Growing Canadian oil production means that shipper volumes on the Enbridge Inc (ENB.TO) Mainline pipeline system may still face rationing, even with the operation of the Trans Mountain Expansion (TMX) project, according to an Enbridge executive’s remarks on Friday.
Enbridge, headquartered in Calgary, achieved a record 3.2 million barrels per day (bpd) of crude shipped on the Mainline in the fourth quarter of 2023.
This success contributed to quarterly profits of C$1.73 billion, a significant improvement from the C$1.07 billion loss reported a year earlier.
Previously, Enbridge had cautioned that the start-up of the 590,000 bpd TMX project could lead to a decline in Mainline volumes.
However, Colin Gruending, executive vice president of liquids pipelines, described this notion as a “bit of a stale concept”, attributing it to material delays in the TMX project.
He explained, “(TMX) has been delayed materially and in that multi-year period of delay, supply has structurally and permanently grown.”
Despite the optimism, Gruending noted the possibility of ongoing apportionment, depending on factors such as the month, day, or crude slate.
Apportionment refers to the rationing of crude movement on a pipeline, and high apportionment typically exerts downward pressure on Canadian crude prices.
Gruending projected that Canadian producers would add approximately 750,000 bpd of supply by the end of 2025, marking a significant increase over a four-year period.
The TMX project, owned by the Canadian government, is aiming for a start-up in the second quarter, but it has encountered multiple delays and cost overruns.
Despite record volumes, Enbridge reported a slightly lower quarterly adjusted core profit from the Mainline system at C$1.30 billion compared to C$1.34 billion a year earlier.
This reduction was partly due to a new Mainline toll agreement with oil shippers, which was lower than the previous arrangement, following the abandonment of earlier plans for long-term contracts.
Additionally, Enbridge reported a quarterly adjusted core profit of C$833 million from its U.S. gas transmission unit, down from C$844 million a year earlier, largely due to low natural gas demand in the U.S. during the fourth quarter.
Adjusted earnings stood at 64 Canadian cents per share, below analysts’ estimates of 68 Canadian cents per share, according to LSEG data. Enbridge shares on the Toronto Stock Exchange were down 0.4% or C$46.02.