Energy Transfer CEO: 'We've Made Mistakes' In Building Mariner East
Sunoco’s parent company admitted it made mistakes in building the Mariner East pipelines through Pennsylvania, and told investors that it will do better in future, but its assurances failed to persuade critics that the project will become any safer for the public or more protective of the environment.
During a Feb. 21 conference call with financial analysts to discuss results for the fourth quarter of 2018, Energy Transfer’s chief executive, Kelcy Warren, appeared to acknowledge the succession of spills, shutdowns and sinkholes that have bedeviled the project during the two-year construction.
“We’ve made mistakes and we are correcting those mistakes and will not make those mistakes again,” Warren said, in answer to an analyst’s question on whether the company has any “learnings from the past to execute better.”
Warren acknowledged the problems the project has faced in Pennsylvania, and said that going forward, the company will “complete good projects” in a way that will control costs.
“We’ve learned so much,” he said in a recording of the call on the company’s website. “We’re going to take our medicine and fix those mistakes and complete good projects going forward. We’ve made some mistakes we’re not proud of, so you’ll see that improve and when we don’t make those mistakes again then our costs are going to improve and the predictability of those costs are likewise going to improve.”
He also implied that the company faces stricter regulation in Pennsylvania than in its home state of Texas, saying: “Every place is not Texas.”
Warren did not specify any of the mistakes, describe the corrective action, or say what prompted his decision to admit the company’s mistakes during the construction project.
In early February, the Department of Environmental Protection issued its latest sanctions on the project, halting the issuance of water permits for unfinished sections of the pipelines, on grounds that Energy Transfer failed to comply with an earlier DEP order for environmental restoration following the explosion of its Revolution Pipeline in western Pennsylvania in September last year.
The DEP’s latest action was accompanied by a statement by Gov. Tom Wolf accusing Energy Transfer of failing to respect Pennsylvania’s laws and communities, and saying the company’s behavior “will not be tolerated.”
In mid-February, the Public Utility Commission told an appeals court that state Sen. Andy Dinniman (D-Chester) should be allowed to argue his case to the PUC that the project should be shut down until its safety can be assured, in part because, the commission said, the pipelines pose a “substantial risk to the safety of residents.”
On Sunday, ET spokeswoman Vicki Granado didn’t provide any more details about Warren’s comments, but repeated that the company recognizes its mistakes, and is talking to state regulators about corrective action.
“Mr. Warren’s comments on our earnings call acknowledged that we made mistakes on our projects in Pennsylvania, and that we must do better,” Granado said. “He has been very clear both internally and externally that those mistakes will not happen again. Our executive management team has communicated to Pennsylvania’s leadership and its regulatory agencies, and now publicly, that we are committed to correcting those mistakes and to working with them on a path forward.”
Critics dismissed ET’s statement, saying that any improvement in its construction record wouldn’t make it any safer to run the high-pressure natural gas liquids pipelines through densely populated areas like the Philadelphia suburbs.
“It’s nice to think that a magic wand will be waved and from this point forward Sunoco will be a good neighbor when it comes to pipeline safety and environmental protection,” Dinniman said. “But we’re not naïve enough to believe that a few lines in the context of a quarterly earnings report are going to make much difference in how Sunoco/ETP operates.”
Dinniman said Chester County residents are still living with Sunoco’s mistakes such as the sinkholes that opened up at a pipeline construction site on a suburban development in West Whiteland Township, first in early 2018 and again in January this year.
Del-Chesco United for Pipeline Safety, an activist group in Delaware and Chester Counties, said Sunoco’s admission of past mistakes doesn’t mean it will operate safely in future.
“Energy Transfer wants investors to believe it’s going to try to do better, but we think the company’s established pattern of unlawful behavior speaks for itself,” Del-Chesco said in a statement.
On Dec. 29 last year, Sunoco began pumping natural gas liquids from southwest Pennsylvania to a terminal at Marcus Hook in Delaware County using a string of different-diameter pipelines that it calls Mariner East 2. That name was originally given to a 20-inch pipe that was due to run across the state but which remains unfinished in some parts of Delaware and Chester Counties.
Mariner East 2 is part of a three-stage project: Mariner East 1 involved reversing the flow of an existing line; the company has plans to build Mariner East 2x. All three lines will run along the same right of way.
This story was published in partnership with StateImpact Pennsylvania, a collaboration between WESA, Allegheny Front, WITF and WHYY, to cover the commonwealth’s energy economy. Read more stories at StateImpact Pennsylvania's website.