Q4 2021 Enbridge Inc Earnings Call
Speaker 1: so one plus a follow-up is necessary.
As necessary.
Speaker 1: We will be prioritizing questions from the investment community, so if you are a member of the media, please direct your inquiries to our communications team who will be happy to respond. And as always, our investor relations team will be available following the call for any follow-ups.
We will be prioritizing questions from the investment community. So if you are a member of the media. Please direct your inquiries to our communications team, who will be happy to respond.
And as always our Investor relations team will be available following the call for any follow ups.
Sure.
Speaker 1: On slide two, I'll remind you that we will be referring to forward-looking information on today's call, and by its nature, this information contains forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filing.
On slide two I'll remind you that we will be referring to forward looking information on today's call and by its nature. This information contains forecasts assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filings.
Speaker 1: We'll also be referring to the non-GAAP measures summarized below. With that, I'll turn it over to Al Monaco. Thanks, Jonathan. Hi, everyone. Just as we begin here, the graphic is really just a reminder of how we kicked off Enbridge Day in December with the theme of how Enbridge is a bridge to a cleaner energy future. So more on that later.
We will also be referring to the non-GAAP measures summarized below.
With that I'll turn it over to Al Monaco.
Thanks, Jonathan Hi, everyone.
As we began here the graphic is really just a reminder of how we kicked off Enbridge day in December with the theme of how Enbridge is a bridge to a cleaner energy future. So more on that later.
Speaker 2: So I'm going to begin with a 2021 recap, our current perspective on the energy markets, followed by our business update and ESG performance, and then Vern will take you through the financial results and outlook.
So I'm going to begin with a 2021 recap our current perspective on the energy markets, followed by our business update and ESG performance and then Vern will take you through the financial results and outlook.
Speaker 2: First though, the closeout of 21 represents five years since the Spectre acquisition.
First though the closeout of 'twenty, one represents five years since the spectra acquisition.
Speaker 2: That deal was obviously transformational for us. It gave us a premier natural gas transmission business and another large gas utility franchise. And we're driving a lot of growth and synergies in that business. We've expanded at the same time the liquids and business and acquired the number one crude oil export facility in North America.
That deal was obviously transformational for us it gave us a premier natural gas transmission business and a another large gas utility franchise, and we're driving a lot of growth and synergies in that business. We've expanded at the same time, the liquids business and acquired the number one crude oil export facility.
In America.
Speaker 2: We built our offshore wind business in Europe , and we have a fulsome low carbon.
We built our offshore wind business in Europe , and we have a fulsome low carbon business.
Speaker 2: We honed our pipeline utility model by selling assets that didn't fit at great value, by the way. Simplified our structure and our financial position has never been stronger. So the business is in an excellent position and we're excited about the future.
We honed our pipeline utility model by selling assets that didn't fit at great value by the way simplified our structure and our financial position has never been stronger. So the business is in an excellent position and we're excited about the future.
As you saw this morning, we had another solid quarter, which closes out what's been a catalyst year in that five year journey I was just talking about.
Speaker 2: As you saw this morning, we had another solid quarter which closes out what's been a catalyst year in that five-year journey I was just talking about.
Speaker 2: We delivered record safety and operating performance, our systems ran full, which drove DCF per share to the top end of the guidance of $4.96, and that included a further $100 million in cost savings.
We delivered record safety and operating performance our systems ran full which drove DCF per share to the top end of the guidance of 496 and that included a further $100 million in cost savings.
Speaker 2: We put $14 billion of capital into service, that includes MoDA, secured another $2 billion of growth and sold another $1.2 billion in non-core assets at good value.
We put $14 billion of capital into service that includes Moda secured another $2 billion of growth and sold another $1 2 billion in noncore assets at good value.
Speaker 2: We made big headway on our crude oil and LNG export strategy and low carbon.
We made big headway on our crude oil and LNG export strategy and low carbon.
With line three in service, we will see record mainline throughput and strong 22 EBITDA growth.
Speaker 2: With line 3 in service, we'll see record mainline throughput and strong 22 EBITDA growth. Now, this couldn't have come at a better time for producers, as 400,000 barrels of new egress and improved netbacks is generating tremendous value, particularly at these prices, and it goes to the value of the franchise.
Now this couldnt have come at a better time for producers as 400000 barrels of new egress and improve net backs is generating tremendous value, particularly at these prices and it goes to the value of the franchise.
Speaker 2: Gas transmission utilization was strong as well. Texas Eastern saw 16 of its top 25 peak days over the past decade. We did have warmer weather at the utility, but we more than made up for that. And renewables came in well, resource and EBITDA-wise.
Gas transmission utilization was strong as well, Texas Eastern saw 16 of its 20 top 25 peak days over the past decade.
We did have warmer weather at the utility, but we more than made up for that and renewables came in well resource and EBITDA wise.
Speaker 2: This all translated into strong cash flow and dividend growth, which continued with a 27th consecutive increase this year.
This all translated into strong cash flow and dividend growth, which continued with the 27th consecutive increase this year.
Speaker 2: And we're free cash flow positive this year with visible organic growth across the businesses.
And were free cash flow positive this year with visible organic growth across the businesses.
Now onto energy markets.
Speaker 2: Just cutting to the chase on this, we're in the middle of an energy crisis.
Just cutting to the chase on this we're in the middle of an energy crisis the.
Speaker 2: The economic recovery is driving strong global energy demand. Normally, we see a supply response, but not this time, given the significant underinvestment in both conventional and renewable.
The economic recovery is driving strong global energy demand and normally we see a supply response, but not this time given the significant underinvestment in both conventional and renewables.
Speaker 2: Not surprisingly, that brings energy shortages, higher fuel costs, and of course inflation as you're seeing, which challenges competitiveness and economic growth. One example alone.
Not surprisingly that brings energy shortages higher fuel costs and of course inflation is youre seeing which challenges competitiveness and economic growth. One example alone U S. Northeast electricity prices last month reached over $300 a megawatt hour several times and Thats the same case.
Speaker 2: U.S. northeast electricity prices last month reached over $300 a megawatt hour several times and that's the same case for heating bills in that area and that's all of course due to lack of gas infrastructure. What we're witnessing today highlights the importance of reliable affordable energy in our lives.
For our heating bills in that area and that's all of course due to lack of gas infrastructure.
What we're witnessing today highlights the importance of reliable affordable energy in our lives.
Speaker 2: The reality is that North American conventional supply will play a large role in years ahead with long live reserves, low break-evens and leading ESG performance.
The reality is that north American conventional supply will play a large role in years ahead with long lived reserves low breakeven and leading ESG performance.
Speaker 2: Both North American advantages and coastal infrastructure will result in higher exports, which is what's behind our crude and LNG export strategy.
Those north American advantages in coastal infrastructure will result in higher exports, which is what's behind our crude and LNG export strategy.
Speaker 2: So, before the crisis, our view was that conventional energy would grow at least through 2035, and what's happening today just reinforces that view. But while energy fundamentals are constructive, we'll be very disciplined in deploying free cash and we'll gradually increase the proportion of low-carbon investors.
So before the crisis, our view was that conventional energy will grow at least through 2035 and what's happening today, just reinforces that view.
But while energy fundamentals are constructive we'll be very disciplined in deploying free cash and we will gradually increase the proportion of low carbon investments.
Speaker 2: We've got a solid inventory of both conventional and low-carbon opportunities, totaling about $6 billion per year. That actually aligns with our free cash flow generating capability after dividends and maintenance capital, including debt capacity.
We've got a solid inventory of both conventional and low carbon opportunities totaling about $6 billion per year.
That actually aligns with our free cash flow generating capability after dividends and maintenance capital including debt capacity.
Speaker 2: Of the $6 billion in investable capacity, we'll prioritize the $3 to $4 billion annually to rateable utility-like projects and low capital intensity growth, and we'll put excess capacity to the next best option, more organic growth, potentially modal-like asset deals, although those are few and far between, and share buybacks.
Of the $6 billion of investable capacity, we will prioritize the $3 billion to $4 billion annually to ratable utility like projects and low capital intensity growth and will put excess capacity to the next best option more organic growth.
<unk> modal like asset deals, although those are few and far between.
And share buybacks.
Speaker 2: On the conventional side, we'll expand and modernize gas systems, which will displace coal and support renewables growth. We'll continue to build out our LNG and export positions and invest in the gas utility. We'll also pursue capital efficient liquids pipelines optimizations. The nice thing is that these businesses also come with embedded low carbon opportunities, namely RNG, hydrogen and CCUS infrastructure.
On the conventional side will expand and modernize gas systems, which will displace coal and support renewables growth will continue to build out our LNG and export positions and invest in the gas utility will also pursue capital efficient liquids pipelines optimizations.
The nice thing is that these businesses also come with embedded low carbon opportunities, namely RMG hydrogen and <unk> infrastructure.
Speaker 2: And our renewables backlog gives us high visibility to growth as well.
In our renewables backlog gives us high visibility to growth as well.
Speaker 2: Moving to the conventional business update, the utility continues to have 45,000 customers annually of growth and we're connecting 27 new communities so we expect to add roughly a billion of rate base this year.
Moving to the conventional business update.
The utility continues to have 45000 customers annually of growth and we're connecting 27, new communities. So we expect to add roughly $1 billion of rate base. This year.
Speaker 2: In gas transmission, as you saw, we sanctioned another two projects totaling $700 million.
In gas transmission as you saw we sanctioned another two projects totaling $700 million.
Speaker 2: Phase two of our modernization program which improves the reliability and reduces emissions and the next phase of our appellation of market expansion which will add much needed capacity in the northeast.
Phase two of our modernization program, which improves the reliability and reduces emissions and the next phase of our Appalachian a market expansion, which will add much needed capacity in the northeast.
Speaker 2: And in that business on rates, we're now in settlement discussions with Texas Eastern Shippers.
And in that business on rates, we're now in settlement discussions with Texas Eastern shippers.
Speaker 2: In liquids with Line 3 now fully in the ground, our capacity is roughly 3.1 million barrels per day, and we're running pretty much full, so we're looking good on liquid volume.
In liquids with line three now fully in the ground or capacity is roughly $3 1 million barrels per day and were running pretty much full so we're looking good on liquids volumes.
Speaker 2: The priority now is to add more downstream egress to the Gulf on Flanagan Seaway Path.
The priority now is to add more downstream egress to the golf on Flanagan Seaway path.
Speaker 2: These are highly capital efficient expansions and come with attractive returns.
These are highly capital efficient expansions and come with attractive returns.
Speaker 2: Now on that note, here's how we see the mainline tolling process unfolding.
And on that note, here's how we see the mainline tolling process unfolding.
Speaker 2: As you know, there's a couple of options, either another CTS like incentive tolling arrangement or cost of service.
As you know Theres, a couple of options either another cts like incentive tolling arrangement or cost of service.
Speaker 2: We're in the consultation and information sharing phase here and the goal is to land on which option works best for our shippers and makes sense for us.
We're in the consultation and information sharing phase here and the goal is to land on which option works best for our shippers and makes sense for us.
Speaker 2: The incentive tolling model has worked very well in the past and aligns us with our shippers and that's because it provides the toll certainty that they want and need to run their business. It keeps costs in check and incentives us to add capacity.
The incentive tolling model has worked very well in the past and aligns us with our shippers and Thats because it provides the toll certainty that they want and need to run their business. It keeps cost in check and incentive for us to add capacity.
Speaker 2: Now in that framework, we take on operating, capital, and FX risk, and of course volumes move up and down, and if we manage all of that well, we can earn a commensurate return above the cost of service return.
In that framework, we take on operating capital and FX risks and of course volumes move up and down and if we manage all of that well we can earn a commensurate return above the cost of service return.
