Enbridge Inc. ( ENB Quick Quote ENB - Free Report) is considering increasing its Mainline system capacity by 200,000 barrels per day (bpd) to reach 3.2 million bpd.
Enbridge’s Mainline system ships the bulk of Canada crude to the United States. It is one of the largest and most important crude oil pipeline systems in North America.
Enbridge will consider advancing the expansion plans only after the government-owned Trans Mountain expansion (“TMX”) project becomes operational. Once completed, TMX will introduce an additional 590,000 bpd of pipeline capacity to Canada’s Pacific Coast, positioning it as a competitor to the Mainline.
The project, which has experienced significant delays, is encountering further setbacks due to a last-minute route deviation request in British Columbia. The project has an initial operational start date scheduled for the first quarter of 2024.
Once TMX comes online, western Canada will possess more export capacity. However, oil companies are already ramping up production in anticipation of the additional pipeline capacity. The longer TMX experiences delays, the greater the risk of western Canada export pipelines reaching their maximum capacity.
Per Enbridge, the capacity for transporting crude oil on the system will be limited in October due to the increased demand surpassing the available capacity. As a result, light crude volumes will see a 7% cut, whereas heavy crude volumes will face a 10% reduction in allocation.
Enbridge’s plan to expand the Mainline oil pipeline capacity aims to address the growing demand for oil transportation services, support increased oil production and maintain its competitive position in the market.
Shares of Enbridge have outperformed the
industry in the past month. The stock has gained 0.6% against the industry’s 0.6% decline.
Image Source: Zacks Investment Research Zacks Rank & Stocks to Consider
Enbridge currently carries a Zack Rank #3 (Hold).
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