Enbridge Readies to Add LNG, Oil Pipeline Capacity in 2023

Researched by Industrial Info Resources (Sugar Land, Texas)--Higher capital costs took a big bite out of Enbridge Incorporated's (NYSE:ENB) (Calgary, Alberta) bottom line in 2022, and executives expect those costs will stick around in 2023. But the company expects about $4 billion of conventional and renewable projects that were placed into service during 2022 will yield strong contributions for the coming year. Industrial Info is tracking about US$10 billion worth of active projects from Enbridge.

Steeper interest rates on its debt and increased depreciation costs on some of its newer assets led to a C$2.5 billion (US$1.87 billion) non-cash goodwill impairment charge for Enbridge's gas transmission business in the fourth quarter of 2022. Full-year earnings of C$2.6 billion (US$1.95 billion) were less than half of 2021's C$5.8 billion (US$4.34 billion).

Click on the image at right for a graph detailing Enbridge's active projects, by project type.

Among Enbridge's most significant achievements in the past quarter was the completion of its agreement with Pacific Energy Corporation Limited (Singapore) to invest US$1.5 billion in the Woodfibre LNG development in Squamish, British Columbia. The complex is designed to have an export capacity of 2.1 million tons per year of liquefied natural gas (LNG), with additional allotments for floating storage. It already is backed by a 15-year offtake agreement from BP plc (NYSE:BP) (London, England), representing 70% of its total export capacity.

Enbridge now has a 30% ownership stake in Woodfibre, and Pacific Energy retains the remaining 70%. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can learn more about Woodfibre LNG in a detailed project report.

Last month, Enbridge acquired an additional 10% ownership in the Gray Oak Pipeline in Texas from Rattler Midstream, a subsidiary of Diamondback Energy (NASDAQ:FANG), bringing Enbridge's economic interest to 68.5%. Phillips 66 (NYSE:PSX) (Houston, Texas) transferred its operatorship of the pipeline to Enbridge in August, giving Enbridge a stronger foothold in the Permian Basin, which Grey Oak connects to Corpus Christi and the Houston area.

"This acquisition further expands Enbridge's presence in the Permian, aligns with the Company's export strategy, and simplifies the ownership structure," the company said in a quarterly earnings-related press release. "Gray Oak is competitively positioned to remain well-utilized as Permian Basin oil production grows."

Parties involved in Gray Oak are weighing a proposed expansion of the pipeline, which would add 325 miles of 450,000-barrel-per-day (BBL/d) crude-oil capacity to the existing 850-mile line. The expansion would run from Orla, Texas, which is at the western end of the Permian, to a third-party midstream system in Victoria County, Texas, which is north of Corpus Christi. The proposal remains in an early analysis phase. Subscribers can learn more from Industrial Info's project report.

Later this year, Enbridge and NextDecade Corporation (NASDAQ:NEXT) (Houston, Texas) could begin construction on the Rio Bravo Pipeline in Texas. The 277-mile line would carry up to 4.5 billion cubic feet per day of natural gas from the Agua Dulce Hub in southeast Texas, which serves as the supply point for several pipelines that cross the U.S.-Mexico border, to NextDecade's Rio Grande LNG Liquefaction and Export Terminal in Brownsville, Texas. Enbridge agreed in 2020 to purchase 100% of the Rio Bravo Pipeline Company from NextDecade and agreed to assume responsibility of the development, financing, construction and operations.

The Rio Bravo Pipeline will be built in a 137.5-mile Phase I and a 139.5-mile Phase II. Subscribers can read detailed reports on NextDecade's Rio Grande LNG terminal, and Phase I and a 139.5-mile Phase II of the pipeline.

Enbridge expects to deploy about $6 billion of capital in 2023, including maintenance. Executives expect Enbridge's 2023 earnings before interest, taxes, depreciation and amortization (EBITDA) to be between C$15.9 billion (US$11.9 billion) and C$16.5 billion (US$12.35 billion).

Subscribers to Industrial Info's GMI Metals & Minerals Project Database can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.

Subscribers can click here for a full list of reports for active projects from Enbridge.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).