Calgary-based Enbridge Inc. announced on Tuesday $1.8 billion of new accretive growth capital investments.
“These investments are directly in the middle of our investment fairway and strategy. They further build out our liquids and natural gas franchises under contracted low-risk commercial frameworks. In combination with currently secured growth projects and organic expansion opportunities under development, they will support the near-term and post-2020 outlook,” said Al Monaco, president and CEO of Enbridge, in a statement.
The company outlined the capital investments as follows:
- Gray Oak Pipeline – Enbridge will invest US$600 million for a 22.75 per cent interest in the Gray Oak Liquids Pipeline, which will deliver light crude oil from the Permian Basin to Corpus Christi and other markets. Gray Oak, currently under construction, is expected to begin service in late 2019, contribute to the post-2020 growth outlook and is an important component of Enbridge’s broader emerging U.S. Gulf Coast liquids infrastructure strategy;
- Cheecham Terminal and Pipeline – Enbridge is acquiring existing liquids pipeline and terminal assets connected with Athabasca Oil Corp.’s Leismer SAGD oil sands assets for $265 million. The assets are synergistic as they are connected with Enbridge’s existing terminal and pipeline assets in the region;
- Gas transmission expansions – Enbridge will invest approximately $800 million on four gas transmission expansion projects coming into service in the 2020-23 timeframe. The Vito Offshore Pipelines will provide service to Shell’s offshore Gulf Coast operations. The Cameron Lateral expansion project will connect Texas Eastern with Gulf Coast LNG export facilities. In addition, the Gulfstream as well as the Sabal Trail Pipelines into Florida will both undergo additional expansion (phase six and phases two and three respectively). All of these expansion projects are being constructed under long-term take-or-pay commercial arrangements.
The company also announced a 10 per cent increase in its common share dividend to $2.95 annually, effective the first quarter of 2019.
“Our strategic positioning as a low-risk regulated pipeline and utility business, combined with the strategic priorities we established last year, are bearing fruit. We will remain focused on these priorities while placing an even greater emphasis on capturing the very best of a large suite of potential organic growth opportunities that we see being driven by our great strategic position and excellent energy fundamentals, particularly growing energy exports from North America,” said Monaco.
“We’ll continue to apply the same type of discipline around capital allocation that we exercised this year as we created financial flexibility by selling assets that weren’t core to our strategy at strong valuations.
“We’ll also look to continue to optimize the performance of our core business. It’s a top priority to further extend the consistent long-term growth track record of our liquids business by providing new win-win tolling options and low-cost throughput enhancements on our Mainline.”
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