m o m m o ROME LLP COUNSaORS AT LAW BLANK June 6,2014

Transcription

1 BLANK ROME LLP COUNSaORS AT LAW Phone: Fax; (215) (215) iewisfflbfarikrorne.coin VIA HAND DELIVERY Rosemary Chiavetta, Secretary PA Public Utility Commission Commonwealth Keystone Building 400 North Street, 2 nd Floor Harrisburg, PA June 6,2014 CO o m >-tn <si<=. G3 cr m > l cn TO ro CO m o m < m o Re: Application of Sunoco Pipeline L.P. for Issuance of a Certificate of Public Convenience and such other approvals, if any, as may be necessary under the Permsyivania Public Utility Code, evidencing approval to extend its service territory for transportation of petroleum products and refined petroleum products by pipeline into Washington County, Docket No. A Dear Secretary Chiavetta, Enclosed please find the Application of Sunoco Pipeline, L.P. for a Certificate of Public Convenience evidencing approval to extend service for transportation of petroleum products and refined petroleum products by pipeline into Washington County. Copies of this Application have been served on the parties to this matter as indicated on the attached certificate of public service. Additionally, kindly date stamp and return the enclosed extra copy of this letter and the Application, and kindly retum them to our messenger for our filing purposes. Thank you. Sincerely yours, BLANK ROME ^ cc: Certificate of Service Christopher A. Lewis (ID #29375) Blank Rome LLP One Logan Square Philadelphia, PA Phone: (215) Counsel for Sunoco Pipeline, LP. One Logan Square 130 Norlh 18th Street Phrladelphin, PA BCK.T Raton Cincinnati Hong Kong Houston Los Angeles New York Philadelphia Princeton Shanghai Washington Wilmington

2 BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION Application of Sunoco Pipeline L.P. for Issuance of a Certificate of Public Convenience and such other approvals, if any, as may be necessary under the Pennsylvania Public Utility Code, evidencing approval to extend its service territory for transportation of petroleum products and refined petroleum products by pipeline into Washington County LP ro o J= 3 fe rn Docket No. A "»>> O APPLICATION OF SUNOCO PIPELINE L.P. FOR CERTIFICATE OF PUBLIC CONVENIENCE (MARINER EAST PROJECT WASHINGTON COUNTY) TO THE PENNSYLVANIA PUBLIC UTILITY COMMISSION: I. INTRODUCTION 1. By this Application, Sunoco Pipeline, L.P. ("SPLP") seeks the approval of the Pennsylvania Public Utility Commission ("PUC" or "Commission") under Sections 1102(a)(1) and 1103 ofthe Public Utility Code, 66 Pa. C.S. 1102(aXl) and 1103, and Sections of the Commission's regulations, 52 Pa. Code , to extend its service territory into Washington County, Pennsylvania, so that SPLP may complete the route for its Mariner East pipeline and commence intrastate shipments of propane and other petroleum products from Houston in Washington County, Pennsylvania to its Twin Oaks facility in Delaware County, Pennsylvania, and to and from points in between. 2. The first phase of the Mariner East project consists of an approximately 300-mile pipeline that will make use of SPLP's existing pipeline infrastructure, supplemented by construction of an additional 51-mile extension from Houston, Pennsylvania to Delmont, 1

3 Pennsylvania, to ship valuable natural energy resources from the Marcellus Shale in Pennsylvania to the Marcus Hook Industrial Complex ("MHIC") on the Delaware River and SPLP's Twin Oaks facilities operated in conjunction with MHIC. Approximately 15 miles of the extension lies within Washington County. A map showing the route ofthe 51-mile extension from Houston, Pennsylvania to Delmont, Pennsylvania is attached hereto as Exhibit "A". As described in more detail below, subject to shipper interest, SPLP intends to undertake a second phase of the Mariner East project which will expand the capacity of the project. 3. The Mariner East project will serve the public interest by: (1) providing take away capacity for natural gas liquids produced from the Marcellus Shale in Pennsylvania, allowing these valuable resources to reach commercial markets and promoting the continued growth and development of Pennsylvania's oil and gas industry; (2) ensuring that the route to the commercial markets remains within the Commonwealth as opposed to the Gulf Coast, so that the Marcus Hook Industrial Complex can become a Northeast hub for the distribution of natural gas liquids to local, regional, national and intemational markets; (3) anchoring the revitalization of the Marcus Hook Industrial Complex, so that jobs and economic opportunities can be created in southeastern Pennsylvania; (4) providing intrastate transportation capacity for propane, so that shippers can arrange reliable, safe, and economical transportation of propane during the winter season, when demand for propane peaks, and supplies of propane are available but existing transportation aitematives are inadequate; and (5) providing an increased supply of propane to the market which will allow consumers, including Pennsylvania residents, to benefit from lower cost propane during the winter season.

