Enbridge Inc. (ENB - Free Report) stated that it has struck an accord with the State of Michigan to replace the aging Line 5 pipelines. The pipeline traverses along the bottom of a channel between Lakes Huron and Michigan.
Concerns regarding the negative impacts on the Lake, following a leak, have been increasing. Laid in 1953, the pipelines carry 540,000 barrel a day.
Per the deal, the company will carry out an evaluation by June 2018 on three options to replace the seven-kilometer stretch of underwater pipeline and observe safety measures to reduce the possibility of a leak.
The replacement options comprise the installment of a new pipeline in a tunnel under the Straits of Mackinac, placing a new pipeline below the lakebed via advanced drilling techniques and excavating a channel in the bottom of the Great Lakes. Consequently, the pipeline will be placed within a secondary enclosure in the channel.
However, other contenders for the project have demanded complete closure of the pipeline after Enbridge’s involvement. They are of the opinion that gaps have been created in the pipeline’s protective coating in recent months. These elevate concerns relating to the deteriorating condition of the pipeline.
Keeping in mind its aging condition, Enbridge operates the pipeline at less than 25% of its maximum pressure capacity for safety. However, the company is optimistic about the pipeline’s condition.
Shares of the company have lost 9.1% compared with the industry’s decline of 3.7% in the last three months.
Enbridge currently carries a Zacks Rank #4 (Sell). A few better-ranked players in the energy sector are BP plc (BP - Free Report) , ConocoPhillips (COP - Free Report) and Northern Oil and Gas Inc (NOG - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see see the complete list of today’s Zacks #1 Rank stocks here.
A major exploration and production company, BP, delivered an average positive earnings surprise of 26.80% in the last four quarters.
ConocoPhillips, based in Houston, TX, is a major global exploration and production (E&P) company. It delivered an average positive earnings surprise of 152.34% in the last four quarters.
Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered an average earnings surprise of 175.00% in the last four quarters.
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