GENESIS ENERGY LP

8. Fixed Assets, Mineral Leaseholds and Asset Retirement Obligations

Fixed Assets

Fixed assets consisted of the following:

(1)Construction in progress primarily relates to our ongoing offshore growth capital projects, which are expected to be completed in 2024 and 2025.

Mineral Leaseholds

Our Mineral Leaseholds, relating to our Alkali Business, consist of the following:

Depreciation expense was $263.5 million, $281.4 million and $295.4 million for the years ended December 31, 2023, 2022, and 2021, respectively. Depletion expense was $4.6 million, $3.9 million, and $3.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Asset Sales and Divestitures

On April 29, 2022, we entered into an agreement to sell the Independence Hub platform to a producer group in the Gulf of Mexico for gross proceeds of $40.0 million, of which $8.0 million, or 20%, was attributable and paid to our noncontrolling interest holder. For the year ended December 31, 2022, we recorded a gain of $40.0 million recorded in “Gain on sale of asset” on the Consolidated Statement of Operations, of which $8.0 million, or 20%, is included in “Net income attributable to noncontrolling interests” on the Consolidated Statement of Operations, as the platform asset sold had no book value at the time of the sale.

Asset Retirement Obligations

We record AROs in connection with legal requirements to perform specified retirement activities under contractual arrangements and/or governmental regulations. For any AROs acquired, we record AROs based on the fair value measurement assigned during the preliminary purchase price allocation.

A reconciliation of our liability for asset retirement obligations is as follows:

At December 31, 2023 and December 31, 2022, $26.1 million and $26.6 million are included as current in “Accrued liabilities” on our Consolidated Balance Sheets, respectively. The remainder of the ARO liability at each period is included in “Other long-term liabilities” on our Consolidated Balance Sheets. Revisions in timing and estimated costs during 2023, 2022 and 2021 are primarily attributable to the accelerated timing and updated costs associated with the abandonment of certain of our non-core offshore assets in the Gulf of Mexico. Such revisions take into account several factors, including changes to legal or regulatory requirements, changes in our estimated useful lives of the associated asset, and the timing and method of abandonment. As there are significant judgements involved in deriving our estimates, actual costs, including the scope of work once it is approved by the relative regulatory agency or contracted party, may differ from our estimates.