Detroit
Wood River, IL to Patoka, IL crude system(b)
Wood River &
Roxana, IL
 
Patoka, IL
 
12”-22”
 
115

 
314

 
All Midwest refineries
Inactive pipelines
 
 
 
 
 
 
44

 
N/A

 
 
Total
 
 
 
 
 
 
1,008

 
1,293

 
 
Products pipeline systems (mbpd):
 
 
 
 
 
 
 
 
 
 
 
Cornerstone products system
Cornerstone
 
Canton, OH
 
8"-16"
 
58

 
238

 
Canton
Garyville, LA products system
Garyville, LA
 
Zachary, LA
 
20”-36”
 
72

 
389

 
Garyville
Texas City, TX products system
Texas City, TX
 
Pasadena, TX
 
16”-36”
 
42

 
215

 
Texas City, Galveston Bay
ORPL products system
Various
 
Various
 
6”-14”
 
518

 
244

 
Catlettsburg, Canton
Robinson, IL products system(b)
Various
 
Various
 
10”-16”
 
1,131

 
513

 
Robinson
Louisville, KY Airport products system
Louisville, KY
 
Louisville, KY
 
6”-8”
 
14

 
29

 
Robinson
Inactive pipelines(b)
 
 
 
 
 
 
123

 
N/A

 
 
Total
 
 
 
 
 
 
1,958

 
1,628

 
 
Wood River, IL barge dock (mbpd)
 
 
 
 
 
 
 
 
78

 
Garyville
Storage assets (thousand barrels):
 
 
 
 
 
 
 
 
 
 
 
Neal, WV butane cavern(c)
 
 
 
 
 
 
 
 
1,000

 
Catlettsburg
Patoka, IL tank farm
 
 
 
 
 
 
 
 
2,626

 
All Midwest refineries
Wood River, IL tank farm
 
 
 
 
 
 
 
 
419

 
All Midwest refineries
Martinsville, IL tank farm
 
 
 
 
 
 
 
 
738

 
Detroit, Canton
Lebanon, IN tank farm
 
 
 
 
 
 
 
 
750

 
Detroit, Canton
Hartford, IL tank farm(d)
 
 
 
 
 
 
 
 
430

 
All Midwest refineries
Total
 
 
 
 
 
 
 
 
5,963

 
 
(a) 
All capacities reflect 100 percent of the pipeline systems’ and barge dock’s average capacity in thousands of barrels per day and 100 percent of the available storage capacity of our butane cavern and tank farms in thousands of barrels.
(b) 
Includes pipelines leased from third parties.
(c) 
The Neal, WV butane cavern is 100 percent owned by MPLX.
(d) 
MPLX leases the Hartford tank farm from Wood River Pipe Lines LLC and Buckeye Terminals, LLC.


40


The throughputs in the following tables are based on days in operation since the MarkWest Merger.
Gas Processing Complexes
 
Location
 
Design
Throughput
Capacity (MMcf/d)
(a)
 
Natural Gas
Throughput (MMcf/d)
(b)
 
