Two U.S. pipelines rack up violations,
threaten industry growth
Send a link to a friend
[November 28, 2018]
By Scott DiSavino and Stephanie Kelly
MEDIA, PENNSYLVANIA (Reuters) - Energy
Transfer LP <ET.N> and its Sunoco pipeline subsidiary have racked up
more than 800 state and federal permit violations while racing to build
two of the nation's largest natural gas pipelines, according to a
Reuters analysis of government data and regulatory records.
The pipelines, known as Energy Transfer Rover and Sunoco Mariner East 2,
will carry natural gas and gas liquids from Pennsylvania, Ohio and West
Virginia, an area that now accounts for more than a third of U.S. gas
production.
Reuters analyzed four comparable pipeline projects and found they
averaged 19 violations each during construction.
The Rover and Mariner violations included spills of drilling fluid, a
clay-and-water mixture that lubricates equipment for drilling under
rivers and highways; sinkholes in backyards; and improper disposal of
hazardous waste and other trash. Fines topped $15 million.
Energy Transfer also raised the ire of federal regulators by tearing
down a historic house along Rover's route.
The Appalachia region has become a hub for natural gas as it
increasingly replaces coal for U.S. power generation, creating an urgent
need for new pipelines. But the recent experience of residents and
regulators with the two Energy Transfer pipelines has state officials
vowing to tighten laws and scrutinize future projects.
![](http://archives.lincolndailynews.com/2018/Nov/28/images/ads/current/peasleymemorials_lda100213.png)
"Ohio's negative experience with Rover has fundamentally changed how we
will permit pipeline projects," said James Lee, a spokesman for the Ohio
Environmental Protection Agency.
Problems with Mariner prompted Pennsylvania legislators to craft bills
tightening construction regulations, which have drawn bipartisan
support.
"Any pipeline going through this area is going to face resistance which
it would not have faced before," said Pennsylvania State Senator Andy
Dinniman, a Democrat.
Energy Transfer spokeswoman Alexis Daniel said the firm remained
committed to safe construction and operation and at times went "above
and beyond" regulations for the two projects.
Construction of the 713-mile, $4.2 billion Rover started in March 2017
and was planned to proceed at about 89 miles a month, while work on the
350-mile, $2.5 billion Mariner East 2 started in February 2017 and was
planned at 50 miles a month, according to company statements on
construction schedules. Both were targeted for completion late last
year.
Regulators and industry experts said the pace of both projects far
exceeded industry norms.
The four other projects examined by Reuters were mostly completed at a
pace averaging 17 miles per month. Reuters selected the projects for
comparison because, like Rover and Mariner, they cost more than $1.5
billion, stretched at least 150 miles and were under construction at the
same time.
Construction on both Energy Transfer pipelines was ultimately slowed
when state and federal regulators ordered numerous work stoppages after
permit violations. Energy Transfer completed the last two sections of
Rover in November and said it expects to put Mariner East 2 in service
soon.
In February, Pennsylvania fined the company $12.6 million for
environmental damage, including the discharge of drilling fluids into
state waters without a permit. After further problems, including the
sinkholes, a state judge in May ordered work halted on Mariner East 2.
Administrative Law Judge Elizabeth Barnes wrote that Energy Transfer's
Sunoco unit "made deliberate managerial decisions to proceed in what
appears to be a rushed manner in an apparent prioritization of profit
over the best engineering."
While pipeline construction schedules vary, the planned timelines for
Rover and Mariner were ambitious, said Fred Jauss, partner at Dorsey &
Whitney in Washington and a former attorney with the U.S. Federal Energy
Regulatory Commission (FERC), which regulates interstate gas pipelines.
![](http://archives.lincolndailynews.com/2018/Nov/28/images/ads/current/napa_bch_032818.png)
"They aren't taking their time ... we're all concerned about it," said
Pennsylvania State Senator John Rafferty, a Republican, referring to
other state politicians, constituents and first responders.
Energy Transfer spokeswoman Lisa Dillinger told Reuters the schedules
were "appropriate for the size, scope, and the number of contractors
hired."
Other companies that planned slower construction of comparable projects
have finished mostly on schedule with almost no violations. Canadian
energy company Enbridge Inc <ENB.TO>, for instance, recently finished a
$2.6 billion, 255-mile pipeline - following a path similar to Rover
through Ohio and Michigan - with just seven violations. Enbridge did not
respond to a request for comment.
