Enbridge Inc Q3 FY2025 Earnings Call

Good morning, and welcome to the Enbridge Inc. Third Quarter 2025 Financial Results Conference Call. My name is Rebecca Morley, and I'm the Vice President of Investor Relations and Insurance. Joining me this morning are Greg Ebel, President and CEO; Pat Murray, Executive Vice President and Chief Financial Officer; and the heads of each of our business units: Colin Gruending, Liquids Pipelines; Cynthia Hansen, Gas Transmission; Michele Harradence, Gas Distribution and Storage; and Matthew Akman, Renewable Power. Please note, this conference call is being recorded and is being webcast. I encourage those listening on the phone to follow along with the supporting slides. We will try to keep the call to roughly one hour and to accommodate as many questions as possible, we will limit questions to one plus a single follow-up if necessary. We will prioritize questions from the investment community. Media members should direct their inquiries to our communications team, who will respond. Our Investor Relations team will be available after the call for any follow-up questions. Now, onto Slide 2, where I will remind you that we'll be referring to forward-looking information in today's presentation and during the Q&A. This information includes forecast assumptions and expectations about future outcomes, which are subject to risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We will also refer to non-GAAP measures summarized below. With that, I'll turn it over to Greg Ebel.

Well, thanks very much, Rebecca, and good morning, everyone. Thanks for joining us on the call today. Before we start, I'd like to take a moment to congratulate Cynthia, who announced plans to retire at the end of 2026. Her outstanding leadership and dedication to Enbridge over the past 25 years is inspiring, and I'm grateful that she'll be continuing to provide guidance to our executive team through the end of next year. I'd also like to congratulate Matthew, who will transition to President of our GTM business at the end of this year as well as Allen Capps, who has been appointed to succeed Matthew as the Head of our Corporate Strategy Group and President of our Power business. As we've said before, and it remains true today, our investment in people creates a deep bench of executive talent to ensure a smooth transition and strong leadership as we move forward. Now moving on to our agenda for this morning. I'm excited to share another strong quarter and highlight the significant progress we've made throughout all segments of our business. It has been a busy quarter for us with new projects serving a wide range of customers across our core franchises. We're going to start today with an update on our financial performance, execution of our increasing number of secured growth projects and prospects. And I'll also highlight the strong returns and stability our business continues to demonstrate and provide an update on each of our four franchises. Pat will then walk through our financial results and capital allocation priorities. And lastly, I'll close the presentation with a few comments on our First Choice value proposition before we open the line for questions from the investment community. We had another strong quarter of results, including record third quarter adjusted EBITDA. That growth was driven by incremental contributions from a full quarter of U.S. gas utilities and organic growth within our gas transmission business. This keeps us on track to finish the year in the upper half of our EBITDA guidance, and we expect to land around the midpoint of our DCF per share metric. Our debt-to-EBITDA is 4.8x for the quarter and remains within our leverage range of 4.5 to 5x. Our assets remained highly utilized during the quarter with the mainline transporting approximately 3.1 million barrels per day, a third quarter record, thanks to strong demand. We reached positive settlements at both Enbridge Gas North Carolina and Enbridge Gas, Utah, which we expect to drive growth as rates begin to take effect. We're still on track to sanction Mainline optimization Phase 1 this quarter and Phase 2 next year, and we'll get into more details on those projects during the business update. Over the quarter, we added $3 billion of new growth capital to our secured capital program, showcasing continued execution on the commitments we laid out last Enbridge Day. In liquids, we sanctioned the Southern Illinois Connector, adding incremental egress out of Western Canada and providing a new long-term contracted service to Nederland, Texas. In Gas Transmission, we sanctioned expansions of our Egan and Moss Bluff storage facilities to support the LNG build-out along the U.S. Gulf Coast. And in the deepwater Gulf, we're expanding our previously approved Canyon system to provide transportation services for bp's recently sanctioned Tiber Offshore development. And earlier in the quarter, we sanctioned the Algonquin Gas Transmission enhancement project in the U.S. Northeast as well as the Eiger Express gas pipeline out of the Permian. And finally, we have advanced a joint venture with Oxy to develop the Pelican CO2 hub in Louisiana. These projects demonstrate the competitive edge from our all-of-the-above approach and our ability to meet growing energy demand across all parts of our business. Now let's look at our value proposition and recap our year-to-date execution before diving into the business updates. Enbridge's low-risk model continues to deliver superior risk-adjusted returns in all economic cycles. Our cash flows are diversified from over 200 high-quality asset streams and businesses that are underpinned by regulated or take-or-pay frameworks. Over 95% of our customers have investment-grade credit ratings. We have negligible commodity price exposure and the majority of our EBITDA has inflation protection. All of this results in Enbridge's industry-leading total shareholder return while maintaining lower volatility compared to peers and broad index constituents. Looking ahead, Enbridge's utility-like business model remains well-positioned and policy support for new investments in critical projects is improving, creating a business environment that incents coordination, dialogue, and growth. And I'm very pleased with how the team continues to grow the business and excited by the opportunities ahead for Enbridge. With that said, let's jump into the business unit updates, starting with Liquids segment. Mainline volumes had another strong quarter, delivering a record 3.1 million barrels per day on average for Q3. The system was a portion for the entire quarter, reflecting continued strong demand for Canadian crude and the need for reliable egress out of the Western Canadian Sedimentary Basin. Given the continued strong demand for the Mainline this year, we expect to reach the top of the performance color ahead of when we initially anticipated. This is a great sign for us and our shippers. We're achieving the maximum allowable returns under the mainline tolling settlement, delivering competitive value to our shareholders and our alignment with customers incentivizes us to move the increased volumes and provide them with access to the best markets. This leads in well to mainline optimization projects that I'll discuss shortly here, in addition to the previously announced projects like Mainline capital investment. In the U.S., we sanctioned the Southern Illinois Connector project, which is backed by long-term contracts for full path service from Western Canada to Nederland, Texas. Once complete, the new pathway will add 100,000 barrels per day of contracted full path capacity to the U.S. Gulf Coast via a 30,000 barrel increase per day on Express-Platte system, 56 miles of new pipeline between Wood River and Patoka, and utilization of 70,000 barrels per day of existing capacity on