Enbridge has begun discussions with customers about expanding its core pipeline system to handle growing volumes of Canadian oil production, the Calgary-based company said Friday.
“We spent the quarter designing the expansion,” Colin Gruending, president of liquids pipelines for the company, said on a conference call with analysts.
Although Enbridge does not yet have a cost estimate for the project, Gruending added, this expansion could be in service as early as 2026 or 2027.
Colin Gruending points out that this would be a small expansion that would add additional capacity along the existing pipeline network, which has already been expanded numerous times in its 75-year history. “It's really more of an optimization, not a retrenchment or a new path. It's in the grip [existante]it is very achievable,” he said.
The Enbridge Mainline is the largest pipeline system in North America, transporting crude oil from Western Canada to markets in Eastern Canada and the US Midwest.
The impact of Trans Mountain
Not long ago, industry observers thought this mainline would be hit by the opening of the Trans Mountain pipeline expansion, which began offering Canadian oil companies access to new export markets off the west coast.
However, this is not the case. Enbridge expects its average annual volume on its Mainline to exceed 3 million barrels per day in 2024, not much different from the 3.1 million barrels per day it achieved in 2023 , before the start of the Trans Mountain expansion.
And Canadian crude oil production hit an all-time high in 2023, at 5.1 million barrels per day, as companies ramped up production in anticipation of the start of the Trans Mountain expansion.
Canada's crude exports hit a record four million barrels per day in 2023, according to Statistics Canada, and continue to climb. And in July 2024, after the start of Trans Mountain, exports of Canadian crude oil to the United States reached a record 4.3 million barrels per day, according to figures from the United States Energy Information Administration. States published this week.
And after the last pipeline?
The production surge was so large that Enbridge said the mainline was in dispatch in July and August, and then again in November. Allocation is an industry term for what happens when demand for uncontracted space on a pipeline exceeds available capacity in a given month.
Several analysts have suggested that Canada's current oil boom could reignite the problem of pipeline shortages sooner than expected. Before the Trans Mountain pipeline expansion project opened earlier this year, Canadian oil companies were hamstrung by a lack of pipeline export capacity, which meant the price of Canadian heavy crude often fluctuated at a price well below the American reference price.
But most industry observers believe the Trans Mountain pipeline expansion was likely the last major oil pipeline project this country will see, given the extreme regulatory, political and environmental challenges associated with building a pipeline.
The Trans Mountain project faced so many obstacles that the federal government ultimately purchased it from developer Kinder Morgan Canada simply to ensure the pipeline would cross the finish line.
Still sufficient export capacity
But in another conference call Friday, Imperial Oil CEO Brad Corson said he isn't worried the industry will run out of pipeline capacity anytime soon.
“We see that there is several years of wiggle room based on existing capacity, but we also believe that there will likely be additional capacity that will be reached in both the Enbridge system and the system [Trans Mountain] as these operators seek to decongest further,” Corson said.
“We have no concerns about export capacity. Whereas a few years ago it was an important consideration when we were thinking about new growth projects,” he added.
Enbridge is also considering a number of expansion projects on its smaller regional pipelines that serve Alberta's oilsands industry, Colin Gruending said.
“It is very important economically that the Western Canadian sedimentary basin is not limited,” he argued.
A profit of 1.29 billion
On Friday, Enbridge reported third-quarter earnings attributable to common shareholders of $1.29 billion, up from $532 million in the same period last year.
The company said earnings were 59 cents per share for the quarter ended Sept. 30, up from 26 cents per share in the same quarter a year earlier.
The most recent quarter's results included a non-cash unrealized net gain of $112 million related to the fair value of derivative instruments in 2024, compared with an unrealized net loss of $782 million a year ago, when the company had also recorded a provision adjustment of 124 million linked to a dispute.
On an adjusted basis, Enbridge said it earned 55 cents per share in its most recent quarter, down from adjusted earnings of 62 cents per share a year earlier.
The average analyst estimate was 56 cents per share, according to LSEG Data&Analytics.