Speaker 2: To illustrate the win-win here, we have roughly a million barrels per day of new low-cost capacity during the last CTS term and that's brought a lot of value to shippers when it's been challenging to add any new egress out of Western Canada.
To illustrate the win win here.
Roughly 1 million barrels per day of new low cost capacity during the last Cte is term and that's brought a lot of value to shippers when it's been challenging to add any new egress out of Western Canada.
While the value equation has worked well in the past for both parties, we're equally comfortable under cost of service arrangement going forward because it minimizes the risk that I mentioned and leader in good risk adjusted return.
Speaker 2: While the value equation has worked well in the past for both parties, we're equally comfortable under a cost-of-service arrangement going forward because it minimizes the risks I mentioned and we earn a good risk-adjusted return.
Speaker 2: As we've seen, shipper consensus is tough to achieve, so we are preparing a cost of service application right now, and we don't want to presuppose the timing, but we're looking to land on a path by this summer, hopefully, and then file either a settlement agreement or a cost of service after that.
As we've seen shipper consensus is tough to achieve so we are preparing a cost of service applications right now.
And we don't want to presuppose the timing, but we're looking to land on a path by this summer hopefully and then file either a settlement agreement or a cost of service after that.
Speaker 2: But either way, we don't anticipate a material change in the context of Enbridge's overall EBIT.
But either way, we don't anticipate a material change in the context of Enbridge is overall EBITDA.
Speaker 2: Sticking with liquids, we've now targeted, integrated, sorry, our Ingleside export terminal and going after expansion.
Sticking with liquids, we've now targeted integrated sorry, our ingleside export terminal and going after expansions.
Speaker 2: storage capacity is fully contracted out for term. We're talking to customers right now about adding another 2 million barrels of capacity which we're targeting to sanction later this year.
Storage capacity is fully contracted out for term, we're talking to customers right now about adding another 2 million barrels of capacity, which we're targeting to sanction later this year.
Speaker 2: On the export side of the facility, we're 60% contracted on the 1.6 million barrels per day of capacity, so the goal of course is to turn that out.
On the export side of the facility, where 60% contracted on the $1 6 million barrels per day of capacity. So the goal of course is to term that out.
Speaker 2: We're also seeing early interest in developing LNG, hydrogen and ammonia exports and that's driven by global petrochemical feedstock demand. Under any scenario that we can see, the Permian's low-cost, abundant supply of natural gas and NGLs are going to be key to meeting that pet-chem demand.
We're also seeing early interest in developing LNG hydrogen and ammonia exports and thats driven by global petrochemical feedstock demand and under any scenario that we can see the Permian low cost abundant supply of natural gas and Ngls are going to be key to meeting that Ted.
Chem demand.
Yeah.
Speaker 2: We're also co-locating up to 60 megawatts of solar power at Ingleside and the graphic here you see shows this will more than achieve net zero with the excess contributing to scope 3 reduction. So essentially net negative at Ingleside. It's a great example actually of how we look at all new investment opportunities.
We're also co locating up to 60 megawatts of solar power at Ingleside and the graphic here you see shows this will more than achieved net zero with the excess contributing scope III reduction so essentially net negative at angles side. It's a great example, actually of how we look at all new investment opportunities.
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Speaker 2: Outside of Corpus, we're continuing to develop the Houston oil and spot terminals and that's the catalyst for expanding upstream heavy access to the Gulf and exports through our system.
Outside of Corpus, we're continuing to develop the Houston oil and spot terminals and thats the catalyst for expanding upstream heavy access to the Gulf and exports through our systems.
Speaker 2: We also have great momentum on LNG exports.
We also have great momentum on LNG exports.
With no end in sight to high LNG prices after a little bit of a pause there theres strong buyer interest and contracting up U S Gulf capacity.
Speaker 2: With no end in sight to high LNG prices, after a little bit of a pause there, there's strong buyer interest in contracting up U.S. Gulf capacity.
Speaker 2: We just brought on our camera and extension project connecting to the Calcasieu PASS facility, our fourth transport.
We just brought on our camera and extension project connecting to the Calcasieu pass facility, our fourth transport deal.
Speaker 2: We've got several projects in development as well, and we've just locked up the PA with Texas LNG to expand Valley Cross.
We've got several projects in development as well and we just locked up the PPA with Texas LNG to expand valley crossing.
Speaker 2: We're now seeing interest in Western Canada LNG, plus local market demand is picking up, so that should drive expansion on our West Coast system. In fact, we're now working on a $2.5 billion expansion of Key South, and we're targeting an open season hopefully by mid-year.
We're now seeing interest in Western Canada, LNG, plus local market demand is picking up so that should drive expansion on our west coast system. In fact, we're now working on a $2 5 billion expansion of T cells, and we're targeting an open season, hopefully by mid year.
Speaker 2: Now, the demand pull for that one is wood fiber LNG, which we understand is progressing well to FID. All in, we've got $6 billion of LNG opportunity in the hopper, which bodes well for post-2024 growth.
Now the demand pull for that one is wood fiber LNG, which we understand is progressing well.
Yes.
All in we've got $6 billion of LNG opportunity in the Hopper, which bodes well for post 'twenty for growth.
Speaker 2: So you can see here that our conventional businesses have a long growth runway.
So you can see here that our conventional businesses have a long growth runway.
Speaker 2: But we know that energy transition is gaining momentum. And as you can see with the investment outlook here, capital is flowing.
But we know that energy transition is gaining momentum and as you can see with the investment outlook here capital is flowing.
Speaker 2: We see the transition as a great opportunity for us to extend our growth.
We see the transition is a great opportunity for us to extend our growth.
Speaker 2: because the fact is our transportation and storage assets are essential to unlocking low carbon energy for the economy and our franchises feed the best North American market.
Because the fact is our transportation storage assets are essential to unlocking low carbon energy for the economy and our franchises feed the best North American markets.
The transition is going to take time as we all know so we're focused on investing capital, where there's a clear path now to execution and with attractive returns.
Speaker 2: The transition is going to take time, as we all know, so we're focused on investing capital where there's a clear path now to execution and with attractive returns.
To assess the pace of transition we look at a number of signposts, we put some of them down here on the slide.
Speaker 2: To assess the pace of transition, we look at a number of samples. We put some of them down here on the slide. The conditions are actually already ripe for renewables, and we've been building that business for a decade.
The conditions are actually already right for renewables and we've been building that business for decades.
Speaker 2: We're starting to see the policy framework and investment flow for hydrogen and CCUS, but they're not where they need to be to accelerate and scale investment.
We're starting to see the policy framework and investment flow for hydrogen and Ccs, but theyre, not where they need to be to accelerate and scale investment.
Speaker 2: Global carbon markets are starting to form, but that'll take time to mature as well.
Global carbon markets are starting to form, but that will take time to mature as well.
Speaker 2: In our view, the importance of regulatory and permitting clarity is underestimated. We need more certainty and shorter timeline to permit projects.
And our view of the importance of regulatory and permitting clarity is underestimated.
With more certainty and shorter timeline to permit projects.
Through 2025, we see about $4 billion of potential investment, including offshore wind in construction and we expect that to ramp up in the second half of the decade as RMG in <unk> and <unk> and hydrogen accelerates.
Speaker 2: Through 2025, we see about $4 billion of a potential investment, including offshore wind and construction, and we expect that to ramp up in the second half of the decade as R&G and CCUS and hydrogen accelerates. So let's run through the key.
So let's run through the key low carbon areas.
Speaker 2: We've got 14 renewables projects in construction right now, including solar cell power in North America and offshore wind in France, totaling 1.5 gigawatts.
We've got 14 renewables projects in construction right now, including solar cell power in North America, and offshore wind in France totaling one five gigawatts.
Speaker 2: Our offshore, over half of the 80 foundations are now in at St. Nazaire and it's on schedule for late this year.
Our offshore over half of the 80 foundations are now in at Saint Nazaire and it's on schedule for late this year.
Speaker 2: Vcom and Calvados are tracking well to 2023 and 2024 ISDs.
The comp and Colorado are tracking well through 2023 and 'twenty four isds.
Speaker 2: We're well underway on our first floating offshore pilot at Provence Grand Large and we see upwards of 750 megawatts of floating potential in France with EDF.
We're well underway on our first floating offshore pilot at per bonds growing large and we see upwards of 750 megawatts of floating potential in France with EDF.
Speaker 2: As you can see, we're busy with our current backlog, so we don't need to chase new projects during this period of frothing.
As you can see we are busy with our current backlog. So we don't need to chase new projects. During this period of frothiness.
Speaker 2: In North America, we're making great progress on solar self-power, three projects in service, ten in construction. That's about $300 million of capital.
In North America, we're making great progress on solar soft power three projects in service tenant construction, that's about $300 million of capital.
Speaker 2: And by leveraging our own land position and load, we've identified another 1.5 gigawatts for development.
And by leveraging our own land position and load we've identified another one five gigawatts for development.
On <unk>, we're working on several early stage developments across the franchise.
Speaker 2: On CCUS, we're working on several early stage developments across the franchise.
Speaker 2: Now as context here, the key drivers of success in CCUS in our view are storage proximity
Now as context here the key drivers of success in <unk> in our view our storage proximity.
Speaker 2: scale and efficiency, and full path integrated solutions, which fits with our capability.
Scale and efficiency and full path integrated solutions, which fits with our capabilities.
Speaker 2: Our Wabamon Carbon Hub development is positioned to capture emissions from a variety of emitters over 20 megatons per year of CO2 capture potential in the circle that you see on the map.
Our Waldo mill carbon hub development is positioned to capture emissions from a variety of emission emissions.
Emitters over 20 Mega tons per year of Sidoti capture potential in the circle that you see on the map.
In December we signed an Mou with capital power and last month, another one with Lehigh cement.
So combined that's close to four megatons to.
Which would anchor wobbled mint, which would make it one of the largest globally.
Timing wise, we could see a phased in service between 25 to 2027. So it is a project that could get the <unk> ball rolling in Alberta very quickly.
Speaker 2: Timing-wise, we could see a phase in service between 2025 to 2027, so it's a project that could get the CCUS ball rolling in Alberta very quickly.
Speaker 2: Important to that project, last week we landed on a great partnership with five Indigenous groups that we hope will be full equity partners in the hub and we're excited about moving forward with them on this project.
Important to that project last week, we landed on a great partnership with five indigenous groups that we hope will be full equity partners in the hub and we're excited about moving forward with them on this project.
With those pieces all in place, we've just father application for poor space through the Alberta government's RFP process.
Speaker 2: On RNG, the technology, economics, and commercial support, as you know, are already established. So we're in scale-up mode on this.
On R&D, the technology economics, and commercial support as you know are already established so we're in scale up mode on this.
Speaker 2: At the gas utility, three RNG facilities are operating and four in construction, and there's over 50 in early stage development.
At the gas utility three LNG facilities are operating at foreign construction and there is over 50 in early stage development.
Speaker 2: The goal here, by the way, in the utility is 5% of our two TCF annual send-out to be RNG by 2030.
The goal here by the way in the utility is 5% of our two tcf annual send out to be <unk> by 2030.
Speaker 2: In gas transmission, there's eight projects in development and a significant opportunity across the entire map.
In gas transmission Theres eight projects in development and a significant opportunity across the entire map.
Speaker 2: Hydrogen is at an earlier stage but with probably much larger investment potential longer term. At this point, the key here is to prove out the technology and scalability. And the Markham project pilots blending green hydrogen into our gas network. That's North America's first one of those facilities which went operational in Q4.
Hydrogen is at an earlier stage, but with probably much larger investment potential longer term.
At this point the key here is to prove out the technology scalability and the market.
Mark can project, a pilot's blending green hydrogen into our gas network, that's north America's first one of those facilities, which went operational in Q4.