4 II. CONTACT INFORMATION 4. The name and address of the Applicant is: Sunoco Pipeline, L.P. Attention: Kathleen Shea-Ballay 1818 Market Street, Suite 1500 Philadelphia, PA Phone: Fax: Correspondence and communications regarding this Application should be addressed or directed to counsel for SPLP, as follows: Christopher A. Lewis, Esq. Michael L. Krancer, Esq. Frank L. Tamulonis, Esq. Melanie S. Carter, Esq. Blank Rome LLP One Logan Square 130 North 18^ Street Philadelphia, PA Phone: Fax: IIL RATIONALE FOR THE MARINER EAST PROJECT CO EC RE 92 1 m O ill cn T) -< / ' rn C ro 0 m CO ro 6. The rapid expansion of natural gas production from the Marcellus Shale deposits has significantly revitalized local economies across Pennsylvania while also enhancing the country's energy supply portfolio and redefining global energy markets. The overall goal of the Mariner East project is to ensure that the natural gas liquids production refined from the Marcellus Shale in Pennsylvania will be able to be transported by pipeline within the Commonwealth as opposed to the Gulf Coast and stored and/or throughput at the Marcus Hook Industrial Complex as opposed to terminals on the Gulf Coast thereby developing the Marcus Hook Industrial Complex as a Northeast hub for the distribution of propane, ethane and other

5 natural gas liquids to local, regional, national or intemational markets. The Mariner East project is intended to provide take away capacity for the Marcellus Shale production and provide the flexibility for this capacity to reach various commercial markets, using labor, resources and pipeline infrastructure within the CommonweaJth. 7. SPLP initially had prioritized for the Mariner East pipeline system to provide interstate transportation of ethane and propane from west-to-east to the Marcus Hook Industrial Complex. Speed to market and other pipeline projects proposing to transport the production to the Gulf Coast necessitated a Pennsylvania pipeline solution that could be quickly implemented to transport the Marcellus Shale production within Pennsylvania and had the added benefit of fostering the development of the Marcus Hook Industrial Complex as the Northeast hub for distribution of this production. Once production was committed to be transported through Pennsylvania, the products would be available for distribution to commercial markets based on demand including, with respect to propane, meeting the demands of the residents within the Commonwealth. 8. As a result of the high supply of propane and other petroleum products generated by the Marcellus Shale, and given the need for uninterrupted deliveries of propane in the Commonwealth, the demand for intrastate transportation of propane has become significant as evidenced by the winter demand. To that end, shippers have expressed interest in intrastate pipeline service to transport propane within the Commonwealth. 9. Given the increased interest expressed by shippers in securing intrastate pipeline transportation facilities sooner than originally anticipated, and in recognition ofthe public interest in ensuring adequate pipeline capacity to meet peak demand for propane during the

6 winter season, SPLP is able to answer shipper demand and the public interest and now has acted to offer intrastate propane service as well. IV. DESCRIPTION OF THE APPLICANT AND ITS CPCs 10. SPLP is a Texas limited partnership formed in 2001 as part of the restructuring of certain subsidiaries of Sunoco, Inc., and is indirectly, wholly-owned by Sunoco Logistics Partners, L.P., a publicly traded master limited partnership (NYSE:SXL). 11. Pursuant to a certificate of public convenience dated January 10, 2002 (and docketed on January 25, 2002), SPLP received approval from the Commission for the transfer, merger, possession and use of, all PA PUC jurisdictional assets of Sun Pipe Line Company ("Sun") and Atlantic Pipeline Corporation ("Atlantic"). In the second ordering paragraph of a Corrected Order docketed on January 28, 2002, the Commission clarified that its approval included "the right of Sunoco Pipeline L.P. to transport petroleum products in the former service territory of Sun Pipe Line Company and Atlantic Pipeline Corp." The acquisition of the Sun and Atlantic pipeline assets permitted SPLP to operate an integrated pipeline system that included, among other things, an 8" pipeline that extended from Point Breeze to Montello, a 12" pipeline that extended from Point Breeze to Montello, an 8" pipeline that extended from Twin Oaks to Exton, Fullerton, Macungie, and Montello, certain 6", 8" and 14" pipelines in segments that extended from Montello to Williamsport, and an 8" 1 See Joint Application of Sunoco Pipeline LP., Sun Pipeline Corp. for Approval ofthe Transfer of Assets and Merger of Sun Pipe Line Company and Atlantic Pipeline Corp. to Sunoco Pipeline L P. for the Right ofsunoco Pipeline LP. to Transport Petroleum Products in the Former Service Territory of Sun Pipe Line Company and Atlantic Pipeline Corp. and for the Abandonment of Services by Sun Pipe Line Company and Atlantic Pipeline Corp., Corrected Order, Docket No. A , A F2000, A F2000 (Jan. 28, 2002).

7 pipeline that extended from Montello to Mechanicsburg, and then from Mechanicsburg to Delmont, Pennsylvania and then from Delmont to Pittsburgh, Pennsylvania. 13. To be able to address the deficit in pipeline infrastructure available for the movement of natural gas liquids from the Marcellus Shale to the commercial markets as quickly as possible and in light of competing projects designed to move these natural gas liquids to the Gulf Coast, the Mariner East project was designed in part to reconfigure certain aspects of SPLP's existing integrated pipeline system to convert certain segments that were in transportation services of certain petroleum products and refined petroleum products (gasoline and distillate) to transportation services of other petroleum products and refined petroleum products (ethane and propane), with the intent that once the Mariner East pipeline system was complete, certain segments of the existing system east of Mechanicsburg would be utilized for both ethane and propane as well as other petroleum products transportation services, while the pipeline segments between Delmont and Mechanicsburg would be initially utilized primarily for transportation services of petroleum products (ethane and propane). 14. SPLP currently continues to provide certificated transportation services of petroleum products and refined petroleum products west of Delmont, PA (in Westmoreland and Allegheny Counties) on a segment of this existing pipeline. 15. To facilitate its Mariner East Project, in 2013, SPLP filed an application with the Commission to abandon a portion of certain intrastate service along portions of its pipeline system and to suspend a portion of certain intrastate service along other segments for the transportation of gasoline and distillates (the "Abandonment Application"). Specifically, SPLP sought to abandon intrastate petroleum pipeline service in the Commonwealth of Pennsylvania per the proposed schedule on the following sections: (1) Point Breeze to Eldorado, Delmont,

