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Enbridge Targeting 2H2019 Completion of Line 3 Crude Oil Project

Enbridge Inc. set a second-half 2019 target last Friday to complete its biggest and most hotly contested pipeline project, replacing and raising capacity on its Line 3 oil export conduit from Alberta across the U.S. Midwest.

The Calgary firm’s 2Q2019 statement assured stockholders the Minnesota Public Utilities Commission (MPUC) enabled construction to stay on schedule by approving the state’s share in June over fevered environmental and native resistance.

The decision was a “critical milestone” for the top item on a C$22 billion ($17.6-billion) Enbridge capital program currently advancing across the continent, said President Al Monaco. The growth agenda is “nicely on track,” he added.

Construction is 40% complete and continuing on the C$5.3 billion ($4.2 billion) Canadian leg of the 1,660-kilometer (1,031-mile) line. Work is scheduled to begin early next year on the Minnesota crossing, the longest part of the $2.9 billion American stretch.

The Line 3 replacement is a 370,000 b/d gain in export capacity for the widely vilified Alberta oilsands, where thermal extraction projects stand out as Canada’s biggest and fastest-growing natural gas user.

Replacing the conduit’s 50-year-old pipe would restore deliveries to the original level of 760,000 b/d, after running at about half-capacity since 2010 because of safety restrictions. Reliability is forecast to improve too.

Enbridge also reported progress on schedule for the natural gas side of its pipeline growth program.

The Nexus project, with Enbridge paying half the US$2.6 billion construction cost to increase delivery capacity for Appalachian gas into central Canada and the U.S. Midwest, is on track for completion by the end of September, reported the company.

The US$1.6 billion Valley Crossing project, under construction since early 2017, will be completed and start supplying 2.6 Bcf/d of U.S. gas into Mexico market by the end of the year, Enbridge said.

Promised asset sales to pay off debt for the US$28 billion merger last year with Spectra Energy Corp. are also advancing at a brisk pace. So far this year sales of noncore properties, led by gas-field gathering and processing operations in British Columbia and the United States, have grossed more than C$7.5 billion ($6 billion) -- well ahead of an initial C$3 billion ($2.4 billion) target.

Enbridge has closed on a previously announced deal to sell its U.S. midstream businesses to an affiliate of private equity firm ArcLight Capital Partners LLC for around C$1.4 billion ($1.1 billion) in cash, management said last Wednesday.

The midstreamer first disclosed the transaction in May, when it revealed that it had agreed to sell its Midcoast Operating LP midstream unit and related subsidiaries as part of an effort to strengthen its balance sheet.

The Midcoast unit includes 11,200 miles of natural gas gathering and transportation pipelines, nearly 2.1 Bcf/d of natural gas processing capacity and about 1.3 Bcf/d of treating capacity in East Texas, the western Anadarko Basin and the Barnett Shale.

The business also includes a natural gas liquids (NGL) logistics and marketing unit and a 35% interest in the Texas Express Pipeline. That system consists of a 594-mile, 20-inch NGL pipeline, and a 35% interest in Texas Express Gathering, which includes 115 miles of NGL pipelines and other infrastructure comprising Enbridge’s Texas Express NGL pipeline system.

Enbridge has also closed the sale of a 49% stake in some of its North American onshore renewable power assets, and a 49% stake in two German offshore wind projects, to Canada Pension Plan Investment board for approximately C$1.75 billion, the company said.

The latest transactions come after Enbridge last month announced that it had agreed to sell its field operations in northern British Columbia and Alberta for C$4.3 billion ($3.3 billion).

The sale of the Canadian gathering and processing assets combined with the transactions closed Wednesday brings Enbridge’s total noncore asset sales for the year to nearly C$7.5 billion, according to Monaco.

“Together, these transactions support our strategy to move towards a pure pipeline and utility business model and provide the company with significant additional financing flexibility as we fund our industry leading secured growth program,” Monaco said.

Enbridge posted second-quarter 2018 earnings of C$1 billion ($800 million) or C63 cents/share (50 cents/share) from C$919 million ($735 million) or C56 cents (45 cents) in the same period of 2017.

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