Enbridge plans intact despite turmoil, profits rise

CALGARY, Alberta (Reuters) - Enbridge Inc said on Wednesday that falling oil prices and the credit crunch are unlikely to derail a C$12 billion ($10.4 billion) plan to boost its pipeline network to carry Alberta oil sands crude to new markets.

Canada's No. 2 pipeline company, which on Wednesday reported its third-quarter profit more than doubled, said falling oil prices and delays and deferrals for oil sands projects will not hurt its profits or delay its planned slate of new oil pipelines.

The volatile markets and the credit crunch have also not impeded the company's ability to issue some C$2 billion of debt to pay for its plans to bring oil sands crude to new markets in the United States, but the company said it is able to wait until the cost of raising money eases.

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Patrick Daniel, president and chief executive officer of Enbridge, addresses shareholders at the company's annual general meeting in Calgary May 7, 2008. REUTERS/Todd Korol

"We can pick our timing," Richard Bird, Enbridge's chief financial officer, said on a conference call. "We could issue term debt even in the current market ... We have the liquidity to wait for spreads to improves but we won't wait too long."

Enbridge, whose pipes already carry the lion's share of Canada's crude exports to the United States, is expanding its system to handle the output of new projects in the oil sands region of northern Alberta, which has the biggest reserves outside of the Middle East.

However, a host of producers have delayed projects or scaled back plans because of lower oil prices, high costs and difficulties finding credit.

Enbridge said that only one of its expansion projects has been affected by the cutbacks.

Petro-Canada and its partners in the Fort Hills oil sands project said last month they may defer building an upgrader that would convert oil sands bitumen into refinery-ready synthetic crude.

Enbridge is building the project's pipeline to carry tar-like bitumen from Fort Hills to the Edmonton, Alberta, region, where the upgrader was to be built.

The company said it has offered the Fort Hills partners a number of designs to accommodate changes in the project, but still expects the line to be in service in 2011.

Enbridge is also planning a further wave of new pipelines and expansion projects once its current slate is complete.

Pat Daniel, Enbridge's chief executive, said the company does not yet know if the current slowdown will affect those plans but expects the new lines to go ahead because Canadian producers will still need to find new markets for growing oil sands production.

"Most, if not all, of these projects will still be required," he said.

PROFITS RISE

Enbridge's third-quarter net income climbed to C$148.4 million ($129 million), or 41 Canadian cents a share, from C$78.1 million, or 22 Canadian cents a share, a year earlier, boosted by C$61.4 million in one-time items.

Those one-time items included unrealized fair value gains on derivative financial instruments and an allowance for equity funds used during construction.