Best Laid Plans - What's Ahead for Energy Transfer's Mariner East Pipes and Marcus Hook Terminal?

Energy markets are constantly changing, but pipelines can take years to complete, and once they’re in the ground, that’s where they stay. Therefore, it’s critical for midstream companies to build as much flexibility as possible into their plans for new pipelines and other infrastructure, because you never know what the markets for crude oil, natural gas, NGLs and refined products might have in store. Energy Transfer apparently has that flexibility in mind as it’s been building out its Mariner East pipeline system across Pennsylvania to the Marcus Hook Industrial Complex (MHIC) near Philadelphia. Today, we consider recent developments regarding these key midstream assets in the Northeast and their still-evolving uses.

As we said in Between Mont Belvieu and the Deep Blue Sea and One of a Kind, the combination of Energy Transfer’s Mariner East system and MHIC helps to balance the Northeast’s LPG and ethane markets. It gives shippers the option of piping large volumes of NGL products from Marcellus/Utica production areas and fractionators in western Pennsylvania, eastern Ohio and northern West Virginia to Marcus Hook, where they can be loaded onto special LPG and ethane carriers and sent to faraway international markets, or distributed to help meet local demand. The 70-Mb/d Mariner East 1 (ME1; blue line in Figure 1), a mostly 8-inch-diameter pipe that has been in service since 2014 for propane and 2016 for ethane, runs from Houston, PA, to Marcus Hook. Mariner East 2 (ME2; yellow line) runs from Scio, OH, to Houston (PA), and from there to Marcus Hook; ME2 came online in late December 2018. While ME2’s design capacity is 275 Mb/d, the need to temporarily employ a smaller, existing 12-inch-diameter pipe along a short section of the 20-inch-diameter pipeline as a workaround has limited its current capacity — we figure that ME2 is moving about 160 Mb/d. (More on this in a moment.) The pipeline’s full, 275-Mb/d capacity is expected to be available sometime next year. Energy Transfer also is in the final stages of building Mariner East 2X, (ME2X; dashed green line) another Scio-to-Houston-to-MHIC pipeline (this one 16 inches in diameter) that is scheduled to enter service in the fourth quarter of 2019. (Again, more on ME2X in a sec.)