Line 3 project cost up 9% to $8.2B, Enbridge says

CALGARY• Regulatory delays and route modifications will increase the cost of En

bridge Inc’s , Line 3 pipeline replacement project, the company said on Thursday, as it reported a lower- thanexpected quarterly profit.

Enbridge, North America’s largest pipeline operator, said the project from Hardisty, Alta., to Superior, Wisc., will cost $8.2 billion, 9 per cent more than its previous forecast.

The increased cost will be offset, however, by lower operating costs and a stronger U.S. dollar, and the project remains on track for service in the second half of 2019, Enbridge said.

Chief executive Al Monaco said on a conference call Line 3 had obtained permits in Canada and North Dakota and Wisconsin, but still re- quired regulatory approval from Minnesota, which Enbridge expects in the third quarter of 2017.

The Line 3 replacement project doubles the capacity of the existing line to 760,000 barrels per day and is the largest project in Enbridge’s history, according to the company.

Asked whether Enbridge can make up for the Line 3 replacement’s capacity elsewhere if the project gets de- layed in Minnesota, Monaco said: “The capacity will be restored once the full line gets replaced.”

The company is unlikely to be affected by rival pipeline projects, TransCanada’s Keystone XL and Kinder Morgan Canada Ltd’s Trans Mountain, Monaco said.

“In terms of attracting spot barrels, we would see us as being extremely competitive,” he said. “The other thing is, a lot of those refin- ers in the U. S. Midwest and Gulf Coast area like the diet of what we’re moving.”

Enbridge’s second-quarter profit was hurt by outages and production disruptions in its liquids pipeline business. The company said it expects the business to improve over the rest of the year, as production and throughput ramps back up on its mainline system.

Still, quarterly profit more than tripled, helped partly by the company’s US$28 billion purchase of natural gas pipeline company Spectra Energy Corp.

Net i ncome att r i butable to shareholders rose to $919 million, or 56 cents per share, in the second quarter ended June 30, from $301 million, or 33 cents per share, a year earlier.

Excluding one-time items, the company earned 41 cents per share. Analysts on average had expected earnings of 48 Canadian cents per share, according to Thomson Reuters.