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Enbridge CEO Al Monaco told shareholders its vast North American oil network will contribute the “lion’s share” of earnings through 2018, but Enbridge will look for ways to become a bigger player in areas that only contribute about 10 per cent of its earnings today

JEFF McINTOSH/THE GLOBE AND MAIL

Enbridge Inc. is poised to fire up two new pipelines that will dramatically boost exports of Alberta oil to Quebec and give the energy industry its first major access to U.S. Gulf Coast refineries.

The Calgary-based pipeline company, the dominant shipper of Canadian oil, said Tuesday that it will begin pumping crude through its contentious Line 9 conduit on Nov. 1 and its much larger Flanagan South line by early December.

Line 9 would send as much as 300,000 barrels of mainly light crude a day to refineries in Montreal and Quebec City, while Flanagan South is designed to shuttle 600,000 barrels of primarily heavy crude a day to the key storage hub of Cushing, Okla. The oil would move on other pipelines from there to refineries on the U.S. Gulf Coast, a key processing region that has remained largely off limits to the energy industry amid protracted delays to TransCanada Corp.'s rival Keystone XL.

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The startup of both Enbridge lines has been a key driver behind strengthening prices for Western Canada Select (WCS) heavy blend in recent months, allaying market fears over export constraints and helping to offset a sharp drop in crude prices. On Tuesday, WCS for November delivery traded for $14 (U.S.) below the price of West Texas intermediate, broker Net Energy said. The U.S. benchmark shed $2.78 or 3 per cent to finish the day at $91.16.

"The discounts are so narrow now and that's really what's helped offset the impact of the global price declining," said Jackie Forrest, vice-president of energy research at ARC Financial Corp. in Calgary.

The new pipeline connections will help reduce volatility for Canadian oil prices by giving Calgary-based producers – long beholden to a single market in the American Midwest – more places to sell crude, she said. "But they don't solve the problem in terms of we still have a limited amount of export capacity on pipe leaving Western Canada."

Surging crude supplies from rock layers in the North Dakota Bakken and other regions have dramatically altered the North American outlook for oil, leading to regional discounts as pipeline capacity lags production gains.

Enbridge said Tuesday that it expects to see those discounts ease as infrastructure catches up.

"I think you're already seeing some of that actually, with respect to heavy oil in particular," said Enbridge CEO Al Monaco. "You've seen the basis narrow up between Western Canada heavy and [Mexican heavy crude], which is a good sign, I think, for Western Canadian producers."

Enbridge said it plans to spend $44-billion (Canadian) on projects through 2018. It is also eyeing business in power generation and a return to the international scene as it seeks growth opportunities into the next decade.

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Mr. Monaco said Enbridge is planning a 760-kilometre oil pipeline in Colombia. He declined to provide specifics, but said the project could cost "in the order" of $6-billion. It is also assessing opportunities tied to Australia's export-led gas boom.

A similar energy rush on Canada's West Coast could yield new business in gas processing, Mr. Monaco said, although Enbridge executives on Tuesday questioned the scale, timing and costs of British Columbia's bet on liquefied natural gas.

Speaking at the company's investor day in Toronto, the Enbridge CEO said building energy infrastructure today is "a bigger challenge" in North America, where pipeline projects including the company's $7.9-billion Northern Gateway have encountered fierce resistance from local groups and environmentalists.

On Tuesday, the company pushed back the startup of a $2.6-billion pipeline (U.S.) called Sandpiper to 2017, citing a regulatory change in Minnesota. The pipeline, designed to move Bakken crude, was originally slated to start up in 2016.

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