Enbridge Inc. is advancing multiple expansion projects on its vast North American natural gas network ahead of expected growth in LNG and pipeline exports from the continent.
During a call to discuss first quarter earnings, CEO Greg Ebel highlighted the recently announced acquisition of a 93.8% controlling interest in the Aitken Creek natural gas storage facility in British Columbia (BC) from FortisBC Holdings Inc.
With working gas capacity of about 77 Bcf, Aitken Creek is connected to the BC (aka Westcoast) Pipeline, Alliance Pipeline and North Montney Mainline, with plans to connect to the LNG Canada export terminal via the Coastal GasLink pipeline. The Aitken Creek acquisition, slated to close later this year, “will enhance our service offering to our customers and support our LNG export strategy,” Ebel said.
Aitken Creek is “the only storage facility in BC that has connections to all the key egress pipelines, including Enbridge’s Westcoast and Alliance pipelines,” Ebel said. “The facility is uniquely positioned to support BC gas production in a volatile price environment, and with Western Canadian gas production expected to outpace demand and egress bottlenecks for the foreseeable future, Aitken Creek is well positioned to create long-term value for Enbridge.”
Calgary-based Enbridge also is planning to relaunch a binding open season later this year for a second expansion of the BC Pipeline system’s T North section.
Meanwhile, engineering work on the Woodfibre liquefied natural gas export project on the BC coast, in which Enbridge holds a 30% equity stake, “is progressing on schedule,” Ebel said. He explained that “by using renewable hydroelectric power, Woodfibre will be the lowest emission LNG export facility in the world.”
In the Appalachian region, Enbridge in April concluded a successful open season on the Texas Eastern Transmission system, aka Tetco. “The Company is pleased with shipper interest and is currently evaluating the results,” management said. As a result, Enbridge will look to sanction an expansion of Tetco by year-end, Ebel said.
Additionally, in April, Enbridge acquired the Tres Palacios Holdings LLC natural gas storage facility on the Texas coast.
Tres Palacios serves gas-fired power plants in Texas, as well as LNG exports to global markets and pipeline exports to Mexico. The facility’s three salt caverns boast combined working gas capacity of about 35 Bcf, along with a 62-mile header pipeline system with 11 inter- and intrastate pipeline connections.
The Tres Palacios transaction improves “our competitive position in natural gas storage along the Gulf Coast,” Ebel said.
Also on the Gulf Coast, Enbridge is ready to proceed with construction of the Rio Bravo pipeline once NextDecade Corp. reaches a final investment decision on the Rio Grande LNG project, “which should be by the end of June,” Ebel said.
Blue Ammonia Update
Natural gas also is central to Enbridge’s energy transition efforts. Ebel highlighted a joint venture with Norway’s Yara International ASA to develop a blue ammonia project on the Texas coast near Corpus Christi.
Plans are to produce ammonia using natural gas as a feedstock, with roughly 95% of the resulting carbon dioxide (CO2) emissions captured and transported to nearby permanent geological storage.
Enbridge on March 31 signed a letter of intent to jointly develop the project, which would have an expected ammonia production capacity of 1.2-1.4 million metric tons/year.
"The joint venture with Yara to construct a uniquely positioned blue ammonia project demonstrates how our existing conventional asset base is leading to significant lower-carbon infrastructure opportunities,” Ebel said. “The project will be ideally situated next to our Texas Eastern pipeline system providing access to low-cost natural gas feedstock and the deep-water docks at the Enbridge Ingleside Energy Center (EIEC) which provide export access to global markets.”
Investment in the project is expected to range from $2.6-2.9 billion with production starting in 2027 or 2028. “Enbridge and Yara will be equal partners in the project and Yara is expected to contract full offtake from the facility, which further enhances the strategic value and commercial viability of the project for Enbridge,” Enbridge management said.
Ebel added that Enbridge’s joint venture with Occidental Petroleum Corp. to develop a nearby carbon dioxide (CO2) sequestration hub “will be used to sequester the project's captured CO2 and the U.S. tax incentives provided by the Inflation Reduction Act are expected to enhance project economics. This project further positions EIEC to become one of the most sustainable terminals in North America producing globally competitive and decarbonized ammonia.”
Enbridge on Monday announced the appointment of Patrick Murray to succeed Vern Yu as CFO. Murray serves currently as Enbridge’s chief accounting officer. Yu is slated to leave the company on June 30 to become CEO of AltaGas Ltd.
The announcement follows first quarter results for Enbridge that “were right in line with our expectations despite extreme volatility in both financial and commodity markets,” Ebel said.
Enbridge, which reports in Canadian currency (C$1.00/US75 cents), posted first quarter net earnings of $1.7 billion (86 cents/share), versus earnings of $1.9 billion (95 cents) in the same period last year. Operating revenue totaled $12.1 billion, versus $15.1 billion a year earlier.
