Flames light up the sky after an Enbridge natural gas pipeline exploded in Kentucky on Thursday.AARON STAMPER/Reuters
A natural gas pipeline owned by Enbridge Inc. that exploded Thursday in Kentucky, killing a woman, will remain shut off while transport officials investigate.
Al Monaco, president and chief executive of the Canadian energy company, said he’s “deeply saddened” by the incident that sent five other people to hospital and set several homes on fire.
“Our hearts go out to the families and community,” Mr. Monaco said, adding the Texas Eastern pipeline won’t be turned back on until it’s “absolutely safe to do so.”
An Enbridge team is working to support the community and help investigators figure out what caused the pipeline to erupt so forcefully that the blast showed up on weather radar.
Mr. Monaco made the remarks on a conference call about second-quarter earnings that showed solid results despite a number of legal challenges surrounding its crude oil pipelines in the United States.
The state of Michigan and a Wisconsin First Nation are each suing the Calgary-based energy company to have its Line 5 crude oil pipeline removed from waters in and around the Great Lakes because of the threat of a spill. A Minnesota court has also rejected an environmental impact assessment for Enbridge’s Line 3 replacement project in June, delaying its completion timeline.
The company’s adjusted earnings rose to $1.35-billion for April, May and June this year compared to $1.09-billion in the same period last year. Its earnings per share were $0.67 cents for the second quarter of 2019, compared with $0.65 for the second quarter of 2018.
“Operationally, all of our core systems continue to run close to full capacity,” Mr. Monaco said. The company is sticking to its previous prediction of $4.30 to $4.60 a share for full-year results.
Enbridge’s oil pipelines continue to account for the lion’s share of its earnings, bringing in $1.74-billion adjusted before interest, income tax, depreciation and amortization (EBITDA) in the second quarter of 2019.
Its natural gas transmission and distribution systems together brought in $1.32-billion. Those systems typically bring in more money during the first and fourth quarters, since people use natural gas to heat their homes. But Mr. Monaco said a colder-than-normal late spring in Ontario meant higher gas-utility volumes this year.
Renewables generated $1-billion in EBITDA for Enbridge in the second quarter of 2019, down from $1.25- billion year-over-year. That sector accounts for only 5 per cent of Enbridge’s EBITDA, Mr. Monaco said. But it could grow since Enbridge announced Tuesday it’s moving forward with the first of four offshore wind farms on the northwest coast of France with partner EDF Renouvelables.
It also revealed $2-billion in other new growth projects to modernize its gas infrastructure in Ontario and expand gas networks in the United States.
But the company cautioned investors it may not be able to replicate such strong results in the second half of the year, in part because its $9-billion Line 3 replacement project to double the old pipe’s capacity won’t be completed this year as originally expected.
Enbridge couldn’t provide an estimate for when the new Line 3 would be ready, since they’re waiting on more guidance from Minnesota about how to get their environmental assessment approved.
Mr. Monaco also said he hoped Enbridge could reach “positive outcomes … in the near term” regarding Line 5. The state of Michigan and the Bad River Band of Lake Superior Ojibwe have both launched legal action seeking to shut it down.
Guy Jarvis, Enbridge’s executive vice-president of liquids pipelines, said they’re “not looking at a shutdown as feasible.” Michigan needs about 400,000 barrels a day of crude oil to meet its needs, and taking away Line 5 would mean 40- to 50-per-cent shortages in the state, he said.
Enbridge also announced Friday it’s changing the way it sells space on its Mainline pipeline system that moves crude oil from Alberta to the United States. It’s currently done on a common carrier system where any approved client can request to ship on it by asking for capacity in the coming month. Enbridge is shifting to have clients bid on contracts that can last for the next 20 years.
If the National Energy Board approves the plan, only 10 per cent of Mainline capacity will be available to short-commitment shipments after 2021.
“This leaves little space for other spot shippers that do not have the same advantages for access,” Tristan Goodman, president of the Explorers and Producers Association of Canada, said. He argued the new scheme could cause barrels of oil to be pushed back into the Canadian market, resulting in oversupply and a depressed price.
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