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Enbridge is seeing a strong demand for additional oil pipeline capacity between Canada and the US Gulf

Enbridge, the Canadian pipeline operator, said that its recent commercial process for gauging oil shippers’ interest in an extension of its Flanagan South pipe was oversubscribed. This indicates a strong demand from oil shippers to increase their capacity to transport oil between Canada and the U.S. Gulf Coast.

On a recent conference call, Enbridge CEO Greg Ebel stated that the success of the Flanagan-South open season -- a term used by the industry to describe the process that pipeline companies use to inform shippers about available capacity and to solicit bids -- has brought Enbridge closer towards formally sanctioning the proposed expansion of Mainline.

Enbridge will make a final decision about the investment in the first phase, which will add 150,000 barrels to the Mainline System, by the end of this calendar year.

Enbridge's Mainline, the largest pipeline in North America with a capacity of 3 million barrels a day from Western Canada into markets in Eastern Canada or the U.S. Midwest is the largest system. Flanagan South, a 954 km (593 mile) connector pipeline that runs from Illinois to Cushing in Oklahoma, is a part of the Mainline network.

Ebel stated that the Mainline system had been in apportionment - a term which means that demand exceeded available capacity - for six out of the eight first months of 2025.

Canadian oil exports to the U.S. enjoy a tariff-free status, and production from Canada's sands is on the rise. S&P Global's recent report estimated that Canada's oil-sands would produce 3.8 millions bpd by 2030. This is a 15% increase over current levels. Trans Mountain, Canada's pipeline that transports oil from Alberta's west coast to British Columbia, where it can then be exported overseas is also looking at increasing its capacity.

No private company has expressed interest in a new pipeline for oil to be shipped overseas. However, polls in Canada, the fourth largest oil producer in the world, have shown a rise in support.

Interest in building

Such a project is unlikely. Ebel said that a new pipeline was unlikely to be built unless certain federal policies are repealed, including a cap on greenhouse gases from oil sands and a ban on oil tanks off the northern coast of British Columbia.

According to data compiled and analyzed by LSEG, Enbridge's adjusted profit per share was 65 Canadian cents for the quarter ending June 30. This beat analysts' expectations of 57 Canadian dollars.

The company reported a quarterly net profit of C$2.18 Billion.

(source: Reuters)