恩橋 (ENB) 2011 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Enbridge Incorporated First Quarter 2011 Financial Results Conference Call. I would now like to turn the meeting over to Guy Jarvis.

Thank you and good morning and welcome to Enbridge Inc.' s first quarter 2011 earnings call. With me this morning are Pat Daniel, President and Chief Executive Officer; Richard Bird, Executive Vice President, Chief Financial Officer and Corporate Development; and taking over for Colin Gruending, we have John Whelen, newly appointed as Senior Vice President and Controller and formerly Senior Vice President, Corporate Development. Before we begin, I'd like to point out that we may refer to forward-looking information during the call. By its nature, this information applies certain assumptions and expectations about future outcomes. So we remind you, it is subject to the risks and uncertainties affecting every business, including hours. Our slides include a summary of the more significant factors and risks that might affect future outcomes for Enbridge, which are also discussed more fully in our public disclosure filings available on both the SEDAR and EDGAR systems .

This call is webcast, and I encourage those listening on the phone lines to view the supporting slides, which are available on our website. A replay and pod cast of the call will be available later today and a transcript will be posted to our website shortly thereafter. The Q&A format will be the same as always. The initial Q&A session is restricted to the analyst community and once completed, we will invite questions from the media. I would also remind you that Jonathan Gould and myself will be available after the call for any follow-up questions you may have. At this point, I'd like to turn the call over to

Great. Thank you, Guy, and good morning, everyone. Thank you all for joining us for a review of our first quarter results. This morning we were pleased to announce adjusted earnings for the first quarter of 2011 of CAD334 million, that's CAD0.89 per share which is a 5% increase in earnings over last year. This is a little ahead of where we were expecting to be in the first quarter, and it starts us out firmly on track to achieve our full-year 2011 adjusted earnings guidance of between CAD2.75 and CAD2.95 per share. Richard, of course, is going to walk through the financial results in a little more detail shortly. But first what I'd like to do is just go back and review some of the new developments for us during the first quarter. Let me begin with new projects that we have through the quarter.

First of all, going back to January, in the Gulf offshore business, we announced CAD150 million expansion of the Venice condensate processing facility in Louisiana and this facility is supplied, of course, by our Mississippi Canyon offshore gas gathering line, which serves the Olympus offshore oil and gas development. The expansion, which is going to double capacity, is expected to be in service by late 2013. Moving on to February, and our green energy business, we announced agreements totaling CAD90 million to acquire two new solar energy projects in Ontario, and those have a combined 20 megawatt's of generating capacity. Firstly, the five-megawatt Tilbury facility was operational in December, and we expect the 15 megawatt Amherstburg plant to be in service by quarter three of this year. Both facilities, of course, are going to sell their power output to the OPA under 20-year fixed price agreements. Also in February, we announced that we'd invest CAD145 million to acquire an additional 6.8% interest in Noverco from GDF, bringing our total position in Noverco now to 38.9%. And we were very pleased to have the opportunity to increase our indirect ownership in Gaz Metro through this mechanism and to reinforce the very strategic relationship that we have with the Caisse.

And finally, in terms of new project announcements, just a few weeks ago, Enbridge Energy Partners announced that it secured sufficient long-term commitments to undertake $175 million expansion of their East Texas gathering and transmission system. And the system, of course, leverages off of the existing footprint in the increasingly prolific Texas side of the Haynesville shale play. So, in aggregate, these new projects represent an addition of almost CAD600 million to our commercially secured growth investments that we will be bringing into service in the next few years. I'd also like to just go back on the quarter and revisit the major announcement that we made in March regarding the Competitive Toll Settlement agreement that was reached with our shippers on the liquids mainline pipeline system. In fact, you will have seen just last week that we filed the final version with the NEB and FERC for their review. Given the endorsement that it has from our shipping community, we don't foresee any issues with the filing and we hope to be in a position to implement this tolling framework starting in July, around about July 1 of this year.

