08/01/2013 09:43 EDT | Updated 10/01/2013 05:12 EDT

Enbridge Posts Higher Q2 Profits, Books $40M In Alberta Spill Costs

Flickr: mastermaq
CALGARY - Enbridge Inc. has posted higher second-quarter profits as new pipelines in the oilsands region of northeastern Alberta came into service and the Seaway pipeline to the U.S. Gulf Coast contributed higher earnings.

The Calgary-based company (TSX:ENB) said adjusted earnings — which strip out the effects of one-time or unusual items — were $306 million, or 38 cents per share, up from $274 million, or 36 cents per share.

Net earnings were $42 million, or five cents per share, up from $8 million, or a penny per share, a year earlier.

The net earnings included $40 million in after-tax, pre insurance-recovery costs related to an oil spill from its Line 37 pipeline in northern Alberta this spring, when the province was experiencing historic flooding.

In late June, about 750 barrels of crude leaked from the line, which carries oil from the Long Lake oilsands project to its Cheecham Terminal.

"Our highest priority is the safety and protection of people and the environment. The conditions that led to this incident resulted from a one-in-100 year water-level event, which made site access and remediation very challenging," said CEO Al Monaco in a release.

"We are proud of the Enbridge team and contractors and appreciate the rapid, professional and safe response to the incident. We also worked closely with our customers to mitigate impacts to their operations to the extent possible."

The spill cleanup is mostly complete and all surrounding pipelines that had been shut down as a precaution have been returned to full service.

Enbridge is Canada's dominant oil shipper with a vast network connecting markets across North America. It also has a natural gas distribution business and a growing renewable energy portfolio.

Enbridge is looking to connect western crude to refineries in the East by reversing the flow of its existing Line 9 pipeline.

Line 9 currently ships imported crude from Montreal to a refinery in southwestern Ontario. The reversal would provide less expensive domestic supplies of crude to refineries such as Suncor's (TSX:SU) in Montreal, which could be retooled to handle heavier crudes.

Pipeline rival TransCanada Corp. (TSX:TRP) announced Wednesday that its Energy East pipeline, which is also geared toward linking western crude to eastern markets, is a-go. TransCanada plans to spend $12 billion to ship up to 1.1 million barrels of crude to refineries as far as Saint John, N.B.

A regulatory decision is expected later this year on Enbridge's Northern Gateway pipeline, a controversial proposal to ship 550,000 barrels per day of oilsands crude across British Columbia to the West Coast port of Kitimat, B.C.

The $6-billion project faces significant obstacles, including vehement opposition from First Nations along the proposed route and skepticism from B.C. Premier Christy Clark over the safety of the project.

Northern Gateway would enable landlocked Canadian crude to fetch a higher prices in lucrative Asian markets.

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