Enbridge Inc. says it's exploring a number of low-cost expansions to its pipeline infrastructure to keep crude oil moving while various larger-scale pipeline proposals remain mired in legal and regulatory delays.
"All of these involve relatively small, low cost, bolt-on projects that can be staged in increments as required to meet shipper needs," Guy Jarvis, the company's president of liquids pipelines, said during a conference call Friday.
"For that reason, we think that they will be attractive in a lower (oil) price, lower supply scenario, or even just in the face of greater uncertainty about oil prices."
One of the initiatives the company is considering is an expansion to the refining area on the eastern Gulf Coast, a project that was first announced in 2013 and expected to be in service this year. It would involve reversing an existing stretch of pipeline that runs between Patoka, Ill., and St. James, La. that is owned by Texas-based Energy Transfer Partners LP.
"The project didn't succeed because we were unable to secure customer support for it at that time, in the face of other options that customers had available for them to get to new and different markets," Jarvis said.
He said the company is now revisiting the project and exploring several other small expansions in light of the decline in crude prices and the delays facing larger pipeline projects.
Many oil producers in Western Canada have been relying on railways to transport crude while waiting on the start of pipeline projects, such as TransCanada's (TSX:TRP) Keystone XL, which would connect Canada's tar sands to refineries on the U.S. Gulf Coast. TransCanada has been trying for six years to get U.S. approval for the 1,179-mile (1,897-kilometre) project that President Barack Obama has threatened to veto.
Jarvis says that transporting crude by rail is costlier than sending it through a pipeline and, given the recent drop in the commodity's value, lower-cost alternatives have become more attractive.
Jarvis's comments follow the Calgary-based company's announcement Thursday of a fourth-quarter profit of $88 million, or 10 cents per diluted share.
That's a significant change from a year ago, when Enbridge reported a net loss of $267 million or 33 cents per share as it took a hedging loss in its energy services division.
Revenue grew to almost $8.8 billion from $8.29 billion, the company said after markets closed Thursday.
Adjusted quarterly earnings were $409 million or 49 cent a share, compared with $362 million or 44 cents per share in the prior-year period.