the Spearhead Pipeline. Looking ahead at additional egress projects, we are continuing to advance approximately 400,000 barrels per day of incremental capacity to the best refining markets in North America via mainline optimization Phase 1 and 2. MLO1, which will add 150,000 barrels per day of incremental egress is entering the final stages of customer approvals. and we are still on track to make FID this quarter and place the project into service in 2027. MLO2 has made significant progress as well, and that project could now add another 250,000 barrels per day of additional capacity in 2028. This second phase of mainline optimization will utilize capacity on the Dakota Access Pipeline, and we're happy to announce that we're teaming up with Energy Transfer to make that happen. So stay tuned for more on MLO2, including an open season announcement early in the new year. Relative to potential greenfield projects that would require significant energy policy change, these brownfield opportunities offer the quickest and most cost-effective way to adding close to 500,000 barrels a day of capacity to satisfy the near-term production increases forecasted out of the basin. Finally, for liquids, we added the Pelican sequestration hub to our backlog, a project in Louisiana, which will provide transportation and sequestration for 2.3 million tons per year of CO2 and is underpinned by 25-year take-or-pay offtake agreements. We will partner with Occidental Petroleum to advance the hub with Enbridge managing the pipeline infrastructure, while Oxy develops the sequestration facility. Now let's turn to our gas transmission business. This quarter, we've sanctioned an additional capital-efficient connection to our Canyon pipeline system to support bp's Tiber development in the deepwater Gulf. Originally announced last October, the Canyon system will transport both crude oil and natural gas under long-term contracts with the Tiber system expected to cost USD 300 million, taking the total Canyon pipeline development to about USD 1 billion and entering service in 2029. In the U.S. Northeast, the AGT Enhancement will increase capacity of the Algonquin pipeline, providing additional natural gas to the critically undersupplied U.S. Northeast, serving local utility demand and reducing winter price volatility. That project is expected to cost USD 300 million and enter into service in 2029. Switching over to the Permian. The Eiger Express Pipeline is a 2.5 Bcf a day Permian egress development running adjacent to the operating Matterhorn Express system and is now sanctioned and expected to enter into service in 2028. Since our initial 2024 investment in the Whistler joint venture, which holds these pipelines, we have invested $2 billion in operating assets and sanctioned another $1 billion of capital expected to enter service through 2028. Also in the Gulf region, we've sanctioned two natural gas storage expansions to support the market, which continues to tighten due to increased LNG, Mexican exports, and regional power demand. Egan and Moss Bluff storage systems, both salt caverns with exceptional connectivity and withdrawal rates are being expanded to offer a combined 23 Bcf of incremental capacity. We expect to invest approximately $500 million in these facilities at 5 to 6x EBITDA builds and come into service in phases through 2033. It's worth taking a moment to dive a little deeper into the growing North American storage market and how we are positioned to serve our customers. Between Moss Bluff and Egan as well as the expansion of Aitken Creek announced last quarter, Enbridge is now set to add over 60 Bcf of new natural gas storage directly adjacent to the major LNG centers in North America. These expansions will come in a timely manner as there is over 17 Bcf per day of additional LNG-related natural gas demand expected to enter service by 2030. This demand dramatically shifts supply economics and increases the importance of strategically located storage capacity. We are connected to all operating U.S. Gulf Coast LNG terminals and continue to invest heavily in infrastructure to enable the future growth of North American LNG. To date, we have sanctioned over $10 billion in projects with direct adjacency to operating or planned export facilities. There is a growing storage deficit across the U.S. Gulf and British Columbia coasts and having existing assets with the opportunity to execute brownfield expansions is incredibly valuable to our customers and investors. Through acquisitions and expansions, we have positioned ourselves as an industry leader in the storage space. With more than 600 Bcf of storage across our North American businesses, we can strongly support our customers as they continue to build out North America's LNG capacity and navigate the overall power demand growth we are expecting in the future. Now let's spend a few minutes recapping all the work we've done in Gas Transmission segment since Enbridge Day earlier this year. At our Investor Day in March, we shared Enbridge's $23 billion gas transmission opportunity set, noting the potential to fit up to $5 billion in projects within 18 months. This opportunity set has grown since then. And today, a little over 6 months later, we've already announced over $3 billion of new projects across our footprint, serving all pillars of natural gas demand growth, including reshoring, LNG, coal-to-gas switching and data centers. With over 23 Bcf a day of new gas demand coming online by 2030, critical investment will be needed to ensure reliable service for customers. And with this list here, you can see we are doing our part, deploying capital to meet the significant increase in natural gas demand across North America regardless of the end-use market. Now let's turn to our gas distribution business. The GDS segment is yet another way for us to capitalize on power demand theme. We've seen data center and power gen opportunities continue to be a tailwind for the segment with over 50 opportunities that could serve up to 5 Bcf a day of demand, including almost 1 Bcf per day of demand for already secured projects. During the quarter, we also reached positive rate settlements with two of our U.S. utility regulators, which are currently being reviewed for final approval. In North Carolina, allowed return on equity increased to 9.65% on an equity thickness of 54%, resulting in a revenue requirement increase of some USD 34 million. The settlement also introduces additional rate riders that allows for quick cycle return of capital for our major projects in North Carolina. These rates came into effect on an interim basis on November 1. In Utah, we filed a settlement for a revenue requirement of USD 62 million, which supports continued investment at attractive returns. We are expecting a rate order before the end of the year with rates to come in effect on January 1, 2026. Both these rate cases showcase the importance of natural gas as a safe, reliable source of affordable energy. Now I'll continue with the power demand theme with our Renewables segment. As you can see from this slide, renewable projects have been a great place to invest in the last few years, driven by strong PPA prices, decreasing supply costs, and the associated tax benefits. The four projects on this slide showcase over 2 gigawatts of power backed by agreements with some of the largest technology and data center players in the world, including Amazon and Meta. Fox Squirrel and Orange Grove are currently operational. Sequoia Solar will fully enter service in 2026 and Clear Fork will follow entering service in 2027. Looking ahead, we still have a number of projects in the queue that we're advancing. But as always, we'll remain opportunistic and continue to stand by our strict investment criteria. With that, I'll now pass it to Pat to go over our financial performance.

