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May 7, 2021

Enbridge reports $1.9B Q1 profit compared with a loss a year ago

Enbridge Line 5 shutdown would impact cash flows: Analyst

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CALGARY -- The CEO of Enbridge Inc. says "bad things" will happen if Michigan Gov. Gretchen Whitmer succeeds in carrying out her order to shut down its Line 5 pipeline through the Great Lakes region next week.

But Al Monaco added he doesn't think that's going to happen given court-ordered negotiations between the state and his company, and Enbridge's court battle against the order to shut down the pipeline that runs beneath the Straits of Mackinac by May 12.

"You just can't take 540,000 barrels per day out of the market and not have bad things happen, ultimately, to consumers and pet-chems (petrochemical plants) and refineries. It's just a very bad outcome," said Monaco on a conference call Friday to discuss first-quarter results.

The federal Liberal government is pushing back against the order and considering taking action under the 1977 Transit Pipelines Treaty with the United States that allows for the uninterrupted flow of energy between the two countries.

After winning some of the state permits needed for a project to build a concrete tunnel to encase the pipeline under the waterway and mitigate the risk of leaks, Enbridge is going ahead with seeking contracts for its construction, said Vern Yu, president, liquids pipelines.

The cost will likely be higher than the initial estimate of US$500 million, he said, without being specific.

Enbridge revealed it has proposed a carbon capture, use and storage pipeline project to potential customers in northern Alberta, where Canada's oilsands projects are located.

The project would be bigger than the existing Alberta Carbon Trunk Line in central Alberta that has capacity to transport 14.6 million tonnes of carbon dioxide per year from industrial sites for enhanced oil recovery, said Yu, and is one of many similar proposals Enbridge is pursuing.

"We're in discussions with multiple parties in the U.S. about potential opportunities as I think we bring a lot of expertise to building these types of projects," said Yu on the call.

"We're talking with customers in the Gulf Coast, customers in the Midwest and the Rockies as well as what we're doing in Canada."

Monaco said the profitability of CCUS projects is "challenged" but that could change as the Canadian government reveals details of investment tax credits for carbon capture it unveiled in its recent budget. He added he hopes those credits are similar to what's being offered in the United States.

Enbridge reported a first-quarter profit of $1.9 billion compared with a loss of $1.4 billion in the same quarter last year when it took a number of large one-time charges.

Operating revenue totalled $12.2 billion, up from $12 billion in the first three months of 2020.

The first quarter results included a gain of $300 million related to the mark-to-market value of derivatives used to manage foreign exchange risk.

In the first quarter last year, the company says it took a $1.7-billion charge related to the value of its investment in DCP Midstream LLC, as well as a $2.0-billion charge related to derivatives.

On an adjusted basis, Enbridge says it earned 81 cents per share for the quarter, down from an adjusted profit of 83 cents per share in the same quarter last year.