HAZARDOUS SPILLS
Energy Transfer, now one of the nation’s largest pipeline operators,
encountered large protests led by Native American tribes and
environmental activists over the route of its Dakota Access crude oil
line in North Dakota in 2016 and has seen protests of Mariner East 2 in
Pennsylvania, where opponents have highlighted its safety record on
existing pipelines.
[to top of second column]
|
![](../images/112818pics/news_q33.jpg)
A signpost marks a pipeline route behind a house outside of
Philadelphia, Pennsylvania April 5, 2018. REUTERS/Stephanie Kelly
![](../images/ads/current/fitzpatrick_lda_SPONSOR_2017.png)
The company has had a relatively high incidence of hazardous liquid
spills and other problems, according to a Reuters review of data
from the U.S. Pipeline and Hazardous Materials Safety Administration
(PHMSA).
Energy Transfer's Sunoco unit ranked third worst among all pipeline
companies in average annual incidents between 2010 and 2017,
according to the PHMSA data. In total, Energy Transfer and its
affiliated companies released more than 41,000 barrels of hazardous
liquids causing more than $100 million in property damage, PHMSA
data shows.
(For a graphic on PHMSA incidents by company, see: https://tmsnrt.rs/2EHd3E4
)
Bibianna Dussling of Media, Pennsylvania, joined a group of
activists protesting Mariner East after learning the project's route
would pass near her daughter's elementary school.
"The violations are really meaningless to them," she said. "You do
so much to protect your children day-to-day, and to face something
like this, that you feel is so much out of your hands."
Energy Transfer's Dillinger said incidents have been sharply reduced
since the merger of Sunoco Logistics and Energy Transfer Partners
into one company, Energy Transfer, in the spring of 2017. Incidents
this year are "trending below industry average," she said.
HISTORIC HOUSE DEMOLITION
The Rover pipeline attracted additional federal scrutiny when Energy
Transfer demolished a historic house along its route.
After Energy Transfer bought the 1843 Stoneman house in Ohio, FERC
staff in February 2016 required the firm to come up with a plan to
prevent adverse effects on the property, according to a staff's
environmental report.
Instead, the company tore down the house in May 2016 without
notifying FERC or the Ohio State Historic Preservation Office.
That led FERC to deny Energy Transfer a so-called blanket
certificate that would have allowed the company to construct Rover
with less oversight, noting the demolition convinced regulators the
company "cannot be trusted" to comply with environmental
regulations.
Energy Transfer did not comment on the denial but said in a
statement that it had "resolved all outstanding issues" with the
demolition and donated more than $4 million to the Ohio preservation
office.
DAMAGED WETLANDS
Once Energy Transfer started building Rover, FERC and West Virginia
regulators required the company to halt work on parts of the project
after violations, including the release of an estimated 2 million
gallons of drilling fluid into wetlands near the Tuscarawas River in
Ohio in April 2017.
![](http://archives.lincolndailynews.com/2018/Nov/28/images/ads/current/parkdistrict_lda_CHRISTMAS_2018.png)
(For a breakdown of Rover’s 681 federal violations, see: https://tmsnrt.rs/2PUGmYr
.)
In Pennsylvania, Mariner East 2 has received more than 80 notices of
violation from the state's Department of Environmental Protection,
mostly for accidental release of drilling fluids.
Drilling fluids can impair the natural flow of streams and rivers
and harm an area's ecosystem, said Lynda Farrell, executive director
of the Pipeline Safety Coalition.
The Ohio Attorney General filed a lawsuit in November 2017 seeking
about $2.6 million from Rover and some of the construction companies
building the pipeline for the alleged illegal discharge of millions
of gallons of drilling fluids into state waters, among other things.
That lawsuit is ongoing.
Energy Transfer’s Dillinger said the company was “disappointed” that
the Ohio AG sued after the company tried to resolve issues amicably
and that it would continue cooperating with regulators.
“We continue to work closely with both state regulators to resolve
any outstanding issues related to our construction,” she said.
(Reporting by Stephanie Kelly and Scott DiSavino; Additional
reporting by Andres Guerra Luz; editing by David Gaffen, Simon Webb
and Brian Thevenot)
[© 2018 Thomson Reuters. All rights
reserved.]
Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
![](http://archives.lincolndailynews.com/2018/Nov/28/images/ads/current/ema_lda_CHRISTMAS_2017.png) |