Sunoco Logistics plans second, larger pipeline to East Coast
Companies eager to ship their bounty of propane, ethane and butane from natural gas wells in the Marcellus and Utica shale fields convinced Sunoco Logistics to start work on a second pipeline to an East Coast port.
The Philadelphia-based company on Thursday provided details of its planned $2.5 billion Mariner East 2 project, which will parallel the smaller Mariner East pipeline that it is converting for natural gas liquids. It will run about 350 miles, connecting processing stations in Chartiers in Washington County, Harrison County, Ohio, and Marshall County, West Virginia, to Sunoco Logistics’ complex along the Delaware River in Marcus Hook, near Philadelphia.
“We think this is going to have a big impact on both sides of the state,” spokesman Jeff Shields said, noting that gas producers in this part of the Marcellus and Utica have clamored for more options to move ethane, butane and propane by-products from wells to lucrative markets. “In southeast Pennsylvania, we think this could be the anchor for the manufacturing renaissance we’ve been talking about.”
CEO Michael J. Hennigan said the pipeline company got commitments from shippers over the summer — including anchor company Antero Resources — and heard from more firms recently, which prompted the plan to build a propane processor in Marcus Hook.
“Over the last several months, the market is realizing there’s going to be a lot more propane available,” he said during a call with analysts. The processor will convert propane to propylene, a feedstock for the chemical industry.
Mariner East 2 will move as much as 275,000 barrels of liquids a day, beginning as soon as the end of 2016. Denver-based Antero committed to 50,000 barrels. The initial Mariner East 1 project, which will have a capacity of 70,000 barrels a day, should begin pumping propane by the end of this year and ethane next year.
That project is reversing an 8-inch diesel pipeline that ran from Marcus Hook to Salem in Westmoreland County into an eastbound line with a 50-mile extension from Washington County. It has been slowed by legal challenges over eminent domain and the zoning status of pumping facilities, and is awaiting a final ruling from the state Public Utility Commission. Several families who challenged the company’s taking land for the extension settled complaints out of court.
Sunoco Logistics will seek approval for Mariner East 2 from federal and state agencies, including the PUC and the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration.
Marcellus and Utica producers pinched by low gas prices are increasing production of what they call NGLs, which fetch twice the price domestically and more overseas.
“The reason we picked the name Mariner was to signal to the market there would be a sufficient and growing need for U.S. NGLs to leave the U.S.,” Hennigan said.
Fort Worth-based Range Resources Corp., the largest producer of the liquids in Appalachia, doubled that production in the third quarter to nearly 5 million barrels. The amount of liquids that Cecil-based Consol Energy Inc. sold during the third quarter increased 650 percent over the previous year.
Both have commitments to move NGL on Mariner East 1, which Range will anchor.
“We are currently exploring capacity opportunities on the Mariner East 2 project,” Consol spokeswoman Kate O’Donovan said. A Range spokesman could not be reached.
David Conti is a Trib Total Media staff writer. Reach him at 412-388-5802 or [email protected].