Sunoco 2012 Annual Report Download - page 63

In summary, total future costs for environmental remediation activities will depend upon, among other
things, the identification of any additional sites, the determination of the extent of the contamination at each site,
the timing and nature of required remedial actions, the technology available and needed to meet the various
existing legal requirements, the nature and terms of cost sharing arrangements with other potentially responsible
parties and the nature and extent of future environmental laws, inflation rates and the determination of our
liability at the sites, if any, in light of the number, participation level and financial viability of other parties.
New Accounting Pronouncements
For a discussion of recently issued accounting pronouncements requiring adoption subsequent to
December 31, 2012, see Note 2 to the consolidated financial statements included in Item 8. “Financial Statements
and Supplementary Data.”
Agreements with Related Parties
Acquisition of Sunoco
The general and limited partner interests that were previously owned by Sunoco were contributed to ETP in
connection with the acquisition of Sunoco by ETP. As a result of these transactions, both the Partnership and
Sunoco became consolidated subsidiaries of ETP. The Partnership has various operating and administrative
agreements with Sunoco, including the agreements described below. Sunoco continues to perform the
administrative functions defined in such agreements on the Partnership’s behalf. The Partnership continues to
work with ETP in determining how the acquisition will impact these agreements going forward.
In March 2011, Sunoco completed the sale of its Toledo, Ohio refinery to affiliates of PBF Holding
Company LLC (“PBF”). Certain agreements with Sunoco to supply or purchase crude oil and provide pipeline
and terminalling services to support the Toledo refinery were assigned to PBF or its agents in connection with the
sale. In September 2011, Sunoco announced its intention to exit its refining business in the northeast and initiated
a process to sell its refineries located in Philadelphia and Marcus Hook, Pennsylvania. In December 2011, the
main processing units at the Marcus Hook refinery were idled indefinitely. Management assessed the impact that
Sunoco’s decision to exit its refining business in the northeast would have on the Partnership’s assets that
historically served the refineries and determined that the Partnership’s refined products pipeline and terminal
assets continued to have expected future cash flows that support their carrying values. However, the Partnership
recognized a $42 million charge in the fourth quarter 2011 for crude oil terminal assets which would have been
negatively impacted if the Philadelphia refinery was permanently idled. The charge included a $31 million non-
cash impairment for asset write-downs at the Fort Mifflin Terminal Complex and $11 million for regulatory
obligations which would have been incurred if these assets were permanently idled. In September 2012, Sunoco
completed the formation of PES, a joint venture with The Carlyle Group, which enabled the Philadelphia refinery
to continue operating. During the second quarter 2012, the Partnership reversed $10 million of regulatory
obligations which were no longer expected to be incurred.
Sunoco utilizes the Partnership’s pipeline and terminal assets to supply refined products to Sunoco’s retail
marketing network as described below under the caption “Pipeline and Terminalling Services.” Some of these
services are provided to Sunoco and its affiliates (including PES) pursuant to agreements with terms that expire
at various times as described below, and some of these services are provided to Sunoco and its affiliates
(including PES) pursuant to agreements that are short term in nature or subject to termination by either party.
Management expects that Sunoco will continue to utilize these services for the foreseeable future. However, if
Sunoco reduces its use of the Partnership’s facilities, it could adversely affect the Partnership’s results of
operations, financial condition or cash flows.
We are party to various agreements with Sunoco and its affiliated entities, as discussed below.
61