Thanks, Greg, and good morning, everyone. It's been another strong quarter across all four business units, thanks to continued high utilization of our assets as well as recent acquisitions. Compared to the third quarter of 2024, adjusted EBITDA is up $66 million, DCF per share is relatively flat and EPS is down from $0.55 to $0.46 per share. The decrease in EPS is primarily due to the profile change associated with our gas utilities, where Q3 tends to be a softer quarter for EPS as EBITDA is seasonally lower, but items such as interest and depreciation remained flat quarter-over-quarter. In Liquids, despite the strong mainline volumes, contributions from the Mid-Con and U.S. Gulf Coast segment are tracking lower due to tighter differentials and strong PADD II refining demand. In Gas Transmission, we experienced a strong third quarter with favorable contracting and rate case outcomes on our U.S. gas transmission assets and contributions from the Venice extension and the Permian joint ventures we added since last year. The Gas Distribution segment is up relative to last year, thanks to a full quarter contribution from Enbridge Gas North Carolina as well as benefit of the quick turn capital we experienced within our Ohio utility. In Renewables, results were up from last year with higher contributions from our wind assets and from the Orange Grove solar facility recently placed into service. Higher financing and maintenance costs from the acquisition of the Enbridge Gas North Carolina assets kept DCF per share relatively flat year-over-year. I'm pleased to once again reaffirm our 2025 guidance and growth outlook across all metrics. Our resilient business model positions us to deliver strong and predictable results through all cycles. We remain confident we will achieve full year EBITDA in the upper half of our guidance range of $19.4 billion to $20 billion, but don't expect to exceed the top of the band. As we mentioned on previous quarterly calls, due to higher interest rates, particularly in the U.S., we continue to expect DCF per share at the midpoint of our $5.50 to $5.90 per share guidance range. Mainline volumes, FX rates, and the acquisition of an interest in the Matterhorn Express Pipeline earlier in the year continue to be the tailwinds to the full year guide. This is partially offset by higher interest rates, along with tight differentials and strong PADD II refining levels, which are expected to continue into the fourth quarter and thus have been reflected as an additional headwind relative to our assumptions heading into the year. Now let's quickly discuss our capital allocation priorities. We remain firmly committed to a thoughtful capital discipline process, remaining within our $9 billion to $10 billion per year annual growth investment capacity as we pursue the wide suite of opportunities ahead. Our highly contracted cash flows support a growing and ratable dividend within our 60% to 70% DCF payout target range, ensuring long-term shareholder returns. We've grown our dividend for 30 consecutive years, a real testament to the stability of our business and the fundamentals that underpin it. On the leverage front, our consolidated net debt to adjusted EBITDA remains comfortably within our target range of 4.5 to 5x. This quarter, we saw $3 billion of newly sanctioned capital advanced. As I've mentioned in the past, I like the fact that we're generating opportunities in all of our businesses, supplementing the next few years with accretive projects while also adding visibility into the back part of the decade with opportunities like our gas storage expansions and our offshore gas transmission projects, which we've announced this quarter. Our capital allocation focus will remain with brownfield, highly strategic and economic projects supported by underlying energy fundamentals, and I'm excited to see this opportunity set materialize into the future. With that, I'll pass it back to Greg to close the presentation.

Thanks very much, Pat. It was indeed a busy quarter on the growth capital side, and I'm extremely pleased with the progress we've made since Enbridge Day in March. The North American energy landscape continues to evolve with energy demand driven by LNG development, power generation, data centers, and baseload growth. Enbridge will continue to play a pivotal role in that growth within a disciplined framework that delivers consistent long-term shareholder value. Our low-risk utility-like business with predictable cash flows is underpinned by long-term agreements and regulatory mechanisms that have allowed us to increase our dividend for 30 consecutive years across a wide range of economic cycles and conditions. Going forward, we expect to achieve 5% growth through the end of the decade, supported by our $35 billion in secured capital. Our scale offers optionality that few in our industry possess, and we'll continue to evaluate accretive investments across our footprint. Lastly, I'll just point out one housekeeping item. As has been typical, we intend to issue our '26 guidance for investors in early December. So please watch for that announcement on December 3. With that, I'll open the call to questions.

Your first question today comes from Spiro Dounis from Citi.

I wanted to start with gas distribution and storage. The release mentioned seeing an acceleration there in commercial activity and it sounds like demand from data centers and power being those initial expectations. So just a multipart question here, but curious what's suddenly driving that acceleration, if there's a particular region where you're seeing it? And how are you thinking about the time frame for when these could start to materialize?

