Enbridge Warns of Continued Oil Pipeline Congestion Despite Trans Mountain Expansion

(Reuters) — Growing Canadian oil production means shipper volumes may still be rationed on the Enbridge Inc. Mainline pipeline system even once the Trans Mountain Expansion (TMX) project is operating, an Enbridge executive said on Friday.

Calgary-based Enbridge shipped a record 3.2 million barrels per day (bpd) of crude on the Mainline in the fourth quarter of 2023, helping it report quarterly profits of C$1.73 billion, compared to a loss of C$1.07 billion a year earlier.

Last year Enbridge warned the start-up of the 590,000 bpd TMX project would likely cause Mainline volumes to fall, but that notion has become a "bit of a stale concept", said Colin Gruending, executive vice president of liquids pipelines.

"(TMX) has been delayed materially and in that multi-year period of delay, supply has structurally and permanently grown," Gruending told an earnings call.

He said those delays were a "slight tailwind" for the Mainline, which ships the bulk of Canada's crude exports to the United States.

"We may still have apportionment once TMX comes in, depending on the month or day or crude slate," Gruending added.

Apportionment refers to rationing how much crude each shipper can move on a pipeline, and high apportionment tends to weigh heavily on Canadian crude prices.

Gruending estimated Canadian producers would add around 750,000 bpd of supply in a four-year period up to the end of 2025.

The Canadian government-owned TMX project is targeting a second quarter start-up but has struggled with repeated delays and ballooning costs.

Despite the record volumes, Enbridge reported a lower quarterly adjusted core profit from the Mainline system of C$1.30 billion compared with C$1.34 billion a year.

The company reached a Mainline toll agreement with oil shippers last year which was lower than the previous one, after scrapping earlier plans for long-term contracts.

Enbridge reported a quarterly adjusted core profit of C$833 million from its U.S. gas transmission unit, compared with C$844 million a year earlier.

Natural gas demand in the U.S. has been low due to relatively mild weather conditions in the fourth quarter.

On an adjusted basis, the company earned 64 Canadian cents per share, compared with analysts' estimates of 68 Canadian cents per share, according to LSEG data.

Enbridge shares were last down 0.4% or C$46.02 on the Toronto Stock Exchange.

($1 = 1.3452 Canadian dollars)

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