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Enbridge looks to Asia as LNG export boom looms

File photo of a gas pipeline.

Canadian pipeline company Enbridge Inc. is working to cash in on the coming surge in liquefied natural gas deliveries around the Pacific rim.

The company is "actively looking today" at resuming its presence in overseas markets, just two years after selling off its international assets, Enbridge chief executive officer Pat Daniel said Wednesday, as the company issued first-quarter earnings amid growing criticism of a controversial domestic project.

"International is one of the growth platforms," Mr. Daniel said, as he sketched out the company's ambitions to find new projects in South America, Asia and Australia.

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By some estimates, the industry's ability to produce liquefied natural gas (LNG) in the Asia-Pacific area will more than double from 2010 to 2015, as export terminals spring up in Australia and Malaysia to feed new import terminals in India and China.

Enbridge is not interested in building LNG terminals, but in constructing the pipe that connects them to producers and markets. "Building a $2- or $3-billion pipeline is something well within our appetite, generally speaking, though we're going to have partners," he said.

The company is also looking again to Colombia, where an surge in oil and gas development is creating "some good opportunities." And Enbridge is also looking at building oil export terminals.

The renewed international interest comes just two years after Enbridge disposed of its last international assets, when it sold a minority interest in a Colombian pipeline to Ecopetrol SA for $400-million (U.S.). In 2008, Enbridge raised $1.36-billion (Canadian) by selling its 25-per-cent ownership in Spanish pipeline transporter Compania Logistica de Hidrocarburos.

But, Mr. Daniel argued, "we never exited international as a strategy," adding the sales enjoyed premium valuations "at a time when we wanted to redeploy capital to a huge capital program and Canada."

That shift in strategy comes amid mounting controversy over some of Enbridge's domestic plans, as it continues to push forward its $5.5-billion Northern Gateway oil pipeline. On Wednesday, dozens of native people lined a Calgary street outside the company's annual general meeting, beating drums, chanting and waving "No Tankers" signs.

Inside, Mr. Daniel faced fierce questioning from representatives of B.C. first nations groups, who have grown increasingly hostile toward a project that would bring Alberta crude to the West Coast for export to Asia and California.

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"We do not want your money. We do not want you to fix our problems," Pete Erickson, a councillor with the Nak'azdli band told Mr. Daniel, whose company has offered nearly $1-billion in equity and other payments to first nations groups.

But dozens of groups, including some in Alberta, have banded together against the line, which they say would endanger rivers and oceans rich in wildlife.

"I'm asking you again, will you respect our traditional law governing our own lands for us to determine our future and not proceed with the Gateway pipeline because we have told you you're not allowed in our territory?" Mr. Erickson said.

Mr. Daniel said the company respects first nations, but alleged hypocrisy among opponents.

"We're seeing a rising tide of activism that says no to proposed energy projects," he said. "But they're the very same people who say yes to … cooked food, to school buses, to ambulances and to gas pedals. And you can't have it both ways."

Despite the fierce opposition, Enbridge is already drafting plans to expand on Gateway. At least three groups are developing LNG export terminals on Canada's West Coast - and Enbridge is eager to build the pipeline to supply them, Mr. Daniel said.

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"We have put forward our credentials to those parties," he said. "We think there would be some synergies with the Gateway right-of-way."

On Wednesday, Enbridge reported first-quarter earnings of $393-million, a 15-per-cent increase over the same period a year ago. Adjusted profits beat analyst expectations by 2 cents a share.

Enbridge also boosted its dividend by 15 per cent to 49 cents a share, payable June 1.

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About the Author
Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More

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