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Mariner East 2 Pipeline Again Delayed by Regulatory Snags

Regulatory setbacks that have plagued the Mariner East (ME) 2 pipeline since last year have delayed the in-service date to 2Q2018, Energy Transfer Partners LP (ETP) said this month.

Construction, which started earlier this year, stopped for about two weeks during the third quarter after Pennsylvania regulators ordered it in response to a series of spills and legal objections from environmental groups.

While the suspension has since been lifted, the Pennsylvania Public Utility Commission (PUC) voted unanimously late last month to uphold an administrative law judge’s (ALJ) decision to prevent the company from building a valve station in West Goshen Township, PA. ALJ Elizabeth Barnes granted emergency relief after she found the company breached a settlement agreement with the township to install the equipment at a specific location.

As a result of the delays, management said it was pushing back ME 2’s startup, which was to have begun in phases this year. ME 2 development began in 2013, when a binding open season was launched, and originally was scheduled to come online late last year. However, regulatory snags, lawsuits and environmental opposition have delayed the project.

CEO Kelcy Warren said the company remains encouraged by the project’s long-term prospects. The 350-mile pipeline would serve as an outlet for ethane, butane and propane in the Appalachian Basin, carrying natural gas liquids from Ohio, Pennsylvania and West Virginia to the Marcus Hook Industrial Complex near Philadelphia for domestic and international distribution. ETP took over the project last year after it merged with Sunoco Logistics Partners LP.

“The way we talk about it, and the way we think we see it now out in the industry, is that Mariner needs to come online,” Warren said. “There is a tremendous amount of barrels that are there now and are going to be there in the future, and they’re looking for a home, but we’ve got to get the project completed. We need to start flowing those barrels. We think Marcus Hook will be the best export and the largest in the country over the next two to three years with growth.”

ETP affiliate Sunoco Pipeline LP has essentially been forced to drop its plans for the valve station in West Goshen until the PUC hosts a hearing in April. Management said the company is evaluating whether to relocate or eliminate the valve equipment. About 99% of the mainline should be buried by the end of the year, CFO Tom Long said.

ME 1 is fully operational, delivering ethane and propane produced in Pennsylvania to Marcus Hook. The company also has plans for a third pipeline that would run parallel to ME 2. All three pipelines, combined with Mariner West, which moves Marcellus Shale ethane to Canada, would have a capacity of up to 800,000 b/d.

ETP, which brought online Phase 1A of the Rover Pipeline in September, said it needs the entire pipeline and ME 2 to enter service before it can start up the $1.5 billion Revolution Project in southwest Pennsylvania to provide more Marcellus gathering and processing services. Rover, which is moving more than 1 Bcf/d of natural gas, is still expected to enter full service during 1Q2018.

Despite ME 2’s delays and its future revenue prospects, management said it’s still open to bringing in a joint venture partner. COO Marshall McCrea said the company has been in discussions with different parties on “the production side and the market side” about such a partnership.

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