Two US pipelines accumulate violations and threaten the growth of the industry

MEDIA, PENNSYLVANIA (Reuters) – Energy Transfer LP (AND N) and its subsidiary Sunoco Pipeline have registered more than 800 federal and state license violations while participating in the construction of two of the largest pipelines in the country, according to an analysis of government data and regulatory registers. Reuters.

The pipelines, called Energy Transfer Rover and Sunoco Mariner East 2, will carry natural gas and gas liquids from Pennsylvania, Ohio and West Virginia, a region that now accounts for more than one-third of state gas production. -United.

Reuters analyzed four comparable pipeline projects and found that they had committed an average of 19 violations during construction.

The violations committed by Rover and Mariner include spills of drilling fluid, a mixture of clay and water lubricating drilling equipment under rivers and highways; sinkholes in the back yards; and the improper disposal of hazardous wastes and other wastes. The fines exceeded $ 15 million.

Energy Transfer has also angered federal regulators by destroying a historic home along the Rover Road.

The Appalachian region has become a hub for natural gas as it increasingly replaces coal for energy production in the United States, creating an urgent need for new pipelines. But the recent experience of residents and regulators with both energy transfer pipelines has prompted state officials to strengthen laws and consider future projects.

"The negative experience of Ohio with Rover has fundamentally changed the way we will allow pipeline projects," said James Lee, spokesman for the Ohio Environmental Protection Agency.

Problems with Mariner prompted Pennsylvania lawmakers to come up with bills to tighten construction regulations, which sparked bipartisan support.

"Any gas pipeline going through this region will face a resistance that he would never have seen before," said Senator Andy Dinniman, a Pennsylvania State Senator.

Alexis Daniel, spokesperson for Energy Transfer, said the company remained committed to building and operational safety and sometimes went beyond the current regulations for both projects. .

The construction of the Rover, worth $ 4.2 billion and a length of 713 miles, began in March 2017 and was expected to continue about 89 miles per month, while the work of the Mariner East 2, of a length of 350 miles and worth $ 2.5 billion, began in February 2017 and was planned at 50 miles. months, according to the company's statements on the construction schedules. Both were to be completed by the end of last year.

Regulators and industry experts said the pace of both projects far exceeded industry standards.

The other four projects reviewed by Reuters were mostly conducted at an average rate of 17 km per month. Reuters selected the projects for comparison because, like Rover and Mariner, they cost more than $ 1.5 billion, run at least 150 miles and are under construction at the same time.

The construction of the two energy transfer pipelines was eventually slowed down when federal and federal regulators ordered numerous work stoppages as a result of license violations. Energy Transfer completed the last two sections of Rover in November and announced plans to bring the Mariner East 2 into service soon.

In February, Pennsylvania fined the company $ 12.6 million for environmental damage, including the discharge of drilling fluids into state waters without authorization. After other problems, including sinkholes, a state judge ordered the halt of work on Mariner East 2 in May.

Judge Elizabeth Barnes, an administrative law judge, wrote that the Sunoco unit of Energy Transfer "deliberately made the decision that required management to proceed in a seemingly hasty manner by apparently giving priority to compared to the best engineers ".

While pipeline construction schedules vary, the planned timelines for Rover and Mariner are ambitious, said Fred Jauss, a Dorsey & Whitney partner in Washington, DC, and a former FERC (Federal Energy Regulatory Commission) lawyer, who regulates interstate gas pipelines. -United.

"They do not take their time … we are all concerned about this," said Pennsylvania State Senator John Rafferty, a Republican, referring to other politicians, voters and first respondents.

Lisa Dillinger, spokeswoman for Energy Transfer, told Reuters that the schedules were "adapted to the size, scope and number of subcontractors hired."

