Sunoco 2013 Annual Report Download - page 55

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New Accounting Pronouncements
For a discussion of any recently issued accounting pronouncements requiring adoption subsequent to December 31, 2013,
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 SXL and Sunoco became consolidated
subsidiaries of ETP. We have various operating and administrative agreements with ETP and its affiilates, including the
agreements described below. ETP and its affiliates perform the administrative functions defined in such agreements on our
behalf. We continue to work with ETP in determining how the acquisition will impact these agreements going forward.
Other Transactions
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 our assets that historically served the refineries and determined that our refined products pipeline and terminal assets
continued to have expected future cash flows that support their carrying values. However, we 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, we reversed $10 million of regulatory obligations
which were no longer expected to be incurred.
Service and Commodity Sales Agreements
Sunoco utilizes our pipeline and terminal assets to supply refined products to its retail marketing network. 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 are 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.
We are party to the following material agreements with our affiliated entities:
• We have a five-year product terminal services agreement with Sunoco under which Sunoco may throughput refined
products through our terminals. The agreement contains no minimum throughput obligations for Sunoco. The
agreement runs through February 2017.
• We have an agreement with PES relating to the Fort Mifflin Terminal Complex. Under this agreement, PES will
deliver a minimum average of 300,000 bpd of crude oil and refined products per contract year at the Fort Mifflin
facility. PES does not have exclusive use of the Fort Mifflin Terminal Complex; however, we are obligated to provide
the necessary tanks, marine docks and pipelines for PES to meet its minimum requirements under the agreement. We
executed a 10-year agreement with PES in September 2012. We had a previous agreement with Sunoco which
included terms similar to those contained in the agreement with PES.
• We have a three-year agreement with Sunoco to provide approximately 2.0 million barrels of storage capacity and
terminalling services to Sunoco at the Eagle Point tank farm which we acquired from Sunoco in 2011. The agreement
expires in June 2014. Sunoco does not have exclusive use of the Eagle Point tank farm.
• In September 2012, Sunoco assigned its lease for the use of our inter-refinery pipelines between the Philadelphia and
Marcus Hook refineries to PES. Under the 20-year lease agreement which expires in February 2022, PES leases the
inter-refinery pipelines for an annual fee which escalates at 1.67 percent each January 1 for the term of the agreement.
The lease agreement also requires PES to reimburse us for any non-routine maintenance expenditures, as defined,
incurred during the term of the agreement. There were no material reimbursements under this agreement during 2011
through 2013.