Sunoco Logistics admits Mariner East 2 delay. The CEO related the delay to permits, not needed property rights!
Sunoco Logistics delays Mariner East 2 pipeline
Construction of the Mariner East 2 pipeline, which has provoked landowner opposition along its route, has been pushed back until summer because of delays in obtaining permits, the pipeline’s operator announced Thursday.
Michael J. Hennigan, the chief executive of Sunoco Logistics Partners L.P., told investment analysts that more time was needed to obtain “hundreds of permits” required to build the cross-state pipeline, which will deliver Marcellus Shale natural gas liquids to Marcus Hook.
“I don’t like the word ‘delay,’” Hennigan said in response to an analyst who used the term. He said the the prolonged review was “not an intentional action” by any particular regulatory agency. The pipeline requires permits from several federal and state agencies, including the U.S. Fish and Wildlife Service, the Pennsylvania Department of Environmental Protection, and the U.S. Army Corps of Engineers.
No mention was made of Sunoco’s ongoing struggles to obtain rights of way from reluctant landowners along the pipeline route. The route largely follows the pathway of the existing Mariner East pipeline, which last year began propane deliveries and this month began sending ethane to Sunoco’s terminal in Marcus Hook.
Hennigan said the initial shipment of ethane would begin loading in the next few days, marking the first time that the material, which is used in petrochemical production, would be exported from the United States. Two European plastics producers have signed contracts to buy the ethane that Sunoco delivers to the Delaware River port.
The JS INEOS Intrepid, one of a fleet of new tankers built by European chemical producer INEOS to carry liquid fuels like ethane and propane, is currently moored in Marcus Hook, according to www.marinetraffic.com. A second vessel, the JS INEOS Ingenuity, has been anchored off the Delaware Coast since Sunday night.
Hennigan updated investors on Sunoco’s plans during a conference call after the Newtown Square company announced its annual financial results. The company is an affiliate of Energy Transfer Partners L.P. of Dallas, Texas.
The delay in the start of construction of the Mariner East 2 pipeline would mean the project now will come online in 2017, rather than the end of 2016, Hennigan said.
The Mariner East 2 project would expand the existing pipeline’s capacity from 70,000 barrels per day to 345,000. It would deliver natural gas liquids from the Marcellus and Utica shale areas of western Pennsylvania, West Virginia and eastern Ohio.
Sunoco says the producer demand for takeaway capacity from the shale region is so strong that Sunoco may build a second, adjacent Mariner East 2 pipeline — that would be a total of three Mariner East pipelines. But it has not yet received enough firm commitments from shippers to commit to the expansion, which Hennigan attributed to uncertainty over the current downturn in oil and commodity markets.
One analyst noted that the current “pause” in the construction start could allow Sunoco more time to line up commitments for the second Mariner East 2 pipeline. Sunoco has said it would want to build both pipelines simultaneously to reduce costs and disruptions.
The first Mariner East project is a 300-mile long 8-inch pipeline that was built 84 years ago to deliver refined products from Philadelphia refineries to inland terminals.
Written by: Andrew Maykuth | philly.com
Photo and caption: Construction was underway in early 2015 to prepare the future site of Mariner East 2 storage and processing equipment at Sunoco Logistics’ complex in Marcus Hook. Delaware County Council
