Patrick D. Daniel, President and CEO Enbridge 2011 Annual and Special Meeting of Shareholders. May 11, 2011 Calgary, AB. Check against delivery

Transcription

1 Patrick D. Daniel, President and CEO Enbridge 2011 Annual and Special Meeting of Shareholders May 11, 2011 Calgary, AB Check against delivery

2 Thank you Mr. Chairman and good afternoon everyone. Once again I d like to welcome you all to Enbridge s 2011 annual meeting of shareholders. Before I get into my presentation, it is a regulatory requirement that I advise you that I will be using forward-looking statements and information. Now I would like to provide a recap of our performance in 2010, review the first quarter of 2011 and talk about our strategy going forward. Let s begin with a look at how Enbridge did in The year 2010 was a positive year for us in many ways, but it was also marked by the most significant environmental incident in our company s history the spill we experienced in Marshall, Michigan in July. Put simply, that spill on Line 6B in Marshall, was a humbling event for Enbridge and its employees. The cause of the pipeline break remains under investigation by the US National Transportation Safety Board. We are committed to understanding and applying the findings of that investigation to all of our operations to reduce the chances of a similar incident ever happening again. From the outset we have worked closely with residents in the Marshall and Battle Creek area to address their individual needs. To date, we have met the cleanup deadlines and milestones set by the Environmental Protection Agency. We have also worked tirelessly with our customers to address any impacts on their businesses and on consumers. With the exception of that incident on Line 6B, 2010 was a positive and productive year for us. Our adjusted earnings reached $984 million in 2010, an increase of 13% over Our investment proposition of reliability, income and growth for shareholders has shown excellent results through good economic times and bad. No matter how you look at our performance, whether it s over a 1-year, a 5-year, a 10-year or even a 50-year basis, Enbridge has significantly outperformed our sector peers and the markets. We ve achieved a compound average return to shareholders of 13.7% per year over the past 58 years. Not only was 2010 a good year financially, but also a good year for the start-up of several new pipelines. 2 P age

3 Last year we commissioned two of the largest Liquids Pipeline expansions we have ever undertaken: the $3.7 billion Alberta Clipper pipeline, increasing our Mainline capacity by 450,000 barrels per day; and the $2.3 billion Southern Lights pipeline, bringing diluent back into Alberta. Also, we continue to build on the strong foundation of our Athabasca and Waupisoo pipelines in the Fort McMurray to Edmonton corridor which provide producers with flexible and cost effective transportation to connect heavy oil and synthetic production to our mainline. In 2010 we secured 7 new pipeline projects for the region. Crude oil production in the Bakken area has ramped up very dramatically in recent years. In 2010 we brought into service pipeline expansions in North Dakota and Saskatchewan. By August of last year, we had secured sufficient long-term commitments to proceed with yet another major Bakken pipeline expansion, increasing takeaway capacity by a further 145,000 barrels per day. Turning to Green Energy, 2010 was an exciting year and notable in that 26 per cent of the capital we spent on new projects across the company was in renewable and alternative energy. We now have interests in more than 850 MW of green generating capacity. We announced two new projects in Ontario in 2010, and entered the U.S. green energy market with our investments in the 250 MW Cedar Point wind project in Colorado and the Neal Hot Springs Geothermal Project in Oregon. In September, we brought the Sarnia Solar expansion online, increasing energy output from 20 to 80 MW, making it one of the largest photovoltaic facilities in the world. The gas transmission side of our business grew through a combination of acquisition, system extension and mid-stream projects, further strengthening our position and reach in this rapidly evolving sector. In July 2010 we acquired the Elk City Gathering and Processing system in the Granite Wash play in the Texas Panhandle for $680 million. In September we connected the Septimus Pipeline, to the Alliance pipeline near Ft. St. John in British Columbia. And Offshore, our Big Foot Oil Pipeline and Walker Ridge Gas Gathering projects are advancing well and expected to be in service in Our Gas Distribution business remains strong and contributed 17 per cent of Enbridge s adjusted earnings in P age

4 We realized improved returns from our incentive regulation model, which rewards efficiency and shares the benefits with our Ontario gas consumers. A true win-win. So in all ways, except the very significant incident at Marshall, 2010 was a very good year has also started off very well. In January we announced plans to more than double the production of condensate from our Venice gas processing facility on the Gulf of Mexico. In February we increased our ownership stake in Gaz Metro to almost 39 per cent through our Noverco investment. And in March we announced agreement on a landmark 10-year Competitive Toll Settlement with shippers on our crude oil mainline system This CTS agreement, once finalized with shippers and approved by the regulators, will provide competitive and strategic benefits for Enbridge and for our customers. It provides toll certainty for our customers and has significant upside for Enbridge as production from the oil sands grows. And in April we announced further investments in gathering and processing infrastructure in the Haynesville shale. Also, in the first quarter we raised our dividend by 15%, which represents the 16th consecutive year that we ve increased the dividend. Our adjusted earnings per share in the first three months of 2011 were $0.89 per share, a little stronger than our expectations and well on track to meet our guidance target of $ $2.95 per share. Looking forward, Enbridge has a suite of growth prospects that extends across all of our operations. Over the past three years we have brought into service $12 billion of new pipelines and other energy infrastructure. Between now and 2014, we already have secured another $6 billion that will come on stream, and we have a further $30 billion in promising opportunities in various stages of investigation. As a result, we expect that our earnings will continue to grow, on average, 10 per cent per year through the middle of this decade. Where will the growth come from? A moment ago I mentioned the impact of the Crude Oil Pipeline Competitive Toll Settlement. With its 10-year horizon and toll certainty we see it as being a strong strategic 4 P age

