Canadian pipeline operator, Enbridge Inc. (ENB), has affirmed that the northern segment of the Athabasca Pipeline (Line 19) between Fort McMurray and Cheecham is back in operation. The pipeline, which runs between Fort McMurray and Cheecham Terminal, was shut down owing to significant release from the nearby Line 37 pipeline.
On Jun 22, Enbridge’s leak detection system identified a release from Line 37 pipeline, which connects facilities in the Long Lake area to Enbridge’s Terminal in Cheecham, Alberta. The company believes that the leakage was mainly due to ground movement caused by torrential rainfall in north Alberta. Consequently, for precautionary measures, Enbridge closed all the pipelines in the area, including Line 19.
Enbridge will conduct further examinations on the Line 37 incident area to safely resume operations of the other lines in the affected region. Moreover, the company has been bearing a cost of $1 million per day, owing to the shutdown of all the pipelines adjacent to Line 37.
The Athabasca Pipeline transports crude oil from various oil sands projects to the mainline hub at Hardisty, Alberta. The Waupisoo Pipeline system carries Alberta oil sands crude from Enbridge Athabasca’s Cheecham Terminal, south of the Enbridge Pipelines Inc. Edmonton Terminal.
Canada-based Enbridge Inc. is a leading energy transportation and distribution company. As a transporter of energy, Enbridge operates, the world's longest crude oil and liquids pipeline system in Canada and the United States. The company is also involved in natural gas transmission and midstream businesses in other countries. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company. It provides distribution services in Ontario, Quebec, New Brunswick and New York State.
However, we remain apprehensive about the company’s midstream natural gas business, which is sensitive to changes in natural gas supply-demand fundamentals and commodity cycles associated with gas processing margins.
Enbridge currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.
Meanwhile, one can look at Cheniere Energy Partners LP (CQP), Oiltanking Partners LP (OILT) and Pembina Pipeline Corporation (PBA) as good buying options. These oil production and pipeline operators – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with the potential to rise significantly from the current levels.
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