As we discussed back in March, we're very pleased with the outcome of this negotiation and I think it, once again, demonstrates the collaborative nature of our relationship with our customers as the agreement enables us to align our interests and their interests. It provides a very stable and competitive toll to shippers, while helping us to maintain our competitive advantage for attracting new barrels to our system. In doing so, it really provides us with the potential for earnings upside down the road if throughput increases as we have conservatively forecast. It could also prove to be a very strategic lever to facilitate market extension products on our system as a result of that fixed toll, and it provides all of these benefits while keeping both Enbridge and our customers out of the regulatory hearing room for many years to come, and we're very pleased with that of course.

On the Northern Gateway front, we have reached another significant milestone, as just last week the Joint Review Panel issued their hearing order. This is important as it now lays out the timeline for submitting intervener evidence and information requests and it establishes the hearing dates. Based on those timeline's, the community hearings would begin in January of 2012, and the final hearings would start in late June of 2012. We do look forward to initiating this comprehensive undertaking, and we believe that the joint review process will allow a rigorous, open and fair review of the application, and any other information provided because it's really designed to gather information from all viewpoints. As a final comment, I just wanted to give a very brief update on the status of Line 6B.

We continue to work the plan that is in place with the US Environmental Protection Agency, and we've recently signed a compliance order with the Michigan Department of Environmental Quality, which would also guide cleanup and remediation work going forward. We had continued cleanup work over the winter, or we have continued clean up over the winter, focusing on environmentally sensitive areas that were more accessible and easier to get to when the ground was frozen. Now with the spring thaw, our remediation efforts are ongoing and we continue to work with the stakeholders in Marshall and Battle Creek area to respond to any individual needs that they have. We committed from the outset of this incident to restore the area as close as possible to pre-spill conditions and we remain fully committed to that goal.

Mandated integrity work on Line 6B was completed in the quarter in compliance with the 180 day deadline set by PHMSA, so that was complete. Further, we have almost completed the pipeline replacement work under the St. Clair River. We now have tunneled under the river, pulled through the new 3,600 foot pipe segment, and all that's left to do now is to tie that line in, which we expect to do by mid-June of this year . We've also re-inspected Line 6B with new advanced internal inspection technologies, and we will continue to take steps as necessary to ensure the integrity of that pipeline. So in summary, it's just been another very busy quarter, with many positive developments. We feel that these will put us in a good position to meet our 2011 earnings guidance, as well as to continue to achieve an expected average annual growth rate of 10% in earnings per share from 2009 through the middle of this decade. So, with that quick update and summary, let me hand it over to Richard to discuss the results for the quarter and some prospects for the

Okay. Thanks, Pat and good morning, everybody. Taking up on slide nine for those of you that are following the slide deck. As Pat mentioned, on the whole, the quarter was in line with our expectations or even a little stronger, setting us up well to achieve our full-year guidance range of CAD2.75 to CAD2.95 per share. However, there were some pluses and minuses within the individual businesses. In Liquids Pipelines, the Canadian Mainline system was off from prior year just a little, that's as expected. Based on the 2011 ITS being in effect for the first two quarters until it is then going to be superseded by our new CT agreement that Pat referred to. Earnings from Southern Lights were also off, as expected.

Our regional Oil Sands system earnings were stronger than prior year, and in fact, a little more so than expected. And Spearhead earnings were expected to be flat, but were actually up. This reflects unusually strong uncommitted volumes at the high uncommitted toll, as well as higher than contracted committed volumes. We don't expect to see this continue in the next three quarters, but it is a strong start for Spearhead. The net result is that liquids pipelines earnings in total are slightly up for the quarter, on the strength of regional Oil Sands and Spearhead, when we expected that they would actually be down and this bodes well for the full year. Gas distribution was up slightly for the quarter, and this too was better than we expected given the change in rate design which progressively shifts earnings from the winter to the summer, relative to the prior year. However, we still expect to be pretty flat for the full year on gas distribution.