Speaker 2: We're developing a similar but larger one in Quebec with Evolution.
We're developing a similar but larger one in Quebec with evolution.
Speaker 2: Finally, let's cover our ESG scorecard and how we're moving the ball forward further.
Finally, let's cover our ESG scorecard, and how we're moving the ball forward further.
Speaker 2: So we're doing well against our emissions targets so far. Intensity is down 21% since 2018 towards our 2030 emissions goal. And absolute emissions are down as well.
So we're doing well against our emissions targets. So far intensity is down 21% since 2018 towards our 2030 emissions GUL and absolute emissions are down as well.
Speaker 2: For example, our three operating solar cell power facilities will reduce about 20,000 tons of CO2 equivalent in the first full year of operation.
For example, our three operating solar self power facilities will reduce about 20000 tons of cotwo over in the first full year of operation.
Speaker 2: And in GTM, for example, investments to modernize compressors lowers emissions by 25% at each facility.
And in <unk> for example investments to modernize compressors lowers emissions by 25% each facility.
Speaker 2: In Lickwoods, we're just signing a long-term power contract with a local utility that could see 45% emissions reductions by 2030 for seven of our pump stations.
In liquids, we're just signing a long term power contract with local a local utility that could see 45% emissions reductions by 2030 for seven of our pump stations.
Speaker 2: And of course, on diversity, we've seen great progress at all levels of our organization, including at the board.
And of course on diversity, we've seen great progress at all levels of our organization, including at the board.
The key to achieving these goals is three actions we've taken.
Speaker 2: The key to achieving these goals is three actions we've taken.
Speaker 2: establishing concrete plans within each of our businesses.
Establishing concrete plans within each of our businesses.
Speaker 2: linking targets to compensation and aligning those goals with capital providers, namely that's the $3 billion of sustainability-linked financing that we've done over the past while.
Linking targets to compensation and aligning those goals with capital providers, namely us the $3 billion of sustainability linked financing that we've done over the past.
Speaker 2: So you can see on the right here that we're leading the pack already, but here's how we get better.
So you can see on the right here that we're leading the pack already but here's how we get better.
Speaker 2: Just to illustrate the mindset behind this, we've previously set emissions targets in the past, 21% down on our Canadian operations and taking out 55 metric tons of CO2 equivalent with our conservation program.
And just to illustrate the mindset behind this we've previously set and met emissions targets in the past, 21% down on our Canadian operations and taking out 55 metric tons of Cotwo event with our conservation programs.
We set four new goals with.
Speaker 2: We set four new goals with four pathways and aligned them with Paris on net zero.
Four pathways and aligned them with Paris on net zero.
Speaker 2: We've now added scope 3 metrics including a contribution to scope 3 reductions by investing in renewables, low carbon fuels, and conservation. So here's how we're building.
We've now added scope three metrics, including a contribution to scope III reductions by investing in renewables low carbon fuels and conservation.
So here's how we're building on this foundation.
Speaker 2: We're going to work with our supply chain to get after scope 3 emissions.
We're going to work with our supply chain to get after scope three emissions.
Speaker 2: will work with third parties to help develop science-based guidelines for the midstream sector.
We work with third parties to help develop science based guidelines for the midstream sector.
Speaker 2: We're enhancing our PCFT disclosures to include a net zero scenario in our next sustainability report. That's coming out in Q2, by the way. And we're developing our new low carbon partnerships to drive innovation across the.
We're enhancing our Tcf disclosures to include a net zero scenario in our next sustainability report that's coming out in Q2 by the way.
And we are developing our new low carbon partnerships to drive innovation across the business.
Speaker 2: we're also integrating ESG further into our capital allocation framework so here's what that looks
We're also integrating ESG further into our capital allocation framework, so curious what that looks like.
First every new investment we consider includes an ESG lens and aligns with our interim and long term targets.
Speaker 2: First, every new investment we consider includes an ESG lens and aligns with our interim and long-term targets.
Speaker 2: Our investment models factor in our emissions targets so we plan for future investments. Our hurdle rate accounts for regulatory and permitting risk and we test new investments against a range of transition scenarios.
Our investment models factor in our emissions targets. So we plan for future investments, our hurdle rate accounts for regulatory and permitting risk and we test new investments against a range of transition scenarios.
Speaker 2: A recent Engelside acquisition as you heard is a great example of how we apply this ESG lens in allocating capital. So with that I'll pass it over to...
Our recent Ingleside acquisition as you've heard is a great example of how we apply this ESG lens in allocating capital.
So with that I'll pass it over to Vern for the financial review.
Speaker 1: Thanks Al, and good morning everyone. Our fourth quarter results were up strongly over 2020 based on solid operational performance across our businesses along with partial year cash flow contributions from the 14 billion dollars of capital that we put to work last year.
Thanks, Al and good morning, everyone. Our fourth quarter results were up strongly over 2020 based on solid operational performance across our businesses.
Along with partial year of cash flow contributions from the $14 billion of capital that we put to work last year.
Speaker 1: This translates into adjusted EBITDA and DCF being up 15% year over year and EPS is 20% higher.
This translates into adjusted EBITDA, and DCF being up 15% year over year, and EPS is 20% higher.
Speaker 1: Foyer DCF for share came in at the top end of our range and our DCF EBITDA was well within guidance.
Full year DCF per share came in at the top end of our range and our DCF EBITDA was well within guidance.
Speaker 2: This is our 16th year in a row where we've hit guidance.
This is our 16th year in a row, where we've hit guidance.
Speaker 1: Main line volumes were about 3 million barrels per day in Q4, reflecting the benefit of the additional capacity from line 3.
Mainline volumes were about 3 million barrels per day in Q4, reflecting the benefit of the additional capacity from line three.
Speaker 1: Ingleside is performing in line with expectations and cash flows are expected to ramp up in 2022 as more contracts kick in.
Ingleside is performing in line with expectations and cash flows are expected to ramp up in 2022 as more contracts kick in.
Speaker 1: These operational results were partially offset by an interim toll provision recorded for the second half of 2021 following the expiry of our CTS agreement.
These operational results were partially offset by an in term toll provision recorded for the second half of 2021, following the expiry of our Cts agreement.
Speaker 1: We have included this full year provision in our 2022 guidance and throughout our three-year financial outlook.
We have included this full year provision in our 2022 guidance and throughout our three year financial outlook.
Speaker 1: Gas transmission utilization was very solid, with additional contributions coming from the capital we placed into service in the fourth quarter, including the $1.5 billion BC pipeline expansion.
Gas transmission utilization was very solid with additional contributions coming from the capital we placed into service in the fourth quarter, including the one 5 billion BC pipeline expansion.
Speaker 1: And as Al mentioned, the utility's annual results are affected by $31 million due to warmer than normal weather.
And as Al mentioned, the utilities annual results were affected by $31 million due to warmer than normal weather.
Speaker 1: But we've had a cold start to 2022. So this is a little bit of a tailwind for us this year.
But we've had a cold start to 2022. So this is a little bit of a tailwind for us this year.
Speaker 1: Wind and solar resources in our renewables business met our expectations.
Wind and solar resources in our renewables business met our expectations.
Speaker 1: In energy services, challenging marketing conditions continue to persist through the quarter. However, as a reminder, most of our committed contracts expire late this year or early next year, which improves our outlook for 2023 and beyond.
In energy services challenging marketing conditions continue to persist through the quarter. However, as a reminder, most of our committed contracts expire late this year or early next year, which improves our outlook for 2023 and beyond.
Speaker 1: Operating results in our U.S. businesses were impacted by a weaker Canadian dollar, but our FX hedging program offsets much of the...
Operating results in our U S businesses were impacted by a weaker Canadian dollar, but our FX hedging program.
Sets much of this.
Speaker 1: And you can see our head gains in eliminations and other.
And you can see our hedge gains in eliminations and other.
Speaker 1: and finally earnings reflect increased depreciation associated with the 14 billion dollars of capital that we spoke about.
And finally earnings reflect increased depreciation associated with the $14 billion of capital that we spoke about.
So another solid year in the book.
Speaker 1: And that sets us up nicely for 2022. Let's move to that outlook now.
And that sets us up nicely for 2022, let's move to that outlook now.
Speaker 1: Our 2022 guidance that we issued in December remains unchanged and it represents a 9% increase in EBITDA over 2021. This includes the interim toll provision that I spoke about.
Our 2022 guidance that we issued in December remains unchanged and it represents a 9% increase in EBITDA over 2021.
This includes the interim total provision that I spoke about.
Speaker 1: Mainline volumes are off to a good start in the first quarter of this year, supporting our forecast of just under 3 million barrels per day on average for the year. This factors in seasonally lower volumes in Q2 and Q3 due to upstream and downstream maintenance activity.
Mainline volumes are off to a good start in the first quarter of this year supporting our forecast of just under 3 million barrels per day on average for the year. This factors in seasonally lower volumes in Q2, and Q3 due to upstream and downstream maintenance activities.
Speaker 1: In our gas businesses, systems are running near full capacity, so good performance in the early part of this year.
And our gas businesses systems are running near full capacity. So good performance in the early part of this year.
Speaker 1: There's been a lot of focus in the market on inflation, interest rates and foreign exchange. So let's recap how we're positioned on these items heading into this year.
There's been a lot of focus in the market on inflation interest rates and foreign exchange. So let's recap how we are positioned on these items heading into this year.
Speaker 1: On inflation, about 80% of our EBITDA has inflation protection built in through contractual escalators and other regulatory mechanisms. So we're well protected on the top line.
On inflation about 80% of our EBITDA as inflation protection built in through contracts roll escalators and other regulatory mechanisms. So we're well protected on the top line.
Speaker 1: We continue to be highly focused on managing costs, and as Al mentioned, since 2017, we've delivered $1.2 billion in aggregate cost savings, with another $100 million realized last year.
We continue to be highly focused on managing costs and as al mentioned since 2017, we've delivered one 2 billion in aggregate cost savings with another $100 million realized last year.
Speaker 1: our exposure to rising interest rates is limited as most of our debt is fixed rate and what's remaining we actively hedge on FX we are about 95% hedged on DCF for 2022 at a rate of 1.28 so we've got good protection against exchange rate volatility.
Our exposure to rising interest rates is limited as most of our debt is fixed rate.
And what's remaining we actively hedge.
On FX, we are about 95% hedged on DCF for 2022 at a rate of one two way. So we've got good protection against exchange rate volatility.
And as you know, we intentionally limit our exposure to commodity prices, which amounts to less than 2% of our EBITDA, but on the margin we could see a little bit of upside from our investments in <unk> Sable and DCP.
Speaker 1: And, as you know, we intentionally limit our exposure to commodity prices.
Speaker 1: which amounts to less than 2% of our EBITDA. But on the margin, we could see a little bit of upside from our investments in AuxSable and DCP. Let's move to the funding plan.
Let's move to the funding plan.
In keeping with our self funded approach all equity funding needs will be met through internally generated cash flows.
Speaker 1: In keeping with our self-funded approach, all equity funding needs will be met through internally generated cash flows.
Speaker 1: Debt maturities in 2022 are about 7% of our total debt which is very manageable and will continue to tap capital from diverse credit markets.
Debt maturities in 2022 are about 7% of our total debt, which is very manageable and well continue to tap capital from diverse credit markets.
Speaker 1: In Q1, we've already swapped out some preference shares with hybrid notes. This allows us to capitalize on lower rates, which optimizes our funding costs.
In Q1, we've already swapped out some preference shares with hybrid notes. This allows us to capitalize on lower rates, which optimizes our funding costs.
Speaker 1: No change to our expectations for leverage. We expect to exit 2022 near the bottom of our 4.5 to 5.0 debt to EBITDA range driven by annualized contributions from Line 3 and the Ingleside Terminal.
