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Enbridge sticks to North American oil, gas, renewables strategy

Highlights

Project spending tied to energy transition

Improved market outlook supports plans: CEO

Houston — Canada's Enbridge expects future spending on growth projects to be more heavily weighted to natural gas and renewables than oil, as it works to meet its carbon reduction goals, CEO Al Monaco said April 7.

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While the North American midstream operator is betting on fossil fuels, including crude, being an integral part of the global fuel mix for decades to come, it is mindful of the challenge in building new cross-border oil pipelines due to regulatory hurdles and fierce opposition from environmental groups. It also believes it can leverage growth from certain existing infrastructure with a less intensive amount of new spending.

During a discussion at the webcast Scotiabank CAPP Energy Symposium, Monaco said Enbridge wants to maintain its current approach and address the energy transition at the same time. Enbridge is holding to a fourth-quarter in-service target for its project to replace Line 3 -- a 1,097-mile crude oil pipeline extending from Edmonton, Alberta to Superior, Wisconsin, Monaco said.

"The liquid systems are going to be generating cash for a long time from here," Monaco said. "Maybe, we are not going to convince every investor of that, but that's how we see it."

Enbridge's goal in recent years has been to run a pure-play utility pipeline business that focuses on generating predictable long-term fixed fees. The company has sold billions of dollars in non-core assets to overhaul its portfolio around that mission, and it has retooled its corporate structure following the 2017 acquisition of US midstream operator Spectra Energy.

Amid the current push by countries around the world to reduce their carbon footprint and use cleaner-burning fuels, Enbridge has also invested more in renewables, including wind and hydrogen. It views natural gas, because of its reliability, as a critical piece in building a bridge to a future with greater use of intermittent renewable energy.

There are hurdles on the gas side, too.

US regulators are being pressed by environmental groups, nonprofits and some elected officials to reverse their in-service approval of Enbridge's Weymouth gas compressor. The Massachusetts facility is a final part of Algonquin Gas Transmission and Maritimes & Northeast Pipeline's 132,705 Dt/d Atlantic Bridge Project.

Line 3 has also faced opposition, which took on new intensity after President Joe Biden revoked the presidential permit for TC Energy's long-delayed Keystone XL heavy crude oil pipeline. Such opposition factors into Enbridge decisions about spending on new projects.

"Protest activity is always part of the equation these days," Monaco said. "We have got a very strong regulatory record here that's been tested."

The recovery in commodity prices and energy demand in the year since the coronavirus pandemic first impacted global markets gives Enbridge confidence in its outlook, as well as its strategy to keep building pipelines and expanding existing infrastructure when there are opportunities to do so, the CEO said.

"Even in the most aggressive energy transition scenarios, I think that's still intact," Monaco said. "Our economies are about to surge post COVID-19. I think that all bodes well."