Enbridge also intends to tackle its rail problem by reversing and expanding its Eastern Access pipeline network. The project plans to add a spur to the Utica shale play in Ohio and will provide essential takeaway capacity for East Coast refiners. Once complete, it should provide even more options for those refiners to kick their expensive Brent habits.
Once all of these projects come online, Enbridge anticipates a return to a better than 1.0 times coverage ratio by 2016. It also still plans to maintain a 2% to 5% distribution yield growth between now and 2016.
What a Fool believes
Enbridge management anticipates that rail will continue to eat into pipeline revenue throughout 2013. Rail is still a $10 premium to pipe on average, but refiners are more than willing to pay the transport premium because it’s still better than Brent. Once midstream gets its act together, though, expect a shift back to pipe.
Until these projects get up to speed, don’t expect any great big upticks in Enbridge revenues unless we see a major upswing in oil and gas prices. At the same time, investors shouldn’t worry too much. The company’s plans should bring it back on the right track, and investors who hang on through this stagnant time will be rewarded.
The article Should You Sweat Your Enbridge Investment? originally appeared on Fool.com and is written by Tyler Crowe.
Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him on Fool.com under TMFDirtyBird, Google +, or Twitter: @TylerCroweFool.The Motley Fool recommends Enterprise Products Partners.
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