UPDATE 3-Enbridge new Gulf Coast capacity seen online in few months

Wed May 7, 2014 6:39pm EDT

(Adds CEO comment on re-exports of Canadian crude)

By Julie Gordon

VANCOUVER May 7 (Reuters) - Enbridge Inc , Canada's largest pipeline company, said on Wednesday its Flanagan South and Seaway expansion projects in the United States aimed at more than doubling capacity to Gulf Coast refineries were on track to begin operating in the next few months.

Also on Wednesday, Enbridge reported its adjusted quarterly earnings fell slightly, but still beat estimates, as higher deliveries were offset by lower tolls and a lack of revenue from Line 9B in Ontario, which is being reversed.

"It was a fairly vanilla quarter and that's a good thing for a pipeline company," said David McColl, an energy analyst with Morningstar. "I think all eyes are still really focused on the latter half of the year when Flanagan and Seaway are going to come online."

Construction of Flanagan South, a new line from Pontiac, Illinois, to Cushing, Oklahoma, was nearly complete and expected to be online in the third quarter, Al Monaco, Enbridge's chief executive officer, told investors on a conference call.

Its other near-term project, the Seaway expansion and twinning, should be completed "in the next couple of months," he said, boosting the Cushing to Freeport, Texas, line to 850,000 barrels per day from 400,000. Seaway is a joint venture with Enterprise Products Partners LP.

The company reaffirmed that it expected to have approval from the Obama administration for its Alberta Clipper pipeline expansion project in time to reach full capacity of 800,000 bpd by the third quarter of 2015. The Alberta Clipper line extends from Hardisty, Alberta, to Superior, Wisconsin.

With much of its growth set to happen over the next five years, Enbridge said it was looking at new opportunities in renewable energy generation, midstream natural gas infrastructure in western Canada and opportunities in Colombia, Peru and Australia.

Last month the company became the first to confirm plans to re-export Canadian crude from the United States.

Speaking to reporters after Enbridge's annual general meeting in Calgary, Monaco declined to give details on possible destinations or whether shipments had started, adding that re-exports were a small part of Enbridge's business but important to customers.

"What we are seeing in the marketplace is demand from our customers to reach other markets. The Gulf Coast in particular is inundated with more and more crude," Monaco said.

Net earnings, which benefited from after-tax gains on asset disposals and non-recurring changes in derivative fair values, rose to C$390 million ($358 million), or 47 Canadian cents per share, from C$250 million, or 31 Canadian cents per share, a year earlier.

Excluding one-time items, Enbridge earned 60 Canadian cents per share, down from 62 Canadian cents in the first quarter of 2013 but slightly above analyst expectations of 57 Canadian cents.

Average deliveries on the regional oil sands system, comprising Athabasca mainline and Waupisoo pipeline, jumped 45 percent to 671,000 bpd. Deliveries on the Canadian Mainline system rose about 7 percent to 1.9 million bpd.

Adjusted earnings from liquid pipelines fell marginally to C$218 million.

Enbridge shares closed up 32 Canadian cents at C$53.31 on the Toronto Stock Exchange. ($1 = 1.0893 Canadian dollars) (Additional reporting by Nia Williams in Calgary and Ashutosh Pandey in Bangalore; Editing by Ted Kerr, Jeffrey Benkoe and Leslie Adler)