Pipeline giant makes big bet on Canadian crude as U.S. tariffs drop on oilpatch

Enbridge Inc. has made a nearly $2.5-billion bet that demand for Canadian oil and gas won’t slow down anytime soon as it announced large capital investments aimed at growing capacity on its Mainline crude pipeline to the United States and expanding natural gas transmission in Northern British Columbia.

The Calgary-based pipeline giant said it plans to boost capacity on its Mainline pipeline carrying crude from Western Canada to markets in the east and U.S. Midwest by 300,000 barrels per day (b/d) by 2028.

Enbridge said it may surprise some that Mainline has been in “apportionment” — an industry term indicating that demand from shippers exceeds a pipeline’s available capacity — for the past few months, despite the looming threat of U.S. tariffs on Canadian energy.

There had been speculation among investors that just the threat of a 10 per cent tariff on Canadian crude could divert more barrels west through the expanded Trans Mountain pipeline (TMX) to the B.C. coast.

“In fact, we (haven’t had) enough pipeline capacity to serve the needs of our customers the last several months,” chief executive Greg Ebel told reporters at the company’s annual investor day conference. “It would take a very long time of sustained tariffs before you would see changing trade patterns and flow patterns, just given the nature of where that product is going, largely to serve U.S. refineries.”

Ebel said it would be very difficult for U.S. refineries to find other sources of supply and equally difficult for Canadian producers to find other sources of demand, beyond what they’re already getting on TMX.

Enbridge said it will spend $2 billion through 2028 on improving reliability and adding to Mainline’s current 3.2 million b/d capacity.

The company