No change to our expectations for leverage we expect to exit 2022 near the bottom of our four five to 5.0 debt to EBITDA range driven by annualized contribution from line three and the Ingleside terminal.
This provides us excellent financial flexibility and results in $5 billion to $6 billion per year of investment capacity.
Speaker 2: This provides us excellent financial flexibility and results in $5 to $6 billion per year of investment capacity.
Speaker 1: A portion of that will fund our secure program, so let's turn over to that.
A portion of that will fund our secured program so let's turn it over to that.
As of today, our secured backlog sits at $10 billion.
Speaker 1: As of today, our secure backlog sits at $10 billion. This reflects the $700 million of further investments in our U.S. gas transmission business that we announced today. We added the phase 2 of Texas Eastern modernization program and phase 2 of Appalachia to market expansion.
This reflects the $700 million of further investments in our U S gas transmission business that we announced today, we added the phase III of Texas Eastern modernization program and phase III of Appalachia to market expansion.
Speaker 1: That is consistent with our thesis that natural gas is a part of the long-term energy equation, providing reliable and affordable growth along with emissions reduction.
That is consistent with our thesis that natural gas is a part of the long term energy equation, providing reliable and affordable growth along with emissions reductions.
Speaker 1: More broadly, our secure program continues to be well diversified across our business.
More broadly our secured program continues to be well diversified across our businesses.
Speaker 2: with an emphasis on rateable and capital efficient growth.
With an emphasis on ratable and capital efficient growth.
Speaker 2: Over our three-year planning horizon, these projects will support a 5% to 7% DCF per share growth outlook.
Over our three year planning horizon. These projects will support a 5% to 7% DCF per share growth outlook.
Speaker 1: And as Al noted, we have good visibility to $6 billion per year of organic growth, coming from conventional and low-carbon investment opportunities, which will support our longer-term growth outlook. So let's wrap up with our capital allocation priorities.
And as Al noted, we have good visibility to $6 billion per year of organic growth coming from conventional and low carbon investment opportunities, which will support our longer term growth outlook. So, let's wrap up with our capital allocation priorities.
Speaker 2: Our priorities start with maximizing our financial strength and flexibility.
Our priorities start with maximizing our financial strength and flexibility.
Our balance sheet is in great strength shape.
Speaker 1: He will strengthen over the year and we have triple B plus ratings from all four credit rating agencies.
It will strengthen over the year and we have triple B plus ratings from all four credit rating agencies. This is exactly where we want to be.
Speaker 2: This is exactly where we want to be. We will continue to grow our dividend rateably. We increased it by 3 percent this year and that's our 27th consecutive annual increase.
We will continue to grow our dividend Ratably, we increased it by 3% this year and that's our 27th consecutive annual increase.
Speaker 2: Annual rateable dividend growth remains core to our value proposition.
Annual ratable dividend growth remains core to our value proposition.
Speaker 2: Our cash flows and balance sheet leave us with about $5 to $6 billion of annual investment capacity.
Our cash flows and balance sheet leaves us with about $5 to $6 billion of annual investment capacity, we will deploy $3 billion to $4 billion to advance brownfield low multiple expansions and optimizations, along with ongoing modernization investments and the utilities annual cap.
Speaker 2: will deploy $3 to $4 billion to advance brownfield low multiple expansions and optimizations along with ongoing modernization investments and the utilities annual capital program. That leaves about $2 billion per year in excess investment capacity for more organic growth.
Capital program that leaves about $2 billion per year in excess investment capacity for more organic growth.
Speaker 2: potential asset acquisitions, share buybacks, or debt repayment.
Potential asset acquisitions share buybacks or debt repayment succeed.
Speaker 2: Successful opportunities will need to meet our low-risk business model, our risk-adjusted hurdle rates, have a strong strategic fit, and align with our mission reduction goals.
Successful opportunities will need to meet our low risk business model, our risk adjusted hurdle rates have a strong strategic fit and align with our emission reduction goals.
Speaker 1: The Ingleside terminal acquisition was a good example of how we check all of these boxes.
The Ingleside terminal acquisition was a good example of how we check all of these boxes.
Speaker 1: In addition, we have a proven track record of opportunistically recycling capital. We did another $1.2 billion last year, and this could supplement our $5 to $6 billion of annual investment capacity.
In addition, we have a proven track record of Opportunistically recycling capital, we did another $1 $2 billion last year and this could supplement our 5% to $6 billion.
Of annual investment capacity.
Speaker 2: The bottom line is we'll continue to be highly disciplined and be good stewards of capital on behalf of our shareholders. So I'll wrap up.
The bottom line is we will continue to be highly disciplined and be good stewards of our capital on behalf of our shareholders. So I'll wrap up and turn it back to al.
Speaker 3: Okay, thank you Vern. Just a few takeaways here. Our diversified business, as you just heard, continues to generate predictable cash flow and consistently growing the dividends.
Okay. Thank you Vern just a few takeaways here are diversified business as you just heard continues to generate predictable cash flow and consistently growing the dividend.
Speaker 3: the solid base along with our secured growth outlook drives 5% to 7% DCF per share CAGR through 24.
The solid base, along with our secured growth outlook drive, 5% to 7% DCF per share CAGR through 'twenty four.
Speaker 3: We have a two-pronged strategy, capitalizing conventional energy fundamentals while increasing low-carbon investments, and we think that supports continued growth beyond 24.
We have a two pronged strategy capitalize on conventional energy fundamentals, while increasing low carbon investments and we think that supports continued growth beyond 'twenty four.
Speaker 3: As you just heard from Vern, we'll remain very disciplined, prioritizing capital efficient and utility-like projects, and ensure free cash is deployed to maximize value. All that to say that we believe that our value proposition remains very solid, and if you recall that five-year look back and how 2021 capped it off, we believe we're in excellent position to continue growth.
As you just heard from Vern will remain very discipline prioritizing capital efficient and utilities like projects and ensure free cash is deployed to maximize value all that to say that we believe that our value proposition remains very solid and if you recall that five year look back and how to.
'twenty one capped it off we believe we're in excellent position to continue growth.
Speaker 3: Before we get to the questions, I want to acknowledge Bill Yarley, our long-time leader of the gas transmission business. A couple of weeks ago, we announced Bill's retirement after 21 years at Enbridge and previous to that, Spectra, and just a remarkable career.
Before we get to the questions I want to acknowledge bill Yardley, our longtime leader of the gas transmission business. A couple of weeks ago, We announced Bill's retirement after 21 years of Enbridge and previous to that spectra and just a remarkable career.
Speaker 3: Bill developed a top-notch gas business and he's been a key member of our broader executive team.
Bill developed a top notch gas business and he has been a key member of our broader executive team.
Speaker 3: Many of you have known Bill for a long time, and it's been a real pleasure to work alongside
Many of you have known bill for a long time, and it's been a real pleasure to work alongside of them.
Speaker 3: He's put a lot of points on the board for us, but what really stands out for me is how he set up the transmission business for the future, particularly in expanding it and executing our LNG export strategy. But he's also personally led a mission to make us better on safety and reliability. And it won't be too far into a discussion with Bill before he gets to the importance of serving our customers.
He has put a lot of points on the board for us, but what really stands out for me is how he set up the transmission business for the future.
Particularly in expanding it and executing our LNG export strategy, but.
But he is also personally led emission to make us better on safety and reliability.
And it won't be too far into a discussion with bill before he gets to the importance of serving our customers.
Speaker 3: Finally, as you heard him speak at Enbridge Day, Bill is very passionate about the future of natural gas. We spent a lot of time thinking and planning for succession and developing people at Enbridge to manage changes like this.
Finally, as you heard him speak at Enbridge day, Bill is very passionate about the future of natural gas.
We spent a lot of time thinking and planning for succession and developing people at enbridge to manage changes like this.
Speaker 3: So taking over for Bill will be Cynthia Hansen, who's had her own mark leading our gas utility over the years, and has been through several senior roles. So it's a natural fit, and she's excited about taking on this new role in Houston.
So taking over for Bill will be Cynthia Hansen.
<unk> had our own mark leading our gas utility over the years and has been through several senior roles. So it's a natural fit and she is excited about taking on this new role in Houston.
Speaker 3: Taking over for Cynthia in Toronto is Michelle Heridance. Michelle currently runs gas transmission operations in Houston and has great experience in every part of the value chain.
Taking over for centre in Toronto, as Michelle Herons, Michel currently runs gas transmission operations in Houston and has great experience in every part of the value chain.
Speaker 3: And finally, in addition to his CSO role, Vern is taking on corporate development, again, a long history of experience and leadership at Enbridge. So we'll end it off there and turn it back to the operator for the Q&A.
And finally in addition to his CFO role Vern is taking on corporate development again, a long history of experience and leadership at Enbridge.
So will the ended off there and turn it back to the operator for the Q&A.
Speaker 4: Thank you. We will now begin the question and answer session. If you have a question, please press star 1 on your touchtone phone.
Thank you we will now begin the question and answer session.
Have a question. Please press star one on your touch cell phone.
Speaker 4: If you wish to be removed from the queue, please press the pound sign or the hash key. If you're using a speakerphone, you may need to pick up the handset first before pressing the number.
You mean removed from the queue. Please press the pound side or the hash key.
I mean, youre using a speakerphone you may need to pick up the handset first before pressing the numbers.
Speaker 4: Once again, if you have a question, please press star 1 on your touch-tone phone.
Once again, if you have a question please press star.
One when your Touchtone phone.
Speaker 4: We will pause for just a moment to compile the Q&A roster.
We will pause for just a moment to compile the Q&A roster.
Speaker 4: Your first question comes from the line of Robert Cattelier with CIBC Capital Markets.
Your first question comes from the line of Robert Kennedy, <unk> with CIBC capital markets.
Speaker 5: Thank you. Good morning, everyone, and thanks for the presentation. I wanted to start with the offshore wind, where we've seen rising costs, causing some financial difficulties for one of the offshore wind contractors. So can you describe your exposure to SAPIM on existing offshore wind projects? And just more generally, how do you see inflation and cost escalation impacting your to other projects, development to FID?
Thank you and good morning, everyone and thanks for your presentation.
I will start with the offshore wind.
Where we've seen rising cost, causing some financial difficulties for offshore drilling contractors.
Can you describe your exposure to the to say Tim.
Existing offshore wind projects.
Generally.
How do you see inflation in cost escalation impacting your ability to other project development to <unk>.
Speaker 3: Okay, Robert, I'm going to quarterback this Q&A, by the way, so I think for this one we'll hand it to Matthew. It's a good question on inflation and offshore wind. Okay, thanks, Al. Thanks.
Okay Robert.
Cornerback this Q&A by the way so I think for this one we'll we'll hand it to Matthew it's a good question on inflation and offshore wind.
Okay. Thanks al Thanks, Rob for your question.
Speaker 5: Yeah, you're right. We are seeing inflationary pressures in the industry generally, as in all infrastructure.
Yes, you are right, we are seeing inflationary pressures in the industry.
Generally.
As in all infrastructure, but.
Speaker 5: On the offshore wind assets and these construction projects, we have very good protection in terms of WRAP EPC contracts.
On the offshore wind offset construction projects, we have very good protection in terms of Rep EPC contracts.
Speaker 5: for construction. So right now, fortunately, we're not seeing inflationary pressure on our capital budgets over there. As you know, same as they're scheduled to come online later this year, and that's in good shape.
For construction so.
Right now Fortunately, we're not seeing inflationary pressure on our capital budgets over there.
As you know all saying is there.
That's scheduled to come online later this year and that's in good shape.
Speaker 5: Regarding SAPIM, they are involved with us, especially at Corsel, Calvados. They are involved in the foundation.
