Critics challenge Sunoco Pipeline as public utility

An array of critics has challenged Sunoco Pipeline L.P.'s attempt to win crucial public utility status for its embattled Mariner East pipeline by recasting the local benefits of the project.

Several advocacy groups filed objections with the Pennsylvania Public Utility Commission before Monday's deadline, calling on the PUC to reject Sunoco's application to declare its cross-state pipeline a public utility, which would allow it to bypass local zoning controls.

Sunoco is repurposing an 83-year-old refined-products pipeline to transport Marcellus Shale natural-gas liquids to Marcus Hook, where most of the material - ethane and propane - would be exported.

After a storm of objections, Sunoco last month hired new lawyers and amended its application to create an intermediate stop for the fuel in Pennsylvania, reinforcing its claim for public utility status.

Sunoco said it added an intrastate option to deliver propane to its Twin Oaks terminal in Delaware County in response to local market demand.

But Scott J. Rubin, an attorney representing residents of West Goshen Township in Chester County, wrote in his formal protest that "the newly concocted intrastate use of the pipeline is a subterfuge solely designed to try to create commission jurisdiction."

The Delaware Riverkeeper Network, the Clean Air Council, the Environmental Integrity Project, and the Mountain Watershed Association also filed protests with the PUC.

Sunoco's application now will go through a full-blown legal proceeding before the PUC and raises the chance that a project viewed by Gov. Corbett and business leaders as a key to channeling Marcellus Shale products to the Philadelphia area may not begin operations by the end of the year, Sunoco's target date.

A hearing before the five-member PUC "will not happen by the end of the summer," said Jennifer Kocher, the PUC's spokeswoman. And any PUC decision could be further delayed by appeals to the Commonwealth Court.

"We're just in the preliminary stages of this," said Aaron Stemplewicz, a staff attorney with the Delaware Riverkeeper Network, which joined the calls that Sunoco's project does not qualify as a public utility.

Sunoco announced the Mariner East project in 2010 as a way for Marcellus Shale producers to resolve a growing problem with an abundance of high-value liquid fuels produced from wells in Western Pennsylvania.

The liquids make the natural gas too rich, so Marcellus drillers faced the prospect of curtailing production unless they could separate ethane and sell it to petrochemical producers. Ethane fetches a premium price, so separating the material allows drillers to make more money and to ramp up more natural gas production.

The ethane slated for delivery on the Mariner East project would be stored in Marcus Hook and shipped by vessels to a Norwegian plastics plant.

The ultimate destination for the product diminished Sunoco's argument that the pipeline is a public utility, serving a public purpose. Sunoco's revised application called for delivering 5,000 barrels of propane to local markets, out of the pipeline's 72,000-barrel-per-day capacity.

Sunoco contends that it has been a public utility corporation since 2002, and that it should be exempt from local zoning restrictions on 18 pump stations and 17 valve stations along its 299-mile route.

Sunoco's project has attracted fierce opposition in West Goshen Township, where it proposes to build a pump station near Boot Road and U.S. 202, not far from a residential development.