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Enbridge$12B P/L Expansions go ahead despite falling oil prices/credit crunch

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This topic contains 3 replies, has 1 voice, and was last updated by  Charles Randall 14 years ago.

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  • #3335

    Charles Randall

    Enbridge expansions to go ahead despite falling oil prices, credit crunch

    Nov. 5, 2008 CALGARY – The $12-billion in pipeline projects on the go at Enbridge Inc. will not be derailed by falling crude prices and rattled financial markets, the company’s chief executive said Wednesday.

    Some major growth projects came into service earlier this year, helping the gas and oil shipper book a 90-per-cent increase in third-quarter earnings, Enbridge CEO Pat Daniel told analysts.

    “This increase in earnings is primarily due to the progress that we’ve made on our first wave of liquids pipeline projects,” Daniel said in a conference call to discuss Enbridge’s latest financial report.

    The Waupisoo pipeline from northern Alberta’s oilsands to the Edmonton refinery hub and Phase 1 of its Southern Access pipeline from Edmonton to Pontiac, Ill. are now onstream and Daniel said good progress is being made on building the Alberta Clipper, Southern Lights and other pipelines.

    “Wave 1 projects are commercially secured and under construction and this drop in crude prices will in no way affect their in-service dates or their earnings profiles once they’re placed into service,” Daniel told the conference call.

    The one exception could be a pipeline Enbridge had been planning to build from the Fort Hills oilsands mine near Fort McMurray, Alta., to a planned upgrader near Edmonton, Daniel said.

    The partners in Fort Hills – Petro-Canada (TSX:PCA), UTS Energy Corp. (TSX:UTS) and Teck Cominco Ltd. (TSX:TCK.A) – recently announced that costs for the project have swelled by half to nearly $24 billion.

    There is a possibility the planned upgrader could be deferred and the partners are expected to clarify their plans later this year.

    “We have been and will continue work very closely with the Fort Hills partnership and are providing the partners with a number of different design scenarios to accommodate shipping either upgraded synthetic crude or raw bitumen,”

    Daniel said it’s too early to tell whether Enbridge’s $15-billion in Wave 2 raft of projects will be affected by the current market conditions.

    But he said there is reason to believe those expansions will come to fruition, since they are set to begin construction in 2012 and beyond.

    One encouraging factor is that the long-term demand outlook for oil is strong, despite current low commodity prices.

    “Just as producers didn’t use $150 a barrel as a planning benchmark during the price runup earlier this year, we’re probably not going to be using $65 per barrel crude oil long term,” Daniel said.

    Many of the projects are also designed to extend oilsands producers’ reach into more lucrative markets like the U.S. Gulf Coast and Asia, where they can attract a better price for their product.

    “In a lot of ways these longer-term projects make even more sense,” Daniel said.

    Earlier Wednesday, Enbridge said its third-quarter profit increased 90 per cent over a year ago from $148.4 million, or 41 cents per share, from $78.1 million, or 22 cents per share.

    Revenues swelled 66 per cent to $4.37 billion from $2.63 billion.
    Enbridge said it is confident it will be able to meet its earnings guidance for the year of between $1.85 to $1.95, despite the falling commodity prices and the impact form hurricane Ike, which knocked out many key U.S. petroleum installations along the U.S. Gulf Coast in September.
    UBS Investment Research analyst Grant Hofer said there was a “modest shortfall” versus his expectations when it came to earnings from liquids pipelines.
    Rating Enbridge’s shares “buy” and setting a price target of $50, Hofer said the company’s capital needs through 2012 “appear to be very manageable.” Enbridge shares were off slightly to $42.29 on the Toronto Stock Exchange Wednesday.

  • #6472

    Charles Randall

    Here is update on Enbridge $12B P/L projects, which are going ahead despite oil prices & credit problems, and some (like Waupisoo P/L & Souther Access P/L) came into service earlier this year. Most of the Enbridge P/L will be for Canadian Bitumen crude blends or Syncrudes to CA & US refineries & upgraders – several with new coking projects just completing.
    The lone Enbridge P/L exception seems to be the PetroCanada Fort Hills Enbridge P/L to upgrader that was delayed.

