With permits in hand, Sunoco confirms plans to build two new pipelines, not one

Sunoco Logistics Partners confirmed Wednesday that it will build two pipelines across Pennsylvania as part of its Mariner East 2 project.

The Newtown Square company said the Pennsylvania Department of Environmental Protection’s recent approval of permits for its pipeline has emboldened more producers to commit to the project, signaling greater interest in building an additional pipeline adjoining the one now under construction.

“We’ve received enough commitments to move forward,” Michael J. Hennigan, the company’s chief executive officer, told investment analysts Wednesday during the company’s quarterly earnings conference call. “We’re building two pipes.”

Hennigan said the company is still maintaining an “open season” to allow more shippers of natural-gas liquids such as propane to commit to buying capacity on the new pipeline, which connects the Marcellus and Utica Shale regions in Ohio, West Virginia, and Pennsylvania to Sunoco’s terminal in Marcus Hook.

Sunoco also is still trying to entice a big customer to build a plant at its Marcus Hook site to convert propane into propylene for the petrochemical market, but Hennigan said the process was slowed because of delays getting the pipeline permitted. "That stalled manufacturer interest," he said.

Hennigan lamented the  delays that had slowed approval of the Mariner East 2 project, as well as the Dakota Access crude-oil pipeline, which is being built by Sunoco’s parent company, Energy Transfer Partners. Sunoco is an investor in the controversial Dakota Access project, and will operate it after its scheduled completion in a few months.

With the Mariner East project, Sunoco had all along planned two new pipelines, and the DEP's approval of water-crossing and sedimentation permits issued this month allows for two pipelines. But the company had not formally committed to the larger project until now.

The Mariner East project is a series of adjoining pipelines that aim to transport large quantities of propane, ethane and butane to Marcus Hook. Though some of the propane is destined for domestic markets, most of the committed shippers are exporting the materials to European petrochemical plants.

Mariner East 1 is a 300-mile pipeline running from Houston, Pa., to Marcus Hook that Sunoco began operating a year ago. Mariner East 2, or ME2, would extend that pipeline an additional 50 miles into Ohio.

Construction has already begun on a new 20-inch-diameter ME2 pipeline, which would quintuple the capacity of Mariner East from 70,000 barrels a day to 345,000 barrels. Sunoco plans to complete the project by the third quarter of this year.

The second Mariner East 2 pipeline, which Sunoco has dubbed ME2X, would be a 16-inch diameter conduit built next to the 20-inch pipeline. The two pipes would be built sequentially, not simultaneously, Hennigan said.