Enbridge’s Capital Projects Should Fuel Growth

Enbridge (ENB) spent 6.8 billion Canadian dollars on capital projects in 2018. And the company has one of the largest capital programs among global energy companies, as its capital expenditure shows. Plus, Enbridge brought into service more than $50 billion Canadian of projects over the last ten years. Of this total, it placed $20 billion Canadian in growth projects into service in 2017 and 2018. Moreover, Enbridge has $19 billion Canadian in growth projects currently in various stages of development. Let’s take a look at some of Enbridge’s upcoming capital projects.

Line 3 replacement project

Enbridge plans to place the Canadian segment of its Line 3 Replacement project into service on December 1. It has agreed with shippers on an interim surcharge until the US portion of the project is complete. The Canadian segment should provide some much-needed takeaway capacity for Western Canadian Sedimentary Basin production.

The US portion of the pipeline has faced delays due to setbacks in regulatory approvals. Learn more in Enbridge’s Line 3 Replacement Project Gets Delayed. In September, the Minnesota Supreme Court denied all remaining appeals of the environmental impact assessment. So the Minnesota Public Utilities Commission has directed the Department of Commerce to submit a revised environmental impact assessment report by December 9. The company expected the project to become operational in the second half of 2020.

Enbridge expects that the total cost of the project may exceed its budget because of these delays. However, it doesn’t expect the extra costs to impact its financial outlook.

Gray Oak pipeline project

Enbridge’s Gray Oak pipeline project is a $0.7 billion pipeline from the Permian Basin and Eagle Ford to the Texas Gulf Coast. The company expects the pipeline to complete by the end of 2019. It expects the project’s volumes to ramp up in Q1 2020. Take-or-pay contracts back the project.

Hohe See wind power project

Enbridge’s Hohe See wind power project is located in the German North Sea. The company started partial operations on the project in October. But it expects the project to become fully operational by the end of 2019. The project’s expected cost is 1.1 billion Canadian dollars, and the power generated by the project is expected to receive long-term fixed pricing. As a result, the company should generate strong and stable returns from the project.

Fueling growth

Enbridge’s upcoming capital projects bode well for the company’s cash flows over the next several years. If you want to learn more about Enbridge’s operations and its segments, check out Must-Know: Enbridge’s Five Business Segments. Also, for the latest energy sector updates, take a look at Market Realist’s Energy & Utilities page.