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Calgary-based Enbridge raises bets on U.S. Gulf Coast LNG, reports higher Q4 earnings

Enbridge logos are on display at the company's annual meeting in Calgary, Thursday, May 12, 2016.
Enbridge logos are on display at the company's annual meeting in Calgary, Thursday, May 12, 2016. THE CANADIAN PRESS/Jeff McIntosh

Calgary-based Enbridge Inc. is raising its bets on the growing liquefied natural gas export sector on the U.S. Gulf Coast by buying the pipeline that would supply the proposed Rio Grande LNG export facility.

Enbridge says it has agreed to pay US$15 million to NextDecade Corp. to buy the pipeline project, with an additional amount not to exceed US$10 million paid if NextDecade decides to go ahead with the LNG terminal in the Port of Brownsville, Texas.

Enbridge Line 3 replacement pipeline delayed
Enbridge Line 3 replacement pipeline delayed

Enbridge would be responsible for building and operating the US$1.2-billion pipeline, which has regulatory approval and capacity of up to 4.5 billion cubic feet per day of gas.

On a conference call to discuss fourth-quarter results on Friday, CEO Al Monaco said the U.S. Gulf Coast is a key growth region for Enbridge because of its heavy oil refineries and its role as an export hub for light oil and natural gas.

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Evacuees return home after pipeline explosion near Prince George, B.C.
Evacuees return home after pipeline explosion near Prince George, B.C.

“We think the Gulf will be the epicentre of how North America will prosecute its global energy advantage, which is hinged on ultra-low-cost supply feeding growing global energy demand,” he said.

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The company has also struck a deal to supply the Annova LNG facility in Port of Brownsville if it goes ahead, through a US$500-million expansion of its Valley Crossing pipeline system.

Enbridge charging an expansion surcharge for all new customers along new Kawartha Lakes line
Enbridge charging an expansion surcharge for all new customers along new Kawartha Lakes line

Enbridge is working with a partner to develop a deep-water offshore crude oil export terminal capable of loading Very Large Crude Carriers (VLCCs) on the Gulf Coast and has announced an oil storage terminal at Houston with ultimate capacity of up to 15 million barrels.

READ MORE: Calgary-based Enbridge to raise dividend by nearly 10 per cent

The company’s Mainline system, which delivers more than 60 per cent of Canada’s oil exports into the United States, had record volumes of more than 2.7 million barrels per day in the fourth quarter and full year of 2019, Enbridge reported Friday.

READ MORE: Enbridge says oil producer complaints won’t alter Mainline pipeline open season plan

It said it succeeded in adding 100,000 bpd in capacity with efficiency and minor expansions by year-end and will move ahead with a plan to add another 50,000 bpd in the same way this year.

A 50,000 bpd expansion of its Express Pipeline this year will mean about 200,000 bpd in new Mainline export capacity for western Canadian producers, it added.

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Enbridge reported putting $7-billion worth of projects into service in the fourth quarter, including the $1.1-billion German Hohe See offshore wind project, the Gray Oak pipeline in Texas, and the Canadian segment of the Line 3 replacement project.

Monaco wouldn’t speculate on whether Enbridge will be able to go back to construction on the U.S. portion of Line 3 this summer after winning a key Minnesota Public Utilities Commission decision earlier this month. He said its unclear when certain remaining needed permits will be granted.

READ MORE: Enbridge declines to estimate Line 3 pipeline startup despite positive state ruling

Enbridge reported adjusted earnings of $1.23 billion for the quarter ending Dec. 31, compared with $1.17 billion for the same quarter last year.

READ MORE: No significant impacts on Lake Superior found from Line 3 pipeline: review

For the full year, the company says it had adjusted earnings of $5.34 billion, or $2.65 per share, compared with $4.57 billion or $2.65 per share for 2018.

Analysts had expected full year adjusted earnings of $5.39 billion or $2.67 per share.

Enbridge shares fell by as much as $1.10 or about two per cent to $54.65 in early trading on the Toronto Stock Exchange on Friday morning before recovering midday to $55.62, down 13 cents.

READ MORE: Enbridge says Mainline contracting delayed, not dead, after regulator ruling

Concern for B.C. community impacted by pipeline blast
Concern for B.C. community impacted by pipeline blast