Enbridge plans to expand overseas energy delivery

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Enbridge Inc. says it will put new focus on capitalizing on the demand for billions of dollars in energy infrastructure needed to help move growing North American oil and natural gas supplies to overseas markets in the decades ahead.

Enbridge chief executive officer Al Monaco outlined the plan even as the development of export facilities between the United States and Canada continues to diverge. The two countries have a highly integrated energy market and production is growing on both sides of the border. But U.S. exports to customers beyond North America continue to grow while new Canadian-based projects to ship to Asia or other global markets have been stymied by regulatory delays, environmental opposition and sluggish demand.

Getting oil and natural gas to foreign markets has become crucial for North American energy companies as the United States has become one of the world's biggest producers of both commodities. The United States is the world's No. 1 energy consumer, but is changing into the role of exporter. Technological breakthroughs, decreased costs and the resulting increase in U.S. oil and gas production has transformed global energy markets, and has contributed to the three-year trough in prices.

Mr. Monaco said Calgary-based Enbridge wants to be a part of a continent-wide push to build hundreds of billions of dollars in North American export infrastructure by 2040. For one, Enbridge said it is going back to a 2015 plan to expand its presence in the U.S. Gulf Coast – already home to pipelines, refineries and export facilities.

"If you look at North America, and the competitive advantage that we have finding oil and gas cost-effectively, it's just a natural that we see a lot more exports," Mr. Monaco said at an investor presentation in Toronto Thursday. "The export market is a huge opportunity."

Ken Medlock, a director at the Center for Energy Studies at Rice University in Houston, said infrastructure built to move oil and gas off the continent isn't going to sit idle in the years ahead. "For the companies that can actually grab that opportunity and actually begin to put steel and cement in the ground, it's going to be a pretty good place to be."

In recent months, U.S. crude shipments abroad have ramped up. The United States is also set to become a net exporter of natural gas by next year, according to the U.S. Energy Information Agency.

Canadian producers say they also want a chance to break into the broader world market. At present, more than 99 per cent of Canadian crude exports go to the U.S., on increasingly jammed-full pipelines. But efforts to get to other markets are running into headwinds: TransCanada Corp.'s $15.7-billion Energy East project is facing fierce opposition along the proposed route to Quebec and the East Coast, and Kinder Morgan Inc.'s plan to expand the existing Trans Mountain pipeline faces a number of Indigenous legal challenges, and an NDP and Green Party partnership in the B.C. legislature promising to halt the federally approved project.

Enbridge vice-president Guy Jarvis said Enbridge is continually trying to make upgrades to existing crude pipelines to ensure they can move more capacity in the years ahead. While TransCanada's long-time plan to build the Keystone XL project could bring more Canadian oil to the U.S., producers still aren't certain that any new heavy oil pipelines – as proposed by Enbridge competitors for U.S. or international market access – will actually be constructed.

"There is still concern amongst our shippers about the viability of the competing pipelines getting approved. And if approved, getting built," said Mr. Jarvis, who heads liquids pipelines and major projects for Enbridge.