Enbridge green-lights pipeline expansion to U.S. Gulf Coast, says focus is ‘south first’

Enbridge said Friday it is focusing expansion efforts on the U.S. Gulf Coast where there is an ongong thirst for Canadian crude. Photo by ROBERT SULLIVAN /AFP/Getty Images

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Enbridge Inc. has green-lit a $1.4-billion expansion of its pipeline network carrying Canadian heavy oil to the U.S. Gulf Coast, underscoring the midstream giant’s continued southbound tilt despite Alberta’s political push to see a new route to the West Coast.

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“We think south makes the most sense,” Enbridge executive vice-president Colin Gruending said Friday, noting the company sees increased demand for Canadian crude on the Gulf Coast as the United States imports less from Venezuela and Mexico.

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“That’s where we’ve got the world’s biggest refining complex who want more of our Canadian oil. There’s lots of demand in the states. It’s growing. Foreign imports are waning.”

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The Calgary-based company announced a final investment decision Friday to boost capacity on its Mainline network by 150,000 barrels per day by 2027, as part of a multi-phase optimization of Canada’s largest export pipeline. The plan includes a 100,000-barrel-per-day expansion of the Flanagan South pipeline, which feeds into the vast refining and export hub on the Gulf Coast.

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The move comes as Alberta’s government continues to press Ottawa to make a new crude export pipeline to the West Coast a priority infrastructure project.

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Enbridge, along with South Bow Corp. and Trans Mountain Corp., were tapped to provide technical expertise and advice on an Alberta government-led proposal.

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Gruending said a pipeline to the West Coast “makes the next most sense” thanks to growing populations and energy demand in Asian markets. But the company is prioritizing incremental projects — add-on expansions of its existing pipelines and infrastructure — rather than building a brand-new pipeline.

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Enbridge’s “base case” assumption is that increases in capacity to the Mainline and the Trans Mountain pipelines could handle the modest production growth it currently predicts in Western Canada of around 500,000 to 600,000 barrels per day by 2030.

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A brand-new pipeline would require “significantly more supply” and would require some policy changes from Ottawa, Gruending said.

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“I’m encouraged. I hear there’s momentum on that front with constructive discussions with Alberta and the Feds and producers,” he said.

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“If there’s an upside case there, we’ve got some more solutions for that. That’d be a great day for Canada.”

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