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Sunoco OKs Mariner East 2, Pursues Marcus Hook NGL Hub

The Mariner East 2 project, the second phase of a broad plan to expand natural gas liquids (NGL) transport out of the Appalachian Basin, is a go following a successful open season, Sunoco Logistics Partners LP said Thursday.

An open season for Mariner East 2 was launched almost a year ago, one of a cascade of competing NGL takeaway proposals from the soaked Marcellus and Utica shales (see Shale Daily, April 30; Dec. 5, 2013).

About $2.5 billion has been earmarked for the expansion, initially designed to provide 275,000 b/d of NGL capacity. Combined with Mariner East 1's 70,000 b/d, the project in total could provide 345,000 b/d of liquids takeaway from Appalachia. With regulatory/permit approvals in line as expected, the expansion could be operational by the end of 2016.

"This vital energy project will provide a comprehensive solution in the region to transport, store and process NGLs from the Marcellus and Utica shales, and will provide the foundation for the continuing rebirth of the local manufacturing sector," said CEO Michael J. Hennigan. "The project also enables the continuing development of the Marcus Hook Industrial Complex, as we convert a former refinery site into a world-class natural gas liquids hub in southeastern Pennsylvania."

Mariner East 1 is nearly complete (see Shale Daily, Oct. 13). Mariner East 2, to be built by Sunoco Pipeline LP, is designed to expand NGL takeaway from the big NGL buckets -- western Pennsylvania, West Virginia and eastern Ohio -- to the Marcus Hook Industrial Complex on the Delaware River in Pennsylvania. At the complex, liquids could be stored and distributed to local, domestic and international markets.

All together, Sunoco Logistics plans to invest around $3 billion in Pennsylvania for Mariner East projects to move resources within the state.

Officials also disclosed that they are "actively developing" a NGL manufacturing complex at Marcus Hook with a propane dehydrogenation (PDH) plant as part of the facility's "revitalization plan."

The PDH expansion "would add quality, permanent jobs, boost activity in the construction sector and act as a catalyst for further development of the regional manufacturing sector," officials said.

As part of its overall investment in the region, the Mariner East projects would allow for "additional propane to be available for consumers in local markets during high demand periods, such as last winter, via distribution terminals at points along the line," the company said.

"The rapid expansion of natural gas liquids production from the Marcellus and Utica shale deposits has significantly revitalized local economies across Pennsylvania, creating thousands of jobs and enhancing the country's energy supply," Sunoco Logistics officials said. "As more natural gas liquids flow through Pennsylvania to Marcus Hook, additional full-time employment opportunities will grow with Sunoco Logistics' long-term investment at this 800-acre site."

Tudor, Pickering, Holt & Co. (TPH) analysts said the expansion plans are much more ambitious than they thought they'd be. "It's finally here and it's bigger than we expected," analysts wrote. Analysts had projected a smaller project.

The addition of a PDH facility to convert propane into propylene to feed nearby facilities adds around $8 million to Sunoco's "already huge $8 billion-plus backlog before PDH," which has the potential to increase it by $1.5 billion, TPH said.

"We aren't sold that a PDH will survive approvals," said analysts, given petrochemical engineering, procurement and construction cost inflation, "but we like Sunoco's aggressive attitude toward building the Northeast's only NGL hub."

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