Enbridge Inc. · TSX:ENB
Enbridge — Corporate Update (March 2014)
18 slides from Enbridge's corporate update, Mar 4, 2014
Slide 1: Line 3 Replacement Program
Line 3 Replacement Program March 4, 2014 Al Monaco President & CEO Guy Jarvis President, Liquids Pipelines J. Richard Bird Executive Vice President, CFO and Corporate Development
Slide 2: Presenters and Question & Answer Period
Line 3 Replacement Program • Presenters: Al Monaco President & CEO Guy Jarvis President, Liquids Pipelines J. Richard Bird Executive Vice President, CFO and Corporate Development • Question & Answer Period 2
Slide 3: Legal Notice
Legal Notice This presentation includes certain forward looking information (FLI) to provide Enbridge shareholders and potential investors with information about Enbridge and management’s assessment of its future plans and operations, which may not be appropriate for other purposes. FLI is typically
Slide 4: Overview, Commercial Terms, Return on Investment, Funding Plan, Execution
Line 3 Replacement Program • Overview • Commercial Terms • Return on Investment • Funding Plan Update • Execution & Growth Outlook 4
Slide 5: Line 3 Replacement
Line 3 Replacement • Line 3: – Part of Enbridge Mainline System – Replacing all remaining segments • Capital Investment: – $7 billion (ENB/EEP) • Expected Completion: – 2nd Half of 2017 • 15 Year Toll Surcharge • Shipper Support: – CAPP/RSG 5
Slide 6: Benefits of Line 3 Replacement
Benefits of Line 3 Replacement • Benefits to Industry – high reliability and assurance to key markets – reduced scheduling impacts of future maintenance – increased scheduling flexibility – improved line balancing • Supports our #1 priority - safety and operational reliability • Positive investment
Slide 7: Capital Costs
Capital Costs • Preliminary unclassified estimates of CDN $4.2 billion and U.S. $2.6 billion • 2014 – 2017 integrity capital savings of CDN $1.0 billion and U.S. $0.1 billion, increasing thereafter 7
Slide 8: IJT/CLT Surcharges
Line 3 Replacement Program IJT/CLT Surcharges • U.S. $0.80 surcharge to Hardisty to Flanagan IJT benchmark toll for years 1-10, $0.75 years 11-15 • Corresponding surcharges apply to barrels moving within Western Canada under Canadian Local Toll • Applies to all volumes • Distance adjusted for longer
Slide 9: U.S. FSM Surcharge
Line 3 Replacement Program U.S. FSM Surcharge • Incremental U.S. capital included in existing Facilities Surcharge Mechanism surcharge • Fixed 10.75% cost-of-service return on 55% equity applying standard 154B methodology 9
Slide 10: Capacity Implications
Capacity Implications • Ex-Gretna annual operating capacity rises to 2,850 kbpd following Alberta Clipper expansions – System in balance ex-Superior • Line 3 Replacement Program will not increase effective system capacity ex-Gretna • Capacity of 2,850 kbpd will accommodate expected late decade throu
Slide 11: Returns and Profile
Line 3 Replacement Program Returns and Profile • U.S. capital is low double digits full life return on equity on incremental capital, slightly tilted profile • Canadian capital is low double digits full life return on incremental equity at 2,600 kbpd, tilted return profile – Varies by up to a couple
Slide 12: 2013 – 2017 Funding Requirements
2013 – 2017 Funding Requirements Excluding Sponsored Investments • Enbridge joint funding of Sandpiper eliminated by Marathon Petroleum funding • Assumes Enbridge funds 50% of U.S. Line 3 program • $2 billion of discretionary unsecured growth capital deferred beyond 2017 Maintenance Capital 5.6 Secu
Slide 13: Cost of Equity Optimization and Flexibility
Cost of Equity Optimization and Flexibility 2013 – 2017 Remaining Requirement $2.7 Billion: $ Billions Preferred Shares $1.8 Sponsored Vehicle Drop Downs $2.0 New U.S. Co-Funding Vehicle $1.0 TOTAL $4.8 ENB Public Equity ~ 13
Slide 14: Project Execution
Project Execution Proven Execution Record Disciplined Project Execution Capital Placed In Service 2008 - 2013 • Successful Alberta Clipper team to execute Line 3 $17 B • Well-known construction corridor • Relationships with landowners and communities along Line 3 Portfolio completed at 1% under tota
Slide 15: Enterprise Wide Growth Capital Program
Enterprise Wide* Growth Capital Program (By In-service Date) - Unsecured - Commercially Secured $41 B $35 B $36 B $36 B $5 B $7 B $10 B $17 B $36 B $29 B $26 B $18 B Enbridge Day 2012 Enbridge Day 2013 Q4 2013 Earnings Call Current** (2012 – 2016) (2013 – 2017) (2013 – 2017) (2013 – 2017) * Includes
Slide 16: Industry Leading EPS Outlook
Industry Leading EPS Outlook Secured Capital 2013 – 2017 by An Industry Leading EPS* Return Profile Growth Outlook (but lumpy) Flat Tilted ($ Billions) ($ Billions) Liquids Pipelines $3.8 $2.2 – Alberta Regional Liquids Pipelines • Tilted Return $7.5 $9.7 – Market Access Initiatives Projects - $7B L
Slide 17: Summary
Line 3 Replacement Program Summary • Provides enhanced ability to reliably accommodate shipper throughput requirements • Significant incremental capital investment opportunity for ENB and EEP on attractive commercial terms • Additional funding requirements are modest and manageable • Major Projects
Slide 18: Q&A
Line 3 Replacement Program March 4, 2014 Q&A