Regarding saipem.
They are involved.
With us.
Especially of course they'll.
Calvados.
They are <unk>.
And the foundations.
No.
Speaker 5: You know, generally, a couple of points there. Calvados is a few years away from in service. And the.
Generally a couple of points there.
Calvados.
A few years away.
From an service.
And.
The major construction work that would start next year.
Speaker 5: As you can imagine, we have the regular protections in terms of
As you can imagine we have the regular protections in terms of.
Speaker 5: uh... bond as well as uh... collateral
Bonds as well as.
Collateral.
Speaker 5: So you know it's also I think the main point it's a very good contract. We don't see any disruption at this point. And you know so we're we're optimistic that there won't be any impact there as we go forward.
So so.
It's also I think the main point.
Good contract.
Don't see any disruption at this point.
And so we're.
We are optimistic that there won't be any impact there.
As we go forward.
Speaker 5: I think the broader point around inflation, though, in this opportunity set is real, though, Robert. I think your point is good. As I refer to in my remarks, I think we've got enough going on here that we're going to...
So.
Back to you.
Yes, I think.
The broader point around inflation, though in this in this opportunity set is real though Robert I think your point is good.
As I referred to in my remarks, I think we've got enough going on here.
Net.
We're going to.
Speaker 3: watch that carefully and we're not going to necessarily get into projects that get us exposed. I mean we know the returns are clamping down in this sector so we're going to be very careful about future investments and you know there's no rush for us to you know get into a whole bunch of projects that are going to crunch our returns so that's the broader perspective on it.
Watch that carefully and we're not going to necessarily get into projects that get us exposed I mean, we know the returns are clamping down in this sector. So we're going to be very careful about future investments and there is no rush for us too.
Get into a whole bunch of projects that are going to crunch. Our returns. So that's the broader perspective on it.
Okay. That's very helpful and maybe one more just on slide 13, you had a comment on your <unk>.
Speaker 5: Okay that's very helpful and maybe one more just on slide 13 you had a comment on your CCUS.
Speaker 5: update about utility like commercial model and returns. I'm just wondering if in your commercial discussions are you taking a cost of service approach or a fee-for-service approach or maybe some other and I'm curious as to what level of scale you think is necessary.
Update about utility like commercial model and returns.
I was just wondering if.
In your commercial.
Discussions are you, taking a positive service approach or a fee per service approach.
Or maybe some other.
I'm curious as to what level of scale you can think of.
Sorry.
Speaker 5: to be able to make that work on a commercial basis.
To be able to make that work on the commercial basis.
Alright, okay.
Speaker 3: Well, I'll start it off and then, as you know, we're working on a project here in Alberta, but generally speaking, this whole sector is going to develop with scale and cost in mind. So our thought is, with
I'll start it off and then.
As you know we're working on a project here in Alberta, but generally speaking.
This is this whole sector is going to develop with scale and cost in mind. So our thought is.
With appropriate sort of what would you call it throughput with Sidoti.
Speaker 3: appropriate sort of throughput with CO2 on the infrastructure, we can make a utility like
On the infrastructure, we can make a utility like.
Speaker 3: structure work. And what I mean by that is good protection in terms of long-term cash flow, and in that way we should be able to provide the lowest cost of capital to actually make things work. So these are very cost and capital intensive projects, so we need to be very thoughtful about how we bring our cost of capital to bear on that. So it really does fit the utility-like model and that should line up.
Our structure work and what I mean by that is good protection in terms of long term cash flow and in that way, we should be able to provide the lowest cost of capital to actually make things work. So these are very.
Cost and capital intensive projects, so we need to be very thoughtful about how we bring our cost of capital to bear on that so it really does fit the utility like model and that should line up with the competitiveness that customers will want on this so.
Speaker 3: with the competitiveness that customers will want on this. So that's that's the bigger picture in terms of scale.
That's the bigger picture in terms of scale.
Speaker 3: what we're thinking about on this project. As you know, we have a rough estimate of investment required for each megaton of reduction, which is about a billion dollars for each. So these are fairly large-scale projects. So that's probably the order of magnitude you're talking about for each megaton. I don't know, Colin, do you want to add anything on that?
We're thinking about it on this project.
As you know we have a rough estimate of.
The investment required for each megaton of of <unk>.
The reduction which is about $1 billion for each so these are fairly scale large scale projects. So.
That's probably the order of magnitude you're talking about for each megaton I don't know Colin do you want to add anything on that.
Speaker 2: I think you covered most of it. The only thing I'll add, Robert, is...
I think you covered most of the the only thing I'll add Robert is.
Speaker 2: point on proximity and and to uh... to help this cost down equation uh... you know
Point on proximity.
And two to help this cost down equation.
Moving.
Speaker 2: the waste product the shortest distance possible contributes meaningfully to the outcome so
The waste product the shortest distance possible contributes meaningfully to the outcome. So.
Speaker 2: Our project is designed to transport and store.
Our project is designed to.
Transport and store.
Speaker 2: the carbon relatively close to the emitting source, so that helps too.
The carbon relatively close to the emitting sources, so that helps too.
Okay. That's helpful color. Thanks, guys.
Thank you.
Speaker 4: Your next question comes from the line of Robert Juan with RBC Capital Market.
Your next question comes from the line of Robert Kwan with RBC capital markets.
Speaker 1: Great. Good morning. I can follow a little bit here on emerging energy transition initiatives.
Great Good morning.
A little bit here on emerging energy transition initiatives.
Speaker 1: whether it's CCUS and you talk about hydrogen and just you've been a returns focused organization historically and I just what's the appetite to deploy capital suboptimal returns just to establish the footprint with the hope of developing a franchise that that can drive additional projects with better returns over time.
Whether it's <unk> you talked about hydrogen and just you've been a returns focused organization historically and I guess, what's the appetite to deploy capital at suboptimal returns just to establish the footprint.
With the hope is developing a franchise that that can drive additional projects with better returns overtime.
Yes.
Speaker 3: Yeah, well, in short, we don't have a lot of appetite to deploy capital in low return projects. I think this is going to be an interesting number of years here as we go forward. I think so far, Robert, we've been able to deploy capital right in line with our traditional investment criteria, as you point out.
Well.
In short, we don't have a lot of appetite to deploy capital.
In a low return.
Projects I think this is going to be.
An interesting number of years here as we go forward I think so far Robert we've been able to deploy our capital.
Right in line with our.
Traditional investment Criterias that point as you point out.
Speaker 3: Whether you look at the RNG opportunities that we're investing in, good returns there, certainly the renewables projects in broad terms have generated Enbridge-like returns, let's call it.
Whether you look at the RMG.
Opportunities that we're investing in.
Good returns there certainly the renewables projects.
In broad terms have have generated.
Enbridge like returns let's call it.
Speaker 3: The hydrogen pilot plant is generating a good return under regulatory protection, let's just call it.
The hydrogen pilot plant is generating a good return under.
Regulatory protection, let's just call. It so that will continue to be the process there.
Speaker 3: So that will continue to be the process. There may be something at the margin, let's say, where we're trying to prove a technology out or prove it out to scale that we could see a little bit of capital deployed to see that happen. But generally speaking, during this period, while we're in a scale-up, we wanna be very careful not to get too far ahead of the curve.
There may be something at the margin, let's say, where we're trying to prove a technology owed or prove it out to scale that we could see a little bit of.
Capital deployed to see that happen, but generally speaking during this period, while we're in scale up we wanted to be very careful not to get too far ahead of the curve.
Speaker 3: on putting capital to work that isn't going to generate the right return for us. So that's our overall approach.
On putting capital to work that isn't going to generate the right return for us. So that's our overall approach.
Speaker 1: That's great, Al. And maybe if I can finish here on the main line, you know, it's been, I guess now a little over 10 years under CTS, you've got a shipper group that's arguably maybe more disparate in terms of their interests than we've seen in the past.
That's great and maybe if I can finish here on the mainline.
It's been I guess now a little over 10 years under Cts you got a shipper group, that's arguably maybe more desperate in terms of their interest and we've seen in the past.
Speaker 1: So what are you seeing just as you've had these initial discussions as the top two or three points?
What are you seeing just as you've had these initial discussions as the top two or three point of.
Speaker 1: of contention in terms of, you know, what they're coming to you and just even what members within the representative shipper group, you know, may be wanting here.
Of contention in terms of what they're they're coming to you and just even what members within the representative shipper group.
Maybe one in here.
Go ahead, Robert good morning.
Speaker 2: You know, it's an interesting question, and while some time has passed, some things...
Okay.
Finishing question and well some time has passed.
<unk>.
Some things stay the same.
Speaker 2: And I don't want to be presumptive here because, as Al mentioned, we're still in relatively early innings consulting and listening carefully to customer interests.
And.
I don't want to be presumptive here, because as al mentioned, we're still.
In relatively early innings consulting.
Consulting and listening carefully too.
Customer interest.
Speaker 2: What's staying the same is the early feedback, which is fairly homogenous.
Whats the staying the same is the.
The early feedback which is fairly homogenous.
Is too.
Speaker 2: ensure Enbridge stays aligned and behaves in a manner that creates value for the shipping community.
Ensure enbridge stays aligned and behaves in a manner that.
Creates value.
For the shipping community.
Speaker 2: And I think it all went through the ingredients to that and moving.
And I think al Lynch for the ingredients to that.
Moving.
Speaker 2: much oil as we can safely every day at $90 a barrel that's that's the primary value.
Well as we can safely everyday at $90 a barrel that's that's the primary value.
Lever here.
Speaker 2: So we're hearing about consistently the need for continued...
So we're hearing about.
It consistently.
Need for continued.
Oh.
Speaker 2: you know, fixed tolling, certainty on the toll, and that alignment.
Fixed tooling certainty on the toll and that alignment.
Speaker 2: So, you know, well, I know that the mainline contracting application was, you know, contentious at the end.
So.
Well I know that the mainline contracting application was.
Contentious at the end.
Speaker 2: You know, I think if we remove the.
I think if we remove.
The.
Speaker 2: the contracting element of it or substantially do that, I think there'll be...
The contracting element of it are substantially do that I think there will be.
Speaker 2: potential for consistent alignment here by the group. Alan, do you want to add anything? Yeah, I think, Robert, you know, everybody's been, what, through the ringer on this over the last, I don't know, three, four years. So, you know, Colin mentioned toll certainty, but just generally certainty commercially for our customers is important as it is for us. So everybody wants to move forward, I think, and try to move along.
Potential consistent alignment here.
Group.
Alan.
Yes, I think Robert everybody's been.
Through the ringer on this over the last.
I don't almost three or four years so.
Carl mentioned toll certainty, but just generally certainty commercially for our customers is important as it as it is for us so.
Everybody wants to move forward, I think and try to move along.
Speaker 3: you know, Colin mentioned tolls, but it's also egress. The key here is that given that it's very difficult to build any pipeline capacity, and we know that the upstream customers do have a lot of opportunity to grow incrementally, they want to make sure that we bring what we brought before, which is ideas and options to move barrels at very low incremental costs for them.
Carl mentioned tolls, but it's also egress. The key here is that given that it's it's very difficult to build any pipeline capacity and we know that the upstream customers do have a lot of.
Opportunity to grow incrementally they wanted to make sure that we bring what we brought before which is ideas and options to move barrels at very low incremental cost for them.
Speaker 3: And then probably the other thing that's staying the same, which I think we've done very well, is just managing costs. And that's why I mentioned in my remarks that
And then probably the other thing that staying the same which I think we've done very well is just managing costs and Thats why I mentioned in my remarks that.
Speaker 3: you know having us aligned to ensure that we're managing the cost part of it ultimately flows through the toll and what we land on here so I think there's a lot of things that that you know argue for a lot of certainty as we've had as they've had in the past so that's the that's the main priority from what we see
Having us aligned to ensure that.
