Fourth trimester | Enbridge would benefit from delayed Trans Mountain expansion project

(Calgary) Enbridge could benefit from increased volumes on its Mainline pipeline system if the start of the Trans Mountain pipeline expansion is significantly delayed, the Calgary energy infrastructure company said Friday.

Like the rest of the Canadian energy sector, Enbridge is closely following the latest developments on the Trans Mountain project, which would represent new oil transportation competition for Enbridge and its mainline. The high-profile pipeline expansion would increase Trans Mountain’s capacity from 590,000 barrels per day to a total of 890,000 barrels per day, but the project has been marred by delays and increased construction costs.

More recently, Trans Mountain Corp. announced that it is facing new construction challenges in British Columbia that will delay the planned first-quarter start of the pipeline until the second quarter of this year.

Colin Gruending, president of Enbridge’s liquid pipeline business, said Friday the company expects Trans Mountain’s in-service date to be June 1er april. He said if that date were pushed back, Enbridge would likely see a slight increase in shipping volumes.

“To the extent that the (Trans Mountain) project is delayed, that’s a slight tailwind,” Gruending said during a conference call to discuss Enbridge’s fourth-quarter results.

“We think we’re going to be almost at capacity anyway, so a slight delay won’t give us a massive increase. But there are advantages to this,” he added.

Enbridge’s Mainline System is the largest oil pipeline system in Canada, providing approximately 70% of total oil pipeline transportation capacity from Western Canada. Transportation demand on the mainline — which transports oil to markets in eastern Canada and the U.S. Midwest — has exceeded capacity in recent years. However, the system has long been expected to lose barrels to Trans Mountain once the expansion project comes online.

Oil production increases

But Mr. Gruending said the situation has changed because of Trans Mountain delays. The pipeline project was originally scheduled to be completed in 2022, and construction delays have given Canadian oil producers more time to increase production in anticipation of additional export capacity.

“I think the idea that the Mainline is going to lose a lot of volume when (Trans Mountain) comes into service is a bit of an obsolete concept,” said Gruending. (…) During this period of delay of several years, the supply increased structurally and permanently. (…) This request is there. She is basically insatiable. »

Statistics Canada data shows Alberta’s oil production hit a new record of 3.82 million barrels per day in 2023. In December alone, Alberta produced 4.19 million barrels per day , an increase of 10% from one year to the next.

A report released in October by Deloitte Canada indicates that Canadian oil production is expected to grow by about 375,000 barrels per day over the next two years, more than the total amount added to Canada’s production levels over the past five years. combined.

Enbridge expects its Mainline system to operate essentially at maximum capacity for most of 2024, an average of three million barrels per day.

In December, Enbridge filed an application with the Canada Energy Regulator for approval of its new Mainline rights agreement. These fees are the fees that oil companies pay to ship their products on a pipeline and allow pipeline operators to generate revenue.

Enbridge has been negotiating a new pricing framework with its customers in the oil sector for a year and a half. Once finalized and approved by the regulator, the new toll agreement will be in force until 2028.

A profit of 1.73 billion

Enbridge reported a profit of $1.73 billion in the fourth quarter, compared with a loss a year earlier when it took a large non-cash impairment charge.

The Calgary-based oil and gas company says earnings were 81 cents per share for the quarter ended Dec. 31.

In the year-ago quarter, Enbridge posted a loss of $1.07 billion, or 53 cents per share, when the company took a $2.5 billion charge related to its gas transportation business.

On an adjusted basis, Enbridge says it earned 64 cents per share in its latest quarter, compared to adjusted earnings of 63 cents per share a year earlier.

The company announced last month that it was reducing its workforce by 650 positions due to what it called “increasingly challenging business conditions.”

Enbridge CEO Greg Ebel said that while geopolitical instability, persistent inflation and rising interest rates have impacted the North American energy sector, the company has met its financial goals for the 18e consecutive year.


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