Energy Transfer 2015 Annual Report Download - page 45

Table of Contents
We are exposed to the credit risk of our customers and derivative counterparties, and an increase in the nonpayment and nonperformance by our
customers or derivative counterparties could reduce our ability to make distributions to our Unitholders.
The risks of nonpayment and nonperformance by our customers are a major concern in our business. Participants in the energy industry have been subjected
to heightened scrutiny from the financial markets in light of past collapses and failures of other energy companies. We are subject to risks of loss resulting
from nonpayment or nonperformance by our customers. The current commodity price volatility and the tightening of credit in the financial markets may
make it more difficult for customers to obtain financing and, depending on the degree to which this occurs, there may be a material increase in the
nonpayment and nonperformance by our customers. To the extent one or more of our customers is in financial distress or commences bankruptcy
proceedings, contracts with these customers may be subject to renegotiation or rejection under applicable provisions of the United States Bankruptcy Code.
In addition, our risk management activities are subject to the risks that a counterparty may not perform its obligation under the applicable derivative
instrument, the terms of the derivative instruments are imperfect, and our risk management policies and procedures are not properly followed. Any material
nonpayment or nonperformance by our customers or our derivative counterparties could reduce our ability to make distributions to our Unitholders. Any
substantial increase in the nonpayment and nonperformance by our customers could have a material effect on our results of operations and operating cash
flows.
Income from our midstream, transportation, terminalling and storage operations is exposed to risks due to fluctuations in the demand for and price of
natural gas, NGLs and oil that are beyond our control.
The prices for natural gas, NGLs and oil (including refined petroleum products) reflect market demand that fluctuates with changes in global and U.S.
economic conditions and other factors, including:
• the level of domestic natural gas, NGL, and oil production;
• the level of natural gas, NGL, and oil imports and exports, including liquefied natural gas;
• actions taken by natural gas and oil producing nations;
• instability or other events affecting natural gas and oil producing nations;
• the impact of weather and other events of nature on the demand for natural gas, NGLs and oil;
• the availability of storage, terminal and transportation systems, and refining, processing and treating facilities;
• the price, availability and marketing of competitive fuels;
• the demand for electricity;
• the cost of capital needed to maintain or increase production levels and to construct and expand facilities
• the impact of energy conservation and fuel efficiency efforts; and
• the extent of governmental regulation, taxation, fees and duties.
In the past, the prices of natural gas, NGLs and oil have been extremely volatile, and we expect this volatility to continue.
Any loss of business from existing customers or our inability to attract new customers due to a decline in demand for natural gas, NGLs, or oil could have a
material adverse effect on our revenues and results of operations. In addition, significant price fluctuations for natural gas, NGL and oil commodities could
materially affect our profitability.
We are affected by competition from other midstream, transportation, terminalling and storage and retail marketing companies.
We experience competition in all of our business segments. With respect to our midstream operations, we compete for both natural gas supplies and
customers for our services. Our competitors include major integrated oil companies, interstate and intrastate pipelines and companies that gather, compress,
treat, process, transport, store and market natural gas.
Our natural gas and NGL transportation pipelines and storage facilities compete with other interstate and intrastate pipeline companies and storage providers
in the transportation and storage of natural gas and NGLs. The principal elements of competition among pipelines are rates, terms of service, access to sources
of supply and the flexibility and reliability of service. Natural gas and NGLs also competes with other forms of energy, including electricity, coal, fuel oils
and renewable or alternative energy. Competition among fuels and energy supplies is primarily based on price; however, non-price factors, including
governmental regulation, environmental impacts, efficiency, ease of use and handling, and the availability of subsidies and tax benefits also affects
competitive outcomes.
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