Utilization
of Design
Capacity
(b)
Keystone Complex
Butler County, PA
 
410

 
265

 
65
%
Houston Complex(e)
Washington County, PA
 
555

 
446

 
80
%
Majorsville Complex
Marshall County, WV
 
1,070

 
789

 
74
%
Mobley Complex
Wetzel County, WV
 
920

 
690

 
80
%
Sherwood Complex
Doddridge County, WV
 
1,200

 
1,020

 
85
%
Cadiz Complex
Harrison County, OH
 
525

 
477

 
91
%
Seneca Complex
Noble County, OH
 
800

 
595

 
74
%
Kenova Complex(c)
Wayne County, WV
 
160

 
102

 
64
%
Boldman Complex(c)
Pike County, KY
 
70

 
30

 
43
%
Cobb Complex
Kanawha County, WV
 
65

 
22

 
34
%
Kermit Complex(c)(d)
Mingo County, WV
 
32

 
N/A

 
N/A

Langley Complex
Langley, KY
 
325

 
99

 
30
%
Carthage Complex
Panola County, TX
 
600

 
493

 
82
%
Western Oklahoma Complex
Custer and Beckham Counties, OK
 
425

 
333

 
78
%
Hidalgo System
Culberson County, TX
 
200

 
105

 
81
%
Javelina Complex
Corpus Christi, TX
 
142

 
99

 
70
%
Total
 
 
7,467

 
5,565

 
76
%
(a) 
Centrahoma processing capacity of 300 MMcf/d is not included in this table as MPLX owns a non-operating interest.
(b) 
Natural gas throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the weighted average design throughput capacity.
(c) 
A portion of the gas processed at the Boldman plant, and all of the gas processed at the Kermit plant, is further processed at the Kenova plant to recover additional NGLs.
(d) 
The Kermit processing plant is operated by a third party solely to prevent liquids from condensing in the gathering and transmission pipelines upstream of our Kenova plant. MPLX does not receive Kermit gas volume information but does receive all of the liquids produced at the Kermit Complex. As such, the design capacity has been excluded from the subtotal.
(e) 
Approximately 35 MMcf/d of processing capacity at the Houston Complex will be decommissioned during the first quarter of 2017 and replaced with 200 MMcf/d of processing capacity.


41


Fractionation Complexes
 
Location
 
Design
Throughput
Capacity (mbpd)
 
NGL Throughput (mbpd)(a)
 
Utilization
of Design
Capacity
(a)
Keystone Complex(b)(c)
Butler County, PA
 
47

 
14

 
30
%
Houston Complex(b)
Washington County, PA
 
60

 
60

 
100
%
Hopedale Complex(b)(d)
Harrison County, OH
 
120

 
110

 
92
%
Ohio Condensate Complex(e)
Harrison County, OH
 
23

 
14

 
61
%
Siloam Complex(f)
South Shore, KY
 
24

 
15

 
63
%
Javelina Complex
Corpus Christi, TX
 
11

 
7

 
64
%
Total
 
 
285

 
220

 
77
%
(a) 
NGL throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the weighted average design throughput capacity.
(b) 
The MPLX Houston, Hopedale and Keystone Complexes have above-ground NGL storage with a usable capacity of 28 million gallons, large‑scale truck and rail loading. In addition, the Houston Complex has large‑scale truck unloading. MPLX also has access to up to an additional 50 million gallons of propane storage capacity that can be utilized in the Marcellus Shale, Utica Shale and Appalachia region under an agreement with a third party that expires in 2018. Lastly, MPLX has up to nine million gallons of butane storage and eight million gallons of propane storage with third parties that can be utilized in the Marcellus Shale and Utica Shale.
(c) 
Includes 33 mpbd of de-propanization only capacity.
(d) 
The MPLX Hopedale Complex is jointly owned by Ohio Fractionation Company, L.L.C. (“Ohio Fractionation”) and MarkWest Utica EMG, L.L.C. (“MarkWest Utica EMG”). Ohio Fractionation is a subsidiary of MarkWest Liberty Midstream & Resources, L.L.C. (“MarkWest Liberty Midstream”). MarkWest Liberty Midstream and MarkWest Utica EMG are entities that operate in the Marcellus and Utica regions, respectively. MPLX accounts for MarkWest Utica EMG as an equity method investment.
(e) 
The Ohio Condensate Complex is owned by MarkWest Utica EMG Condensate, L.L.C. MPLX accounts for Ohio Condensate as an equity method investment.
(f) 
The MPLX Siloam Complex has both above-ground, pressurized NGL storage facilities, with usable capacity of two million gallons, and underground storage facilities, with usable capacity of 10 million gallons. Product can be received by truck, pipeline or rail and can be transported from the facility by truck, rail or barge. This facility has large‑scale truck and rail loading and unloading capabilities, and a river barge facility capable of loading barges up to 860,000 gallons.
De-ethanization Complexes
Location
 
Design
Throughput
Capacity (mbpd)
 
Natural Gas
Throughput (mbpd)
(a)
 
Utilization
of Design
Capacity
(a)
Keystone Complex
Butler County, PA
 
14

 
11

 
79
%
Houston Complex
Washington County, PA
 
40

 
37

 
93
%
Majorsville Complex
Marshall County, WV
 
40

 
42

 
105
%
Mobley Complex
 
Wetzel County, WV
 
10

 
6

 
82
%
Sherwood Complex
Doddridge County, WV
 
40

 
18

 
45
%
Cadiz Complex
Harrison County, OH
 
40

 
4

 
10
%
Javelina Complex
Corpus Christi, TX
 
18

 
11

 
61
%
Total
 
 
202

 
129

 
64
%
(a) 
NGL throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the weighted average design throughput capacity.


