One and done: Why Enbridge thinks they alone can fill the gap in Canada's export capacity
Speaking at an investor day conference in Toronto this week, Enbridge Executive VP Guy Jarvis told shareholders his company's pipeline expansion plans are Canada's best shot at expanding crude export capacity.
Although Jarvis didn't specifically mention Trans Mountain or Keystone XL, the VP suggested "competing pipelines" may not get built, even if approved. Jarvis thinks the replacement of Line 3 and upgrades of existing Enbridge export pipelines will be enough to meet industry needs until 2028.
In the past year, TransCanada's Keystone XL and Kinder Morgan's TransMountain Expansion were also approved, in addition to the replacement of Line 3. The three projects will add 1.8 million bbl/day of additional export capacity, exceeding growth plans in the oil sands. That has left some shareholders worried that too much capacity on the horizon will reduce tolls and profitability for the midstream companies.
Besides Line 3, Enbridge has other expansion plans on the horizon, including expanding the Southern Access line to 1.2 million bbl/day and adding another 250,000 bbl/day on its Flanagan South/Seaway pipeline. Enbridge thinks it can add up to 750,000 bbl/day of additional capacity through small debottlenecking projects over the next 5 years. The company plans to begin discussions next year on a new tolling agreement for post-2022.
But Enbridge is not without its own internal struggles. In January, Wisconsin's Bad River Band denied easement for a 20 km section of Line 5 that crosses the band's reservation. The band would like to see the line decommissioned and removed.
Minnesota regulators have now begun public consultations on the Line 3 replacement, with several litigation teams already lined up in protest. Line 3 runs from Hardisty, Alberta to Superior, Wisconsin. Replacing the 50 year-old pipe will bring capacity back to 760,000 bbl/day from the current 390,000 bbl/day. However, the company has rerouted the line in some areas that were too congested. Hearings will run through November and a final decision is expected by next April. If all goes according to plan, construction on the US portion of the line will begin in the latter-half of next year, putting the in-service date in mid-2019. The project has already been approved in Wisconsin and North Dakota.
ENBRIDGE INVESTOR DAY PRESENTATION: LIQUIDS PIPELINES