Sunoco 2008 Annual Report Download - page 29

Pipeline operations of Sunoco Logistics Partners L.P., or the Partnership, the master limited partnership in
which we hold a 43 percent interest, face significant competition from other pipelines for large volume
shipments. These operations also face competition from trucks for incremental and marginal volumes in areas
served by the Partnership’s pipelines. The Partnership’s refined product terminals compete with terminals owned
by integrated petroleum companies, refining and marketing companies, independent terminal companies and
distribution companies with marketing and trading operations.
Our cokemaking business is also highly competitive. Competition mainly impacts our ability to obtain new
contracts supporting development of additional production capacity, both in the United States and internationally.
Competitors include conventional chemical by-product coke oven engineering and construction companies, other
merchant coke producers and competitors that have developed and are attempting to develop heat-recovery
cokemaking technology.
The actions of our competitors, including the impact of foreign imports, could lead to lower prices or
reduced margins for the products we sell, which could have an adverse effect on our business or results of
operations.
We maintain insurance against many, but not all, potential losses or liabilities arising from operating hazards
in amounts that we believe to be prudent. Failure by one or more insurers to honor their coverage
commitments for an insured event could materially and adversely affect our future cash flows, operating
results and financial condition.
Our business is subject to hazards and risks inherent in refining operations, chemical manufacturing and
cokemaking and coal mining operations and the transportation and storage of crude oil, refined products and
chemicals. These risks include explosions, fires, spills, adverse weather, natural disasters, mechanical failures,
security breaches at our facilities, labor disputes and maritime accidents, any of which could result in loss of life
or equipment, business interruptions, environmental pollution, personal injury and damage to our property and
that of others. In addition, certain of our facilities provide or share necessary resources, materials or utilities, rely
on common resources or utilities for their supply, distribution or materials or are located in close proximity to
other of our facilities. As a result, an event, such as the closure of a transportation route, could adversely affect
more than one facility. Our refineries, chemical plants, cokemaking and coal mining facilities, pipelines and
storage facilities also may be potential targets for terrorist attacks.
We maintain insurance against many, but not all, potential losses or liabilities arising from operating
hazards in amounts that we believe to be prudent. Our insurance program includes a number of insurance
carriers, including American International Group, or AIG, and its subsidiaries. Disruptions in the U.S. financial
markets have resulted in the deterioration in the financial condition of many financial institutions, including
insurance companies. In light of this uncertainty and the volatile current market environment, it is possible that
we may not be able to obtain insurance coverage for insured events. Our failure to do so could have a material
adverse effect on our future cash flows, operating results and financial condition.
If we are unable to complete capital projects at their expected costs and/or in a timely manner, or if the market
conditions assumed in our project economics deteriorate, our financial condition, results of operations or cash
flows could be materially and adversely affected.
Delays or cost increases related to capital spending programs involving engineering, procurement and
construction of new facilities (or improvements and repairs to our existing facilities) could adversely affect our
ability to achieve forecasted internal rates of return and operating results. Delays in making required changes or
upgrades to our facilities could subject us to fines or penalties as well as affect our ability to supply certain
products we make. Such delays or cost increases may arise as a result of unpredictable factors in the marketplace,
many of which are beyond our control, including:
• denial or delay in issuing regulatory approvals and/or permits;
• unplanned increases in the cost of construction materials or labor;
21