Sure, this is Michele Harradence. I'm happy to discuss that. We're observing this trend across the board, which highlights the true value of our diverse utility portfolio. In relation to the 7 Bcf of data center opportunities, we categorize it into our baseload demand, data centers, and coal-to-gas conversions. This is largely focused on power generation and the electrification trends we've mentioned. The baseload demand exists in Ontario, Ohio, and Utah, with significant growth in data centers, especially in Ohio and Utah. We're looking at potentially up to 8 gigawatts of early-stage developments in those locations, with mid-stage projects estimated to serve over 6 gigawatts. Ontario is also experiencing substantial growth. Additionally, coal-to-gas conversions aimed at boosting power generation are taking place in North Carolina. However, when we evaluate all the capital opportunities for GDS, around 20% pertains to data centers and power generation. The core utility growth, supported by our modernization program, still provides numerous opportunities. We have several major projects underway, such as the Panhandle regional project, which has recently gone into service at nearly $360 million in Southwest Ontario. The Moriah Energy Center in North Carolina and the 215 Phase 1 and 2 projects total approximately $1.2 billion together. We’re also executing a $200 million reinforcement project in Ottawa, Ontario. There's a notable amount of growth and opportunity in our utilities. While our residential growth has softened in Ontario, it's robust in North Carolina and Utah due to population inflow. Lastly, we're actively pursuing storage opportunities, which represent a significant portion of our capital allocation. I hope that addresses your question.

Yes, there is significant upside from what we anticipated when we acquired the assets two years ago. Many hadn't seen the data center, especially in areas like Ohio, while we were confident about the growth in Utah and North Carolina. However, the prospects in Ohio, particularly in the industrial and power sectors related to data centers, are impressive. It's important to recognize that the benefits extend beyond just power. The growth in industries like manufacturing, with companies such as Caterpillar and GE needing to expand their operations, will contribute significantly. Additionally, there are secondary benefits from data centers and artificial intelligence that will impact all commodities, including oil, as we witness higher GDP and industrial expansion. The construction of this infrastructure requires fuel, whether gasoline, diesel, or oil, which affects the entire system.

Great. That's helpful color. Second question, maybe just going to Line 5. You all recently received a favorable decision from the Army Corps there. And it sounds like you expect state permits to be confirmed soon. So just curious how you're thinking about starting construction on that segment? And how do the outstanding item in Michigan play into next steps here?

Sure, Spiro. It's Colin here. I'll try to keep this answer brief, as questions regarding Line 5 can sometimes take a bit longer. The permitting for both the Wisconsin reroute and the Michigan tunnel is gaining momentum, particularly with support from the White House focusing on energy security. In Wisconsin, we are currently awaiting the findings from the administrative law judges on the recent hearing, which we expect to receive soon. We aim to complete the Wisconsin reroute by 2027, while the tunnel will be a few years behind that timeline.

Your next question comes from the line of Aaron MacNeil from TD Cowen.

It's great to see the new disclosure around Mainline optimization Phase 2. Am I right to view this as an acceleration in terms of the cadence that you're planning to offer expanded egress to Canadian producers? And if so, what's driving that expedited timing? Is it customer demand? Is it sort of a race to be first to market? How should we think about it?

Well, maybe I'll start with a little context because I think you're right. This is maybe not one some people expected, although I'd say people have always underestimated what we can do with that super system. So remember, first of all, you got customers out there that are in particular Canadian customers looking at from an oil sands perspective, you don't have the type of depletion issues that are going on in some of the shale plays. You've got a strong U.S. dollar, which is critical, driving netbacks. So you got quite a different environment going on, obviously, in Canada and some other jurisdictions that analysts may focus from that perspective. But really the attitude of customers and what we can offer. But Colin, do you want to talk about that super system element of it?

Yes. I think it's not necessarily an acceleration. We've been actively engaged in this for some time. The Canadian basin, as Greg mentioned, has turned out to be relatively advantaged compared to other regions. While we may have lost some focus on it, our customers certainly have not. We've analyzed the fundamentals and anticipate a supply growth of 500,000 to 600,000 barrels a day by the end of the decade. Our recent announcements align with what we discussed during Enbridge Day. The team is working diligently, and I’m very proud of their innovative efforts in engineering and commercialization to take advantage of current opportunities. If there are larger policy changes, there could be even more potential to unlock significant value in Northern Alberta. However, even under our base case scenario, the prospect of 600,000 barrels a day is substantial. We have consistently outlined our southbound strategy, and should there be a larger unlocking, the western solution could also come into play, complementing that development. But for now, the south remains our focus, as our customers prefer that route due to integrated business models, large efficient, long-lasting refineries, and decreased competition from Venezuela and Mexico. Canadian oil is poised to gain market share in that basin. Our strategy remains steady, and we are proud to have sanctioned the Southern Illinois Connector. This project serves as our initial step and is currently underway. We've approved a dual-flow path with 30,000 additional capacity on Platte and another 700 coming down our spearhead pipeline, which we'll transport via ETCOP, in partnership with Energy Transfer. MLO1 is currently in progress, and we expect to make a commercial announcement in the next couple of months. This project targets 150,000 barrels a day, is capital-efficient, and utilizes existing infrastructure. We have also conducted a successful open season on the Flanagan South path through Seaway with our partner Enterprise Products, which is moving forward. As for MLO2, it's in the planning stages and has a greater capacity than we initially expected, increasing from 150,000 to 250,000 barrels a day. Similar to MLO1, this will utilize existing infrastructure and involve joint venture partners. Everything is coming together well; it's not an acceleration but rather a continuation of progress, hopefully setting us up for success.