We're managing the cost part of it ultimately flows through the toll in what we land on here. So I think theres a lot of things that.
Argue for.
A lot of certainty as we've had as they've had in the past. So that's the that's the main priority from what we see.
Speaker 1: That's great. Appreciate the comments and Bill, all of us in retirement.
That's great I appreciate the comments and bill all the best in retirement.
Thank you very much Robert.
Thank you Robert.
Speaker 4: Your next question comes from the line of Jeremy Connick with J.P. Morgan.
Your next question comes from the line of Jeremy Tonet with Jpmorgan.
Hi, good morning.
Speaker 3: All right. All right. And Bill, you will be missed. Best of luck going forward. Thanks very much, Jeremy. Appreciate it.
Hi.
And Bill you will be missed.
Best of luck going forward.
Thanks, very much Jeremy I appreciate it.
Speaker 3: Um, you know, just want to touch on the main line a little bit here. And I don't know if you guys, um, exactly disclosed it, but as we think about the reserves booked in the fourth quarter, uh, just want to confirm that that's for two quarters, third quarter and fourth quarter. And do you guys quantify, uh, what that level was?
Just wanted to touch.
Much on the mainline a little bit here and I don't know if you guys.
Exactly disclosed it but as we think about the reserves.
Booked in the fourth quarter.
Just wanted to confirm that's for two quarters third quarter and fourth quarter.
Hi, guys quantify.
What that level was.
Speaker 2: So this we're going to hand to Vern. Hi, Jeremy. The reserve that we booked was for Q3 and Q4. And as we've talked about at our investor day in December , we're not disclosing the magnitude of that or the provision that we have in 22 and beyond. So I think you'll understand that these are commercially sensitive numbers and we don't want to broadly disclose those.
So this we're going to hand to over.
Hi, Jeremy.
The reserve that we booked was for Q3 and Q4 and as we talked about at our Investor Day in December we're not disclosing the magnitude of that or the provision that we have in 'twenty two and beyond so I think youll understand that these are commercially sensitive numbers and we don't want our broadly disk.
Closes.
Speaker 3: got it uh fair enough there and then um just want to come uh back to buybacks i guess a little bit and i was wondering if you could provide just maybe a little bit more color on the capital allocation calculus and far as far as you know what could lead to different levels of buybacks if it's you know if that falls in the ranker of where uh capital allocation points to just trying to get a sense there's a big program out there but what what might actually transpire
Got it.
Fair enough there and then.
Just wanted to come back to buybacks I guess, a little bit and I was wondering if you could provide just maybe a little bit more color on the capital allocation calculus and far as far as what could lead to different levels of buybacks.
If that falls in the rank of where capital allocation points to just trying to get a sense is a big program out there, but what might actually transpire.
Speaker 2: I'll start it off, Vern can add. I think we've got some broad criteria of how we're going to deploy this share buyback program. I think, just going back a little bit, Jeremy, it certainly moved up in the order for us after Line 3 went into service. I think we communicated that and it's certainly right in the mix right now. So the way to think about it generally is...
Okay, well I'll start it off Vern can add.
I think we've got some broad criteria of how we're going to deploy this share buyback program I think just going back a little bit Jeremy.
It has certainly moved up in the order for US. After line three went into service I think we communicated that and it certainly.
Right in the mix right now so the way to think about it generally as we want to make sure. The balance sheet is is in very strong position at.
Speaker 2: we want to make sure the balance sheet is in very strong position at all costs. And the reason for that is we need that flexibility to take on opportunities that we see in capitalism. So leverage is number one. Now, beyond that...
At all costs and.
The reason for that is we need that flexibility to.
Take on opportunities that we see and capitalize them. So leverages number one now beyond that.
Speaker 2: you've got this vying for capital between additional organic growth
You've got this vying for capital between additional organic growth.
Speaker 2: potentially some asset M&A, the motor-like opportunities, and then of course we'll look at where the shares are in the market and determine. So it's all about how we maximize the value here amongst those three options after we make sure the balance sheet is in check. So that's the policy or approach generally to using the buyback program.
Potentially some asset M&A the motor like opportunities and then of course, we will look at where the shares are in the market and determined so it's all about how we maximize.
The value here.
Amongst those three options after we make sure the balance sheet.
As in check so.
That's the that's the.
Policy or approach generally to using the buyback program.
Speaker 2: Vern do you want to add anything? Well I'll just add that we we continue to think that the shares are undervalued so buying more of our assets is always a good thing and it's really nice to to have another avenue to give some capital back to our shareholders on top of our dividend. So really you can think about it that it's a supplement to our to our annual dividend. Got it.
Brian do you want to add anything.
I'll just add.
We continue to think that the shares are undervalued, so buying more of our assets is always a good thing.
And it's really nice to have another avenue to give some capital back to our shareholders on top of our dividend. So really can think about it is that it's a supplement to our to our annual dividend.
Got it that's very helpful. I'll leave it there. Thank you.
Okay. Thanks, Jeremy.
Speaker 4: Your next question comes from the line of Rob Hope with Scotiabank.
Your next question comes from the line of Rob Hope with Scotiabank.
Speaker 5: Morning everyone, and congrats on the upcoming retirement bill. All the best in the future.
Good morning, everyone.
Congrats on the upcoming retirement Bill all the best in the future.
Speaker 5: The question actually could be for you Orsia. Looking at the $2.5 billion T South expansion, is this entirely dependent on wood fiber proceeding? And if so, is this kind of a 2026-2027 in-service date for this pipeline expansion just given when wood fiber is expected to come in?
The question actually can be for you or looking at the $2 5 billion T cell expansion is this entirely dependent on wood fiber proceeding and if so.
Is this kind of a 2026 2027 in service.
For this pipeline expansion just given when when fiber is expected to come in.
Speaker 2: Yeah, pretty much, pretty much, Rob. You know, we've been expanding T South quite a bit. You know, just finished one last year that was about a billion dollars for customers.
Alright.
Yeah pretty much pretty much Rob.
We've been expanding piece of.
Quite a bit just finished one last year that was about $1 billion for customers.
Speaker 2: in southern B.C. and the Pacific Northwest. So the next big one is probably going to be related to a major offtake and wood fiber certainly would fit that bill. And yeah, anything we start now would be a, you know, 25, 26 in service. So a lot of optimism there. I think there are bites.
In southern BC in the Pacific Northwest. So the next big one is probably going to be related to a major offtake in wood fiber certainly would fit that bill.
And anything we start now would be at.
$95 26 in service so a lot of optimism there I think.
There are bite sized project you have been following them for sure but.
Speaker 2: project. You know, you've been following them for sure, but yeah, I think they've got a good shot.
Yes, no I think I think they've got a good shot.
Speaker 5: All right. Great. Thank you. And then just moving over to the crude oil business, the downstream expansion opportunities on Flanagan and Seaway, what are the gating factors to get these things more further along, just given that Line 3 is now in service? And has the cap line reversal changed any of the dynamics there, just given alternate avenues of flow?
Alright, great. Thank you.
And then just moving over to the crude oil business the downstream expansion opportunities on Flanagan and Seaway.
The gating factors to get the thing more further along just given that line three is now in service and <unk>.
Has the cap line reversal changed any of the dynamics there just given alternative ultimate.
And there is a flow.
Okay over to Colin.
Speaker 2: Hey Rob, so on the first part, our downstream pipes, we've mobilized early work on that to maintain a quick ISD. We would be talking to customers on both of those.
Hey, Rob so on the first part.
Our downstream pipes.
We've mobilized early work on that to maintain.
Yeah.
Yeah.
We've been talking to customers on both of those.
Speaker 2: You should probably think about those in concert with EHOD as well. They kind of all go together and it would be good to have.
You should probably think about those in concert with the hottest Walter that kind of all go together.
Good to have.
Speaker 2: some turmoiling at the end of all that down in Houston. Timing-wise,
Some terminalling at the end of all that down in Houston.
Timing wise.
We're having parallel discussions with industry as we advance.
Speaker 2: We're having parallel discussions with industry as we advance the mainline tolling framework. You can see how they would interrelate to ensure you could get egress to use that downstream space. There is interest in it for sure. So that's the kind of the timing we're thinking on those. On the other.
The mainline tolling framework, you can see how they would interrelate.
To ensure you could get egress to to use that downstream space. There is interest in it for sure.
So thats the kind of the timing we're thinking on those.
On the other.
Speaker 2: business development ideas. Those are Ingleside and Express, etc. Those are all happening on a quicker basis, I would say, independent of the main line.
Our.
Business development ideas, those or Ingleside and express et cetera. Those spot those are all happening on a quicker basis I would say independent of the mainline.
Speaker 2: Gantt chart on your on your question on Kaplan, I think we're.
Gantt chart on your on your question on cap line.
I think we're.
Speaker 2: Viewing that as more opportunity than threat at this point. As you know, we feed it from three of our pipelines and upstream about the main line and regional.
Viewing that is.
More opportunity than threat at this point as you know.
We feed it from three of our pipelines and in upstream about the mainline and regional so.
Speaker 2: Um, we don't, we're not seeing tapline, um, cannibalize, uh,
We don't we're not seeing cap line.
Cannibalize Flanagan South volumes for example.
Speaker 2: I think they're moving about 100 a day, and I think that came off of rail and barge service previously, so it didn't steal it from our side.
I think if anything moving about 100 a day.
And I think that came off of.
Rail and barge serviced previously so it didn't it didn't steal it from our system.
Alright, I appreciate the color. Thank you.
Speaker 3: I appreciate the call. Thank you. Thanks. Thanks, Rob.
Thanks.
It's Rob.
Speaker 4: Your next question comes from the line of Ben Pham with BMO.
Your next question comes from the line of Ben Pham with BMO.
Speaker 6: Thanks, good morning. What are your updated thoughts on non-core asset sales at this point? And I'm probably more curious about the more commodity-based businesses. Are you comfortable just holding on to capitalize on increasing margins, or is this a good window to look at monetization?
Okay. Thanks, good morning.
I was wondering.
What are your updated thoughts on noncore asset sales.
At this point on them.
So I'm curious about the the more commodity base.
Those are your comfort just holding onto to capitalize on an increasing margins or is this a good window to look at monetization.
Speaker 7: yeah hey ben um you know generally speaking on non-core asset sales
Yeah, Hey, Ben.
Generally speaking our noncore asset sales.
Speaker 7: there's not a lot that fits that category. I mean, certainly we could look at, you know, portions of
Not a lot that fits that category I mean, certainly we could look at portions of.
Speaker 7: our other assets, if we could see great value, we'd always look at that and the team's always monitoring that. As far as the commodity sensitive ones, there's really not a lot in that category. Certainly the main ones would be Auxable.
Our other assets, if we could see great value, we would always look at that and the team is always monitoring.
That as far as the commodity sensitive ones that theres really not a lot in that category.
Certainly the main ones would be ox sable.
Speaker 7: and DCP. In the case of AuxSable, it's really tied to the Alliance pipeline, as you know, from an operational point of view, and the commodity exposure there is relatively low for us in the bigger picture context of Enbridge. In the case of DCP, I think you're familiar with that one. It's a relatively small piece of our EBITDA as well.
And and DCP in the case of Ark Sable.
Really tied to the alliance pipeline as you know from an operational point of view and the commodity exposure. There is relatively low for us in that in the bigger picture context of Enbridge.
In the case of DCP, I think youre familiar with that one.
It's a relatively small piece of our EBITDA as well.
Speaker 7: and it comes with a very large negative tax basis in that asset. So right now I think we're pretty comfortable in just holding those relatively small pieces of commodity.
And it comes with a very large negative basis tax basis in that asset so right.
