Mariner East 2's up and running, and here's why that's great news for natural gas producers

Paul J. Gough
Pittsburgh Business Times

Pennsylvania's natural gas industry got an end-of-the-year present with news that the Mariner East 2 pipeline has become operational.

The 350-mile pipeline from Washington County to the Marcus Hook complex near Philadelphia officially went into operation Saturday. The pipeline and its predecessor, Mariner East 1, carries ethane, propane and butane from the natural gas fields of the Marcellus and Utica shale to Marcus Hook for distribution nationally and internationally.

"Mariner East 2 is a pretty big deal for both wet-gas producers and midstream players in the Northeast," said Justin Shiver, research analyst at Denver-based East Daley Capital Advisors.

Natural gas liquids — the ethane, propane and butane that is a byproduct of production of some of the natural gas made in the Marcellus and Utica shales — depend on rail and increasingly pipeline to get out of the local markets and a higher price.

Shiver said the Mariner East 2 will allow Appalachian NGLs to go to premium foreign markets and will bring in higher revenue for companies like Range Resources Corp. (NYSE: RRC), Antero Resources (NYSE: AR), and Southwestern Energy (NYSE: SWN).

"With higher prices being received for their NGL volumes, it is likely that producers will focus more heavily on their wet-gas acreage, which results in an increase in volumes being processed by midstream companies in the Northeast," said Shiver.

It's been a long road for the Mariner East 2, which was delayed in 2018 due to separate enforcement action by the Pennsylvania Department of Environmental Protection and the Public Utility Commission. Sunoco Logistics, which is a subsidiary of Energy Transfer Partners (NYSE: ETP), was fined in August for alleged violations related to the construction of Mariner East 2. The PUC placed and later removed restrictions on the construction of the Mariner East 2.

David Spigelmyer, president of the Marcellus Shale Coalition, praised the opening of the Mariner East 2.

“This is a welcome, positive step forward in the critical expansion and modernization of Pennsylvania’s natural gas infrastructure network. These projects, which are built predominantly by our building trades and local laborers, are key to connecting more consumers and manufacturers throughout the Commonwealth to the benefits made possible by our abundant and affordable natural gas supplies," Spigelmyer said.