Gas pipelines, processing, and energy services was flat for the quarter. We saw strength from Aux Sable and that strength has been largely locked in for the remainder of the year with our hedging program. However, our offshore pipeline business was off significantly due to the impact of permit delays on drilling activity and throughput. As a result, we have tempered our expectations for this segment a little. Our sponsored investments made a solid contribution to growth for the quarter, just as expected, and corporate was a little better than last year, again consistent with our expectations. So, altogether, another quarter of reliable earnings, growth, and a nice dividend.

Moving to slide 10, I'll also comment on the CAD1.3 billion renewable energy asset drop-down to the Enbridge Income Fund which we have proposed to the Boards of the Fund and Enbridge Income Fund holdings. Of course, completion of this drop-down is dependent on the assessment of the proposal by the independent committee. But we think it can be a good win-win for the shareholders of both Enbridge Income Fund holdings and Enbridge Inc. This proposed drop-down represents a resumption of the original purpose for the Fund, which was interrupted first by the SIFT tax and then by the global financial crisis, both of which had a destabilizing and adverse affect on the Fund's valuation and ability to raise capital on attractive terms. That's behind us now. If the drop-down is completed, it will enable a significant increase in dividends to public shareholders of Enbridge Income Fund holdings, it will diversify the asset base of the Fund with a solid package of long-lived assets, and it will expand the market capitalization and liquidity of Enbridge Income Fund holdings, reinforcing its financial capacity to undertake further investments. The benefit for Enbridge shareholders will not be as immediate, but the drop-down will reinforce Enbridge longer-term growth.

In the near term, the proceeds Enbridge receives will provide little accretion to earnings per share, as they are applied to repay debt. But in the longer term as the proceeds are reinvested, we expect to see it a pickup of about CAD0.10 a share from this transaction. This reflects the combined effect of sourcing equity at a lower cost than issuing Enbridge shares, plus the uplift from the incremental investment enabled by the additional equity capacity. Enbridge shareholders will also benefit from reestablishing the effectiveness and financial capacity of the Fund as a low cost of funding for potential further assets. That concludes my comments and I'll hand it back to Pat to wrap up.

Thanks, Richard. And to just very quickly summarize, we're comfortably on track to meet our EPS guidance range of CAD2.75 to CAD2.95 for 2011. We continue to see steady progress in securing attractive growth opportunities that fit very well with the investment profile of Enbridge. And of course, the recently announced CTS agreement is another very positive of development in our relationship with our shippers and it sets us up to potentially benefit from future growth in the Oil Sands in many ways. Lastly, we're looking to reestablish Enbridge Income Fund as a low-cost source of funding for future growth, as Richard has just described. So, with that very quick summary, let's move onto the Q&A session.

(Operator Instructions) Carl Kirst, BMO Capital.

Thank you. Good morning, everybody and nice quarter. Just a quick question, I know this is minor in the grand scheme of things, but Richard, on the offshore you mentioned you'd tempered expectations a little bit for the year. Should we continue to think second, third and fourth quarter will stay in the current levels? I suspect we're not going to see a pickup in offshore volumes anytime soon. Maybe the broader question is if this is just due to permit delays, this shouldn't signal any change in long-term strategic thinking with offshore, but wanted to touch on that, too, if I could.

Maybe, Richard, you can take the first part of that and then I'm going to circle back and address the longer-term.

Okay, sure. My comment, Carl, on tempering our expectations was for the segment as a whole, because we don't -- we're not going to provide guidance on sub-segment within the segment. I think it's fair to say that we are going to see weakness in offshore for the balance of the year. As you indicated, it's going to take a while for that volume situation to work itself back out. And I'll turn it over to Pat to cover the longer-term.