42


Natural Gas Gathering Systems
 
Location
 
Design
Throughput
Capacity(MMcf/d)
 
Natural Gas
Throughput(MMcf/d)(a)
 
Utilization
of Design
Capacity(a)
Keystone System
Butler County, PA
 
227

 
194

 
85
%
Houston System
Washington County, PA
 
984

 
716

 
74
%
Ohio Gathering System(b)
Harrison, Monroe, Belmont, Guernsey and Noble Counties, OH
 
1,393

 
867

 
63
%
Jefferson Gas System(c)
Jefferson County, OH
 
250

 
65

 
26
%
East Texas System
Harrison and Panola Counties, TX
 
680

 
578

 
85
%
Western Oklahoma System
Wheeler County, TX and Roger Mills, Ellis, Custer, Beckham and Washita Counties, OK
 
585

 
364

 
62
%
Southeast Oklahoma System
Hughes, Pittsburg and Coal Counties, OK
 
1,205

 
449

 
37
%
Eagle Ford System
Dimmit County, TX
 
45

 
31

 
69
%
Other Systems(d)
Various
 
70

 
11

 
16
%
Total
 
 
5,439

 
3,275

 
61
%
(a) 
Natural gas throughput is a weighted average for days in operation. The utilization of design capacity has been calculated using the weighted average design throughput capacity.
(b) 
The Ohio Gathering System is owned by Ohio Gathering Company, L.L.C., which MPLX accounts for as an equity method investment.
(c) 
The Jefferson Gas System is owned by Jefferson Dry Gas, which is a joint venture between MarkWest Liberty Midstream and EMG MWE Dry Gas Holdings, LLC. MPLX accounts for Jefferson Dry Gas as an equity method investment.
(d) 
Excludes lateral pipelines where revenue is not based on throughput.


43


NGL Pipeline
 
Location
 
Design
Throughput
Capacity (mbpd)
 
NGL
Throughput (mbpd)
 
Utilization
of Design
Capacity
Sherwood to Mobley propane and heavier liquids pipeline
Doddridge County, WV to Wetzel County, WV
 
45

 
40

 
89
%
Mobley to Majorsville propane and heavier liquids pipeline
Wetzel County, WV to Marshall County, WV
 
80

 
64

 
80
%
Majorsville to Houston propane and heavier liquids pipeline
Marshall County, WV to Washington County, PA
 
47

 
34

 
72
%
Majorsville to Hopedale propane and heavier liquids pipeline
Marshall County, WV to Harrison County, OH
 
90

 
72

 
80
%
Third party processing plant to Keystone ethane and heavier liquids pipeline
Butler County, PA
 
32

 
7

 
22
%
Keystone to Mariner West ethane pipeline(a)
Butler County, PA to Beaver County, PA
 
35

 
12

 
34
%
Houston to Ohio River ethane pipeline(b)
Washington County, PA to Beaver County, PA
 
57

 
16

 
28
%
Majorsville to Houston ethane pipeline(a)
Marshall County, WV to Washington County, PA
 
60

 
66

 
110
%
Sherwood to Mobley ethane pipeline
Doddridge County, WV to Wetzel County, WV
 
27

 
18

 
67
%
Mobley to Fort Beeler ethane pipeline
Wetzel County, WV to Marshall County, WV
 
