Enbridge Inc. has sanctioned two separate U.S. natural gas projects for its Texas Eastern Transmission system, aka Tetco, to replace aging equipment and to expand Appalachia capacity to the Northeast.
The expansions were announced during the fourth quarter conference call led by CEO Al Monaco. The volatile global energy markets, he told investors, can be traced in part to the lack of natural gas infrastructure, and Enbridge wants to be part of the solution.
“Just cutting to the chase on this,” Monaco said, “we’re in the middle of an energy crisis. The economic recovery is driving strong global energy demand. Normally, we see a supply response, but not this time, given the significant underinvestment in both conventional and renewables.”
The underinvestment has created “energy shortages, higher fuel costs, and of course, inflation, as you’re seeing, which challenges competitiveness and economic growth.” These issues are “due to a lack of gas infrastructure…What we’re witnessing today highlights the importance of reliable, affordable energy in our lives.”
North American “advantages and coastal infrastructure will result in higher exports,” which is key to Enbridge’s crude and liquefied natural gas (LNG) export strategies, the CEO said.
Enbridge expects conventional oil and gas supply to grow through at least 2035, reinforced by the energy crisis today, Monaco said.
“On the conventional side, we’ll expand and modernize gas systems, which will displace coal and support renewables growth,” he told investors. “We’ll continue to build out our LNG and export positions and invest in the gas utility. We’ll also pursue capital efficient liquid pipelines optimizations.”
Increasing Safety, Reducing Emissions
As part of its growth strategy, Enbridge has sanctioned an estimated $400 million upgrade for the 8,580-mile Tetco system. Tetco can transport up to 13.05 Bcf/d and 74 Bcf of storage, connecting Texas and Gulf Coast gas supply to the Northeast.
In phase two of the Tetco modernization project, aging compressor equipment would be replaced to increase safety and reliability, while reducing greenhouse gas emissions. The upgrades would be staged, with in-service beginning in 2024.
Enbridge also is moving forward with Tetco’s $100 million Appalachia to Market Phase II expansion. The expansion, set to be in service in 2025, would increase capacity to Northeast markets.
LNG prospects are expanding too. Enbridge in January executed a precedent agreement in far South Texas with Texas LNG Brownsville LLC. The estimated $400 million expansion of the Valley Crossing Pipeline would supply the LNG export terminal.
In the past year, Enbridge placed about $10 billion of growth projects into service across each of its four businesses, Monaco told investors.
Full-year contributions are expected in 2022 for several projects, including $1 billion for the Gas Transmission segment’s modernization program. Enbridge also spent $100 million for the Cameron Extension on the Gulf Coast to move gas to the Calcasieu Pass LNG export facility in Louisiana. And in Western Canada, the British Columbia Pipeline is advancing a $2.5 billion expansion to serve LNG and local market demand growth.
During the fourth quarter, Enbridge also completed its acquisition of Moda Midstream Operating LLC, which included the Ingleside Energy Center in South Texas. The company is developing about 2 million bbl of additional permitted oil storage on site, along with a solar facility with up to 60 MW.
Growth in 2022, however, is likely to be driven by an increase in Mainline oil volumes, which are expected to average 2.95 million b/d, the CEO said.
“The last year has once again demonstrated the importance of reliable and affordable energy to the world’s social and economic well being,” Monaco said. “While it’s clear we need to reduce global emissions to achieve our climate objectives, it’s also important that we transition our energy systems prudently by ensuring adequate supply of conventional energy, while increasing lower-carbon forms of energy.”
Where Are RNG, Hydrogen And CCS Opportunities?
Beyond natural gas and oil infrastructure, Monaco highlighted other business opportunities in the queue for renewable natural gas, as well as hydrogen and carbon capture and storage (CCS) infrastructure. Enbridge’s utility also is expanding after adding more than 40,000 natural gas customers last year.
“We now have seven renewable natural gas projects operating or under construction, with a healthy backlog of new projects in development,” Monaco said. “Our new hydrogen blending facility in Markham, the first of its kind in North America, just began operations.”
Four wind projects offshore France including a floating facility, are expected to be in service by year’s end. In North America, Enbridge has 10 solar self-power projects under construction across the liquids and gas transmission systems, which are set to generate about 100 MW of renewable power.
Enbridge has multiple collaborative efforts underway too for the proposed Open Access Wabamun Carbon Hub in Central Alberta. A memorandum of understanding was secured in January to collaborate with Lehigh Cement, part of HeidelbergCement Group, on a carbon storage solution for a facility in Edmonton.
Lehigh is developing a full-scale CCS solution for the cement industry at its Edmonton facility to capture 780,000 metric tons/year of carbon dioxide. Captured emissions would be transported via pipeline and permanently sequestered by Enbridge. The hub could be in service in 2025.
Earlier this month, Enbridge and the First Nation Capital Investment Partnership, consisting of four Central Alberta Indigenous Nations, also signed a letter of intent to work collaboratively to advance the Wabamun Carbon Hub.
“We’re also making good progress toward our medium- and long-term emissions goals across our operations,” Monaco said. The company has added Scope 3 metrics, which measure and track indirect emissions by customers using its products.
Enbridge, which reports in Canadian dollars, earned $1.84 billion (91 cents/share) in 4Q2021, versus year-ago profits of $1.78 billion (88 cents). For the year, profits climbed to $5.82 billion ($2.87/share) from 2020’s $2.98 billion ($1.48). The conversion rate is C$1.00/U.S.78 cents.
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