Yes, I hope you recognize that as Colin discusses our pipeline systems, he's highlighting not only the mainline but also Express-Platte, ETCOP, and DAPL, all of which we fully own. This provides us with various ways to serve our customers and offers multiple opportunities for our investors to succeed. It's an exciting aspect that I believe doesn't always receive its due value in the market.

That's a ton of great context. As a related follow-up, a significant portion of the $35 billion of secured capital comes into service in 2027. As we think about all these liquids projects that you just outlined, continued success in GTM, steady growth across the utilities. Do you see sort of a, I guess, what I'll call a high plateau in terms of capital entering into service towards the end of the decade? And do you see any timing or capital sequencing issues to maintain the spend between $9 billion and $10 billion?

Maybe Pat will want to add to this, but I don't think so. I mean, we're constantly adding to the back end. Look, I think that's not unusual for companies like ourselves. Just go through the stuff that Colin went through, right? You're talking '27, '28 and then '29, '30, you'll see additional pieces as well. The gas trend deep Gulf stuff is all '29. Storage piece comes in some late '29, '30. So I think it will stay up at that amount. That's what gives us the confidence on 5% growth. It's a bit of a flywheel that's going on right now, which is quite positive. But from a balance sheet perspective, we feel very good about that 9 to 10. Pat?

Yes, I believe we have a strong outlook for 2026. We have set aside some capacity for MLO 1s and 2s. For MLO 1, we will have some expenses in 2026; for MLO 2, the expenses will likely be smaller since it's scheduled for a later timeframe, but we will still reserve some capacity because we are confident in their progress. As Greg mentioned, we are excited to continue to expand throughout the latter part of the decade, which we hope will enhance the clarity of the enterprise's growth. It's quite typical in our infrastructure sector to secure capital for the upcoming years, nearing the limits of your capacity as you fill up in subsequent years. I believe our team has done an excellent job over the past six months in achieving this, so we are very comfortable with our position.

Your next question comes from the line of Jeremy Tonet from JPMorgan.

Just want to kind of maybe follow up a little bit on the last line of questions there with regards to growth over time and having talked about this 5% EBITDA growth potential over the medium term post '26. And I know you're not going to give us the December update today, but just wondering any foreshadowing you might be able to provide us here or thoughts into how we should be thinking about how that update could unfold?

Yes, I'm not sure we can provide much on that right now since it's December. However, we've made significant progress on the gas side recently, and Michele provided a solid overview of the liquid side as well. Contrary to some opinions, we've accomplished several initiatives in renewable power over the past year. This reflects the advantages of our portfolio and the various benefits stemming from power demand, policy changes, and GDP growth that bolster our confidence and indicate growth across the board. So, in response to your question about potential pullbacks, we actually see acceleration, particularly in renewable initiatives, many of which are well-positioned from a policy standpoint. Additionally, as Pat mentioned, we have the balance sheet strength and internally generated cash flow to support these demands. Each dollar of added EBITDA increases our capacity by an additional $4 or $5, and we are highly focused on that. This is likely where I would conclude today. Pat, do you have anything else to add?

Yes. I mean I think our message, if you remember back 6 months ago at Enbridge Days was that the whole goal here was to add clarity into that back end of the decade growth rate. And I think it's fair to say that we're doing a substantial amount of projects that should help to clarify that. So we're confident in the growth rates that we've put forward, and we'll continue to add to this backlog. We know there's more to come in really every business, which is what I like the most about it. We've got a very diverse set of opportunities over what really turns out to be a 5- to 7-year timeline now. So yes, we're feeling good about the growth rates.

Your next question comes from the line of Jeremy Tonet from JPMorgan.

Just wanted to dive in a little bit more into Western Canada and gas storage there. With LNG Canada ramping up. Just wondering if you could provide maybe a little bit more color on the tone of customer conversations there. It seems like the market is going to need a lot more logistics. You're expanding gas storage capacity there. Just wondering if you could elaborate any more on how you see this unfolding. It seems like these would be fundamental tailwinds to rates and economics overall, but just wondering what you guys are seeing.

Yes, thanks, Jeremy. It's Cynthia Hansen. I agree that we are experiencing positive momentum, especially in storage. In the last quarter, we announced a significant expansion of our Aitken Creek storage, which is unique in that BC area. We currently have about 77 Bcf of storage and announced an additional 40 Bcf. Construction for that will begin in the early part of next year, and it will be operational a couple of years after that. When we announced this opportunity, 50% of that storage was contracted immediately with a long-term agreement, indicating that our customers recognize the potential and are supportive of this expansion. As we explore further opportunities, particularly with LNG Canada Phase 2, it not only enhances our storage but also allows for the expansion of our West Coast system. Earlier this year, we introduced the Birch Grove project, which expands T-North and aligns with these developments. There are strong prospects ahead, and we hope to see continued growth in LNG export opportunities. We will require support from the BC and Canadian government to ensure these projects attract the necessary long-term capital to realize that potential.

Your next question comes from the line of Robert Catellier from CIBC Capital Markets.

I'd like to go back to the Data Center and Power Generation opportunities. Obviously, that's a hot part of the market right now. And I think your own gas distribution business is advancing more than $4 billion of related projects. Can you provide some detail on how you're managing cost risk, in particular, in areas like that, that are hot and where there's a lot of competition, supply chain constraints and customer focus on time to market?

