Leader in Oil Spills Buys Dakota Pipeline's Energy Transfer Co.

Sunoco Logistics Partners L.P. is set to buy its competitor Energy Transfer Partners — under fire over the construction of the Dakota Access oil pipeline — for about US$20 billion, AP reported Monday. Shares for both companies fell in the afternoon by 8-9 percent.

Sunoco Logistics has been found to spill crude more often than any company, with more than 200 leaks since 2010, according to a Reuters analysis of government data.

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The lands of the Standing Rock Sioux Tribe sit a half mile south of the proposed route of the Dakota Access pipeline. The tribe fears the line could destroy sacred sites during construction and that a future oil spill might pollute its drinking water.

A tribal protest over the US$3.7 billion project drew broad support from other Native American nations, domestic and international environmental groups and Hollywood celebrities.

In response to the tribe's objections, the U.S. government earlier this month called for a temporary halt to construction along a section of the 1,100-mile line in North Dakota near the Missouri River.

Sunoco Logistics is one of the largest pipeline operators in the United States. Energy Transfer is constructing the Dakota Access pipeline to pump crude produced at North Dakota's Bakken shale fields to the U.S. Gulf Coast. Once completed, it will hand over the pipeline's operation to Sunoco.

Sunoco acknowledged the data and told Reuters it had taken measures to reduce its spill rate.

"Since the current leadership team took over in 2012, Sunoco Pipeline has enhanced and improved our integrity management program," spokesperson Jeffrey Shields told Reuters via email. This significantly cut the amount of barrels lost during incidents, he said.

Reuters analyzed data that companies are obliged to disclose to the Pipeline and Hazardous Materials Safety Administration when they suffer spills and found that Sunoco leaked crude from onshore pipelines at least 203 times over the last six years.

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PHMSA data became more detailed in 2010. In its examination, Reuters tallied leaks in the past six years along dedicated onshore crude oil lines and excluded systems that carry natural gas and refined products. The Sunoco data include two of its pipeline units, the West Texas Gulf and Mid-Valley Pipeline.

That made it the operator with the highest number of crude leak incidents, ahead of at least 190 recorded by Enterprise Products Partners and 167 by Plains All American Pipeline, according to the spill data reported to PHMSA, which is part of the U.S. Department of Transportation.

Sunoco and Enterprise both said most leaks take place within company facilities and are therefore contained, while Plains All American did not respond to a request for comment.

The main option that was considered for routing the line away from the Standing Rock Sioux Tribe reservation was previously discarded because it would involve crossing more water-sensitive areas north of the capital Bismarck, according to the project's environmental assessment.

Sunoco and its units leaked a total of 3,406 net barrels of crude in all the leaks over the last six years, with Sunoco saying it found that crude lines not in constant use were a significant source of leaks.

However, In September, Sunoco received a corrective measure for its newly constructed Permian Express II line in Texas, which leaked 800 barrels of oil earlier this month. The company is already contesting a proposed $1.3 million fine from regulators for violations related to welding on that line.

While total pipeline incidents have increased by 31 percent in the last five years, large spills of 500 barrels or more are down by 32 percent over the same time, the report said.

Sunoco accounted for about 8 percent of the more than 2,600 reported liquids pipeline leaks in the past six years in the United States.

The company has made previous efforts to improve safety, a former Sunoco employee who declined to be identified said. It overhauled safety culture after a spill in 2000, and did so again after another in 2005 that dumped some 6,000 barrels of crude into the Kentucky River from its Mid-Valley Pipeline. Sunoco acknowledged that some of its pipeline equipment dates back to the 1950s.

A 2014 corrective measure regulator issued for Sunoco's Mid-Valley Pipeline cited "some history of internal corrosion failures" as a potential factor in a leak that sent crude into a Louisiana bayou near an area used for drinking water.

Crude spills on Sunoco's lines in 2009 and 2011 drew a rebuke from the U.S. Environmental Protection Agency in a settlement announced this year. The EPA said the settlement aimed to "improve the safety of Sunoco's practices and to enhance its oil spill preparedness and response."