Right now I think we're pretty comfortable and just holding those relatively small pieces of commodity exposure.
Okay.
Speaker 6: Thanks for that, and also your comment around renewable returns coming down and being careful about future investments, you know, I would like to hear that, but what about also being opportunistic on maybe buying some of these junior renewable developers, that could be a challenge in terms of returns and inflation, is there a window here to take advantage and go into new geographies, for example?
Thanks, Ron.
And then also.
Your comment around renewable returns coming down and being careful about future investments on.
I'd like to hear that but what about that also being opportunistic on.
Maybe buying somebody's junior.
Renewable development that could be challenged in terms of returns and inflation is there is there a window here to take advantage of and gone to new geographies for example.
Speaker 7: Yeah well you're right to point out that you know valuations have certainly compressed over the last little while and some of them are encountering difficulties. It's probably not a primary objective of ours right now and the reason for that is I think we've got
Yes, you.
You're right to point out that valuations have certainly compressed over over the last little while and some of them are encountering difficulties is probably not a primary objective of ours right now than the.
The reason for that is I think we've got as I alluded to earlier quite a bit going on in the business and when you talk about the solar cells power opportunities Theres, a number of what we call front of the meter renewables opportunities where we.
Speaker 7: as I alluded to earlier, quite a bit going on in the business and when you talk about the solar self-power opportunities, there's a number of what we call front of the meter renewables opportunities where we can bring our expertise to bear. We've got the projects that Matthew's been working on and developing for the last
We can bring our expertise to bear we've got the projects that Matthew has been working on and developing.
For the last two to three years. So I think we've just got enough on the go right now.
Speaker 7: two to three years. So I think we've just got enough on the go right now to not necessarily require going out and doing some kind of M&A deal. We always watch it, of course, but low likelihood at this point.
To not necessarily require going out and doing some kind of M&A deal.
We always watch it of course, but low likelihood at this point.
Speaker 6: Okay, great. And maybe just a quick one for Colin, perhaps on the Waldman project, or maybe anything in Alberta, CCUS. Do you need to get the CR involved at some point, or the OC69? Like, how does that – does that feed in at all?
Okay, Great and then maybe just a quick one for Colin perhaps on the Waldmann project or maybe anything in Alberta.
Do you do.
Do you need to get the CR and.
Involved at some point or Bill C 69, like how does that does that fit in at all.
Speaker 2: Uh, we'll need regulatory, uh, permits.
We will need a regulatory.
Permits.
<unk>.
Speaker 2: You know, physically, as they develop, it's an intra-Alberta situation, it doesn't cross.
Physically as they develop.
It's Ed.
Intra Alberta.
Situation doesn't cross border so.
Outside of all.
Speaker 2: But the whole industry will need clarity quickly on permitting on this whole.
The whole industry will need clarity quickly on on permitting.
I missed this hole.
Yeah.
Speaker 2: new slate of projects, so we'll be advancing that in parallel. The ISDs for the emitters we're working with here are relatively early in the relative scale of things, in 2025-26.
New slate of.
Of projects, so we will be advancing that in.
Parallel.
<unk> for the emitters were working with here are relatively early in the relative scale of things in <unk> and.
<unk> 'twenty five 'twenty six.
Speaker 2: We've got some time to work on that, but not a lot. Yeah, I think you mentioned C69. I don't think that applies here. I'm pretty sure about that, Colin, but if there's something different, we'll get back. But I don't think C69 applies. Okay, makes a lot of sense. Okay, thanks.
We've got some time to work on that but.
And I think you mentioned <unk> I don't think that applies here.
Pretty sure about that calling but.
If there's something different we'll get back, but I don't think C 69 o'clock.
Okay makes a lot of sense, okay. Thank you.
Okay.
Yes.
Speaker 4: Your next question comes from the line of Brian Reynolds with UBS.
Your next question comes from the line of Brian <unk> with UBS.
Speaker 6: Brian . Hi. Good morning. Good morning, everyone. Just as a follow-up on the shared buyback authorization in mainline, I'm just curious if you could, you know, provide a little bit more color on, you know, how mainline contracting uncertainty and reserving could ultimately, you know, impact the size and pace of those buybacks over the balance of 22 and 23. Thanks.
Brian .
Good morning, everyone.
Just as a follow up on the share buyback authorization in my mind was curious if you could provide a little bit more color on how mainline contracting uncertainty in reserving could ultimately impact.
Does the pace of those buybacks over the balance of 'twenty one.
Thanks.
Speaker 1: Yeah, you know, Brian , we don't see that actually. I think as Vern alluded to, we've made our provisions, it's within the guidance that we're talking about for 22, as well as our 22 to 24 outlook.
Yes, Brian .
We don't see that actually.
I think as <unk> alluded to we've made our provisions it's within.
The guidance that we're talking about for 'twenty, two as well as our <unk>.
'twenty two to 'twenty four outlook.
Speaker 7: So I think if you look at the, call it the variability in those outcomes, it's actually relatively small and in the bigger picture, the share buyback program really shouldn't be impacted by the outcome there. So that's how we're looking at it, just from the numbers that we see and the variability, it's not going to be impacted by, the share buybacks won't be impacted by the mainline outcome.
So I think.
If you look at the call.
The variability in those outcomes, it's actually relatively small and.
And the bigger picture of the share buyback program.
Really shouldnt be impacted by the outcome. There. So that's how we're looking at it just from.
The numbers there.
We see and the variability, it's not going to be impacted by.
The share buybacks won't be impacted by the mainline okay.
Speaker 6: Great, I appreciate all that, Keller. And then as a follow-up.
Great I appreciate all that color.
And then as a follow up just.
Speaker 6: Curious if you could provide an update on the Markham Hydrogen Blending, you know, post and service, you know, how is the project performing and do you see this project as scalable and replicable across the rest of your footprint at this time? Yeah, that's a that's a great question, Brian . So Cynthia is on the line. So Cynthia.
So if you could provide an update on the Martin hydrogen blending post in service now how is the project performing do you see this project is scalable and replicable across the rest of your footprint at this time.
Yes, that's a great question, Brian So simply is on the line so Cynthia.
Speaker 8: Yeah, thanks, Brian . And thanks, Al. We just started with the project. It went live, and as Al said in Q4, it's been performing well. You know, we will continue to learn from it. It is something that we're looking to scale, and we're very hopeful. So things are progressing as we had expected, and we'll continue to provide updates to as that opportunity unfolds. So it's a good start.
Yes, Thanks, Brian and thanks Al.
We just started with the project.
<unk>.
Or it's been performing well.
We will continue to learn from it.
It is something that we're looking to scale and we're very hopeful so things are progressing.
We have acted and will continue to provide updates.
As that opportunity and it's a good start.
Great I appreciate you kind of have a great day everyone.
Speaker 7: Thanks, Brian .
Thanks, Brad.
Speaker 4: Your next question comes from the line of Linda Ezegales with TD Security.
Your next question comes from the line of Linda as Nogales with TD Securities.
Speaker 8: Thank you. I just would like to also wish Bill all the best in his retirement and a big congratulations to Cynthia and Michelle for their new roles.
Thank you.
I just would like to also wish Bill all the best in his retirement and a big congratulations to Cynthia Michel for their new roles.
Maybe.
You could help us maybe paint a little picture of that.
Speaker 8: picture about how this Alberta carbon capture initiative might evolve from a operational and governance and ownership framework, recognizing that a lot of different partners bring unique attributes and skills to the table. I'm just wondering, you know, what are the guardrails of what is possible for the range of ownership that Enbridge would consider, how important is operatorship and how those interfaces might work if there's elements that others operate, and then also layering on the governance. There's a lot of complexity, and I realize that it's all being navigated, and there might be some sensitivities, but anything you could help us understand as to how to mitigate some of the execution risk beyond the commercial framework.
How this alberta carbon capture initiatives.
Might evolve from a operational and governance and ownership framework.
Recognizing that a lot of different partners bring unique attributes and skills to the table I'm just wondering.
What are the guardrails of what is possible for what.
The range of ownership that Enbridge would consider how important is operator ship and.
How those interfaces might work if there's elements that others operate and then also layering on the governance Theres a lot of complexity and I realize that it's all being navigated and they make some sensitivities, but but anything you could help us understand as to how to mitigate some of the execution risk on.
Beyond the commercial framework.
Speaker 7: Okay, well, I'll start off, Linda, thanks for the question. Well, first of all, I think you're right in pointing this out. This is going to be.
Okay, well I'll start off Linda Thanks for the question.
Well first of all I think youre right in pointing this out this is going to be a let's put it this way a collaboration as I mentioned in my remarks. This is going to take.
Speaker 7: a, let's put it this way, a collaboration. As I mentioned in my remarks, this is going to take
Speaker 7: a lot of integration if you just think about the capture, the transportation, all the way through to storage. So we see this as a combination of players and it's going to take a
A lot of integration if you just think about the capture of the transportation all the way through to storage. So we see this as a combination of players and it's going to take emitters.
Speaker 7: There'll be certainly some government policy angles with respect to the regulatory part of it, but also how we manage poor space.
There'll be certainly some government policy angles with respect to.
The regulatory part of it but also.
How we manage poor space. So there's a lot to go on here.
Speaker 7: So there's a lot to go on here. Another element of this, which I mentioned, is First Nations participation, and we could see them become equity owners, which I think is just a great opportunity for us and for the First Nations. So I think at a high level, it's a combination. In terms of governance and how we actually operate an asset like this.
Another element of this which I mentioned.
His first nations participation and we could see them become equity owners, which I think is just a <unk>.
Great opportunity for us and for the first nations. So I think at a high level. It's a combination in terms of governance and how we actually operate an asset like this.
Speaker 7: I see it probably developing as a large joint venture where we're going to take the expertise of for each part of the value chain and have the experts roll with it. So I'm envisioning that we run with the transportation and the storage and then of course the upstream capture part may be others involved particularly on the emissions front. So that's the big picture on this. A lot of this of course will be TBD as we move forward on the commercial construct.
It's probably IC are probably developing as a large joint venture where.
We're going to take the expertise for each part of the value chain and have the experts roll with it so.
Envisioning that we run with the transportation and the storage and then of course.
The upstream capture part maybe others involve particularly on the emissions front. So that's the big picture on this a lot of this of course will be TBD as we move forward on the commercial construct.
Speaker 9: Thank you. And just as a follow-up, recognizing that each jurisdiction has unique geographic and likely regulatory and policy attributes, how much of the discovery of this process could be used and leveraged for other jurisdictions? And what other jurisdictions do you think Enbridge would bring value to the table in terms of getting involved in carbon capture initiatives?
Thank you and just as a follow up recognizing that each jurisdiction is unique geographic and likely regulatory and policy attributes.
How much of the the discovery of this process could be used and leveraged for other other jurisdictions and what other jurisdictions do you think and branch would bring value to the table in terms of getting involved in carbon capture initiatives.
Speaker 7: Okay, well this one maybe, as you saw on the map there, we've got a number of these we're working on, so maybe I'll invite the business units to talk about specific areas. So I'll start with Colin, and then perhaps Matthew, if you want to cover anything else. So Colin, what do you think?
Okay, well this one maybe as you saw on the map there we've got a number of these were working on so maybe I'll invite.
The business units to talk about <unk>.
Specific areas, so I'll start with call in and then.
Perhaps Matthew if you want to cover anything else, so calling what do you think.
Speaker 2: I think the primary answer is yes, Linda will.
Preliminary answers, yes Linda.
Speaker 2: the learnings here. I think as I'll mention in your question and further there's lots to learn here.
Port the learnings here and I think as I mentioned in your question and further there's lots to learn here.
Speaker 2: So Alberta is at the front end of this and good for them.
So Alberta is at the front end.
Of this.