Yes. Obviously, several areas there. And as they relate to the gas distribution side, obviously, prudency kicks in. But recall, those are rate base type driven setups, right? So you're getting on a capital structure, call it, 10% return in the U.S. on about 50% equity. So as long as we're being prudent, I'm not feeling too concerned about that. Now that being said, given the size of the company, we are actively and we're out there doing that, making sure that we've got good alliance agreements with various contractors, giving us the best rates, actually going forward and even stockpiling, if you will, compressors and things like that. And remember, on the inflationary side, I'd say about 30% most of these large projects would be CapEx related to equipment and things like that. So those relationships are really critical. And a lot of them, obviously, we're avoiding tariff structures through contract mechanisms as well. So far, so good. The biggest concern I have is on the people side of things and just getting the time and equipment in place. So we're pretty good at that. I think we feel in terms of those long-term relationships with contractors and stuff like that. But Rob, it's something definitely we're watching closely. It's also why I love some of the projects that we announced today that are all relatively small, as Colin said, singles and doubles and quick cycle, relatively speaking, so that you don't have long drawn-out processes. And then the last piece is, as you know, a better attitude with policy around permitting and acceptance of these critical projects. And that takes a risk off the table from a CapEx perspective as well.

Okay. That's very helpful. And then a bit of a regulatory question here for Colin, and maybe we'll have to take this offline. But I'm curious about the Mainline optimization too and the interplay with the Dakota Access Pipeline, given there's still some lingering permitting issues there. So maybe, Colin, you could walk us through whatever relevant regulatory updates on DAPL that relate to the Mainline optimization too.

Yes. Sure, Robert. And it's a good question and one we've thought through. So we don't need a new presidential permit across the border. And we're confident that the DAPL EIS will come through in the spirit of energy security and energy dominance. So we're confident in that line of thinking.

Your next question comes from the line of Rob Hope from Scotiabank.

You've mentioned a couple of times that the policy environment is getting better for energy infrastructure. In Canada, how are you interfacing with the Canadian major projects office? Enbridge has over, we'll call it, $8 billion of projects in development in BC. You could do more on the liquid side there as well. Is there a way to get incremental support to further derisk these projects?

Yes. At this point in time, we haven't put projects through the office. It's great that it's set up. Hopefully, that will be helpful for those national interest projects. But most of the things or all the things we're talking about are short cycle, relatively permit light. And so we haven't seen the need to go down that route. But that being said, we've had several conversations with them. Obviously, Don is well known in the industry and respected and has been very good to don't hesitate if you need some help around permits, et cetera, and working through the lab of the Canadian government. So we won't hesitate. But to date, and I don't see that actually on any of the projects that we have. As you know, we have several billion dollars of projects being done in BC, things Colin's talked about today. But a lot of them are relatively permit light and even not giant CapEx as individual chunks. So I just don't see us using the major project office at this point in time.

Appreciate that color. And then maybe just going back to the Mainline. I appreciate all the details on further expansions, Colin. But maybe to dive in a little deeper, and I know it's early days, but what would an MLO3 look like? And how much more incremental capacity do you think you can get out of the basin without, we'll call it, a good amount of large diameter pipe?

Robert, you're reading my mind. So we've got some hitters warming up in the dugout. MLO3 and 4 are stretching. Our engineers are looking at that as well because there is a scenario here, right, where Canada and the U.S. do a bigger trade deal and energy is part of it. And the imperative may accelerate further. So we do have some, again, in-corridor in fence line solutions for that. But it's premature for us to probably talk about those.

Your next question comes from the line of Manav Gupta from UBS.

We are actually seeing a lot of resurgence in solar stocks in the U.S., and you actually have a very strong solar portfolio. But because you have everything else, which is also so good, sometimes it's underlooked. So can you talk a little bit about your renewables portfolio and solar in particular and more deals like Clear Fork with Meta, if you could talk on those points, please?

Sure, Manav, it's Matthew here. Yes, you're quite right. I mean I think investment discipline is the order of the day in renewables, given some of the cross currents in the policy landscape, but we have to keep our eye also on the opportunity here because the customer demand for this remains very, very strong. We are still in the window where we've got interconnection-ready projects that are in fantastic locations with strong local support and great resource while the production tax credit window remains open. And so there's definitely a lot of interest from customers on the data center side around that, in particular, on our solar portfolio. We've talked about Project Cowboy out in Wyoming. We are building a lot of stuff, as you know, you mentioned Clear Fork with Meta and ERCOT. But that Wyoming project has a tremendous amount of interest and is potentially a very big one and is well advanced. And so again, we're going to be navigating carefully, but there should be win-wins here because customers know that there's this window. And there aren't that many projects that can actually get in into their windows and they need the electrons, and they want it, if possible, lower zero emissions. So I think we're really well positioned. But again, we'll be navigating this and with a very close eye on our risk profile and making sure that we are consistent with our low-risk business model across everything we do.

Perfect. My quick follow-up is your partner, Energy Transfer, talked about the Southern Illinois connector, exactly the kind of crude that U.S. refiners need. Can you also highlight some of the benefits of this project? And can you confirm if this is probably 2028 start-up, if you could talk a little bit about that?

Yes, thanks, Manav. I agree with your assessment. This is a new market for our mainline system to Nederland, Texas. We have a map of all the refineries and we aim to serve all of them. Approximately 75% of U.S. refineries are now connected to our Mainline system, so this is not entirely new for us. It’s not technically complex as we're utilizing existing capacity on Spearhead, but it involves longer transportation. Previously, this capacity was directed to the Patoka area, but now 100 out of the 200 on Spearhead will be redirected to Nederland, Texas. We're also expanding the Platte system, which involves straightforward pump refurbishment. Thus, we are very confident in our execution and the timeline looks promising.

