* Seaway reversal on track for May 17 start
* Q1 adj EPS C$0.50 vs est C$0.48; on track for full-year target
* Q1 net profit hurt by hedging losses
* Shares edge higher
By Julie Gordon and Scott Haggett
TORONTO/CALGARY, Alberta, May 9 (Reuters) - Enbridge Inc , Canada’s No. 2 pipeline company, reported a 14 percent jump in quarterly earnings on Wednesday and said it remains committed to building the controversial C$5.5 billion ($5.5 billion) Northern Gateway pipeline despite fierce opposition from communities along the route.
At its annual meeting in Toronto on Wednesday, the Calgary-based company was greeted by protesters from environmental groups and from some of the British Columbia aboriginal groups that have staunchly opposed the project over worries that oil spills could contaminate their water supplies.
If built, Northern Gateway would carry 525,000 barrels per day of Alberta oil sands crude to a deepwater port at Kitimat on the British Columbia’s Pacific Coast.
“We are the wall that will stop this pipeline dream,” said Chief Jackie Thomas of the Saik’uz First Nation in British Columbia. Thomas traveled to the meeting with other protesters on a train journey organized by the Yinka Dene Alliance, a coalition of British Columbia First Nations opposed to the project. “We’ve looked at it and made our decision,” Thomas said.
The line, which Enbridge expects to be in service by 2017, would allow Canadian oil producers to tap high-paying Asian markets. It has the backing of the Canadian government, which has said the project is in the national interest even as regulatory hearings proceed.
Despite protests by native groups, Enbridge Chief Executive Pat Daniel said he is certain he can win the backing of aboriginal communities, which are known as First Nations.
“The project is so much in Canada’s national best interest that we’re committed to working with First Nations that are presently opposed, to bring them onside,” he told reporters following the company’s meeting, where he faced questions from the line’s opponents. “Even (after) the meeting, I’ve chatted further to try to find some sort of common ground, so that we can make this a win-win for First Nations, for communities along the right of way, for all of Canada.”
Enbridge is offering the First Nations a 10 percent equity interest in the line. Daniel said that 22 of the 45 communities along the line’s 1,170 km (730 mile) route have accepted the offer but did not offer details. CAPLINE INTEREST
The company, whose lines move the bulk of Canada’s crude oil exports to the United States, also said on Wednesday it would want to play a role in any potential reversal of the massive Capline oil pipeline as it looks to move Alberta oil sands crude to refineries on the eastern Gulf of Mexico coast.
Enbridge would be interested in participating in any acquisition of the underused 630-mile (1,020 km) line that now takes oil from Louisiana to southern Illinois.
“We definitely could benefit from it,” Daniel said on a morning conference call. “There are issues to be resolved around existing refineries along Capline and where they get their crude from, but we’re watching and monitoring that one very closely.”
With production from Alberta’s tar sands set to rise to nearly 2.7 million barrels per day by 2015 from a current 2 million bpd, Enbridge and its rivals are looking for ways to move Canadian oil away from the U.S. Midwest market - where a glut of crude has depressed prices - and into the Gulf Coast refineries.
The Capline, operated by Royal Dutch Shell Plc, once carried as much as 1.2 million barrels of oil per day to Midwest refineries. But shipments have dwindled to under 200,000 bpd as Canadian and Bakken crudes supplant the more expensive imported and Gulf of Mexico supplies that the line ships.
The low volume has raised speculation that the line could be better used to carry Canadian and North Dakota crudes to Louisiana refineries. Daniel said Enbridge has often looked for ways to send Canadian crude to the eastern Gulf coast and its existing pipelines could feed crude to the reversed line.
To be sure, the line’s current customers have not yet backed a reversal and no one has stepped forward to acquire the line or take charge of a project to reverse it.
Earlier this month, Marathon Petroleum Corp, which owns a stake in the line, said Capline remains an important supply link for its 212,000 bpd refinery in Catlettsburg, Kentucky. SEAWAY REVERSAL
Enbridge said it still expects to begin taking crude from the Cushing, Oklahoma, storage hub to refineries on the Texas Gulf coast next week on the Seaway pipeline it and Enterprise Product Partners LP are reversing.
Though it will initially carry 150,000 bpd, the Seaway line will be expanded to ship up to 850,000 bpd. Enbridge also plans boost the size of its 193,000 bpd Spearhead line from Flanagan, Illinois, to Cushing to carry as much as 775,000 bpd of Canadian crude to the storage hub to supply Seaway.
Enbridge said first quarter net income fell 27 percent to C$264 million, or 34 Canadian cents a share, on hedging losses.
But adjusted income rose 14 percent to C$376 million, or 50 Canadian cents per share, beating analysts’ average expectation of 48 Canadian cents, according to Thomson Reuters I/B/E/S.
The company said it is on track to achieve full-year adjusted profit of C$1.58 per share to C$1.74 per share.
Enbridge shares rose 7 Canadian cents to C$39.77 on the Toronto Stock Exchange. The shares have risen 30 percent over the past 12 months.