DAPL Owners Sunoco and Energy Transfer Partners Announce Merger: What this Means for the Dakota Acce
Though the Army has called for a halt to the construction of DAPL underneath Lake Oahe in North Dakota, current owner Energy Transfer Partners still proposes moving forward with construction. With DeFund DAPL, the Rust Belt Tribune continues this series o to look at DAPL and the larger banks and fossil fuel companies that finance the destruction of Earth.
On November 21, 2016, it was announced that Sunoco Logistics Partners, L.P. (SXP) will acquire Energy Transfer Partners (ETP) in a join merger. ETP now owns SXP’s general partner which manages the company.
ETP, SXL, and Philips 66 currently own the Dakota Access Pipeline (DAPL). Once the merger is complete, Sunoco will own 75% and oversee its operations. This is dangerous because Sunoco has one of the worst pipeline safety records in America. The increase in ownership will give Sunoco not only ownership over DAPL but everything that ETP owns.
This includes over 70,000 miles of pipeline stretching across the country. DAPL is just one of many. Another oil catastrophe is probable based on Sunoco's history. Where the catastrophe and how many more will occur in the future is still unknown. As are the disastrous consequences.
In our next volume, we will discuss the dangers of transporting fossil fuels in more depth. Now we look at Sunoco just as we did with ETP in Volume 1.
The Current Ownership Structure of Sunoco and Energy Transfer Partners
Currently, there are two master limited partnerships in the Sunoco Family. Both are master limited partnerships whose units are sold on the New York Stock Exchange (NYSE) like shares of a corporate stock.
ETP owns both of the Sunoco Partnerships as can be seen in the figure below (reproduced from Volume 2 ):
The limited partners (Sunoco, L.P. and SXL) include all the unitholders who have purchased units in the company. These units are like shares of stocks to a corporation. By purchasing them, an individual or business gains partial ownership of the firm. This serves to also help finance the company.
General partners (Sunoco G.P., LLC and Sunoco Partners, LLC) can also purchase units, but their main responsibility is to manage, oversee, and assume legal responsibility for the limited partner’s operations. If the business fails, the general partners must pay all debts and losses.
The Operations of Sunoco, LP.
Sunoco, L.P. (SUN) operates Sunoco’s retail segments and wholesale fuel distribution.
We [Sunoco] distribute Sunoco-branded motor fuel to 6,800 convenience stores, independent dealers, commercial customers and distributors -- including approximately 1,340 C-stores and retail fuel sites operated by SUN. Our operations span 30 states mainly east of the Mississippi River, from Maine to Florida and west to Wisconsin and New Mexico."
In addition, SUN manufactures and markets racings fuels while supplying the “official fuel of NASCAR.”
The retail segment includes a includes Sunoco convenience stores and gas stations as well a number of other retailers that SUN owns. These include:
Stripes: A series of around 725 convenience stores in Texas, New Mexico, and Oklahoma
Taco Laredo Company: The proprietor of Stripes which operates restaurants in around 440 Stripes locations and select Sunoco stores
APlus: A series of around 440 convenience stores in the East and Southeast
Macs: Operates a series of retail stores in Georgia, Virginia, Tennessee, Washington D.C., and Maryland
Tigermarket: Operates a series of retail stores in Georgia, Virginia, Tennessee, Washington D.C., and Maryland
Aloha Petroleum, LTD.: Operate around 50 Aloha Island Mart convenience stores
The Operations of Sunoco Logistics Partners, L.P.
In order to sell fuel wholesale or supply it to its retail stores, Sunoco provides the pipelines, trucks, and trains which ship Sunoco fuel to its destination. In addition, they operate in the crude oil and natural gas liquids (NGLs) markets as well by transporting, buying, storing, and marketing these fuels.
SXL has published several maps which trace their pipelines, terminals, refineries, fractionators, and other assets. Each map focuses on one of their three primary segments: crude oil, NGLs, and refined products. In two of these, ETP’s current assets are shown..
What Happens After the Merger?
Once this merger is complete, all ETP units will be converted into SXL units. ETP will cease to exist. All of its assets including its interest in DAPL will become the property of SXL. Thus, until Marathon and Enbridge finalize their partial purchase of Bakken Holdings, SXL will retain a 75% ownership stake in DAPL and ETCOP.
Nothing has been released yet about SXL’s general partner. It is possible that it will disappear with ETP. Without having a limited partner to oversee and manage, it cannot act as a general partner. Assuming that this is what occurs, the new Energy Transfer and Sunoco family of partnerships will look like this:
Conclusion
Giving SXL oversight over such a large number of companies, pipelines, terminals, and other assets is foolish and dangerous. Sunoco’s safety record is already poor with hundreds of pipeline incidents including leaks within the last ten years. The company has proven itself unable to safely transport fuel and is now being trusted with an even larger arsenal of pipelines and companies to oversee and manage.
To understand the scope of this problem, we will investigate the dangers of Sunoco more deeply in the next #NoDAPL volume.
This is Volume 3 of a continuing series on the Dakota Access Pipeline. Volumes 1 and 2 discussed the current organizational structure of DAPL’s owners and the tax benefits they receive. This volume takes a look at the recent merger announced between two of those companies.
(Article by Alexander Fred)