  • #6451

    Charles Randall

    Enbridge oil pipeline

    An Enbridge crew lowers pipe into a trench in LaSalle County, south of the Fox River, on Oct. 30, 2008.” href=”” jQuery1226902167781=”2″>An Enbridge crew lowers pipe into a trench in LaSalle County, south of the Fox River, on Oct. 30, 2008.”>
    By Photo courtesy of Enbridge

    An Enbridge crew lowers pipe into a trench in LaSalle County, south of the Fox River, on Oct. 30, 2008.
    By Jeff Montgomery  The Journal-Standard
    Sun Nov 16, 2008, 08:19 PM CST
    An aggressive pipeline expansion project conducted by Enbridge Inc. is making its way through four counties in the northern half of Illinois, and will ultimately affect areas as far south as the companys Flanagan terminal in Marion County.
    The ongoing construction is part of the companys $2.1 billion Southern Access Expansion project, which calls for 424 miles of new pipeline stretching from Superior, Wis., to Pontiac, Ill.
    According to the corporations Web site, the project seeks to meet the current and future rise in refinery demand by effectively utilizing an increase in oil supplies coming from western Canada, North Dakota and Montana.
    The goal is to increase the capacity of the entire Enbridge system by 400,000 barrels per day, said Dave Henderson, a community relations consultant for Enbridge.
    Enbridge is a North American energy transportation and delivery company that operates in Canada and the United States. The corporation operates the longest crude oil and petroleum pipeline system in the world.
    Illinoisans are currently witnessing the effects of the Southern Access Expansion program, which will result in new pipeline in Boone, DeKalb, and LaSalle counties, as well as the northern part of Livingston County.
    Following the completion of the Southern Access Expansion project, Enbridge will launch a closely related effort referred to as the Southern Access Extension project.
    This project, slated to begin construction in 2010, will extend the pipeline from Enbridges Flanagan terminal to a key transportation hub in Pakota, Ill.
    Construction Updates
    There are two distinct stages within the Southern Access Expansion Program. Stage 1 of the project, which consists of 321 miles of new pipeline in Wisconsin, was completed April 1, 2008, and the pipeline is currently in operation. Enbridge is now making progress on the projects second stage.
    According to Henderson, Enbridge is employing a strategy often used by oil companies in which a construction project is separated into numerous sub-projects, commonly referred to as spreads.
    Stage 2 of the Southern Access Expansion project is separated into three distinct spreads. The divide-and-conquer strategy ultimately makes the process more efficient.
    There are different construction companies going through the same construction process on each spread, said Henderson. Eventually, we weld the pipeline together.
    The second spread in Stage 2, which spans DeKalb County, is complete and Enbridge is now involved in land restoration, a process in which land surrounding the pipeline is returned to its condition prior to any disturbance.
    Spread one, which crosses the Wisconsin-Illinois border and extends into Boone County, is nearing completion. And spread three, located south of DeKalb County, will likely be finished in January 2009.
    The Southern Access Extension, meanwhile, is taking slightly longer than expected.
    In terms of timing we are looking at construction in 2010,
    said Joe Martucci, an Enbridge community relations representative in central Illinois. We have had a few delays in the project. The process is taking longer than we anticipated.
    Local Landowners Affected
    Enbridges plan to expand its pipeline system has had a direct impact on landowners, many of whom are farmers in northern Illinois. According to Henderson, negotiating easement agreements with landowners is a crucial and time-consuming part of the process.
    It takes years to complete a project, Henderson said. But it only takes months to complete the actual pipeline.
    While a handful of farmers have voiced their discontent with Enbridges pipeline expansion, the process has been relatively fluid, according to Mariam Wassmann, director of information for the DeKalb County Farm Bureau. Ive been told by Enbridge that most of the farmers have been cooperative, said Wassmann.

  • #6450

    Charles Randall

    Here is update on Enbridge P/L – Southern Access Expansion for its completed and next stages and the following Southern Extension project.

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