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Energy Transfer expects Rover to be fully operational early in 2018

Energy Transfer Partners LP said it will have an upturn in its financial results once its Rover natural gas pipeline is in service across the Midwest, not only because it will start generating cash but because it will make it easier to attract new customers to its other projects.

Energy Transfer executives expected the Rover Pipeline LLC project's first phase will be in service by the end of 2017, and the entire project will be ready for full commercial service in January 2018.

Speaking on the company's second-quarter earnings call Aug. 9, Energy Transfer Equity LP Chief Commercial Officer Marshall McCrea said the 3.25-Bcf/d project will help both the company and gas producers in eastern Ohio, western Pennsylvania and northern West Virginia. Energy Transfer Equity on Aug. 8 reported second-quarter limited partners' interest in net income of $204 million, down from $239 million in the 2016 quarter. Energy Transfer Partners reported second-quarter net income of $292 million, down from $472 million during the same period last year.

McCrea noted that both Energy Transfer's Mariner East 2 natural gas liquids pipeline and the Revolution gathering pipeline project depend on Rover's in service date. McCrea said even though Mariner East 2 will be in service in the 2017 fourth quarter and Revolution will come online as soon as Rover connects to an associated cryogenic gas processing plant, attracting new customers will be tricky while Rover remains incomplete.

"We are in great shape the day we bring on initial revenues, and we are highly confident that we will bring on significantly more commitments and more volumes after we bring the pipeline in service," McCrea said. "But it is kind of hard to bring new customers on until your project that's been in the works for many years [is] in service."

CFO Thomas Long noted that construction for Rover pipeline's first phase "is substantially complete," with the "phase 1-A" portion in Ohio slated for completion by next week. Rover will complete "phase 1-B" in approximately 40 days, once it receives authorization to drill under Captina Creek in Ohio. The Captina Creek crossing is the project's last remaining mainline drill site. Activity at the site has been on hold since the Federal Energy Regulatory Commission ordered the project to stop some drilling activities after spills of drilling fluids.

COO Matthew Ramsey said Rover has worked closely with the Ohio Environmental Protection Agency over the spill of approximately 2 million gallons of drilling slurry at the Tuscarawas River on April 13. He said the river cleanup should be done by mid-August.

"I think those issues will now resolve themselves pretty quickly," he said.

Ramsey reiterated claims that Rover made to FERC and a third-party investigator that, even after the investigator released its findings, the company does not know why diesel fuel was detected in the spilled drilling fluid. "I think that we will get through that issue with FERC without any real big problems," he said.