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Two U.S. pipelines rack up violations, threat industry growth

MEDIA, PENNSYLVANIA (Reuters) – Energy Transfer LP ( ET.N ) and its Sunoco pipeline subsidiary have racked up more than…

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.

Construction takes place after sinkholes appeared in the backyards of houses in a cul-de-sac outside of Philadelphia, Pennsylvania, April 5, 201

8. REUTERS / Stephanie Kelly

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 US gas production.

Reuters analyzed four comparable pipeline projects and found them averaged 19 violations each during construction.

The Rover and Mariner violations included spills of boring fluid, a clay-and-water mixture that lubricates equipment for drilling under rivers and highways; sinkholes in backyards; og forkert bortskaffelse af farligt affald og andet trash. Fines topped $ 15 million.

Energy Transfer also raised the federal regulators by tearing down a historic house along Rover’s route.

The Appalachia region has become a natural gas hub as it increasingly replaces coal for U.S. power generation, creating an urgent need for new pipelines. Men de seneste erfaringer med beboere og regulatorer med de to Energy Transfer pipelines har statsansatte vowing to tighten laws and scrutinize future projects.

“Ohio’s negative experience with Rover has fundamentally changed how we will allow 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 that 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 continue 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 to 50 miles a month, according to company statements on construction schedules. Beide waren gericht voor de voltooiing van laat-last jaar.

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 average of 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 heeft de laatste twee afdelingen van Rover afgerond in november en zei dat het verwacht is dat Mariner East 2 in dienst snel wordt geplaatst.

In February, Pennsylvania fined the company $ 12.6 million for environmental damage, including the discharge of boring 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 US Federal Energy Regulatory Commission (FERC), which regulates interstate gas pipelines.

“They are not 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 slow construction of comparable projects have finished mostly on schedule with almost no violations . Canadian energy company Enbridge Inc ( ENB.TO ), for example, recently completed 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.

Slideshow (2 Images)

HAZARDOUS PLAYS

Energy Transfer, now one of the nation’s largest pipeline operators, encountered major protests by Native American tribes and environmental activists across 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.

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.

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 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. 19659031] 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 company 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 can not 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.

(For a breakdown of Rover’s 681 federal violations, see: tmsnr.rs/2PUGmYr.)

In Pennsylvania, Mariner East 2 has received more than 80 notices of violation from the state Department of Environmental Protection, mostly for accidental release of drilling fluids.

Drilling fluids can impair the natural flow of streams and rivers and damage 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 allegedly 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 to cooperate with regulators.

GRAPHIC: One gas pipeline, 681 federal violations – tmsnrtrs/2PUGmYrGRAPHIC: Sunoco’s hazardous spill – tmsnr.rs/2EHd3E4GRAPHIC: Racing to build pipelines – tmsnr.rs/2PkLg0n

Reporting by Stephanie Kelly and Scott DiSavino; Additional reporting by Andres Guerra Luz; editing by David Gaffen, Simon Webb and Brian Thevenot

Our Standards: The Thomson Reuters Trust Principles.

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