Sunoco Logistics Sees Progress on Key Pipelines after Regulatory Delays

Researched by Industrial Info Resources (Sugar Land, Texas)--After a regulatory delay last year, construction has finally begun on the Mariner East 2 natural gas liquids (NGL) pipeline project throughout Pennsylvania, according to executives with Sunoco Logistics Partners LP (NYSE:SXL) (SXL) (Newtown Square, Pennsylvania). Industrial Info is tracking more than $3 billion in active Sunoco Logistics projects.

Chief Executive Officer Michael Hennigan said last week during the company's fourth-quarter 2016 earnings presentation that "from a big picture standpoint," Sunoco Logistics' earnings expectations and financial plans were delayed as a result of longer-than-anticipated process for regulatory approvals on projects, including Mariner East 2.

Mariner East 2 was originally expected to be online by the end of 2016. "So although we're disappointed in the delay to our plan, we are pleased to be moving forward," Hennigan said.

In November, the company said it was delaying the startup date of Mariner East 2 by several months due to permit timing issues. For related information, see November 16, 2016, article-Sunoco Logistics Delays Mariner East 2 NGL Pipeline Startup.

The first phase of the Mariner East Pipeline was completed in the first quarter of 2016 and can transport up to 70,000 barrels per day (BBL/d) of NGL from the Marcellus and Utica shale plays to interconnect with an existing Sunoco pipeline to take it to the company's industrial complex in Marcus Hook, Pennsylvania, where the company has an ethane export terminal.

The Mariner East 2 project will expand the total Mariner East takeaway capacity to 345,000 BBL/d. Industrial Info is tracking nine projects that are part of Mariner East 2, with a total value of more than $1 billion. For more information on the Mariner East Pipeline, see Industrial Info's project report.

Hennigan said last week that construction of Mariner East 2 in Pennsylvania has begun after receiving permits from the Pennsylvania Department of Environmental Protection. Sunoco Logistics is targeting completion of construction by the end of third-quarter 2017, he said, with the pipeline to be put in service ahead of the 2017-2018 winter.

Mariner East 2 will bring NGL to the Delaware Valley "and create a manufacturing rebirth in Southeastern Pennsylvania, utilizing local production," Hennigan said. Also, the Marcus Hook portion of Sunoco Logistics' plans has been under construction, he continued, with an additional cryogenic propane tank expected to be completed in June and a butane cryogenic tank to be completed in July. Once the tanks are operational, the company expects to be able to move in additional NGL via rail to the Marcus Hook complex and to the Eagle Point terminal in New Jersey, until the pipeline construction is complete.

Sunoco Logistics is working to develop the Marcus Hook complex as an East Coast energy and manufacturing hub, Hennigan said, adding: "We've had discussions with many companies who have interest in manufacturing in Marcus Hook, that have been waiting on the [Pennsylvania environmental] permits to be issued. Now, those discussions can reenergize and move forward."

Hennigan also pointed out progress on the Bakken Pipeline project, which is expected to achieve commercial operations in the second quarter. Sunoco Logistics has a stake in the project, including the Dakota Access Pipeline, along with other energy companies.

"Despite the delay from the original end of 2016 anticipated start, it's exciting to be looking forward to bringing this project online," Hennigan said. For more on the Dakota Access Pipeline, see Industrial Info's project report. For related information, see January 31, 2016, article - Trump Orders Benefit KXL, DAPL and Other 'High Priority' Infrastructure Projects.

Sunoco Logistics is merging with Dakota Access Pipeline stakeholder Energy Transfer Partners (NYSE:ETP) (Dallas, Texas), in an all-stock deal valued at $19.93 billion. For related information, see November 22, 2016, article - Sunoco Logistics to Acquire Energy Transfer Partners.

Sunoco Logistics announced net income of $705 million for 2016, compared with $393 million for 2015. The company linked the increase to non-cash gains related to inventory adjustments resulting from changes in commodity prices, and a gain on the acquisition of the remaining 50% interest in SunVit Pipeline LLC. SunVit connects Sunoco Logistics' newly acquired 2-million-barrel crude oil terminal in Midland, Texas, to the company's Permian Express 2 pipeline.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.