President-elect Donald Trump recently created a diplomatic row by suggesting Canada could be taken over through “economic force”. From the vantage of crude oil midstream, the irony is that Calgary-based Enbridge (ENB) is the clear market alpha. ENB has built a continent-wide pipeline system to move Canadian barrels to the Gulf Coast, plus a leading position in South Texas to export Permian crude oil. ENB also dominates East Daley’s survey of upcoming midstream expansions.
Enbridge’s growth prospects start in Canada. East Daley Analytics’ Crude Hub Model forecasts pipeline egress from the Western Canadian Sedimentary Basin (WCSB) to become constrained by YE25. The bottleneck emerges as production increases 226 Mb/d (4.7%) Y-o-Y, according to our WCSB Production Scenario Tool. The start of the Trans Mountain Pipeline expansion (TMX) opened new takeaway to the Pacific Coast in May ‘24, yet Canadian oil production grows steadily in our outlook and eventually fills available pipeline egress.
In its 3Q24 earnings update, Enbridge revealed it is in discussions with shippers to expand the Mainline. We view an eventual Mainline expansion as likely. Canada’s West Coast infrastructure is saturated after TMX, and we don’t expect new life for South Bow’s (SOBO) Keystone XL extension, despite the incoming Trump administration. TC Energy (TRP) has discontinued preservation costs and in 3Q24 booked an impairment charge for the Keystone project. That would leave a Mainline expansion as the best option to meet future WCSB growth.
ENB is also picking up more barrels from the Bakken through an open season on its Bakken Pipeline. East Daley believes ENB successfully secured 30 Mb/d to transport Bakken barrels north to Cromer, MB for a Clearbrook, MN delivery via the Mainline’s Line 65.
In April ‘24, ENB expanded Flanagan South Pipeline by 60 Mb/d to bring capacity to 720 Mb/d. The expansion helps the feasibility of a future Mainline project, as Flanagan South primarily carries Canadian production. Combined with Seaway Pipeline, Flanagan South allows WCSB barrels to reach Gulf Coast refiners and export docks. The company is building the Enbridge Houston Oil Terminal (EHOT), a 2.7 MMbbl capacity sour crude terminal, to handle more. ENB expects to start service on EHOT in 2Q26.
ENB is also a top player for Permian crude oil exports thanks to its $3B acquisition of Moda Midstream in 2021. That deal gave it the renamed Enbridge Ingleside Energy Center (EIEC) near Corpus Christi, the largest US crude oil export terminal by volume. EIEC loads ~25% of all Gulf Coast crude exports, according to the Crude Hub Model.
Enbridge’s march through South Texas isn’t over. The company in Oct ‘24 acquired more land adjacent to the EIEC from Flint Hill Resources, plus two additional docks. That acquisition will support the Ingleside Phase 7 Tank Expansion, adding five tanks (490 Mbbl total capacity), plus an expansion of the Gray Oak Pipeline to bring more Permian and Eagle Ford production to the Ingleside docks. The first phase for 80 Mb/d was due to be completed in December ’24. The second phase, expected by mid-2025, will add 40 Mb/d and take Gray Oak’s total capacity to 1,020 Mb/d.
East Daley tracks Enbridge’s many expansions at the asset level in the ENB Financial Blueprint. For example, we estimate the latest Ingleside expansion will generate ~$C12MM in annual EBITDA to the company. ENB expects the first tank to be operational by late 2025, and to complete all the tanks by YE26. – Kristy Oleszek, Gage Dwan and Andrew Ware Tickers: ENB, SOBO, TRP.
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