Enbridge aims to grow beyond oil pipelines; eyes gas, international projects

CALGARY – Enbridge Inc. (TSX:ENB) is looking to diversify beyond its core North American oil shipping business, eyeing opportunities to grow its presence outside of Canada and the United States and invest in more natural gas pipelines and power generation.

CEO Al Monaco told shareholders Tuesday its vast North American oil network will contribute the “lion’s share” of earnings through 2018, but Enbridge will look for ways to become a bigger player in areas that only contribute about 10 per cent of its earnings today.

“We believe developing these new platforms is critical,” Monaco said.

He made his remarks as Enbridge laid out for investors a $44-billion slate of projects it has in the hopper through to 2018, $33 billion of which have been commercially secured.

Enbridge used to own pipelines in Colombia and Spain, but sold those interests several years ago to fund expansion to its North American oil network.

Now, the company is looking to re-enter the international scene, with its sights set on Colombia and Australia, said Vern Yu, Enbridge’s senior vice-president of corporate development.

“This whole time we haven’t stopped looking for investment opportunities internationally. We continue to be picky and selective in what we want to invest in,” said Yu.

“Really what we’re looking for is to get opportunities to replicate our business model in North America where there are strong market fundamentals in the country that we’re going to invest in and the projects have the same kind of risk profile that we have here in North America.”

Colombia is aiming to grow its oil production by 20 to 30 per cent over the next five years. Enbridge is in the early stages of planning a 760-kilometre pipeline that would connect oilfields in Colombia’s interior with the west coast.

In Australia, opportunities would likely centre around natural gas, where production is expected to triple over the next five years.

On the gas pipeline front, Monaco said Enbridge is more inclined to build new ones from scratch, though acquiring existing infrastructure is a possibility, too.

And when it comes to power generation, Yu said Enbridge aims to double the capacity it has in its portfolio by 2018 to around 3,000 megawatts. That would require an investment of around $3 billion.

Opportunities could include gas-fired capacity in Alberta, which today is reliant on coal. The market for wind power in Texas also looks good, Yu added.

“We are looking for markets that require new generation. We’re looking for markets where we can get long-term offtake arrangements. We’re looking for markets where there are reliable transmission grids and then finally for renewables, we’re looking for markets that have good energy resources,” he said.

Monaco repeatedly spoke of how difficult it has become in recent years to build new pipeline projects.

“Executing these projects today is, make no mistake, a bigger challenge, mainly permitting delays that stem from opposition to energy and the need for regulators to really demonstrate a robust review of all projects,” he said.

“This is not going to get easier, so a strong project management capability is absolutely essential today.”

An Enbridge executive recently said the goal of having its controversial Northern Gateway pipeline built by 2018 is quickly evaporating, as it looks to earn support from B.C. First Nations along its route from Alberta to the West Coast.

Northern Gateway would connect 525,000 barrels of oilsands crude to a tanker port at Kitimat B.C., from which the oil would be shipped to Asia. It received a federal permit to go ahead in June, subject to 209 conditions, but Enbridge has signalled it does not intend to make a final decision to break ground any time soon.

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