Energy Transfer 2015 Annual Report Download - page 60

Table of Contents
The costs of providing pension and other postretirement health care benefits and related funding requirements are subject to changes in pension fund
values, changing demographics and fluctuating actuarial assumptions and may have a material adverse effect on our financial results.
Certain of our subsidiaries provide pension plan and other postretirement healthcare benefits to certain of their employees. The costs of providing pension
and other postretirement health care benefits and related funding requirements are subject to changes in pension and other postretirement fund values,
changing demographics and fluctuating actuarial assumptions that may have a material adverse effect on the Partnership’s future consolidated financial
results. While certain of the costs incurred in providing such pension and other postretirement healthcare benefits are recovered through the rates charged by
the Partnership’s regulated businesses, the Partnership’s subsidiaries may not recover all of the costs and those rates are generally not immediately responsive
to current market conditions or funding requirements. Additionally, if the current cost recovery mechanisms are changed or eliminated, the impact of these
benefits on operating results could significantly increase.
Our contract compression operations depend on particular suppliers and are vulnerable to parts and equipment shortages and price increases, which
could have a negative impact on results of operations.
The principal manufacturers of components for our natural gas compression equipment include Caterpillar, Inc. for engines, Air-X-Changers for coolers and
Ariel Corporation for compressors and frames. Our reliance on these suppliers involves several risks, including price increases and a potential inability to
obtain an adequate supply of required components in a timely manner. We also rely primarily on two vendors, Spitzer Industries Corp. and Standard
Equipment Corp., to package and assemble our compression units. We do not have long-term contracts with these suppliers or packagers, and a partial or
complete loss of certain of these sources could have a negative impact on our results of operations and could damage our customer relationships.
Mergers among Sunoco Logistics’ customers and competitors could result in lower volumes being shipped on its pipelines or products stored in or
distributed through its terminals, or reduced crude oil marketing margins or volumes.
Mergers between existing customers could provide strong economic incentives for the combined entities to utilize their existing systems instead of Sunoco
Logistics’ systems in those markets where the systems compete. As a result, Sunoco Logistics could lose some or all of the volumes and associated revenues
from these customers and could experience difficulty in replacing those lost volumes and revenues, which could materially and adversely affect our results of
operations, financial position, or cash flows.
A portion of Sunoco Logistics’ general and administrative services have been outsourced to third-party service providers. Fraudulent activity or misuse of
proprietary data involving its outsourcing partners could expose us to additional liability.
Sunoco Logistics utilizes both affiliated entities and third parties in the processing of its information and data. Breaches of its security measures or the
accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information, or sensitive or confidential data about Sunoco Logistics or its
customers, including the potential loss or disclosure of such information or data as a result of fraud or other forms of deception, could expose Sunoco
Logistics to a risk of loss, or misuse of this information, result in litigation and potential liability for Sunoco Logistics, lead to reputational damage, increase
our compliance costs, or otherwise harm its business.
A material decrease in demand or distribution of crude oil available for transport through Sunoco Logistics’ pipelines or terminal facilities could
materially and adversely affect our results of operations, financial position, or cash flows.
The volume of crude oil transported through Sunoco Logistics’ crude oil pipelines and terminal facilities depends on the availability of attractively priced
crude oil produced or received in the areas serviced by its assets. A period of sustained crude oil price declines could lead to a decline in drilling activity,
production and import levels in these areas. Similarly, a period of sustained increases in the price of crude oil supplied from any of these areas, as compared to
alternative sources of crude oil available to Sunoco Logistics’ customers, could materially reduce demand for crude oil in these areas. In either case, the
volumes of crude oil transported in Sunoco Logistics’ crude oil pipelines and terminal facilities could decline, and it could likely be difficult to secure
alternative sources of attractively priced crude oil supply in a timely fashion or at all. If Sunoco Logistics is unable to replace any significant volume
declines with additional volumes from other sources, our results of operations, financial position, or cash flows could be materially and adversely affected.
An interruption of supply of crude oil to our facilities could materially and adversely affect our results of operations and revenues.
While we are well positioned to transport and receive crude oil by pipeline, marine transport and trucks, rail transportation also serves as a critical link in the
supply of domestic crude oil production to U.S. refiners, especially for crude oil from regions such as the Bakken that are not sourced near pipelines or
waterways that connect to all of the major U.S. refining centers. Federal regulators have issued a safety advisory warning that Bakken crude oil may be more
volatile than many other North American
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