CALGARY, Alberta (Reuters) - Enbridge Inc (ENB.TO) is making big strides with a multibillion-dollar plan to ship crude from Canada’s oil sands to Asia, the pipeline operator said on Thursday as it reported a more than fourfold jump in second-quarter profit.
Enbridge, Canada’s No. 2 pipeline company, also boosted its forecast for 2008 earnings. Its shares jumped 4 percent.
The company aims to file its regulatory application for the Gateway pipeline in the first quarter of next year, having secured C$100 million ($98 million) in funding for the effort from oil sands producers and Asian refiners, Chief Executive Pat Daniel said.
“We’ve now held a number of joint project meetings with them to get their guidance and direction and input on the project and have got very strong support to move this along as quickly and promptly as we can,” Daniel told analysts.
Enbridge had put Gateway on the backburner to move ahead with its extensive U.S. pipeline expansion plans, but remounted the proposal early this year amid growing interest from refiners in Singapore and Japan. Daniel declined to disclose the players pushing the proposal ahead.
The company is consulting with landowners and aboriginal communities along the proposed route across the Rocky Mountains, and has garnered positive reaction from the federal and provincial governments, Daniel said.
“It’s considered very much in Canada’s national and best interest and we see momentum building,” he said.
The line would ship 400,000 barrels of oil sands-derived crude a day to Kitimat, British Columbia, from central Alberta, a distance of 1,150 km (715 miles). It would include an adjacent line to move condensate in the other direction.
At Kitimat, the oil would be loaded onto tankers and shipped across the Pacific Ocean, adding a major new market for Canadian producers.
The cost has climbed from the last estimate of C$4.2 billion, but it is not yet known by how much, Daniel said.
In the second quarter, Enbridge — best known as operator of the main pipeline that moves Canadian oil to the U.S. Midwest and southern Ontario — earned C$658 million, or C$1.81 a share, up from year-earlier C$147 million, or 41 Canadian cents a share.
Net income included a C$556 million after-tax gain from its C$1.4 billion sale of its stake in the Spanish pipeline Compania Logistica de Hidrocarburos SA, announced in May.
Excluding onetime items, earnings rose 15 percent to C$150 million, or 42 Canadian cents a share, from C$130 million, or 36 Canadian cents a share.
Analysts, on average, had expected a profit of 39 Canadian cents, according to Reuters Estimates.
It attributed the improvement to the allowance of equity funds used during construction on the Southern Lights pipeline, Southern Access mainline expansion and Alberta Clipper projects.
It also benefited from strong results in its energy services arm and Enbridge Energy Partners (EEP.N).
Revenue rose 42 percent to C$3.9 billion
Enbridge now expects operating earnings of C$1.85 to C$1.95 a share this year, up 5 Canadian cents from its last estimate.
Its shares jumped C$1.54 to C$45.18 on the Toronto Stock Exchange, representing a 12 percent gain so far this year.
Additional reporting by Frank Pingue; Editing by Peter Galloway