Citing the need for finalized government policies and producer commitments to oil sands growth, Enbridge Inc. has put its plan to expand oil export pipelines from Canada on hold. The largest pipeline company on the continent intends to prioritize American crude routes to the Gulf Coast over expanding its cross-border Mainline, which spans from Canada into the U.S.
During an earnings call on Friday, Ebel said, "We expect MLO2 and our broader opportunity set to evolve to meet industry needs." "In the near-term, we're focused on advancing expansions on Flanagan South and Southern Access extensions as the next phase of sequenced growth across our mainline and market access system."
Enbridge shares were at $76.25, up 1.73%. Crude oil was at $84.79, up 1.44%.
Liquids pipelines president Colin Gruending said the delay might lead to a "small imbalance" in the system around 2028. The US project's "scope is simpler and will yield better economics for us here initially," he said.
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Because the Mainline operates as a common carrier, Enbridge is unable to lock in multi-year agreements to support its expansions, whereas other pipeline systems can; instead, capacity is reserved monthly.
Part of the Mainline is already being built to add 180,000 barrels of new daily capacity, and Enbridge said this is the first export expansion to be given the go-ahead since 2017.
The ML02 project belonged to a broader group of initiatives intended to boost overall pipeline capacity by roughly 2 million barrels per day.
This move deals a blow to Canada's ambitions to substantially boost oil shipments in the years ahead. Earlier this month, the federal and Alberta governments formally proposed building a pipeline to Canada's west coast that could export an added 1 million barrels of crude per day to Asia within ten years.
Trans Mountain Corp., owned by the Canadian government, expects capacity on its Alberta-to-Vancouver system to rise from the current 890,000 barrels per day to roughly 1.2 million in the next several years. Trans Mountain would construct the proposed 1 million-barrel-a-day line to a new southern BC deep-water facility, which would have a target start in the early 2030s if regulators approve it.
South Bow Corp. has separately proposed a 550,000-barrel-per-day oil line tied to a U.S. development resembling Keystone XL, the cross-border pipeline that the Biden administration halted in 2021. South Bow's stock was at $51.93, up 1.01%.
Still, Enbridge is optimistic about the new political direction in Canada overall. "We are quite excited about the coming policy environment, we've been advocating it for years," Gruending said.
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