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Enbridge sees $20-bln in capital spending

The Enbridge Tower is pictured on Jasper Avenue in Edmonton Aug. 4, 2012.

DAN RIEDLHUBER/REUTERS

No one can say Enbridge Inc. isn't investing heavily for future growth.

After announcing an expansion to its mainline system between Edmonton and Hardisty, Alberta on Thursday, the total value of the pipeline operator's commercially secured project portfolio rose to $20-billion through 2016.

As if that isn't enough on Enbridge's plate, analyst Paul Lechem at CIBC World Markets notes that the company has another $10-billion of "highly probable" unsecured projects it's looking to launch.

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To fund this program, Enbridge has been extremely active in the equity markets, already raising $2.5-billion this year. Management has been smart: Investors are still dying for yield, so the company has issued a wad of preferred shares, and those deals have almost been always upsized.

The sad news for bankers is that the latest project won't add to its projected equity increases, because Enbridge has already accounted for it in its fundraising program. This summer, chief financial officer Richard Bird said Enbridge's funding requirements for all of its programs had spiked to $23.5-billion, and about $3.7-billion of that had to come from equity.

Having already raised $2.5-billion, they've got about $1.2-billion left, which is no small number, but it's chicken scratch compared to what they've already done this year. Plus, the additional money has to be raised by 2016, so there's a big window.

The latest mainline expansion comes with a $1.8-billion cost and will add a 36-inch line, boosting capacity to 800,000 barrels per day, as well as new terminal facilities in Edmonton and Hardisty.

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