Good for them.
Speaker 2: But we feel we can port this to other parts of our footprint, right?
But we feel we can we can put this to other parts of our footprint right.
Speaker 2: where we have physical presence, local know-how, and customer relationships. So on a Liquids footprint,
Where we have physical.
Presence local knowhow and customer relationships, so on our liquids footprint.
Speaker 2: you know, we have conversations, are developing concepts in Houston in the Corpus area for starters.
We have conversations.
<unk> concepts in Houston.
And in the Corpus area for starters.
Cynthia.
Speaker 10: Sure. Thanks, Colin. As you know from the map, you can also see that we have a lot of infrastructure around some industrial hubs in Ontario. So whether that's Hamilton or Sarnia industrial area, with our storage capabilities that we have and our knowledge of the geography in Ontario, I think there's opportunities for us.
Sure. Thanks Alan.
As you know from the map.
We have a lot of infrastructure.
From industrial.
And im.
And whether that Hamilton.
Dusty malaria.
Fair with our storage capabilities that we have in our knowledge geography in Ontario.
There's opportunities.
Thank you.
Speaker 4: Your next question comes from the line of Puneet Satish with Wells Fargo.
Your next question comes from the line of <unk> cities with Wells Fargo.
Speaker 5: Thanks. Good morning. The takeaway situation in the Bakken continues to look constrained, and I know in the past you were evaluating an expansion of Alliance to accept more Bakken gas. I guess the question is, where does that expansion stand today? And I know there's a bunch of competing projects, but is that something you're still pursuing?
Thanks, Good morning.
Situation in the Bakken continues to be constrained and I know in the past you are evaluating an extension of alliance to extent more Bakken gas I guess the question is where does that expansion stand today and I know, there's a bunch of competing projects, but is that something you are still pursuing.
Speaker 7: Bill that's probably something for you. Yeah you know we've been talking to producers on and off over the course really of the last few years and it's just a matter of you know getting the right concentration and traction you know we feel as though there's there's great connectivity and we bring the gas to the right place so nothing to report as far as new contracts there but we keep we do keep pursuing that.
Okay, Bill that's probably.
Something for you, yes, we've been talking to producers on and off for.
Over over the course really over the last few years and it's just a matter of getting the right concentration and traction.
We feel as though there is there is great connectivity and we bring the gas to the right place. So.
Nothing to report as far as new contracts, there, but we keep we do keep pursuing that.
Okay, Great and then I guess I was just wondering if you could comment at least directionally on how either of the two commercial frameworks advanced on mainline.
Speaker 5: Okay, great. And then I guess I was just wondering if you could comment at least directionally on how either of the two commercial frameworks you're advancing on Mainline would impact your financials. I know you've embedded the reserve and the guidance for toll uncertainty, but is it fair to assume that if you're able to advance either of the commercial frameworks, it would have a modest positive impact on your financials?
Impact your financials, I know you've embedded the reserve and the guidance for total uncertainty, but is it fair to assume that if youre able to events either of the commercial frameworks.
A modest positive impact on your financials.
Speaker 3: Sorry, can you repeat that last part of the question again? Yeah, the last part is just, is it fair to assume that if you're able to advance either of the commercial frameworks, it would have a modest positive impact on your financials?
Sorry can you repeat that last part of the question again.
The last part is just is it fair to assume.
If you are able to advance either of the commercial frameworks. He would have a modest positive impact on your financials.
Speaker 3: I think the reserve or provision really is our best guess at where we end up at the end.
I think the reserve.
Provision really.
Is our best guess of where we end up at the end of the day.
Speaker 7: I think maybe if I understood the question right, what Vern said is the answer really. With the provision, you can think of it as a neutral outcome.
I think maybe if I if I if I understood the question right.
What <unk> said is the answer really with the provision you can think of it as you know.
Neutral.
Speaker 7: if we book the provision as to the best outcome we think there is or the most likely, I don't think we see much beyond on the upside or downside. So I wouldn't say that, you know, it's a modest positive effect as you had
Outcome.
We booked a provision.
As to the best outcome. We think there is are the most likely.
I don't think we've seen much beyond on the upside or downside. So I wouldn't say that it's a modest positive effect as you had mentioned.
Speaker 3: Yeah, I should reiterate that obviously we think on the context of our
Yes, I should reiterate that obviously, we think on the context of our.
Speaker 11: consolidated EBITDA over $15 billion for 2022, any outcome is non-material. I think the bigger takeaway here though is really what we said about the commercial outcome.
<unk> EBITDA.
Over $15 billion for 2022 any outcome is not material I think the bigger takeaway here, though is really what we said about the commercial outcomes. So we're quite comfortable managing.
Speaker 7: So we're quite comfortable managing a CTS-like environment. We've proven that for the last, I think, 25 years, working on incentive-free.
Cts like environment.
<unk> proven that for the last I think 25 years working on incentive ratemaking, but.
Speaker 7: But, you know, as I said earlier, we're equally comfortable, though, with cost of service.
As I said earlier, we're equally comfortable though with cost of service and so with the provision and the fact that process service would certainly minimized the risks that we were talking about.
Speaker 12: And so with the provision and the fact that cost of service would certainly minimize the risks that we were talking about, I don't want to say we're agnostic because I think as...
I don't want to say, we're agnostic because I think as we were pointing out earlier and Colin was referring to.
Speaker 7: we were pointing out earlier, and Colin was referring to, I think our shippers were probably happy moving on to a new CTS.
I think our shippers were probably happy.
Moving onto our new Cts so.
Speaker 7: you know, those are the things that we look at. It really is more of a
Those are the things that we look at it really is more of a.
Speaker 7: commercial issue going forward here, given that we've booked the provision.
Commercial.
Issue going forward here, given that we booked the provision.
Speaker 5: Got it. Thanks. And Bill, congrats on your retirement. Thank you. Thank you.
Got it.
And bill Congrats on your retirement thank you.
Thank you.
Speaker 13: Your next question comes on the line of Andrew Kuski with Credit Suisse.
Your next question comes from the line of Andrew Kuske with Credit Suisse.
Speaker 5: Thanks. Good morning Alex. You kind of started the beginning of the call framing the energy crisis that people are experiencing right now with high pricing and then also the producer discipline side of it. And I guess that's a bit of a two edged sword for you. You can wind up with a lack of volume growth but better counterparties.
Thanks, Good morning out I'll, let you kind of start at the beginning of the call framing the energy crisis people are experiencing right now with high pricing.
And then also the producer discipline side of it and I guess, that's a bit of a two edged sword for you you can wind up with a lack of volume growth, but better counterparties.
Speaker 14: just how do you see that translating to your business overall and then does that really compel you to pivot faster into some of the energy transition activities.
Just how do you see that translate into your business overall, and then does that really compare you to pivot faster into some of the energy transition activities.
Speaker 1: Yeah, you know, I think, Andrew, the way we see this is, as I alluded to there.
Yes.
I think Andrew.
The way we see this is as I alluded to there.
Speaker 7: it's pretty clear that the conventional runways going to be there for a long time at the same time you've got uh...
It's pretty clear that the conventional runway is going to be there for a long time at the same time you've got.
Sure.
Speaker 15: pretty solid discipline we're seeing out there. I mean, there may be some upticks that you've heard about recently, particularly in the Permian around drilling and so forth, but
Pretty solid discipline, we're seeing out there I mean, there may be some upticks that you've heard about recently, particularly in the Permian around drilling and so forth but.
Speaker 7: you know, generally speaking, producing community is not unhappy in our view, given where prices are and the fact that they're not really deploying a lot of capital and returning it back to shareholders. So I think that discipline is going to be maintained. With respect to how we pivot, again,
Generally speaking.
Producing community is not unhappy in our view given where prices are and the fact that they're not really deploying a lot of capital and returning it back to shareholders. So I think that discipline is going to be maintained with with respect to how we pivot.
Again.
Speaker 7: You know, if you look at any of the three areas, as I said, RNG is probably the fastest.
If you look at any of the three areas as I said R&D is probably the fastest.
Speaker 16: growing, but maybe lower capital investment opportunities there. But hydrogen and CCS are going to take some time.
Growing, but maybe lower capital investment opportunity is there, but hydrogen or Ccs are going to take some time.
Speaker 7: policy-wise, incentive framework-wise.
Policy wise, the incentive framework wise.
Speaker 7: That's got to still develop. So I think we're going to have to be disciplined here and really focus on the two pronged approach. Conventional energy will have runway. We'll capitalize on those opportunities.
Thats caught us skills developed so I think we're going to have to be disciplined here and really focus on the two pronged approach conventional energy will have run rate, we will capitalize on those opportunities, but we'll also look to gradually invest in low carbon providing that we can make those work economically.
Speaker 17: but we'll also look to gradually invest in low-carbon, providing...
Speaker 7: that we can make those work economically and scale up over time. So those are going to happen, but they'll happen not in the next two to three years, but after that we'll certainly be scaling up those investments.
And scale up over time, so those are going to happen, but they will happen or.
Not in the next two to three years, but after that will certainly be scaling up those investments.
Speaker 5: Yeah, that does help. And then just to follow up, and it really focuses on the producer health and the discipline they have at this point in the cycle. Has that changed the dialogue that you have with them at this point in time in your customer focus, or is it more of the same from an Enbridge perspective?
Hope that helps.
No that does help and then just a follow up and it really focuses on the producer health in.
The discipline they have at this point of the cycle and has that changed the dialogue that you have with them at this point in time and your customer focus or is it more of the same from an equity perspective.
Speaker 18: I think it's pretty much the same. We have a lot of dialogues across the four businesses with our customers on all kinds of issues. So I think so far their health has been very positive for our industry and us. We like the fact that
Alright.
It's pretty much the same I mean, we.
A lot of dialogues across the four businesses with our customers.
All kinds of issues, so I think so far.
<unk> health has been very positive for our industry and us.
We like the fact that.
Speaker 7: you know, they've sort of turned over and balance sheets have strengthened and ultimately I think that's going to be very positive for the industry and they'll probably get back on to, you know,
That sort of turned over and balance sheets to strengthen them and ultimately I think that's going to be very positive for the industry and they'll probably get back on to.
Speaker 19: growth year outlooks, but as for the next two to three years, I think we're keeping in touch and being very responsive. The CCUS project that Colin was talking about is a good example. There's a lot of producer interest in that, but we're being very careful to make sure that whatever we talk about with them has cost in mind, in that that'll be a big driver on the growth in CCUS going forward. Okay, that's great.
Growth year outlooks, but as for the next two to three years I think we're keeping in touch and in being very responsive.
The Ccs projects that Colin was talking about is a good example.
There's a lot of producer interest in that but we're being very careful to make sure that whatever we talk about with them has cost in mind.
In that that'll be a big driver on the growth in <unk> going forward.
Okay. That's great. Thank you.
Okay. Thanks, Andrew.
We have reached our time limit and not able to take any further questions. At this time I will now turn the call over to Jonathan Morgan for final remarks.
Speaker 4: We have reached our time limit and not able to take any further questions at this time. I will now turn the call over to Jonathan Morgan for final remarks.
Speaker 20: Great. Thank you. And thank you for joining us this morning. We appreciate your ongoing interest in Enbridge. As always, our investor relations team is available following the call to address any additional questions you may have. So once again, thank you and have a great day.
Great. Thank you and thank you for joining us. This morning, we appreciate your ongoing interest in Enbridge as always our Investor Relations team is available following the call to address any additional questions. You may have so once again, thank you and have a great day.
Thank you ladies and gentlemen, we appreciate your participation. This concludes today's conference you may now disconnect.
Speaker 21: Thank you, ladies and gentlemen. We appreciate your participation. This concludes today's conference. You may now disconnect.
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Speaker 22: On the Losers Club.