CALGARY – The CEO of Enbridge Inc. says he sees momentum shifting in favour of his company’s controversial Northern Gateway pipeline, with an agreement between Alberta and British Columbia on West Coast oil exports the latest encouraging sign.
“We think it’s quite positive, actually, that we’re seeing some good collaboration between the provinces. I think it shows leadership by both of the premiers,” Al Monaco told analysts and reporters on a conference call Wednesday.
“Certainly what I take away, and what we take away as a company, is that this is a very good pathway, I think, to getting to a yes answer here.”
Under the deal announced Tuesday, B.C. will not ask Alberta for a slice of its oil royalties to ensure it has its fair share of the project’s economic benefits — the most contentious of Premier Christy Clark’s five conditions for oil pipelines crossing her province.
However, Alberta supports B.C.’s right to negotiate with industry on that matter. The two premiers are on the same page when it comes to caveats around environmental protection and First Nations consultation, though critics say those conditions are a long way from being met.
Monaco said it’s too soon to say what, if anything, Enbridge can offer on that front.
“We’ve obviously been giving that a lot of thought. We’ve been talking to communities, First Nations, people along the right-of-way and now this will allow us to, I think, open up a greater dialogue,” he said.
The interests of oil companies that have committed to ship their crude on Northern Gateway must be taken into account in any such discussion, he added.
Monaco also said the cost of the Northern Gateway pipeline is likely to go over its current price tag of $6 billion, which is based on an “outdated” 2010 estimate.
Enbridge is doing some preliminary engineering and design work, which will allow it to pin down a more accurate figure. The work so far points to increasing costs and inflation between 2010 and now is also a factor.
The earliest Northern Gateway could be up and running is 2018, Monaco said. A regulatory decision is expected around the end of this year, though an Enbridge executive has said previously he expects opponents to appeal any approval.
Northern Gateway would carry 525,000 barrels of oilsands crude per day from the Edmonton area to the West Coast port of Kitimat, B.C. From there, the crude would be loaded on tankers and sent across the Pacific to lucrative Asian markets. A smaller, parallel line would flow in the opposite direction, carrying imported diluent, a petroleum product used to thin bitumen so it can move through pipelines.
The project has faced stiff opposition in B.C., centred on the environmental damage that could result from an oil spill on the pipeline itself or from tankers along the coast.
Another pipeline company, Kinder Morgan, is planning to nearly triple the size of its existing Trans Mountain line, which runs from Alberta to the B.C. Lower Mainland, enabling oilsands exports from the West Coast. That proposal, too, has faced strong dissent.
Also Wednesday, Enbridge said its adjusted earnings in the third quarter rose to $278 million, which was up four per cent from a year earlier but below analyst estimates.
The adjusted earnings amounted to 34 cents per share, which was a penny below estimates compiled by Thomson Reuters.
The Calgary-based pipeline company did better in terms of net income, which more than doubled to $421 million in the quarter, or 51 cents per share, from $187 million, or 24 cents per share a year earlier.
The net income, which includes the impact of Enbridge’s hedging program and an insurance payment received by the company, was above estimates of 36 cents per share.
Enbridge’s overall revenue was just under $9 billion, up from $5.6 billion a year earlier, largely due to higher commodity sales. Revenue from pipeline and gas distribution sales was also up.