Enbridge eyes growth opportunities outside of North American home base

CALGARY - Enbridge Inc. is eyeing new opportunities outside of its home base of North America, including early-stage plans to build a multibillion-dollar pipeline through Colombia.

The Calgary-based company (TSX:ENB) said Tuesday it's in talks with five shippers in the South American country about building a 760-kilometre pipeline from oilfields in the interior to its west coast. From there, the crude can be exported to Asia.

The pipeline could cost around $6 billion, although a final estimate has not been pinned down, CEO Al Monaco told reporters following an investor update.

"Where we are right now is we're in the process of trying to work through the environmental work and the commercial work with these five shippers that needs to be done before we can make any kind of decision and that should hopefully happen by the end of 2015 — could be a little bit later than that," he said.

Monaco made his remarks after laying out for investors a $44-billion slate of projects Enbridge has in the hopper through to 2018, $33 billion of which have been commercially secured.

Enbridge is keen to diversify beyond its core North American oil shipping business. In addition to seeking out new opportunities abroad, it's also looking to build its presence in natural gas pipelines and power generation.

The company used to own pipelines in Colombia and Spain, but sold those interests several years ago to fund expansion to its North American oil network.

In addition to a potential re-entry into Colombia, Enbridge also has its sights set on Australia, said Vern Yu, Enbridge's senior vice-president of corporate development.

Yu said Enbridge will be "picky" in selecting international projects.

"Really what we're looking for is to get opportunities to replicate our business model in North America where there are strong market fundamentals in the country that we're going to invest in and the projects have the same kind of risk profile that we have here in North America."

Colombia is aiming to grow its oil production by 20 to 30 per cent over the next five years.

In Australia, opportunities would likely centre around natural gas, where production is expected to triple over the next five years.

On the gas pipeline front, Monaco said Enbridge is more inclined to build new ones from scratch, though acquiring existing infrastructure is a possibility, too.

And when it comes to power generation, Yu said Enbridge aims to double the capacity it has in its portfolio by 2018 to around 3,000 megawatts. That would require an investment of around $3 billion.

Opportunities could include gas-fired capacity in Alberta, which today is reliant on coal. The market for wind power in Texas also looks good, Yu added.

During the investor presentation, executives repeatedly spoke of how difficult it has become in recent years to build new pipeline projects.

"Executing these projects today is, make no mistake, a bigger challenge, mainly permitting delays that stem from opposition to energy and the need for regulators to really demonstrate a robust review of all projects," Monaco said.

"This is not going to get easier, so a strong project management capability is absolutely essential today."

Enbridge's Sandpiper project, which would carry crude from North Dakota oilfields to eastern markets, is the latest to encounter a delay. Minnesota regulators will be reviewing the need for the project and its route separately, rather than concurrently, pushing it back by one year.

And an Enbridge executive recently said the goal of having its controversial Northern Gateway pipeline built by 2018 is quickly evaporating, as it looks to earn support from B.C. First Nations along its route from Alberta to the West Coast.

Northern Gateway would connect 525,000 barrels of oilsands crude to a tanker port at Kitimat B.C., from which the oil would be shipped to Asia. It received a federal permit to go ahead in June, subject to 209 conditions, but Enbridge has signalled it does not intend to make a final decision to break ground any time soon.

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