VANCOUVER (Reuters) - Enbridge Inc ENB.TOENB.N, Canada’s largest pipeline company, said on Wednesday its Flanagan South and Seaway expansion projects in the United States aimed at more than doubling capacity to Gulf Coast refineries were on track to begin operating in the next few months.
Enbridge also reported adjusted quarterly earnings fell slightly but still beat estimates as higher deliveries were offset by lower tolls and a lack of revenue from Line 9B in Ontario, which is being reversed.
“It was a fairly vanilla quarter and that’s a good thing for a pipeline company,” said David McColl, an energy analyst with Morningstar. “I think all eyes are still really focused on the latter half of the year when Flanagan and Seaway are going to come online.”
“Any delay really on either of those pipelines would be cause for concern, but at this point there shouldn’t be any major delays,” he added.
Construction of Flanagan South, a new line from Pontiac, Illinois, to Cushing, Oklahoma, was nearly complete and expected to be online in the third quarter, Al Monaco, Enbridge’s chief executive officer, told investors on a conference call.
Its other near-term project, the Seaway expansion and twinning, should be completed “in the next couple of months,” he said, boosting the Cushing to Freeport, Texas line to 850,000 barrels per day from 400,000 bpd. Seaway is a joint venture with Enterprise Products Partners LP EPD.N.
“Both projects will have a positive impact on earnings later this year,” Monaco said, referring to Seaway and Flanagan South.
The company also reaffirmed that it expected to have approval from the Obama administration for its Alberta Clipper pipeline expansion project in time to reach full capacity of 800,000 bpd by the third quarter of 2015. The Alberta Clipper line extends from Hardisty, Alberta, to Superior, Wisconsin.
With much of its growth set to happen over the next five years, Enbridge said it was now looking at new opportunities in renewable energy generation, midstream natural gas infrastructure in western Canada and opportunities in Colombia, Peru and Australia.
Net earnings, which benefited from after-tax gains on asset disposals and non-recurring changes in derivative fair values, rose to C$390 million ($358 million), or 47 Canadian cents per share, from C$250 million, or 31 Canadian cents, a year earlier.
Adjusted to remove one-time items, Enbridge earned 60 Canadian cents per share in the quarter, down from 62 Canadian cents in the first quarter of 2013. Analysts, on average, expected 57 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Average deliveries on the regional oil sands system, comprising Athabasca mainline and Waupisoo pipeline, jumped 45 percent to 671,000 bpd. Deliveries on the Canadian Mainline system rose about 7 percent to 1.9 million bpd.
Adjusted earnings from the its liquid pipelines fell marginally to C$218 million, hurt by lower tolls and the absence of revenues from Line 9B pipeline.
Enbridge shares were up 37 Canadian cents at C$53.36 at midday on the Toronto Stock Exchange, in line with the broader energy market and 28 cents to $48.95 on the New York Stock Exchange.
Additional reporting by Ashutosh Pandey in Bangalore; Editing by Ted Kerr and Jeffrey Benkoe