Enbridge sees ‘tailwind’ for its Mainline system as Trans Mountain faces delays

Enbridge Inc. could benefit from increased volumes on its Mainline oil pipeline network if the startup of the Trans Mountain pipeline expansion is significantly delayed, the Calgary-based energy infrastructure firm said Friday.

Enbridge, like the rest of Canada’s energy sector, has been closely watching the latest developments with the Trans Mountain project. The high-profile pipeline expansion will increase Trans Mountain’s capacity by 590,000 barrels per day to a total of 890,000 barrels per day, creating new oil shipping competition for Enbridge and its Mainline system, but the project has been marred by delays and construction cost increases.

Most recently, Trans Mountain Corp. announced it has run into new construction challenges in B.C. that will delay the pipeline’s expected first quarter startup until sometime in the second quarter of this year.

Colin Gruending, president of Enbridge’s liquids pipelines business, said Friday the company has been assuming an April 1 in-service date for Trans Mountain. He said if that date is pushed back, Enbridge will likely see a small boost in shipping volumes.

“To the extent it (Trans

Mountain) is delayed, that’s a slight tailwind,” Gruending told a conference call to discuss Enbridge’s fourth-quarter earnings.

“We believe we’re going to be substantially full anyway, so a slight delay doesn’t provide a massive increase for us. But there is some upside to that.”

Enbridge’s Mainline network is Canada’s largest oil pipeline system, providing about 70 per cent of the total oil pipeline transportation capacity out of Western Canada. Demand for shipping on the

Mainline - which moves oil to markets in Eastern Canada and the U.S. Midwest - has exceeded capacity over the past few years. However, the network has long been expected to lose barrels to Trans Mountain once the expansion project comes online.

But Gruending said that picture has changed due to Trans

Mountain’s delays. The pipeline project was originally supposed to be finished in 2022, and the construction delays have meant more time for Canadian oil producers to ramp up production in anticipation of the additional export capacity.

“I think this notion that the Mainline is going to lose a bunch of volume when (Trans Mountain) comes on is a bit of a stale concept. It might have been valid a view years ago, but it’s been delayed materially,” Gruending said.