(Reuters) - Enbridge Inc ENB.TO on Friday once again defended its decision to contract capacity on its Mainline system and said it would move forward with an open season to solicit bids if the pipeline operator wins necessary approval.
The company plans to sell 90% of space under long-term contracts to shippers on the nearly 3 million barrels-per-day (bpd) Mainline, instead of continuing the older practice of rationing space monthly.
With congested pipelines, some oil producers worry that Enbridge’s changes will further limit access.
After two years of negotiations and changes to the contract, Enbridge has landed on a very good balance of benefits for everybody, including producers, integrated companies and refiners, Chief Executive Officer Al Monaco said on a conference call with analysts.
Earlier on Friday, Enbridge posted a quarterly profit that fell short of analysts’ estimates, hit by weaker earnings at its energy services unit and liquids pipeline segment, sending its shares down more than 1%.
The energy services unit, which provides marketing services to North American refiners and producers among others, swung to a loss of C$22 million ($16.60 million).
Enbridge transported 1.6% more crude on its Mainline system during the fourth quarter ended Dec. 31, however adjusted core earnings from Canada’s longest pipeline fell 3.7%.
The headline EBITDA miss may cause some concern given robust equity outperformance, however the company hit full-year guidance and attractive defensive characteristics remain apparent, wrote analysts at Tudor Pickering Holt & Co.
Pipeline operators in Canada have faced strong opposition from environmental and indigenous groups, which has stalled some new pipeline projects at a time when rising production is already pressurizing existing infrastructure.
Enbridge has been trying to get approvals for its Line 3 project that would replace an aging pipeline from Alberta to Superior, Wisconsin, allowing it to double capacity to 760,000 bpd.
The company said it still doesn’t have clarity on when the permits will be issued but once it gets them, construction should take between six to nine months.
Excluding items, Enbridge earned 61 Canadian cents per share, below analysts’ expectations of 63 Canadian cents per share, according to IBES data from Refinitiv.
Reporting by Shanti S Nair in Bengaluru; Editing by Subhranshu Sahu
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