8 Blawnox, and Pittsburgh; (2) Montello to Eldorado, Delmont, and Blawnox; and (3) Twin Oaks to Icedale, Malvern, Eldorado, Delmont, and Pittsburgh Concurrently with the Abandonment Application, SPLP filed a petition to temporarily suspend service for the transportation of gasoline and distillate on certain pipeline routes that extended from (1) Point Breeze to Mechanicsburg and (2) Twin Oaks to Exton, Fullerton, Macungie, Montello, Mechanicsburg, Tamaqua, Williamsport, and Kingston. 3 In its Suspension Petition, SPLP advised that "[r]ather than abandon those services, SPLP believes it is prudent and consistent with the public interest to preserve the opportunity to provide intrastate service on those segments and, to that end, is requesting through its Petition a temporary suspension of those services." By Order entered on August 29, 2013 and subsequently clarified on October 17, 2013, the Commission approved both the Abandonment Application and the Suspension Petition, authorizing SPLP to suspend intrastate pipeline service on the designated routes for 18 months The effect of the Commission's approval of the Abandonment Application and Suspension Petition is that SPLP continues to hold a CPC to provide petroleum products and refined petroleum products transportation service on its pipelines between Twin Oaks and Delmont, Pennsylvania; however, service has been temporarily suspended on routes east of 2 See Application of Sunoco Pipeline LP. for: (I) Issuance of a Certificate of Public Convenience approving the Abandonment of a Portion of Its Petroleum Products Pipeline Transportation Service within Pennsylvania, from: (I) Point Breeze to Eldorado, Delmont, Blawnox, and Pittsburgh; (2) Montello to Eldorado, Delmont, and Blawnox; and (3) Twin Oaks to Icedale, Malvern, Eldorado, Delmont, and Pittsburgh; and (I!) All Other Approvals or Certificates Appropriate or Necessary Under the Public Utility Code to Grant the Relief Requested in the Application, as filed on June 28, 2013, Docket No. A See Petition of Sunoco Pipeline, LP. for Approval of Temporary Suspension of Petroleum Products Transportation Service From: (I) Point Breeze to Mechanicsburg and (2) Twin Oaks to Exton, Fullerton, Macungie, Montello, Mechanicsburg, Tamaqua, Williamsport, and Kingston (Ihe "Suspension Petition"), Docket No. P 'Id 5 See Application of Sunoco Pipeline L.P. for a Certificate of Public Convenience to Abandon a Portion of its Petroleum Products Pipeline Transportation Service in Pennsylvania, Order, Docket Nos. A , P (Aug. 29, 2013, as amended Oct. 17, 2013). 7

9 Mechanicsburg in accordance with the Commission's approval of the Suspension Petition and a tariff supplement subsequently filed by SPLP (the "Suspension Segment"), and certain transportation service for gasoline and distillate that included points west of Mechanicsburg and out to Delmont was abandoned pursuant to a CPC authorizing abandonment (the "Abandonment Segment"). 19. To meet demand during the upcoming winter season and in response to shipper interest, SPLP initially will be resuming service in the Suspension Segment. SPLP has filed a new tariff, with an effective date of September 1, 2014, Tariff Pipeline - Pa.P.U.C. No. 16, that implements intrastate propane service between Mechanicsburg and its Twin Oaks facility. This will allow SPLP to implement the earlier transport of propane by pipeline from Mechanicsburg prior to the full completion of the Mariner East pipeline and to significantly increase the delivery capacity due to the superior efficiency of pipeline transportation as compared to truck and rail transportation. 20. On May 21, 2014, SPLP filed with the Commission a Petition to Amend the August 29, 2013 Order authorizing the abandonment. The Petition to Amend requested the Commission to affirm that SPLP could institute intrastate propane service from Delmont, Pennsylvania to Twin Oaks, because while SPLP had abandoned a portion of its service in the Abandonment Segment, it never relinquished its authority under its existing CPCs to provide petroleum products and refined petroleum products transportation service in the certificated territories. 21. Upon the approval of the Petition to Amend, SPLP intends to meet shipper demand by commencing intrastate propane service from Delmont, Pennsylvania, moving the origination point further west and closer to the Marcellus Shale region. This will enable shippers