Other companies planning to slow down the construction of comparable projects completed their work on schedule, almost without violation. Canadian Energy Corporation Enbridge Inc. (ENB.TO), for example, has just completed a $ 2.6 billion, 255 km pipeline – following a path similar to that of Rover across Ohio and Michigan – with only seven violations. Enbridge has not responded to a request for comment.

HAZARDOUS SPILLS

Energy Transfer, one of the largest pipeline operators in the country, has faced significant protests led by Native American tribes and environmental advocates on its crude oil pipeline route Dakota Access in North Dakota in 2016, as well as by Mariner East 2 protests in Pennsylvania, opponents have highlighted its safety record on existing pipelines.

According to a Reuters study on data from the US Pipeline and Hazardous Materials Safety Administration (PHMSA), the company has experienced a relatively high incidence of hazardous liquid spills and other problems.

According to PHMSA data, Energy Transfer's Sunoco unit ranked third among the worst airlines in terms of average annual incidents between 2010 and 2017. In total, Energy Transfer and its affiliates rejected more than 41 000 barrels of dangerous liquids, causing property damage of more than $ 100 million, according to PHMSA data.

(For a graph of PHMSA incidents by company, see: tmsnrt.rs/2EHd3E4)

Bibianna Dussling of Media in Pennsylvania joined a group of activists protesting against Mariner East after learning that the project would be near her daughter's primary school.

"Violations really do not mean anything," she said. "You do so much to protect your kids day-to-day and to deal with something like that, that you feel so out of your hands."

Dillinger, of Energy Transfer, said the incidents have significantly decreased since the merger of Sunoco Logistics and Energy Transfer Partners into a company, Energy Transfer, in the spring of 2017. This year's incidents are "below the industry average" , she said.

DEMOLITION OF HISTORIC HOUSE

The Rover pipeline caught the federal government's attention when Energy Transfer demolished a historic home along its route.

Following Energy Transfer's purchase of 1843 Stoneman House in Ohio, FERC staff in February 2016 asked the company to develop a plan to avoid adverse effects on the property, according to an environmental report from the company. staff.

Instead, the company demolished the home in May 2016 without informing FERC or the Ohio State Historic Preservation Office.

This led FERC to deny Energy Transfer a so-called general certificate that would have allowed the company to build Rover with less oversight, noting that the demolition had convinced the regulators that it was "impossible to trust the company. "to comply with environmental regulations.

Energy Transfer did not comment on the refusal, but said in a statement that he had "solved all the outstanding issues" with the demolition and donated more than $ 4 million to the preservation office from Ohio.

Damaged wetlands

Once Energy Transfer began building Rover, the FERC and West Virginia regulators asked the company to suspend work on parts of the project after violations, including the release of about 2 million gallons of drilling fluid in wetlands located near the Tuscarawas River in Ohio in April 2017.

(For a breakdown of the 681 federal violations of Rover, see: tmsnrt.rs/2PUGmYr.)

In Pennsylvania, Mariner East 2 has received more than 80 violation reports from the State Department of Environmental Protection, primarily for the spill of drilling fluids.

Drilling fluids can affect the natural flow of streams and rivers and damage the ecosystem of a region, said Lynda Farrell, executive director of the Pipeline Safety Coalition.

The Attorney General of Ohio filed a lawsuit in November 2017 asking about $ 2.6 million to Rover and some of the construction companies building the pipeline for the alleged illegal dumping of millions of gallons of fluids. drilling in state waters, among others. This trial is ongoing.

Energy Transfer's Dillinger said the company was "disappointed" that the Ohio Ohio company was sued after trying to resolve the issues amicably and that it would continue to cooperate with the authorities. regulation.

"We continue to work closely with the two state regulators to resolve any outstanding issues related to our construction," she said.

GRAPHIC: A gas pipeline, 681 federal offenses – tmsnrt.rs/2PUGMYRGRAPHIC: Sunoco – tmsnrt.rs/2EHd3E4GRAPHIC spills: Pipeline construction race – tmsnrt.rs/2PkLg0n