Energy Transfer Plans $4.5 Billion in Growth Projects, as Worst Appears Over for Rover and Mariner East 2 Pipelines

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Researched by Industrial Info Resources (Sugar Land, Texas)--Energy Transfer Partners' (NYSE:ETP) (Dallas, Texas) prospects of placing several growth projects into service this year and next appear to be looking up, especially as the company is once again underway with its Rover natural gas pipeline and Mariner East 2 natural gas liquids (NGL) pipeline after receiving headwinds from regulatory agencies. The company says it intends to invest $4.5 billion in growth projects this year.

In a conference call regarding the company's full-year and fourth-quarter 2017 performance, Chief Financial Officer Tom Long gave updates on several of the company's projects, including the Rover and ME2 pipelines and gas processing plants.

The company was earlier this year ordered to stop horizontal directional drilling (HDD) under the Tuscarawas River in Ohio after a complaint made to the U.S. Federal Energy Regulatory Commission (FERC) by the Ohio Environmental Protection Agency over spilled drilling fluid. For more information, see January 23, 2018, article - Ohio Asks Feds to Stop Rover Pipeline Horizontal Drilling. Phase 1 of the pipeline in Ohio already is in service.

Long said, "We are pleased to say that Phase 1 of Rover is now capable of transporting more than 1.7 Bcf [billion cubic feet] per day of natural gas from Cadiz, Ohio, to Defiance, Ohio, the majority of which we are receiving full negotiated rates on. ... On February 6, we received FERC approval to resume our HDD operations at the Tuscarawas River, and we remain committed to continue to comply with the approved HDD plans and the additional measures requested and approved by FERC. Work also continues along several HDD locations along Phase 2. Today, we are more than 99% complete with construction for the full project and more than 82% with the HDDs." The project is expected to go into service in the second quarter of this year and will transport up to 3.25 Bcf/d of natural from the Marcellus and Utica shales to markets in the U.S. and Ontario. The project has an estimated total investment value (TIV) of $4.2 billion. For more information, see Industrial Info's project report on the Ohio section of pipeline.

Energy Transfer has also faced headaches on its Mariner East 2 (ME2) NGL pipeline from the Pennsylvania Department of Environmental Protection (PDEP), which ordered drilling stopped on the project earlier this year for permit violations. The violations were rectified, and PDEP has allowed drilling to resume. The 350-mile pipeline will carry NGL from the Marcellus Shale to an export terminal near Philadelphia. Long said Energy Transfer is "making progress on this project, with 94% of mainline construction complete and 83% of HDDs completed or underway. At this time, we continue to target placing ME2 into service by the end of the second quarter of 2018." For more information, see Industrial Info's project reports on the Ohio and Pennsylvania portions of the pipeline.

In regard to oil pipelines, the company is making progress on the section of its Bayou Bridge Pipeline between Lake Charles and St. James in Louisiana. Long said, "On Bayou Bridge, on the 30-inch segment from Nederland [Texas] to Lake Charles, we transported an average of 145,000 barrels per day (BBL/d) in the fourth quarter. On the 24-inch segment of Bayou Bridge from Lake Charles to St. James, construction is now underway, and we expect commercial operations to begin in the second half of 2018." The second section of the project began construction earlier this year and has an estimated TIV of $250 million. The pipeline will carry up to 280,000 BBL/d and is expandable up to 480,000 BBL/d. Troy Construction LLC (Abilene, Texas) and Sunland Construction Incorporated (Delcambre, Louisiana) are general contractors. For more information, see Industrial Info's project report.

Long said Energy Transfer is in the early stages of evaluating a crude oil pipeline from the Permian Basin to Nederland.

Long also discussed projects involving the company's natural gas processing plants, including its Rebel 2 cryogenic processing plant in Garden City, Texas, construction of which began last summer. "The 200 million [cubic foot] per day Rebel 2 plant in the Midland Basin is still expected to go into service in the second quarter of 2018," Long said. "We're nearing capacity in the Midland Basin and will need Rebel 2 as soon as possible to meet producer demand in the region." For more information, see Industrial Info's project report.

On the company's addition of a fifth NGL fractionation train at its Lone Star plant in Mont Belvieu, Long said, "Lone Star's 120,000-BBL/d Frac 5 is still expected to be in service in the third quarter of 2018. It is fully subscribed by multiple long-term, fixed fee contracts and also includes NGL product infrastructure and a new 3 million-barrel Y-grade cavern." Construction on the train began in the first half of last year. Construction on a sixth, 140,000-BBL/d train began earlier this year. The train is expected to be in service in early 2019. S&B Engineers and Constructors Limited (Houston, Texas) is providing engineering, procurement and construction on both projects, which have a combined TIV of $700 million. For more information, see Industrial Info's project reports on Train 5 and Train 6.

Energy Transfer reported fourth-quarter 2017 net income of $1.1 billion, compared with a net loss of $336 million in fourth-quarter 2016. The company pointed to higher revenues in its Midstream segment and a deferred tax benefit from the recent Tax Reform Act as leading to the increased income. Full-year net income was $2.5 billion, compared with $583 million in 2016.

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