Energy Transfer (ETP) Arm's Mariner East 2 Suffers Setback
Zacks Investment Research | Jan 08, 2018 10:30PM ET
Energy Transfer Partners’ (NYSE:ETP) subsidiary Sunoco Pipeline LP’s Mariner East 2 pipeline recently hit a regulatory roadblock due to the Pennsylvania Department of Environmental Protection’s (DEP) order to halt the construction of the project. The partnership has been ordered to suspend all construction activities on the project except the maintenance of erosion controls. The partnership has been also allowed to carry out limited maintenance of horizontal directional drilling equipment.
The 350-mile long pipeline is designed to transport natural gas liquids from Ohio and Western Pennsylvania to outside Philadelphia. The construction permits associated with the pipeline has been temporarily suspended since the partnership has failed to comply with the Clean Streams Law and the Dam Safety Act. The $2.5-billion pipeline has leaked several times over a year, leading to environment hazards. The leakages have contaminated Philadelphia’s groundwater, forcing residents to leave home. The locals allege that the project has polluted potable water.
The DEP has outlined certain terms and conditions, on the satisfactory completion of which, the partnership will be able to resume the operations of the pipeline.
Sunoco Pipeline now needs to submit a comprehensive operations plan indicating responsive measures to address the concerns and also identify the entire construction activities underway, detailing Chapter 102 and Chapter 105 permit under which the activity is authorized. The partnership has been granted 30 days’ time to prepare and submit the proper responsive plans which will be reviewed by the DEP.
Zacks Rank and Key Picks
Headquartered in Dallas, TX, Energy Transfer is a Master Limited Partnership primarily engaged in the gathering, processing, storage and transportation of natural gas and natural gas liquids through a network of pipelines spanning almost 62,500 miles.
The partnership is poised to grow on the back of its geographically dispersed asset mix. Further, Sunoco’s merger with Energy Transfer is likely to augur growth and value of the partnership and result in around $200-million cost savings by 2019.
However, the partnership’s pricing chart is not impressive. Over a year, Energy Transfer has lost 22% as compared with the 15% decline of the Zacks Investment Research
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