10 to avoid the added expense and risks associated with trucking the propane from the Marcellus Shale region to Mechanicsburg. 22. Finally, subject to the Commission's grant of this Application, SPLP will be able to offer pipeline transportation service (both interstate and intrastate) from Houston, Pennsylvania via an interconnection with the existing pipeline at Delmont to the Marcus Hook Industrial Complex and its Twin Oaks facility. The completion of this phase of the Mariner East project will provide for the contiguous movement of the Marcellus Shale production of ethane, propane and other petroleum products from Houston, Pennsylvania to the Marcus Hook Industrial Complex and the Twin Oaks facility and will increase the capacity of propane that is capable of being transported by pipeline, whether via interstate or intrastate movements, and available for delivery or use in Pennsylvania. This phase of the project is scheduled to be fully operational to transport propane as well as ethane in mid Subject to continued shipper interest, SPLP intends to undertake a second phase of the Mariner East project which will expand the capacity of the project by constructing: (1) a 16 inch or larger pipeline, paralleling its existing pipeline from Houston, PA to the Marcus Hook Industrial Complex and along much of the same route, and (2) a new 15 miles of pipeline from Houston, PA to a point near the Pennsylvania-Ohio boundary line. This second phase ofthe project to expand the Mariner East pipeline system, sometimes referred to as "Mariner East 2" will increase the take-away capacity of natural gas liquids from the Marcellus Shale and enable SPLP to provide additional on-loading and off-loading points within Pennsylvania for both intrastate and interstate propane shipments, and increase the amount of propane that would be available for delivery or use in Pennsylvania. The new 15 mile expansion ofthe pipeline is shown on Exhibit "A" as a dotted red line. SPLP has conducted an "Open Season" for Mariner

11 East 2 which clearly has demonstrated significant shipper interest for additional pipeline capacity of propane, ethane and other natural gas liquids for transport to the Marcus Hook Industrial Complex and other destinations points within Pennsylvania When completed, the Mariner East project will (i) provide desperately needed pipeline infrastructure to transport ethane, propane, and other petroleum products from the Marcellus Shale to markets in Pennsylvania and elsewhere; (ii) facilitate the repurposing of the Marcus Hook Industrial Complex as the Northeast hub for distribution to commercial markets; (iii) promote sustained economic development and jobs-creation throughout multiple regions in Pennsylvania; (iv) allow shippers to arrange reliable intrastate transportation of propane during the winter season when demand for this service peaks; and (v) provide an increase in the propane supply available to the market thereby allowing consumers, including Pennsylvania residents, to benefit from lower propane prices. V. LEGAL STANDARDS FOR COMMISSION APPROVAL 25. The Public Utility Code requires prior approval for the commencement of public utility service. Section 1102(a)(1) of the Public Utility Code requires a certificate of public convenience "For any public utility to offer, render, fumish or supply within this Commonwealth service of a different nature or to a different territory." 7 Pursuant to Section 1103 of the Public Utility Code, 66 Pa. C.S. 1103, the Commission may issue a certificate of public convenience 6 Because the expanded capacity proposed by the second phase of the Mariner East project would be providing the same service in the same service area as proposed in this application, SPLP will not be required to seek additional authorization from the Commission to complete that phase ofthe project Pa. C.S. 1102(a)(1). 10

12 if it finds that the certificate "is necessary or proper for the service, accommodation, convenience, or safety of the public." Because SPLP is an existing utility certified by the Commission, SPLP is entitled to a continuing presumption of financial, technical,-and managerial fitness. Rural Tel. Co. Coal. v. Pub. Util. Comm'n, 941 A.2d 751, 761 (Pa. Commw. Ct. 2008); In re Evansburg Water Co., 81 Pa. P.U.C. 152, 173. To the extent deemed necessary by the Commission, SPLP will fumish information to demonstrate financialfitnessupon request. 27. By way of further support, SPLP possesses the necessary technical and managerial fitness to provide the proposed service. SPLP currently owns and operates a network of approximately 2,200 miles of refined product pipelines in the Northeast, Midwest and Southwest United States. As noted above, SPLP has operated intrastate petroleum products pipelines as a PUC-certificated public utility since SPLP's operating history demonstrates that it is sufficientlyfit- both technically and managerially - to provide the proposed service. VI. PUBLIC NECESSITY/INADEQUACY OF EXISTING SERVICES 28. The proposed intrastate service is necessary or proper for the service, accommodation, convenience, or safety of the public because it will provide the public with numerous benefits. a) Public Interest and Necessity Remedying Infrastructural Deficiencies 29. The Commission previously recognized the public benefits of increasing existing natural gas delivery infrastructure. In the Commission's August 29, 2013 Order granting a certificate of public convenience to abandon intrastate petroleum products pipeline service on 66 Pa. C.S. 1103(a). 11

13 certain east-to-west segments of the Mariner East Pipeline ("Abandonment Order"), segments of which are applicable to the present Application, the Commission agreed that the "Mariner East" project provided public benefits because "enhanced delivery options for the abundant supply of natural gas liquids and the moderation of commodity costs due to the injection of a new supply of ethane and propane into existing natural gas markets" provide adequate justification By utilizing the Mariner East pipeline as proposed in this Application, SPLP submits to the Commission that the benefits of Pennsylvania's prolific shale gas wells will be maximized to their fullest and critical propane supplies will more readily be transported across the state and into the markets where they are needed. It should be noted that the maximum available capacity for shipment of propane on the Mariner East Pipelines would be sufficient to fully supply every propane customer in Pennsylvania, including both residential heating and industrial applications. b) Public Interest and Necessity: Keeping Marcus Hook Industrial Complex Open, Operational and Growing 31. Furthermore, the Mariner East 1 Project, in conjunction with the Mariner East 2 project, will have the added significant benefit of facilitating the repurposing ofthe Marcus Hook Industrial Complex ("Marcus Hook Refinery" or "Refinery"), which will sustain economic development and jobs in the region. The 109-year old Marcus Hook Refinery closed operations in December 2011, resulting in 490 layoffs. 10 At roughly the same time, two other refineries in 9 See Abandonment Order, Docket Nos. A and P , p. 7. These Abandonment Orders were sought and granted with the understanding that the energy production revolution in Pennsylvania required a complete rethinking of the direction and nature of service along the existing Mariner East pipelines. As noted before, the line had been an east to west directional line. The paradigm shift in energy production in Pennsylvania rendered the east to west pipeline anachronistic. Hence, there was no longer a need to ship product to the east but^ instead, the opportunity to ship productfromthe production fields in the west to the east. 10 See Stamm, Dan, et al., Pink Slips Expectecl as Sunoco Idles Refinery, NBC 10 Philadelphia, Dec. 2, 2011, 12

