Enbridge pipeline expansion delayed by wait for U.S. permit
Scott Haggett, Reuters
CALGARY, Alberta - Enbridge Inc’s plan to expand the capacity of its Canada-to-U.S. Alberta Clipper pipeline by 120,000 barrels per day have hit a snag, the company said on Friday, as getting a U.S. presidential permit for the project is taking longer than expected.
Enbridge, Canada's largest pipeline company, which also reported a lower than expected quarterly profit on Friday, said it no longer expects to get the permit amendment for the Alberta Clipper expansion in time to start pumping more oil at midyear, as it had planned.
However, it said it can tweak its massive mainline system, which delivers the bulk of Canada's oil exports to the United States, to handle additional shipments until it has the permit in hand.
"Based on where we see things at the moment and over the last few weeks, we feel the permit amendment will take longer than midyear issuance that we had expected," Enbridge Chief Executive Al Monaco said on a conference call. "That being said, we are undertaking some temporary system optimization efforts that pretty much mitigate any impact on throughput."
Enbridge is no longer saying when it expects to get the go-ahead for the project, which involves adding pumping capacity to the existing Alberta Clipper line, which now carries 450,000 bpd from Hardisty, Alberta, to Superior.
Once a routine administrative matter, getting presidential permits for pipelines that cross the U.S.-Canada border have become politicized as environmental groups battle TransCanada Corp's Keystone XL pipeline project and the expansion of production at Canada's oil sands.
TransCanada has waited more than five years for the Obama administration to decide if it will approve the Keystone XL project. Analysts, however, don't expect Enbridge's expansion to attract the same level of attention from opponents that Keystone XL has received.
"There's nothing that's getting us as concerned as we are with other projects such as Keystone," said David McColl, an analyst at Morningstar. "Enbridge's projects have managed to avoid the same level of activist scrutiny."
Enbridge wants to expand the Alberta Clipper line to be able to handle 800,000 barrels per day so that it can move rising volumes of crude from the Alberta oil sands. It had expected the first phase of the expansion to be complete at midyear, while a second, 230,000 bpd, phase had been scheduled to be wrapped up next year.
The company said it can handle the additional crude expected for the initial phase by adding chemicals that reduce drag, allowing more oil to be shipped on existing lines, and through other measures until it has the permit in hand.
Enbridge reported a lower-than-expected adjusted profit in the fourth quarter, mainly due to losses on hedging contracts.
Enbridge posted a net loss of C$267 million ($243 million), or 32 Canadian cents a share, compared with a profit of C$146 million, or 18 Canadian cents a share, a year earlier.
The loss was mainly driven by a C$337 million loss at its energy services business due to a fall in the fair value of its unrealized derivatives.
Excluding one-time items, Enbridge earned 44 Canadian cents per share, below the average estimate of analysts of 46 Canadian cents, according to Thomson Reuters I/B/E/S.
Enbridge had warned in December that 2013 earnings would be at the low end of its target as it completed an expansion of its pipeline network.
Revenue, however, jumped more than 18 percent to C$8.29 billion in the quarter as higher volumes were pumped though its Canadian Mainline and other new pipeline systems.
Analysts were expecting revenue of C$7.94 billion.
Enbridge shares, which have gained 8 percent in the last six months, were down 15 Canadian cents at C$47.22 on the Toronto Stock Exchange.