A criminal probe into the Mariner East family of NGL pipelines may be an indication that local public support is fading for the Energy Transfer LP project, which Marcellus Shale drillers are relying on for expanded access to high-priced global markets.
Claiming that Pennsylvania's governor and pipeline regulators failed to protect the public during the operation and construction of the pipelines, District Attorney Tom Hogan of Chester County, Pa., said Dec. 19 that he would investigate the actions of Energy Transfer and the subsidiary developing the project, with potential charges including environmental crimes, criminal mischief and corrupt organizations.
"We have seen sinkholes created by the pipeline drilling, contaminated well water, and some subtle and not-so-subtle bullying of Chester County citizens by big corporate interests," Hogan, a Republican elected to his position, said in a public statement. "We expected the state regulators and the governor to step in and assure the safety of Pennsylvanians. They have not." The pipeline system has run into state regulatory setbacks and local resident lawsuits, but this is the first indication of prosecutorial scrutiny.
Gas producers, particularly Antero Resources Corp. and Range Resources Corp., are counting on a portion of the 345,000-barrel-per-day Mariner East 2 pipeline to open by the end of the year. Range is already an anchor shipper on the 70,000-bbl/d Mariner East 1 to fulfill contracts with a European plastics manufacturer.
Antero spent at least $50 million more than planned in 2018 in anticipation of Mariner East 2 opening on time, CEO Paul Rady told analysts on the company's Nov. 1 earnings conference call. "Our understanding is that they're moving along, that it will be brought on in phases. That's going to allow production on the order of 150,000 barrels per day, and then, once they get it worked out within the next year, then it can expand quite a bit more."
The two pipelines are designed to carry NGLs — ethane, propane and butane — from processing plants in western Pennsylvania and West Virginia to a port in Delaware County, near Philadelphia, for export. An Energy Transfer representative confirmed the company's intention to have enough of Mariner East 2 completed Dec. 31 for new flows to begin.
Spokespeople for Range and Antero did not reply to requests for comment.
In the past, during Mariner East 1 shutdowns, Range said it finds buyers for the liquids in markets farther west and south in the U.S.
After Hogan's Dec. 19 announcement, Energy Transfer said the allegations were baseless and it hoped to resolve concerns with direct talks. "We vehemently deny any such wrongdoing and we take issue with the many factual inaccuracies contained in the district attorney's press release," Energy Transfer said in a statement.
This rare step by a local prosecutor is the latest in a series of headaches for Energy Transfer but will not result in any immediate shutdown of the project, according to a source in the district attorney's office.
"This is not a process to shut down the pipeline," said the source, who spoke on condition of anonymity because he was not authorized to comment publicly. However, it is another signal that residents of the suburban Chester County community are "overwhelmingly" opposed to Mariner East, the source said.
A representative of the Public Utility Commission declined to comment on whether the district attorney for Chester County, which sits near the eastern end of the Mariner East route, could obtain a court order closing the pipelines.
Several Chester County residents, combined with residents from next-door Delaware County, lost their bid for an emergency shutdown of the Mariner East pipelines Dec. 11 after claiming that the Energy Transfer subsidiary's emergency preparedness plan was inadequate for a relatively densely populated suburb. Their complaint is still before the Public Utility Commission, but an administrative law judge ruled that it was not sufficient to warrant an immediate shutdown.
Spokespeople for both the Public Utility Commission and the state Department of Environmental Protection pushed back Dec. 20 against Hogan's contention that regulators have been idle. Their agencies have started and stopped work and flows on the Mariner East lines and levied millions of dollars in fines, primarily for spilling drilling muds along the shared path of the two pipelines, the spokespeople said.
Hogan said the combination of an explosion on Energy Transfer's Revolution Pipeline in western Pennsylvania and a tour of the sinkholes Chester County residents have found on their land along Mariner East's right of way persuaded him to take action.