14 the region (the Sunoco Philadelphia refinery and the ConocoPhillips refinery in Trainer, Delaware) were being closed." 32. The economic implications of these closures, had they occurred, would have been profound and devastating. The White HousCj-and other elected officials, recognized the negative implications for national security associated with the simultaneous closures of three refineries on the eastern seaboard. 12 As a result, federal, state, and local officials, as well as labor and management representatives and other stakeholders began an intense process of exploring either resale or repurposing of the refineries. Although the market obstacles facing these facilities seemed insurmountable, a year later, two of the three refineries were operational under new ownership. 33. While the Marcus Hook Refinery could not be saved as an oil refinery, it was purchased by an affiliate of Sunoco Logistics Partners L.P. to be repurposed and well-positioned as a regional hub for a petrochemical industry powered by Marcellus Shale natural gas and natural gas liquids being extracted from the western and northern tier of Pennsylvania and other reaches of Appalachia. An IHS Study, commissioned on behalf of the Delaware County Industrial Development Authority, concluded in June 2012 that the Marcus Hook facility could be repurposed into a major industrial complex with the feedstock of natural gas liquids from the western and/or northern parts of the Commonwealth The IHS Study identified seven potential reuse possibilities ranging from a mere terminal with little employment growth, to various natural gas liquids processing facilities which would, by far, create and sustain the most jobs and collateral economic development. Relevant " See Kerkstra, Patrick, Taking Care of Our Own: How Democrats, Republicans, Business, and Labor Saved Thousands of Jobs and Our Refineries, Center on Regional Politics, Temple University (2012). 12 See id. 13 See IHS, Sunoco Marcus Hook Industrial Complex Economic Opportunity Reuse Study (June, 2012). 13

15 to the present Application, the Mariner East 1 and 2 pipelines are critical to the realization of continued economic and jobs growth in the region because these pipelines will transport natural gas liquid components to the Marcus Hook Industrial Complex. Without these pipelines, the numerous benefits associated with repurposing the Marcus Hook Industrial Complex may.never be realized. 35. In addition to providing pipeline transportation of natural gas liquids from west to east from the Marcellus Shale to the Marcus Hook Industrial Complex, the Mariner East project provides the foundation for the further build out, construction and development of energy related processing facilities at the site, including the construction and operation of a natural gasoline splitter. The further build out, construction and development of the Marcus Hook Industrial Complex would result in additional job creation both in connection with the construction of any additional processing facility as well and the on-going operation of these additional facilities. 36. Mariner East will enable the Marcus Hook Industrial Complex to become a world-class hub for natural gas liquids processing unique on the East Coast. 37. Presently there are 125 employees at the Marcus Hook Industrial Complex which is a significant improvement for a site that was expected to have only 50 employees during the ramp down of the refinery assets and no employees once the refinery assets were completely dismantled and the site permanently closed. 38. This represents a significant job growth rate as compared to the mere 0.3% job growth rate in the Philadelphia-Camden-Wilmington Metropolitan Statistical Area in the past year as reported by the Bureau of Labor Statistics See U.S. Dept. of Labor, Bureau of Labor Statistics, Philadelphia Area Employment-February 2014: Local Rate of Employment Growth Below National Average, 14

16 i 39. In addition, there are about approximately 450 union construction contractors currently on site daily and that is expected to continue well beyond the end of 2015 when the Mariner East and other energy-related projects at the facility come on line. 40. Completion of Mariner EastT-and 2 present the opportunity for further direct job growth at the Marcus Hook Industrial Complex and indirect job creation in the region. 41. In short, the Mariner East projects are part and parcel to the above-described rebirth of the Marcus Hook Industrial Complex and the broader region and, for this additional reason, completion of the Mariner East Project is firmly in the public, and national, interest. c) Public Benefit and Necessity: Inadequacy of Existing Services and Public Safety Concerns 42. As noted above, the available aitematives for transporting propane and other natural gas liquids are inadequate. Simply put, local and national pipeline resources have thus far proven insufficient to keep up with growing domestic production of oil and NGLs, especially in the Southeastern Pennsylvania region. 43. Moreover, the public interest is served by transporting NGLs via pipeline both on an absolute basis and on a relative basis as compared to other available modes of transportation. d) Pipelines remain a proven safe way to transport petroleum products. 44. This Commission has recognized that pipeline transportation of petroleum products is safe and, in fact, the safest mode for transportation of petroleum products.' According to the 2013 Annual Pipeline Safety Performance Report & Strategic Plan published by the Association of Oil Pipe Lines (AOPL) and the American Petroleum Institute (API), in 2013 U.S. pipelines transported over 14.1 billion barrels of crude oil, gasoline. 15 See Application of Interstate Energy Company, 46 Pa. P.U.C (1973). In this proceeding, Commission found pipeline transportation to be generally superior and preferable to rail transportation of petr products, concluding that transportation by pipeline is less costly, less environmentally damaging, less hazard life, and less likely to damage property as commonly occurring through rail derailments. Id. 15

