Enbridge's Gateway project back in play

CALGARY - Enbridge Inc. is making big strides with a multibillion-dollar plan to ship crude from Canada's oilsands to Asia, the pipeline operator said Thursday as it reported a more than fourfold jump in second-quarter profit.
 
Enbridge, Canada's No. 2 pipeline company, also boosted its forecast for 2008 earnings. Its shares jumped four percent.

The company aims to file its regulatory application for the Gateway pipeline in the first quarter of next year, having secured $100 million in funding for the effort from oilsands producers and Asian refiners, chief executive Pat Daniel said.

"We've now held a number of joint project meetings with them to get their guidance and direction and input on the project and have got very strong support to move this along as quickly and promptly as we can," Daniel told analysts.

Enbridge had put Gateway on the backburner to move ahead with its extensive U.S. pipeline expansion plans, but remounted the proposal early this year amid growing interest from refiners in Singapore and Japan. Daniel declined to disclose the players pushing the proposal ahead.

The company is consulting with landowners and aboriginal communities along the proposed route across the Rocky Mountains, and has garnered positive reaction from the federal and provincial governments, Daniel said.

"It's considered very much in Canada's national and best interest and we see momentum building," he said.

The line would ship 400,000 barrels of oilsands-derived crude a day to Kitimat, B.C., from central Alberta, a distance of 1,150 kilometres. It would include an adjacent line to move condensate in the other direction.

At Kitimat, the oil would be loaded onto tankers and shipped across the Pacific Ocean, adding a major new market for Canadian producers.

The cost has climbed from the last estimate of $4.2 billion, but it is not yet known by how much, Daniel said.

In the second quarter, Enbridge -- best known as operator of the main pipeline that moves Canadian oil to the U.S. Midwest and southern Ontario -- earned $658 million, or $1.81 a share, up from a year-earlier $147 million, or 41 cents a share.

Net income included a $556-million after-tax gain from the $1.4-billion sale of its stake in the Spanish pipeline Compania Logistica de Hidrocarburos SA, announced in May.

It attributed the improvement to the allowance of equity funds used during construction on the Southern Lights pipeline, Southern Access mainline expansion and Alberta Clipper projects.

It also benefited from strong results in its energy services arm and Enbridge Energy Partners.

Revenue rose 42 per cent to $3.9 billion.

Enbridge now expects operating earnings of $1.85 to $1.95 a share this year, up five cents from its last estimate.