Your next question comes from the line of Sam Burwell from Jefferies.

Some of this has been touched on already, but just a quick one on Southern Illinois and the whole path. So I mean the Mainline optimization seem like they're on the right track and Mainline volumes were 3Q record. But downstream of that, low volumes in 3Q, and it seems like it's going to be a headwind in 4Q as well. So just curious if you have a view on when that could improve? And then is there anything to read into the 100,000 barrels a day capacity on Southern Illinois because I think the open season figure was higher than that, like 200. So just curious on your thoughts on full pass volumes improving over time.

Sure. I can take that. So I think it's a temporary anomaly here. That path on our liquid system south of Chicago down to the Gulf has been pretty robustly used for a long time. It's been recently weaker, still pretty good, but a little bit weaker as you saw in our disclosures, Pat talked about it. That is due really not the weakness of the South per se, but more so that, that demand, that upper PADD II demand has been unusually strong in the last quarter or 2. So higher absorption of that high Mainline throughput, just a bit further North. And so double-click on that, why is that? A couple of reasons. One, our product levels were lower given fuel demand. And so those refiners were running pretty hard, so higher utilizations to replenish those inventories. And secondly, they had I would say, higher than average just uptime. And so the combination of those two factors kept a lot of that mainline oil at home, so to speak, in the upper PADD II market. I think Q4 should be maybe a little better than Pat suggested. We've seen some early quarter improvements here. And then moreover, I think just longer term, we've got a lot of confidence in that path. In fact, we just have successfully run two open seasons for that path, both have been oversubscribed to expand it. So I'd say it's a temporary effect. You also asked about 200 versus 100, yes, pardon me. So yes, we we're pretty happy with the 100 with our partner there. We actually had oversubscription for the 100, but we end up settling it at 100. It's just the most efficient kind of sweet spot on that project for economics overall.

Your next question comes from the line of Ben Pham from BMO Capital Markets.

I wanted to touch base first on the Woodfibre LNG project. Could you remind us going forward how the mechanism works on the contract as you close on the in-service dates?

Yes, I think you mean Woodfibre. Cynthia can take that, right? You mean...

Woodfibre, sorry.

Thank you for the question. The way our contract is structured allows us to finalize the toll closer to the in-service date. This means our return will be based on the toll structure that is established at that time. We are able to benefit from the delay in that term as costs increase, which helps us minimize exposure to some of the cost overruns that are emerging on the project. We are excited to share that we are 50% complete with the construction, and we believe we have a strong path towards achieving the 2027 in-service date.

Now the other thing, we'll have to see how it plays out, but the Canadian budget did have some accelerated bonus depreciation for LNG projects that have low emissions. And I think as we've talked about before, this will be amongst, if not the lowest emission LNG project globally given how it's getting its power. So we'll watch for that, which should be helpful from a return perspective as well.

Got it. And I have to chuck when I said Woodside because I do have a follow-up question on that partnership more specifically. Just think about your investments in on the BC Coast. And I'm curious just with LNG additions ahead and some of the strategic partnership you've seen with Williams in particular, is there appetite for Enbridge, may not something specifically like that, but maybe just appetite for LNG beyond what we have right now.

Yes, Ben, we are not short on opportunities; we have plenty. I don't anticipate us taking on an LNG facility with commodity exposure, unlike some others you mentioned. We'll focus on the Woodfibre opportunity for now and see what happens next. There are still many factors to consider regarding construction on the BC Coast. So, let's stick with our Woodfibre project before exploring other options. Also, you noticed our announcement today about storage projects supporting LNG on the Gulf Coast. Aitken will support LNG in BC. Many of the projects Cynthia discussed, including the pipeline project, are areas we understand well and generate solid regulated returns from. In this current environment, that seems to be a more suitable approach for us. We will always consider opportunities, but I don’t think our investor strategy allows for significant commodity exposure. That is not our intention.

Your next question comes from the line of Maurice Choy from RBC Capital Markets.

First question is about your crude oil production growth projections. I remember back in Enbridge Day, you've made a forecast that you may see more than 1 million barrels a day of growth through to 2035. Assuming that projection was made based on the landscape at that point in time, how would you view this growth now given what appears to be a supportive regulatory and political landscape in Canada?

This is Colin. Yes, that's a great question. I believe both of those projections are internally consistent, and our outlook remains stable. There's a potential upside if Canadian federal policy aligns with the vision of becoming a global energy superpower, which we strongly support. In that scenario, there is definitely potential for growth. However, that's still uncertain at this point. Therefore, we've adjusted our business plan to the base case and are developing additional solutions if that upside materializes.

You'll gain good insight on that, Maurice, right? If the policy conditions in Canada ensure competitiveness as a producing nation, the first indication will be our producers becoming more optimistic about production, allowing us to react as capital forms. However, at this time, we would not change the million target for 2035. The MLOs, the Southern Illinois Connector, and our Mainline investment capital align with our plans for rollout between now and the end of the decade, assuming all other factors remain constant.

That makes sense. If I could finish off with a question on the Pelican CO2 hub. Oftentimes, these types of projects are perceived to have a lower return than the 4 to 6x build multiple that you can deliver within liquids pipeline outside the Mainline. Recognizing that you do have an internal competition for capital among your various businesses, I wonder if you could comment on the returns here or just more broadly about lower carbon opportunities, how do they compete for capital internally?