64

 
24

 
38
%
Fort Beeler to Majorsville ethane pipeline
Marshall County, WV
 
45

 
24

 
53
%
Seneca to Cadiz liquids pipeline
Noble County, OH to Harrison County, OH

 
90

 
20

 
22
%
Cadiz to Hopedale liquids pipeline
Harrison County, OH
 
90

 
38

 
42
%
Langley to Siloam liquids pipeline(c)
Langley, KY to South Shore, KY
 
17

 
12

 
71
%
East Texas liquids pipeline
Panola County, TX
 
39

 
27

 
69
%
(a) 
This pipeline is FERC-regulated.
(b) 
This is the section of the Mariner West pipeline, which is FERC-regulated, leased to and operated by Sunoco Logistics Partners LP.
(c) 
NGLs transported through the Langley to Ranger and Ranger to Kenova pipelines are combined with NGLs recovered at the Kenova facility. The design capacity and volume reported for the Langley to Siloam pipeline represent the combined NGL stream.

Crude Oil Pipeline
 
Location
 
Design
Throughput
Capacity (mbpd)
 
NGL
Throughput (mbpd)
 
Utilization
of Design
Capacity
Michigan crude pipeline
Manistee County, MI to Crawford County, MI
 
60

 
9

 
15
%

MPC-Retained Midstream Assets and Investments

The following tables set forth certain information related to our crude and products pipeline systems not owned by MPLX.
As of December 31, 2016, we owned undivided joint interests in the following common carrier crude oil pipeline systems.
Pipeline System
 
Origin
 
Destination
 
Diameter
(inches)
 
Length
(miles)
 
Ownership
Interest
 
Operated
by MPL
Capline
St. James, LA
 
Patoka, IL
 
40”
 
644

 
33
%
 
Yes
Maumee
Lima, OH
 
Samaria, MI
 
22”
 
95

 
26
%
 
No
Total
 
 
 
 
 
 
739

 
 
 
 

44


As of December 31, 2016, we had partial ownership interests in the following pipeline companies.
Pipeline Company
 
Origin
 
Destination
 
Diameter
(inches)
 
Length
(miles)
 
Ownership
Interest
 
Operated
by MPL
Crude oil pipeline companies:
 
 
 
 
 
 
 
 
 
 
 
Illinois Extension Pipeline Company LLC
Flanagan, IL
 
Patoka, IL
 
24"
 
168

 
35
%
 
No
LOCAP LLC
Clovelly, LA
 
St. James, LA
 
48”
 
57

 
59
%
 
No
LOOP LLC (LOOP)
Offshore Gulf of 
Mexico
 
Clovelly, LA
 
48”
 
48

 
51
%
 
No
Total
 
 
 
 
 
 
273

 
 
 
 
Products pipeline companies:
 
 
 
 
 
 
 
 
 
 
 
Ascension Pipeline Company LLC(a)
Riverside, LA
 
Garyville
 
TBD
 
TBD

 
50
%
 
No
Centennial Pipeline LLC(b)
Beaumont, TX
 
Bourbon, IL
 
24”-26”
 
796

 
50
%
 
Yes
Explorer Pipeline Company
Port Arthur, TX
 
Hammond, IN
 
12”-28”
 
1,883

 
25
%
 
No
Muskegon Pipeline LLC
Griffith, IN
 
Muskegon, MI
 
10”
 
170

 
60
%
 
Yes
Wolverine Pipe Line Company
Chicago, IL
 
Bay City &
Ferrysburg, MI
 
6”-18”
 
743

 
6
%
 
No
Total
 
 
 
 
 
 
3,592

 
 
 
 
(a) 
The pipeline diameter and length for these companies will be determined when these pipeline projects are placed into service.
(b) 
All system pipeline miles are inactive.
We also own 183 miles of private crude oil pipelines and 658 miles of private refined products pipelines that are operated by MPL for the benefit of our Refining & Marketing segment on a cost recovery basis. The following table provides additional information on these assets.
Private Pipeline Systems
 
Diameter
(inches)
 
Length
(miles)
 
Capacity
(mbpd)
Crude oil pipeline systems:
 
 
 
 
 
Lima, OH to Canton, OH
12”-16”
 
153

 
85

St. James, LA to Garyville, LA
30”
 
20

 
620

Other
6”-14”
 
2

 
15

Inactive pipelines
 
 
8

 
N/A

Total
 
 
183

 
720

Products pipeline systems:
 
 
 
 
 
Louisville, KY to Lexington, KY (a)
8”