Yes, and I think, Carl, the short-term issues are largely related to the point that you made about permit delays, and as you know, it has not been a very active time in the offshore. But we remain convinced that long-term, the offshore Gulf of Mexico has very strong potential . As you know, that's primarily as an oil play, but with associated gas, that bodes well for our gas system and for new oil opportunities. Again, I don't need to tell you or I'm sure most of our audience, that the premise upon which I suggest there's tremendous upside is just the long-term security of supply issue in the US. That huge reserve is one that ultimately will be developed and developed safely in our

I appreciate the comments. And then, if I could, just one quick follow-up on Northern Gateway with the time frame that has now been established. Is that something that can still queue up a potential regulatory decision by year-end 2012, or is that now more a 2013 event?

I would think it probably will be early 2013 at this point. We had expected at one point to have the hearing late this year, and then kind of mid-year to third quarter of next year decision. I think now, with the hearing in these two stages, January and June, that an early [2013] decision would be a more likely case.

Great, thank you so much.

Thank you.

Juan Plessis, Canaccord Genuity.

Great. Thank you very much. You mentioned in the MD&A that you're seeking to recover around $175 million of capital costs for recovery of accelerated integrity programs on Line 6B. You also make mention that additional integrity expenditures may be required and could be significant. Just wondering if you can share with us what level of additional integrity costs going forward have been factored into the IJT?

Richard, can you take that?

Yes, again, that's $175 million within Enbridge Energy Partners, which is going to be recovered on their facilities surcharge mechanism. I don't think, one, that we have disclosed or are planning to disclose the aggregate amounts of integrity capital that we're planning to spend either south of the border or north of the border, but it's certainly going to be a significant number, always has been a significant number. If anything, we're, with the lessons from the Marshall leak, we're intensifying our integrity program. But, we have allowed what we think is a very ample amount to flow through both Lakehead tolls and therefore the sharing of the tolls between the Lakehead system and the Canadian system, and as well to be absorbed on the Canadian side as well. So, certainly this would be anticipated, the $175 million anticipated and we anticipate significant further expenditures as well.

Okay thank you for that. And as a follow-up question, with respect to your green power strategy and your proposal to roll down those assets into Enbridge Income Fund and Enbridge Income Fund Holdings, can you comment on how this fits with your strategy of growing your renewable power business?

Well, I think it fits very well, Juan, because, as you know, we are very committed to growing our green power business. I think, as we look back on 2010, about 25% of our expenditures, our expended capital, was on green power and we are very committed on a number of fronts to continue to grow it. This just makes the economics of so doing and the capital efficiency even better, to be able to use the two different corporate structures.

Okay, thank you very much.

Thank you.

Robert Kwan, RBC Capital Markets.

Good morning. Just first question, on the regional pipeline system you mentioned that it was better than you'd expected and you also mentioned the year-over-year increase where that was increased tolls, new laterals, Hardisty caverns and lower G&A. Just wondering what part of that surprised you and if there was a breakdown between breaking it all out on the year-over-year basis?

Richard can you --

Sure. I don't think we're going to get as granular as to what components were lined up that way, but I think generally, it was the volumes being stronger that would be the part that was a little better than we had expected.

Okay. And are you seeing that continue into the second quarter?

I think there's good reason to suggest we'll continue to see strong volumes for the balance of the year.

Okay. My other question, on Gateway, you disclosed you spent about CAD200 million to date, CAD100 million has been funded by the shippers and refiners. Can you just give some color as to how much cost you expect to continue as you move through the process, at least over the next, call it 12 to 18 months? And is there any cost recovery mechanism or is this now 100% to Enbridge?

I'm going to ask Guy to comment on this as well, Robert. But as you know, the first CAD100 million was 100% Enbridge, at which point we slowed down and then resumed under a cost sharing arrangement with shippers that are part of a sponsor group that we have established for Gateway, and they will pick up their pro-rata costs -- share of cost going forward. So going forward, it will be split out among the sponsors. And Guy, at this point, I don't know that we have an estimate to go through the regulatory process?