17 diesel and jet fuel across our nation, with % of those barrels reaching their destination safely In fact, pipeline transportation of petroleum products has become safer in the last decade with a 62% reduction in pipeline releases from 2001 to The U.S. Department of Transportation's Pipeline Hazardous Materials Safety Administration (PHMSA) just announced that in 2013 pipeline incidents reached an all time low PHMSA reports 45% less serious pipeline incidents, i.e. those resulting in fatalities or major injuries, since The count has declined each year since This Commission has been delegated the authority to enforce all federal safety standards for intrastate NGL transportation and, thus, would have jurisdiction to enforce safety rules for the applicable sections of pipeline subject to this application. 52 Pa. Code 59.33; 42 Pa. B (September 22, 2012). 50. Not only is pipeline transportation of petroleum products safe as an absolute matter, pipeline transportation is the safest mode of transportation compared to the other available modes of transport. 51. According to a Fraser Institute Report issued in October 2013 entitled Intermodal Safety In Transport of Oil, pipeline transportation of oil related products is safer than any other mode of transportation. 16 See AOPL, Annual Liquid Pipeline Safety Performance Report & Strategic Plan (2013), 17 Id. li See PHMSA's Proposed Pipeline Penalties Hit All-Time High; Serious Pipeline Incident Count Hits All- Time Low; PHMSA (April 7,2014), d=9c7c87c 1 a3e2541 OVgn VCM10O0OOd2c97898RCRD&vgnextchanneI=d248724dd7d6cO 10 Vgn VCM e8 a8corcrd&vgnextfmt=print. 16

18 52. The Report compiled data from the U. S. Department of Transportation from between 2005 and The Study states that, "after reviewing available data on the safety of different oiltransport modes, we conclude that the evidence is clear: transporting oil by pipeline is safe and environmentally friendly." 54. The Study further notes that, "pipeline transportation is safer then transportation by road, rail or barge, as measured by incidents, injuries and fatalities." 55. From a worker safety point of view, Fraser found that the injury rate in the United States was 30 times higher for rail workers than pipeline workers. 56. For trucking, the injury rate was 37 times higher for truck workers than pipeline workers. 57. Fraser also found that the rate of mishaps for truck transportation was 20 incidents per billion ton-miles and for rail 2 incidents per billion ton miles compared to pipelines at less than 0.6 per billion ton miles. 58. While pipelines during a mishap tend to release more product per spill than rail, the recovery rate for the product is faster for pipelines. 59. The Study concludes that, "...resistance to pipeline transport is sending oil to market by modes of transport that pose higher risk of spills and personal injuries [than do pipelines]." 60. Accordingly, it is in the public interest to provide for the mode of transportation as requested in this application. >9 See Furchtgott-Roth, Diana and Kenneth P. Green, Studies in Energy Transportation: Intermodal Safety in the Transport of Oil, Fraser Institute (October 2013), httpsy/ 17

19 e) Meeting the Demand for Intrastate Capacity Propane Shortages 61. Perhaps most notably, approval of this Application would help to ensure that the unprecedented domestic shortage of propane suffered by many Pennsylvanians during the winter season could be adequately addressed. Approximately 189,000 Pennsylvania, households use propane for home heating. 20 Below-normal temperatures in the Northeast and Midwest combined with a lack of pipeline capacity to result in supply shortages that could not meet demands. 21 According to the U.S. Energy Information Administration ("EIA"), the national average residential propane price jumped by $1.05 per gallon during the winter of , to $4.01 per gallon, almost $1.72 per gallon higher than the same period last year. 22 EIA notes that this was the largest single weekly increase since the survey began in Some customers dependent on propane-fueled heat sources were left without sufficient supply. 62. This "perfect storm" of events prompted both the federal and state government to undertake drastic measures. Federally, FERC was compelled to take the unprecedented action of invoking its emergency authority under the Interstate Commerce Act by issuing an order directing the TE Products Pipeline Company (TEPPCO) to provide pipeline priority treatment to propane shipments from Texas to the Midwest and Northeast. 24 In so doing, FERC recognized that: [pjrices are continuing to rise [and] some states are providing emergency heating assistance to residents who can no longer afford fuel costs. [I]n the Midwest and Northeast, limited supplies have forced companies to "short-fill" customer tanks. Counties in 20 See Statement of Adam Sieminski, Administrator, Energy Information Administration, U.S. Department of Energy, Before subcommittee on Energy and Power, Committee on Energy and Commerce, U.S. House of Representatives (March 6, 2014) (referencing U.S. Energy Information Administration, Independent Statistics and Analysis, Propane Situation Update (March 5,2014)). 21 See Steve Ferris, Propane Shortage Not a Problem Locally, Herald-Standard (February 18, 2014). 22 See U.S. Energy Information Administration, Northeast Sees Hikes in Heating Oil Demand, Prices (January 29, 2014). 23 Id 24 Enterprise TE Products Pipeline Co., LLC, 146 FERC H 61,076 (Feb. 7, 2014). 18

