This June 29, 2018 photo shows tanks at the Enbridge Energy terminal in Superior, Wisconsin. Enbridge is planning to expand its Gray Oak pipeline, which carries oil from the Permian Basin to the Gulf Coast.Jim Mone/The Associated Press
Calgary-based Enbridge Inc. ENB-T is spending US$500-million to bolster its American business, underscoring the optimism it has for expansion opportunities in the continent’s oil and gas basins.
The investment, announced Wednesday as part of the company’s Investor Day in New York, includes the expansion of Enbridge’s Ingleside Energy Center export terminal near Corpus Christi, Tex. It’s planning to add 2.5 million barrels of additional storage there, and has signed an agreement to buy two marine docks and land next to the facility from Flint Hills Resources.
The pipeline company is also planning to expand its Gray Oak pipeline, which carries oil from the Permian Basin to the Gulf Coast.
Enbridge chief executive officer Greg Ebel told media that the deals will increase the company’s access to dock space, allowing it to load more very large crude carriers to meet growing customer demand.
The Ingleside export facility is “bang in the middle of what we want to do” in terms of expansions to meet a growing global demand for North American oil and gas, he said.
“Increasingly, exports are an important player. We see that on the LNG side, definitely on the Gulf Coast, and starting to come to fruition on the west coast of Canada as well.”
Driven in part by surging demand and also by the expectation of the Trans Mountain pipeline expansion coming online soon, Canadian oil production has been booming in recent months.
During the fourth quarter of 2023, major Canadian oil producers including Canadian Natural Resources Ltd. CNQ-T, Imperial Oil Ltd. IMO-T and Suncor Energy Inc. SU-T all broke production records. Cenovus Energy CVE-T said this week it plans to boost energy production by 19 per cent over the next five years as the country’s pipeline capacity expands.
Enbridge bought Ingleside three years ago, but it has exceeded the company’s expectations. Much of the product that lands there comes from the Permian basin, which straddles western Texas and southeastern New Mexico. Mr. Ebel called it “one of the most competitive basins on the planet,” and expects production to grow by a couple of million barrels per day by the end of the decade.
“A lot of that product is going to be pipelined down to places like our Ingleside export facility and shipped offshore. So expanding the Gray Oak pipeline fits right in line with that export capacity growth and the needs of our customers.”
He’s optimistic about opportunities for the Western Canadian sedimentary basin, too, and believes Canadian oil production will grow by more than half a million barrels per day before 2030.
“You know, as soon as people think there’s too much pipeline capacity, there’s more production being produced and more need for that production, so you need pipelines.”
On Wednesday, Enbridge reaffirmed its 2024 forecast for three million barrels per day of oil shipments on its Mainline network, only slightly below the 3.1 million barrels per day annual average achieved in 2023.
Mr. Ebel believes the company can build up pipeline capacity to meet projected increases by boosting the performance of its current systems, rather than huge expansions.
Enbridge has doubled volumes on its Mainline system over the past 10 years, for example, but that hasn’t all involved major capital expansions.
Mr. Ebel said the Mainline pipeline, which has been expanded in incremental stages many times over the course of its 75-year history, could need additional expansion within the next few years to meet growing demand from Canadian oil producers.
“I think we’re in a good position to help the producers, our customers, ship oil, if that’s their desire – and the market would suggest it is – without really significant capital expansions,” he said.
Along with the expansions in Texas, Enbridge says it will spend about US$200-million as part of a newly formed joint venture to develop and construct a gas pipeline to serve Shell and Equinor’s offshore Sparta development in the Gulf of Mexico.
With a report from Canadian Press