I think, Pat, the estimate to take us through to ideally getting NEB approval was a total of CAD250 million.

Okay. So our original CAD100 million plus CAD150 million more.

Okay. So there's very little left to spend, is that a way to think about it?

That's right. Yes.

Okay. That's great. Thanks, Pat. Thanks, Richard.

Okay. Thank you.

Matthew Akman, Macquarie.

Thank you. Have a couple quick questions on the quarter and then maybe a bigger picture one on the balance sheet and where that's going. First, just on the quarter, was there any Aux Sable hold back on hedging? Or did it flow right through in the quarter?

I'm not sure I completely understand that question, Matthew, but the way that we book Aux Sable, we're always cautious in the early quarters because the sharing mechanism that applies to that asset with BP is a full-year agreement, and so we're not really sure what our share is going to be until the full year has come and gone.

Yes, that's what I was getting at. So, normally in the first couple quarters, you'll book on a more conservative fashion, and won't flow through the full positive impact of the first quarter commodity price impact. Is that what's happened here?

Yes, our booking practice would be consistent, although with the strength that we are seeing, we would have picked up more in the first quarter, so to speak.

Okay, thanks. On gas storage, you talk about investing CAD40 million to CAD50 million, and obviously, storage spreads have compressed quite a bit. I'm just wondering what the economic model is for recovering capital on a return on that capital?

Yes. So, that additional storage is fully contracted. We went out with an open season, inviting contracts for an even larger amount of storage, but what we ended up with contracts sufficient to support that magnitude of storage. And I think the best way to describe the economics is kind of traditional Enbridge economics, low risk -- something like that would be in the double-digits to low teens territory in terms of return on equity.

Okay, good. So you're not taking merchant exposure on that?

Absolutely not.

Okay. Thanks. And my last question's on balance sheet, if you just look at what's going on with the Company, you're generating a lot of cash flow, cash flows is way up year-over-year. The bigger CapEx projects are behind you, there's obviously a lot of growth, but in the quarter, you paid down debt, and you actually issued shares. Meanwhile, you're selling assets down to generate even more balance sheet room, selling assets into the income fund, and Richard, it's not like you to issue shares to pay down debt. Obviously, that's dilutive. What are you guys preparing for?

Well, Matthew, nothing specific, other than good solid management of the balance sheet. I guess one advantage of having been around in this business as long as I have, I have seen the ups and downs, and of course, having been not too far out from a rather dramatic down cycle in the financial market, we think having a little bit of dry powder on the balance sheet is not a bad idea at all. Also, as I mentioned to you, the first quarter alone, we secured another CAD600 million worth of new development opportunities. And we've got -- I don't underestimate the opportunities that will be brought the brought to this Company as a result of the CTS agreement.

Maybe just to reiterate that, by fixing the toll over a ten-year period, for our customers, they now have the confidence that, that core system is something that they can depend very much on to extend into new market areas, whether it's further east in PADD II, whether it's over into PADD I, whether it's South from Cushing. And it may be coincidence, but we have seen a significant uptick in business development-related discussions around extension of our system now that we've got that fixed toll system in place. So, don't worry about our ability to effectively reinvest the little bit of cash that we've got available on the balance sheet. We're quite comfortable we're going to be able to do that at very good returns for shareholders.

Okay. Thanks, guys, those are my questions.

Thanks, Matthew.

Andrew Kuske, Credit Suisse.

Thank you, good morning. The first question is for Pat, and it just relates to the conservative majority that just came into the House of Commons. How do look at your prospects for developing Gateway? And then just even more broadly, just infrastructure in general in Canada under a conservative majority government?