20 Tennessee and Alabama have been forced to close schools due to lack of propane for heat. Many states have limited or curtailed propane deliveries to municipal and commercial facilities in favor of residential customers; The U.S. Department of Transportation also issued emergency declarations concerning trucking regulations in 35 states (including Pennsylvania) and the District of Columbia, to help facilitate the delivery of propane to commercial and residential customers. Additionally, the Home Heating and Emergency Assistance Through Transportation Act was enacted on March 21, 2014, which extended the Department of Transportation emergency measures through May 31, 2014, in an effort to replenish depleted propane supplies. 64. In Pennsylvania, Governor Corbett took emergency action and temporarily waived certain restrictions on commercial drivers to help ensure uninterrupted deliveries of propane gas and heating fuel in the Commonwealth. That action temporarily waived the normal federal hours of service requirements for drivers of trucks carrying propane and heating oil, and extended the timeframe for driving without a mandatory rest period from 11 hours to 14 hours. The goal of this program, as well as the Federal measures, was to allow for more distant deliveries of propane by allowing out-of-state trucks to purchase propane and ship to the Midwest and Northeast. 65. These drastic and unprecedented state and federal emergency measures can be attributed to, in large part, severely deficient pipeline infrastructure. According to the Department of Homeland Security, there are few additional options (beyond additional pipelines) to increase propane supplies, primarily because "[tjhere are a limited number of transport and 25 Id. 26 See Home Heating Emergency Assistance Through Transportation Act of 2014, H.R (March 21, 2014). 27 See Commonwealth of Pennsylvania Governor's Office, Proclamation of Propane and Heating Oil Emergency (January 9, 2014). 19

21 delivery trucks... and limited railway capacity... transporting propane to and from... bulk storage and distribution terminals." 28 Indeed, the trucking network is already operating well beyond its normal capacity. The remaining option is to increase delivery via pipeline. In the end, there is no question that additional propane infrastructure is critically needed in the Northeast, including Pennsylvania, to resolve these propane market conditions. 66. Fortunately, propane supplies are more than sufficient to meet demand. The rapid growth in U.S. propane supply has allowed the U.S. to become a net propane exporter. More locally, the development of the Marcellus Shale deposits has created an abundant supply of propane. In fact, propane refined from natural gas has been the fastest-growing component of overall U.S. propane production. 30 As stated by a local executive of a propane distribution facility, "[SJupplies are ample, but getting the gas to markets where it's needed is difficult due to limited pipelines." 31 A recent report by the Department of Homeland Security concluded that propane pipeline infrastructure has failed to keep up with supplies, observing that "[IJimited propane pipelines and an increasing reliance on rail and truck transportation have resulted in seasonal propane supply issues." 32 The situation is perhaps best summed up by the Pennsylvania Propane Gas Association statement, concluding that "the propane supply in the United States remains the strongest it has been in recent memory. What Pennsylvania customers are feeling are the results of a strained transportation and infrastructure system that are masquerading as a 28 United States Department of Homeland Security, Integrated Task Force Homeland Infrastructure Threat and Risk Analysis Center, HA Update I: Propane Supply Issues in the United States (January 28, 2014). 29 Id. 20 See Statement of Adam Sieminski, Administrator, Energy Information Administration, U.S. Department of Energy, Before subcommittee on Energy and Power, Committee on Energy and Commerce, U.S. House of Representatives (March 6, 2014). 31 See Steve Ferris, Propane Shortage Not a Problem Locally, Herald-Standard (February 18, 2014). 32 United States Department of Homeland Security, Integrated Task Force Homeland Infrastructure Threat and Risk Analysis Center, IIA Update I: Propane Supply Issues in the United States (January 28, 2014). 20

22 propane shortage." 33 Approval of this Application wiil significantly benefit the public by relieving pressure on propane stocks and allowing a plentiful propane supply to more readily be transported to demanding markets, where increased supply should result in lower propane prices to the consumer. 67. Pennsylvanians will also benefit indirectly by the many ancillary affects of this project. SPLP is providing shippers with an opportunity to keep propane produced in Pennsylvania within Pennsylvania when demand is great. In addition to the direct benefits of more efficient and effective intrastate propane infrastructure, approval of this Application will have the added benefit of job creation in the Commonwealth. 68. In short, the events surrounding last winter demonstrate the overwhelming need for improved pipeline infrastructure in the nation, and in Pennsylvania in particular. By utilizing the Mariner East pipeline as proposed in this Application, SPLP submits to the Commission that the benefits of Pennsylvania's prolific shale gas wells will be maximized to their fullest and critical propane supplies will more readily be transported across the state and into the markets where they are needed. Shipments of propane on the Mariner East Pipeline could potentially fully supply every propane customer in Pennsylvania, including both residential heating and industrial applications. Accordingly, approval of SPLP's request to offer intrastate propane transportation service along the Mariner East Pipeline is in the public interest. 69. As noted above, the available alternatives for transporting propane are inadequate. Simply put, local and national pipeline resources have thus far proven insufficient to keep up with growing domestic production of oil and natural gas liquids. Faced with a lack of pipeline capacity, shippers have turned to rail and trucking resources, which the Commission has " Pennsylvania Propane Gas Association, Statement on Propane Transportation and Infrastructure Issues (January 23,2014). 21

