Enbridge plans to up capacity in two systems amid surge

CALGARY Enbridge Inc. plans to expand its main oil pipeline system and its newly acquired natural gas pipeline system in British Columbia as production of both commodities continue to rise in Western Canada.

Enbridge closed a bidding period for new capacity on its T-South pipeline between northern B.C. and Vancouver on June 2 and gas producers fully committed to supporting an expansion project that would expand the line’s capacity by 190 million cubic feet per day, Enbridge president and CEO Al Monaco told investors during presentation in Toronto on Thursday.

Monaco said the expansion project was “fully subscribed”, which analysts say highlights a desire among producers to diversify away from Alberta’s AECO prices, the natural gas benchmark index.

“We had bids totalling over three times the expansion capacity,” Enbridge executive vice-president and president, gas transmission and midstream William Yardley said.

The company plans to spend $1 billion expanding the line, which delivers most of the natural gas Vancouver uses to heat homes, with a planned in-service date of 2020. Enbridge acquired the T-South pipeline when it spent $37 billion to buy Houston-based Spectra Energy Corp., a transaction which recently closed.

Alliance Pipeline L.P., which is 50-per-cent-owned by Enbridge, has similarly asked producers in the area for firm commitments to deliver an additional 500 million cf./d to the Chicago market. “We received significant interest there,” Yardley said.

Increasing natural gas demand in Vancouver, Seattle and soon at Woodfibre LNG’s export terminal near Squamish, highlight the case for the T-South expansion, Eau Claire Energy Advisory president Ed Kallio said.

“T-South has been like gold. Anybody who has T-South (capacity) keeps holding it and there are a lot of people looking for it,” he said, adding he wasn’t surprised by the demand for capacity given growing gas supplies in the area.