Enbridge is investing US$735 million in the expansion of its natural gas pipeline system in British Columbia. The move comes in response to increased demand for takeaway capacity resulting from production growth in the Montney play.
The expansion is rumored to add 190 000 ft3/d of capacity to the T-South system by 2020. It will involve the looping of the T-South line and upgrades to compressor stations along the route.
“Through our early open-season process on our Western Canadian system, we are expecting strong demand for the expansion of our T-South gas pipeline, given the attractive fundamentals supporting natural gas production growth from the Montney and the Duvernay,” said Enbridge’s president and CEO, Al Monaco, in a statement.
The company said that the existing system was currently fully contracted and an expansion was necessary to meet increasing customer demand “as a result of rapidly growing production in the prolific Montney and Duvernay regions”.
Enbridge acquired its BC Mainline system as part of its US$20 billion all-stock merger with Spectra Energy in February.
“We brought together what we believe are the highest-quality infrastructure franchises in North America under one roof,” Monaco told reporters on the conference call. “This provides us with unparalleled low-risk commercial profile and an industry-leading growth programme across six platforms.”
“We had a seamless Day 1 transition and, integration-wise, we are on track,” said Monaco.
However, he also told reporters that Enbridge might form subsidiaries to reduce leverage created by the acquisition of Spectra assets. In addition, Enbridge may be interested in acquiring other unidentified companies through smaller deals.
Monaco also said that construction on Enbridge’s Line 3 pipeline replacement project from Alberta to Superior, Wisconsin would continue regardless of a legal challenge from a Manitoba-based Aboriginal group.
Enbridge’s statement said that the company had brought US$1.8 billion of projects into service thus far in 2017, including the Athabasca Twin oil pipeline, the Norlite diluent pipeline and the Jackfish Lake gas pipeline expansion.
According to the statement, all of these projects are supported by low-risk take-or-pay contracts, or similar commercial arrangements, that will generate “highly predictable” earnings and cash flow.
During the remainder of 2017, Enbridge expects to bring an additional US$8.1 billion of growth projects online.
“Given the timing and return profiles of these projects, the full earnings and cash flow impacts will be seen in 2018 and beyond,” said the company in its statement.
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