23 previously recognized to be a more costiy and less safe alternative for transporting liquid fuels. 34 By way of further example, Pennsylvania has already experienced two derailments of rail tankers in 2014, both of which were transporting oil and/or petroleum from western sources to eastern markets. 35 Approval of the proposed service would provide a more economic transportation resource for shippers and safer transportation infrastructure for Pennsylvania residents. J) Conclusion 70. Approval of the Application will provide the additional infrastructure necessary to connect propane produced from Pennsylvania shale gas wells to commercial markets, including local markets. As with the interstate transportation of propane, granting SPLP authority to commence intrastate transportation of propane in Washington County will enhance delivery options for the abundant supply of natural gas liquids and prevent transportation bottlenecks that could frustrate future production of natural gas and natural gas liquids in Pennsylvania. In the wake of the propane shortage experienced in 2014, SPLP's proposed service will increase the supply of propane in markets with a demand for these resources, ensuring that Pennsylvania's citizens enjoy access to propane heating fuel and other positive economic impacts of robust natural gas and natural gas liquids production. Additionally, the proposed service would offer a safer and more economic alternative to existing rail and trucking services. Therefore, pursuant to Sections 1102(a)(1) and 1103(a) of the Public Utility Code, approval of this Application is in the public interest. 34 See Application of Interstate Energy Company, 46 Pa. P.U.C (1973). In this proceeding, Commission found pipeline transportation to be generally superior and preferable to rail transportation of petr products, concluding that transportation by pipeline is less costly, less environmentally damaging, less hazard life, and less likely to damage property as commonly occurring through rail derailments. Id. 35 See Reuters, Train Carrying Crude Oil Derails in Pennsylvania, NEW YORK TIMES (Feb. 13, 2014) (reporting oil spills in western Pennsylvania following a derailment of tank cars carrying crude oil and liquefied petroleum gas); see also Tim Logue, Train Derailments Have Delco Reps Scrutinizing Safety, DELAWARE Co. TIMES (Jan. 26, 2014) (reporting a derailment of tankers carrying crude oil to Philadelphia refineries). 22

24 VII. SITING OF THE PIPELINE EXTENSION 71. SPLP performed a preliminary siting analysis to determine the most suitable route for the 51-mile extension from Houston to Delmont. This analysis included consideration of environmental issues, identification of alternative routes, analysis of the alternative routes, and selection of the proposed pipeline route. This process enabled SPLP to select routes for the pipeline extension that appropriately balanced functional requirements, environmental factors, social factors, and cost considerations. Where local landowners objected to granting easements for the siting of the pipeline, SPLP has endeavored to find alternative routes that are economically feasible." 72. In selecting a route for the extension, SPLP sought, among other things, to minimize impacts to the natural and human environment, minimize route length and cost, avoid densely populated areas, maximize distance from residences, schools, cemeteries, historical resources, and recreation areas, and minimize impacts to wetlands and conservation areas. 73. In addition, SPLP has worked with property owners to locate the right-of-way across their land in order to minimize the impact to existing and future land uses. 74. Currently, SPLP has acquired 95 easements from landowners in Washington County. There are currently 27 open tracts in Washington County. VIII. OTHER CERTIFICATED SERVICE PROVIDERS 75. SPLP is unaware of any other company furnishing intrastate pipeline transportation services for petroleum products in Washington County. 76. SPLP is also unaware of any other company that is certificated by the Commission to make intrastate shipments of propane, ethane, and other petroleum products from 23

25 the Marcellus Shale region in western Pennsylvania to storage and industrial facilities in eastern Pennsylvania. IX. RATES FOR PROPOSED SERVICE 77. As noted above, SPLP has filed a petition with the Commission pursuant to Section 703(g) ofthe Public Utility Code, 66 Pa. C.S. 703(g), to amend the Order authorizing abandonment of tariffs for certain petroleum and refined petroleum products (gasoline and distillate) to state that SPLP may provide transportation service for petroleum products and refined petroleum products in the segment of the pipeline where the tariff was abandoned, subject to the filing of appropriate tariffs with the Commission providing terms and conditions and rates for the service to be provided. 78. Consequently, SPLP anticipates that, before a recommended decision is made concerning this Application, a tariff will be on file with the Commission for service between Delmont, Pennsylvania and the Twin Oaks facility in Delaware County. 79. SPLP therefore requests that it be permitted, upon approval of this Application, to file a tariff supplement, on one days' notice, setting forth the rates that will apply to the service that includes the 51-mile extension and origination from Houston, Pennsylvania. X. REQUEST FOR APPROVAL 80. For the foregoing reasons, SPLP requests that the Commission approve this Application and issue a Certificate of Public Convenience extending its service territory for the intrastate shipment of petroleum products and refined petroleum products by pipeline into Washington County, Pennsylvania, all as necessary and proper for the service, accommodation, convenience, or safety of the public. SPLP also requests that the Commission grant any 24

26 additional approvals or certificates necessary to effectuate the relief requested in this Application. 81. Additionally, SPLP requests that the Commission grant any other relief deemed necessary and appropriate to implement the proposed service described in this Application. WHEREFORE, Sunoco Pipeline L.P. requests that the Pennsylvania Public Utility Commission grant this Application and issue a Certificate of Public Convenience and such other approvals, if any, as may be necessary under the Pennsylvania Public Utility Code, to extend its service territory for petroleum products and refined petroleum products transportation service by pipeline as discussed above. Dated: June 6, 2014 Respectfully Submitted, BLANK ROME LLP Christopher A^Lewis (ID #29375) Michael L. Krancer (ID # 39443) Frank L. Tamulonis (ID# ) Melanie S. Carter (ID# ) Blank Rome LLP One Logan Square Philadelphia PA Phone: (215) Counsel for Sunoco Pipeline L.P. LP \ \ o a- % c- "at to 25