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Enbridge (ENB) Commences Mex-Border Pipeline's Offshore Work

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Enbridge Inc. (ENB - Free Report) recently started construction work on its Valley Crossing natural gas pipeline’s border crossing offshore part, per Reuters. The $1.6 billion pipeline that lies between Mexico and Texas is scheduled to come online in October.

The energy infrastructure company is currently working on a 305-meter part of the pipeline’s offshore section, while the rest 165-mile onshore and offshore section is ready for operation. The company has plans to start the pipeline’s commissioning process soon.

Significance of the Pipeline

The Valley Crossing pipeline has a shipping capacity of 2.6 billion cubic feet of natural gas per day (Bcf/d). It will transport gas from Texas to Mexico’s growing energy market. Following the energy reform in Mexico, the country witnessed a rising interest from international oil and gas companies.

Energy-related imports have risen in the country over the past few years. Mexico’s year-to-date average gas import from the United States currently stands at 4 Bcf/d.

The pipeline is designed to supply clean burning gas primarily to the Mexican state-run utility company, Federal Electricity Commission aka CFE, which has around 37 million clients. Moreover, the pipeline is expected to open new market opportunities for the gas producers in Texas. As a result, Enbridge’s cash flow is expected to benefit immensely.

There’s More

The Valley Crossing pipeline would to be connected to the Sur de Texas-Tuxpan pipeline in the Gulf of Mexico, and is expected to create a huge pipeline network between the United States and Mexico. The Sur de Texas-Tuxpan pipeline is currently being built by a joint venture between Sempra Energy (SRE - Free Report) and TransCanada Corp. (TRP - Free Report) .

Price Performance

Calgary Canada-based Enbridge has lost 14% in the past year compared with 7.4% decline of its industry.

Zacks Rank and One Stock to Consider

Enbridge Energy carries a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for a better-ranked stock like Delek US Holdings, Inc. (DK - Free Report) that sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is anticipated to improve 39.2% year over year, while its bottom line is expected to increase 230.2%.

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