Sunoco fights connection to pipeline firm

The Mariner East pipeline. (Photo from sunocologistics.com)
The Mariner East pipeline. (Photo from sunocologistics.com)
Posted: July 07, 2014

Sunoco's good corporate name is taking a beating these days, as community activists and bloggers post snarky statements under headlines like "Sleazy Sunoco," linking the company to fracking and eminent domain.

The trouble for Sunoco Inc., the Philadelphia company with nearly 4,900 retail fuel stations and convenience stores in 23 states, is that it has nothing to do with the cross-state pipeline project that has attracted fierce local opposition and has become embroiled in a contentious matter before the Pennsylvania Public Utility Commission.

The project, called Mariner East, will carry natural gas liquids such as propane across Pennsylvania from the Marcellus Shale region. It's the work of Sunoco's corporate offspring, Sunoco Logistics Partners L.P.

But in the hands of careless journalists and picket-sign painters, the companies all just become "Sunoco."

According to brand consultants and public-image experts, Sunoco the fuel retailer faces a big challenge disassociating itself from the actions of its corporate doppelgänger.

"At the core, a brand is very often a company's most valuable asset," said Rick Jacobs, principal of the corporate-branding consultancy Monigle Associates in Denver. "It is rarely a good idea to let one of your most valuable assets be in the hands of others where you don't control what's going on there."

The identity issue has been raised by residents in West Goshen Township, Chester County, where Sunoco Logistics has proposed building a pumping station on an 83-year-old pipeline it is repurposing as Mariner East for Marcellus products.

Sunoco Pipeline, a Sunoco Logistics subsidiary, has asked the PUC to declare it a public utility to bypass local zoning restrictions. The move is opposed by several municipalities and environmental groups, as well as the Pennsylvania State Association of Township Supervisors.

"Sunoco, Sunoco Logistics, Sunoco Pipeline?" said Tom Casey, a leader of the community opposition. "There's a lot of confusion about who's doing this. Who are these people?"

Casey had heard company officials explain that Sunoco Inc. and Sunoco Logistics are two separate companies, with different missions. Then a public-affairs officer handed him a business card that identified him as a Sunoco Logistics employee. The other side of the card identified him with Sunoco Inc.

"He has the same job with both companies at two different addresses," Casey said. "That's confusing."

Nevertheless, Casey said, the community organizations rallying opposition against Sunoco Pipeline dismissed a strategy of deliberately attacking the retail fuel dealer.

"That would kind of turn you into more of a radical group," he said. But Casey added that he no longer shopped at Sunoco.

If this bothers Sunoco, its spokesman, Jeff Shields, is not letting on too much.

Nor is the spokesman for Sunoco Logistics, the selfsame Jeff Shields, who said in an e-mail that the pipeline company "is proud of its roots with a company and a name that has represented good corporate citizenship and American prosperity for more than a century."

Despite sharing some personnel, Sunoco Inc. and Sunoco Logistics do, indeed, have divergent missions that are growing increasingly out of alignment as they go their separate ways.

Past and present

Historically, Sunoco Logistics was a support unit providing pipelines and storage of crude oil and refined products for the integrated oil company known as Sun Oil.

Sun Oil, which later became Sunoco Inc., has sold off its far-flung empire of refineries, oil wells, and chemical plants over the years and now is principally a retail marketer of motor fuel and convenience-store merchandise.

Sunoco Logistics, which was spun off as a separate company, is still contractually obligated to support Sunoco's retail operations. But its new ventures, such as the Mariner East project, are unrelated to its former parent company.

Both are now units of Energy Transfer Partners L.P., a Dallas company that bought Sunoco Inc. in 2012 and acquired the controlling interest in Sunoco Logistics. That included about a third of the pipeline company's limited-partner units that are separately traded on the New York Stock Exchange under the ticker symbol SXL, the name by which Sunoco Logistics is known in the industry.

Sunoco Logistics could rename itself something else - say, SXL - to provide some cover for Sunoco. But image experts say crusader activists would see right through such a strategy.

"That would backfire on the company double time, because now the public's suspicion of evil would be confirmed by the company's efforts at deception," said Rob Frankel, a Los Angeles branding expert.

Sunoco Logistics also might not be eager to jettison its well-known family name for anonymity.

'Great lift'

"The Sunoco brand probably provides great lift, opens many doors, for Sunoco Logistics," said Jacobs, of Monigle Associates. "It gives them instant credibility."

And for all the ill will that Sunoco Logistics has created along the 299-mile pipeline route - it faces several landowner lawsuits - its offenses do not rise to the level of corporate disasters like BP's Deepwater Horizon accident, which prompted customers to shun BP's retail stations.

Sunoco Inc. already has a long history of oil extraction, and so an association with a pipeline transporting hydraulically fractured Marcellus Shale gas liquids is not an image-altering event, said Oscar Yuan, a partner at New York brand consultant Millward Brown Vermeer.

"It's not like customers are buying something from Whole Foods," he said, "and suddenly they find out Whole Foods is fracking."


amaykuth@phillynews.com

215-854-2947 @maykuth

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