Sunoco Logistics plans additional pipeline to deliver Marcellus liquids to Marcus Hook

Sunoco Logistics Partners disclosed Thursday that it plans to build an additional pipeline to deliver Marcellus Shale products to Marcus Hook, reflecting a growing market for liquid fuels derived from the region's shale drilling.

The Philadelphia company said it now intends to build two pipelines simultaneously as part of its Mariner East 2 project. The project, announced in November, is the second phase of a plan to move materials including propane, butane, and ethane from Appalachian shale-gas fields to the Marcus Hook Industrial Complex southwest of Philadelphia.

The new twin pipelines would largely follow the route of Sunoco's first Mariner East project, an 84-year-old repurposed fuel pipeline crossing Pennsylvania that went into service in December.

Sunoco Logistics recently began securing easements on the 350-mile Mariner East 2 route that provide for construction of two pipelines.

Jeffrey Shields, a Sunoco Logistics spokesman, said building both pipelines at the same time would reduce disruptions to property owners and "also makes business sense" because it would cut construction costs.

Sunoco last year secured commitments from shippers for the first new pipeline, but the capacity on a second new pipeline is tentative. The company needs to hold an "open season" to sign up shippers before putting the pipe into the ground.

"We can't say it's a done deal," Shields said.

Sunoco Logistics' growing ambitions for the Mariner East project reflects a bullish outlook on the Marcellus and the Utica Shale formations in Pennsylvania, Ohio, and West Virginia. Both formations produce liquids such as ethane, propane and butane, which are used as building blocks by the petrochemical industry.

Several competitors to Sunoco Logistics are scrambling to expand capacity to transport natural gas liquids (NGLs) to Gulf Coast outlets in Louisiana and Texas.

Sunoco's efforts to expand the Mariner East pipeline has received support from the industry and some political leaders, who point to the massive industrial redevelopment in Marcus Hook as solid local downstream development from the Marcellus Shale boom.

But much opposition from environmental groups and landowners has formed to the plethora of new pipelines.

About 100 property owners in Uwchlan Township, Chester County, met Wednesday night to organize a strategy after getting letters or visits from Sunoco Logistics about the Mariner East 2.

"Landowners I have been in touch with are not interested in having their neighborhood turned into an industrial highway for Sunoco's profit," said Jeff Kern, a landowner who organized the meeting. Landowners are concerned about the safety of the pipelines, and their effect on property values.

Pipeline opponents point to the explosion in January of a one-year-old NGL pipeline in West Virginia that burned about 5 acres of woodlands and scorched a house about 2,000 feet away. Federal investigators said the ATEX Pipeline failed near a weld.

Rich Raiders, a pipeline lawyer who negotiates easements for landowners, said it was difficult to stop a pipeline that has been approved by regulators. He suggested it may be better to try to negotiate a more attractive agreement.

"I often get the question, 'Can I just chase these people off my property?' " said Raiders, whose practice is based in Gordon, Pa. "That's extremely unlikely."

Many of the NGLs being delivered to Marcus Hook would be loaded onto vessels and shipped to European buyers.

But Sunoco Logistics says it is also building new local markets. It is developing plans to construct a propane dehydrogenation plant in Marcus Hook that would convert propane into propylene. A buyer for that material might be Braskem SA, the Brazilian petrochemical maker with U.S. headquarters in Philadelphia and operations in Marcus Hook.

Shields said Sunoco had not estimated the cost of building a second Mariner 2 pipeline. Construction of the first pipeline was initially projected to cost $2.5 billion.

The two new pipelines would dramatically increase the volumes of NGLs being delivered to Marcus Hook.

The Mariner East pipeline will deliver 70,000 barrels of NGLs a day when it is fully operating later this year.

By comparison, the new 20-inch Mariner East 2 project proposed last year would deliver 275,000 barrels when it comes online at the end of 2016.

Shields said the second new pipeline, 16 inches in diameter, would deliver 225,000 barrels per day.