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“We are going to be allocating capital predominantly in the U.S. until competitive projects in other jurisdictions present themselves that compel us to allocate capital elsewhere”
Enbridge says federal energy policies are still standing in the way of a possible major new pipeline in Canada, while its customers are looking for relatively smaller and faster projects in the United States.
Calgary pipeline giants Enbridge Inc. and TC Energy Corp. say they’re seeing stronger customer demand in the United States, even as Canadian politicians push for nation-building infrastructure north of the border.
François Poirier, the chief executive of TC Energy, said the company’s returns in the U.S. “are meaningfully higher than in Canada,” which means it will focus on the much larger market, despite hopes for a pipeline project on its home turf.
“Canada gas has to compete for capital with the other business units in the company,” Poirier said this week during a conference call on quarterly earnings.
“We are going to be allocating capital predominantly in the U.S. until competitive projects in other jurisdictions present themselves that compel us to allocate capital elsewhere.”
For its part, Enbridge says federal energy policies are still standing in the way of a possible major new pipeline in Canada, while its customers are looking for relatively smaller and faster projects in the United States.
The pipeline operator, which was behind the ill-fated Northern Gateway project that would have taken Alberta oil to British Columbia’s northern coast, said Friday policies such as a tanker ban are holding back investment.
‘The issue is one of government policy‘
“We have been a proponent of such a project in the past and, in fact, invested several $100 million dollars to get there,” Enbridge CEO Greg Ebel told analysts in a conference call.
“So the issue is not one of there being a proponent. The issue is one of government policy setting the conditions for that to get investment to occur. Let’s be honest, the government has not done that yet, and it’s not clear they intend to, at least from our perspective.”
The Carney government’s recent Bill C-5 gives Ottawa the ability to fast-track infrastructure projects it deems vital for the national economy, but has yet to announce a list of projects.
The controversial bill grants the government the authority to override existing laws, theoretically including the ban on oil tankers on the northwest coast of B.C., which would allow for export to Pacific markets.
In the absence of any action from the government, Ebel said any line to the west coast would effectively be a “pipeline to nowhere.”
“Our customers at this point in time really want to go south. That’s the premium market,” he said.
The Calgary-based energy company reported $2.18 billion in earnings for the quarter ending June 30, up from $1.85 billion in the same quarter last year.
Ebel said he’s seeing rising demand from tech companies like Amazon.com Inc. and Meta Platforms Inc., which are looking for renewable power and natural gas south of the border.
Even when dealing with Big Tech, Ebel said the infrastructure demands are still on a relatively small scale. He said he’d rather build 10 different “$100-million-dollar expansions that happen quickly,” compared to a new “billion-dollar pipe.”
“Sometimes I think people are looking for the big splash, billion-dollar pipeline projects,” he said. “I think those are going to be few and far between for individual data centres.”
As for the energy sector, Ebel said governments south of the border are cutting red tape to speed up growth, and he hopes the trend moves into Canada.
“In the meantime, we’ll continue to provide counsel and advice to folks like the premier of Alberta, who you know, continues to work to advance not only the province’s interest, but I actually think Canada’s energy interests and sovereignty via new energy infrastructure.”
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