In the investing world, it’s not always ‘what have you done for us lately?’ Often, it’s ‘what are you planning to do for us down the road?’
Here are two companies in the oil and gas pipeline industry that I believe are worthy of investing in because of their growth plans.
1. Enbridge Inc
Enbridge Inc (TSX: ENB)(NYSE: ENB) has a suite of growth projects amounting to a record value of capital investment. All are expected to come into service by 2017. Byron Neiles, SVP, Major Projects, said, “We’re currently working on $36 billion in commercially secured growth projects, and every single one of our businesses is growing — from liquids and gas pipelines to renewable power generation to gas distribution.”
Alberta Regional Infrastructure initiative: This initiative is to support the development of Alberta’s oil sands. One element of this initiative is the proposed Norlite Diluent Pipeline. This pipeline, when joined with the company’s existing Southern Lights Pipeline, would create a diluent pathway from Chicago to the core of Alberta’s oil sands.
Flanagan South pipeline project: This is a US$2.8-billion project. It will extend 950 kilometres from Enbridge’s Flanagan Terminal near Pontiac, Illinois to Cushing, Oklahoma. The line will have an initial capacity of approximately 600,000 barrels per day. The benefits of this project should begin to be realized soon, as it is expected to come into service this quarter.
Line 3 replacement program: This is a $7 billion project and the largest in Enbridge’s history. It is a considerable enhancement of the company’s mainline liquids pipeline system. This is the Canadian and U.S. mainline system running from Edmonton, Alberta to Superior, Wisconsin.
2. TransCanada Corporation
TransCanada Corporation (TSX: TRP)(NYSE: TRP) also develops and operates energy infrastructure in North America. In the last 10 years, TransCanada has invested more than $40 billion in high-quality natural gas pipelines, oil pipelines and power facilities.
Recent project completion: In January of this year, TransCanada’s Gulf Coast Project commenced delivering crude oil to Texas refineries. This completed crude oil pipeline provides a direct connection between the oil hub in Cushing, Oklahoma and delivery points on the U.S. Gulf Coast. The project cost US$2.3 billion.
Coastal GasLink Pipeline project: Shell Canada and its JV partners in the LNG Canada project chose TransCanada to develop a pipeline (650-kilometres) to deliver natural gas from the Montney gas-producing region, near Dawson Creek, B.C., to LNG Canada’s proposed liquefied natural gas facility near Kitimat, B.C. The Coastal GasLink pipeline will provide the transportation capacity required to support continued natural gas development activities in northeast B.C.
Napanee Generating Station: TransCanada is in the preliminary stages of developing the proposed Napanee Generating Station. This proposed facility will be on the existing Ontario Power Generation Lennox Generating Station site near the Town of Napanee. The proposed facility will provide on-demand power to Ontario homes, schools, institutions and businesses. The project is a 900-megawatt natural gas-fuelled electricity generating station.
The takeaway for investors: I believe these major investments in energy infrastructure will result in greater earnings for the companies mentioned and greater EPS and future dividend increases for shareholders.
These are just a few examples of the capex programs these companies are undertaking. Perform your due diligence on these two companies that have future plans for padding your trading account with income.