5 lever to extend the reach of our crude oil network, moving crude oil east into PADD I markets and south past Cushing to refiners on the US Gulf Coast. Therefore, we continue to seek shipping commitments to extend our mainline into markets on the east coast (like Philadelphia) and eastern PADD II (to refineries in Toledo and Lima). In the south, we are working on Project Monarch, a 350,000 barrel per day outlet for light crude south from Cushing. This project would help address the price discounts of crude oil in the Cushing area. The Gateway Pipeline project will offer a large-volume outlet of Western Canadian crude oil to growing Pacific Rim economies via Canada s West Coast. Last May, we filed our regulatory application for Gateway triggering the start of a thorough regulatory review by a Joint Review Panel. Just last week, the JRP issued its hearing order, which set the hearings for January, Through the National Energy Board and the Canadian Environmental Assessment Agency, Canada has a very thorough process that will evaluate the commercial, technical and safety aspects of Gateway and equally importantly allow for stakeholder input. The Project will allow Canada s oil producers to diversify from the single customer we have now, the US, to a global marketplace. It will bring significant and broad economic benefit and employment adding 1,150 long-term jobs across the country and nearly 63,000 person-years of employment during construction. We believe this Project is a critical component of Canada s global energy strategy and national economic development. We also see more opportunity ahead in the Athabasca region, where we have a strong competitive advantage. We are the best positioned to capture projected increases in oil sands production and anticipate having eight upstream production areas tied into our regional system by In the Bakken, the tremendous pace of drilling and growth in production means increasing demand for pipeline capacity. Our extensive Bakken gathering system, combined with easy access to our mainline, gives us a strong competitive advantage. Moving on to our gas businesses. Unlocking North America s massive shale gas plays has altered the natural gas business profoundly and we are well positioned to succeed in this dynamic market. Alliance is anchored in the heart of the liquids-rich Montney region in northeastern BC and passes right through the Bakken, where it can bring on that gas production. 5 P age

6 Our gathering and processing systems in Texas give us a strong footprint in the Granite Wash, Barnett shale, Haynesville and Bossier plays where we anticipate significant supply growth. Long term, the fundamentals for Gulf of Mexico offshore production are strong as the US looks to reduce its dependence on overseas supply. Our offshore gathering systems are well positioned to capture new deep and ultra-deep water production. With regard to the future of our renewable business, we continue to see the promise of disciplined investment in this area and anticipate significant growth. Our existing diverse base of generation wind, solar, waste-heat, geothermal and fuel cells provides a foundation for a strong new investment platform in Enbridge. We also expect growth from International pipeline projects. Although we have an excellent inventory of opportunities in North America, we are always on the lookout for potential international investments. We have a proven track record in generating value for shareholders in the international arena and we have an international technology consulting arm that allows us to showcase our expertise and helps us identify attractive opportunities. We anticipate continued growth in our Gas Distribution business, increasing our customer base by 35,000 per year. This growth, compounded with growth in recent decades, is driving the need for substantial infrastructure reinforcement in our system, particularly in densely populated urban areas. In recent weeks, I ve had the opportunity to speak to audiences in Canada and the U.S. about the critical need for greater societal understanding of the value of secure, reliable energy. Energy is a great enabler. In fact, the defining difference between a developed and developing country is the wide and reliable availability of inexpensive energy. Our Energy4Everyone foundation provides tangible proof of the life-changing impact that energy has for people in developing countries, through our projects in Africa and Central America. In North America, We ve got great access to affordable energy, but many seem to take for granted the vast energy infrastructure that enables our society to operate. Today we see a rising tide of activism that says no to proposed energy projects and initiatives rather than seeking balanced, sustainable development. They say not in my back yard, not in your back yard, not in anyone s back yard. 6 P age

7 Those who say no to energy infrastructure development whether it s oil sands, pipelines, refineries, power stations or transmission lines are the same ones who say yes to light switches, cooked food, school buses and gas pedals. But they can t have it both ways. Our society simply cannot enjoy the incredible benefits of abundant, reliable and inexpensive energy without energy development. Even green energy requires large-scale infrastructure. Enbridge moves a huge amount of energy to the people who need it and we strive to do that as safely as possible. It is our primary Corporate Social Responsibility to deliver energy and enable society. We are also proud to be recognized for our leadership in investing in our communities. Through our programs such as Safe Community and School Plus we help to make communities better places to live. We re also making significant progress toward our Neutral Footprint initiative. And I would be remiss if I didn t mention the Enbridge Ride to Conquer Cancer. We re honoured to be the national sponsor of this important fund-raising event for cancer research. Earlier this year, Enbridge was once again named one of the Global 100 Most Sustainable Corporations. As I wrap up, I want to acknowledge our more than 6,400 employees and thank them for exemplifying Enbridge s values of accountability, responsibility, integrity, and transparency. I would also like to thank the members of our Board of Directors for their exemplary guidance over a year characterized by significant accomplishments and humbling challenges. Thank all of you very much for your attention and attendance. We will now open the floor to questions. 7 P age