Enbridge to invest in Montney pipeline capacity
Friday, May 19, 2017
Enbridge is investing C$1 billion (US$735 million) in the expansion of its natural gas pipeline system in British Columbia. The move comes in response to increased demand for takeaway capacity resulting from production growth in the Montney play.

The expansion is slated to add 190 mmcf (5.4 mcm) per day of capacity to the T-South system by 2020, the company announced last week while releasing its financial results for the first quarter of 2017. It will involve the looping of the T-South line and upgrades to compressor stations along the route. Enbridge launched a binding open season for capacity on the expanded system on April 25.

Gas from BC and Alberta will be delivered into the Huntington and Sumas area at the Canada-US border for distribution further south.

“Through our early open-season process on our Western Canadian system, we are expecting strong demand for the expansion of our T-South gas pipeline, given the attractive fundamentals supporting natural gas production growth from the Montney and the Duvernay,” said Enbridge’s president and CEO, Al Monaco, in a statement.

The company said that the existing system was currently fully contracted and an expansion was necessary to meet increasing customer demand “as a result of rapidly growing production in the prolific Montney and Duvernay regions”.

During a conference call with reporters following the release of results and the pipeline expansion announcement, Monaco expressed surprise over the Montney’s potential.

“That’s probably something that’s going to provide more opportunities than we initially thought,” he said.

Enbridge acquired its BC Mainline system as part of its C$27 billion (US$20 billion) all-stock merger with Spectra Energy in February. As a result of the deal, Enbridge became North America’s largest infrastructure company.

“We brought together what we believe are the highest-quality infrastructure franchises in North America under one roof,” Monaco told reporters on the conference call. “This provides us with unparalleled low-risk commercial profile and an industry-leading growth programme across six platforms.”

Monaco expressed satisfaction with operations following the merger.
“We had a seamless Day 1 transition and, integration-wise, we are on track,” said Monaco.

However, he also told reporters that Enbridge might form subsidiaries to reduce leverage created by the acquisition of Spectra assets. In addition, Enbridge may be interested in acquiring other unidentified companies through smaller deals.

Monaco also said that construction on Enbridge’s Line 3 pipeline replacement project from Alberta to Superior, Wisconsin would continue regardless of a legal challenge from a Manitoba-based Aboriginal group.
Enbridge’s statement said that the company had brought C$2.4 billion (US$1.8 billion) of projects into service thus far in 2017, including the Athabasca Twin oil pipeline, the Norlite diluent pipeline and the Jackfish Lake gas pipeline expansion.

According to the statement, all of these projects are supported by low-risk take-or-pay contracts, or similar commercial arrangements, that will generate “highly predictable” earnings and cash flow.

During the remainder of 2017, Enbridge expects to bring an additional C$11 billion (US$8.1 billion) of growth projects online. Most of these will brought into service in the third or fourth quarter of the year, with another C$4 billion (US$2.9 billion) worth of developments slated to enter operations in 2018.

“Given the timing and return profiles of these projects, the full earnings and cash flow impacts will be seen in 2018 and beyond,” said the company in its statement.

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