Yes. Look, I think both ourselves and Oxy are pretty darn careful on this front. If this project didn't earn at least the returns that we get from other Liquids projects, as you say, outside the Mainline, it wouldn't have got sanctioned. So obviously, I would even argue there's always some policy risk, so you want to make sure you get this right. So this is very much in that wheelhouse, if not a bit better. And obviously, the tax incentive structures, we've got a lot more clarity on that out of the OBBB bill that came out so that we know exactly what our tax incentives are on that. And it's got a long-term 20-, 25-year contract with offtake player. So I would say returns are at least, if not a little bit better than what we're seeing in this world. Policy support is there where it may not be for some of the other unconventional investments. And we love our partner on this front who has very similar return type parameters.

I was just going to layer on that it's a very selective investment. We're going to take a crawl, walk, run approach to developing low-carbon infrastructure. I think the pace of it generally is a lot slower than most observed a few years ago. So we're going to take a very careful and disciplined approach here, as Greg mentioned.

It's great to hear. I wish Cynthia all the best in her retirement, and congratulations to Matthew on your new role.

Thank you.

Thank you.

Your next question comes from the line of Theresa Chen from Barclays.

I would also like to congratulate Cynthia on her retirement. Thank you for all your insights over the years, and I'd like to congratulate Matthew as well on his new role. Going back to the discussion around the Mainline expansion. So when it comes to resourceful solutions for moving incremental WCS barrels to the U.S. Gulf Coast, leveraging your JV system with Energy Transfer is certainly a capital-efficient approach. And as the downstream southbound capacity fills up over time, have you or would you also consider partnering with other pipelines such as topline, which also runs from the upper Mid-Continent to the Gulf Coast and currently has available capacity?

Yes, Theresa. And I think joint ventures are a big part of Enbridge's playbook. Cynthia has got a bunch, Matthew's got a bunch. We've got a bunch in our portfolio, and we're proud to partner with basically everyone in the industry. And I think that's going to be a part of everybody's playbook going forward. We also partner with enterprise products on Seaway. We've gone from 0 barrels a day through that system to what's going to be not far from now, 1 million barrels a day. So I think we've utilized joint ventures extensively. We've got a whole bunch of others across the system as well. So we're open to that. I think teamwork makes the dream work here in an exciting environment.

Got it. Looking at your medium-term outlook, how do you plan to align DCF per share growth with EBITDA growth over time, given that DCF per share has recently trailed EBITDA growth? What are the key drivers in bridging the two over time?

Yes, it's Pat. Thank you for the question. We have been clear that the disconnect over the last couple of years was mainly due to cash taxes, and we see that stabilizing. We’ve noticed some positive tax decisions in the U.S., and there are many discussions about potential developments in Canada. Overall, we anticipate that cash taxes will return to a level more consistent with the growth it had seen in previous years. This is why those two aspects are expected to align as we progress further into the decade.

Your next question comes from the line of Praneeth Satish from Wells Fargo.

On the Egan and Moss Bluff gas storage expansions, can you break down how much of the 23 Bcf of capacity is already committed under long-term contracts versus any shorter-term contracts or merchant capacity? And then given that you're moving forward with the expansion, I assume pricing is favorable, much higher than historical levels. But can you provide some color on the contract durations? Is it kind of in the typical 3- to 5-year range? Or are you able to get something longer in this environment? And then I guess as a follow-up to that, like how do you think about the trade-off between locking in longer storage term contracts versus keeping them shorter so you could potentially benefit from higher recontracting rates in the future?

Thanks, Praneeth. It's Cynthia. I would say that where we are right now, we have Egan, the first cavern that we're developing there is about 50% contracted and we'll, over a period of time, lag into that. We're managing these assets. It's an existing portfolio. So we're going to manage those contract terms consistently with how we've operated those assets. When we look at the overall contract terms, it is a speed from that 2- to 5-year kind of average overall. We always look for those longer terms as to be part of that portfolio. But as you noted, just with the opportunities right now as we continue to see the demand for storage increase, and we've seen some strong pricing associated with that, that's really supporting this ongoing development that we're doing. We want to try and manage the portfolio to really optimize that structure as we go forward.

Yes. And that 3 to 5 years, 2 to 5 years is pretty typical the way that we've done it historically. And look, I think we've got a super high level of confidence in the LNG coming in on the Gulf Coast. So that probably lets us leg into the contracts and we want to. But it depends on the location, right? Like, for example, the Aitken Creek contract, I think we took about half of that and have it under a 10-year contract. So it just depends on the situation, and it's worked extraordinarily well. I'm glad you raised the storage question because we got 600 Bs or so across North America, all with great optionality outside the regulated piece. But we're adding just the announcements in the last 12 months, 10% to that number. So it's a big uptick for us at the right time in the market, and I feel very good, as Cynthia says, the way we'll leg into this.

And then I'm sure you saw that Plains recently announced the acquisition of the remaining interest in the EPIC Crude pipeline. They've talked about potentially expanding the pipeline, may or may not do it. But if they do, it seems like it could be a positive for your Ingleside assets. So just curious if you have any thoughts on that deal or just the overall landscape now at Corpus and the puts and takes for your Ingleside and Gray Oak assets.

Yes, it's Colin here. Yes, and we've observed that, obviously. And we're partners with Plains on Cactus II already. I'm sure there's more work we can do together to the spirit of the question a couple of minutes ago on teaming up. Our franchise remains a work in progress, but it's still really a good one. Ingleside is the #1 export terminal on the continent. It's poised to grow all the advantages it has, Gray Oak. It's great. So we're pretty confident with our system there and hopefully can do even more with Plains going forward.

And that concludes our question-and-answer session. I will now turn the call back over to Rebecca Morley for closing remarks.

Great. Thank you, and we appreciate your ongoing interest in Enbridge. As always, our Investor Relations team is available following the call for any additional questions that you may have. Once again, thanks so much, and have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.