Andrew, I just commented about the fact that I've been around for a long time and one of the things that I've learned over the years is that it's best to stick to the numbers and not talk a lot about politics. Let me say that the conservative government has understood the very important strategic value of Gateway to this country. We're very appreciative of that and we would hope to continue to win their support by showing that we can safely and effectively develop the Gateway pipeline project. At the same time, we know that they want to ensure that we very effectively including First Nations as we're doing through our equity offering and work closely with First Nations and other stakeholders along the way. So we're pleased with the fact that we've had the opportunity to present and make known the very important role that this project can play in Canada's long-term energy security.

And then, just another question, not really a policy orientation, but one that might be a bit more numbers focused -- you've had a few international assets over the years, you exited those businesses, and the evaluations have changed quite a bit around the world versus what we've seen really over the last decade, and some markets that were frothy 10 years ago aren't frothy now. Is there any specific area where you actually see some interesting value from an Enbridge perspective? And could you potentially revisit markets that you looked at 10 years ago?

The answer, one word answer is yes; we could revisit some of the markets. Just to do a very quick replay, realize that we never exited international as a strategy. We monetized two assets because of premium valuations and at a time when we wanted to redeploy the capital to a huge capital program in Canada. We do want to have international as one of the growth platforms that continues to drive this 10% growth story for Enbridge going forward. And we are looking internationally right now, we're looking in South America, there are some good opportunities as a result of new developments in Colombia.

We were very happy with our investment in Colombia and the way in which we were treated there. We've also been looking at the market from -- the international market from the perspective of energy moving into China, India, and other developing countries, for example, LNG projects that are targeted; not that we're in the LNG business, but there are gas pipelines associated with LNG projects that might work for us. So we're looking -- I won't say far and wide, because I don't want you to think for a minute that we're using a shotgun, we are pretty rifle approach on international, and we're doing the business development work out of North America. But, we are actively looking today.

Okay. Thank you very much.

Thank you.

Linda Ezergailis, TD Securities.

Thank you. This is maybe a follow-on to Matthew's question about your balance sheet. Given the attractive valuations and our affiliates at the Fund and the US MLP level, could we see potentially Enbridge selling other assets to your affiliates and what would be the main constraint to that process? Would it be a public market appetite for new equity at the affiliate level or something else?

There are a lot of considerations there, Linda, and I'm going to ask Richard to supplement my response to this. We always look at it, as you know, from the point of view of the cost of capital of those entities relative to the Enbridge cost of capital. And of course, their ability to access capital markets as well, which would often be required in the case of a significant roll down of assets. So those, and of course, the issues around ensuring that we've got the governance practice in place to effectively do a roll down are very important. Richard, you probably want to supplement that.

Sure, I think you've touched, Linda, on one of the key constraints, which is the ability of the sponsored investments to fund. In the case of EEP, it's got a pretty robust capital expenditure program of its own . So, it hasn't, in recent years, had much capacity for additional drop-downs. In the case of the Fund, as I described before, it's gone through a period where it wasn't attractively valued. Now it is. It's a relatively small cap player at the moment, and so the immediate constraint would be its ability to issue additional equity and fund a significant further drop down. We hope to put that to the test, to a successful outcome with this drop down, and if it is affected the way we expect it to be, it'll build that capacity for the future.

And of course, the last constraint, coming back to your balance sheet question, is Enbridge's need for the Funding that would be generated by such drop downs. And, as Pat mentioned, we are seeing a pretty significant bundle of investment opportunities on the horizon. Probably an uptick from what we've seen previously, and at the moment, we think we're in a good position to cover that. But if we need additional funds, that would be a place would

Great. Thanks. And just as a follow-on to Andrew's question about international, can you specifically comment on Australia and if you're seeing anything there given how it is an economy that is indirectly benefiting from some of the demand in commodities in India and China and could be seen as a comparable economic environment to Canada in many ways?

Yes, Linda, we have been looking in Australia, for the reasons you've indicated, and it fits with our category that I mentioned earlier of a number of LNG projects aimed at the Southeast Asian market, with significant gas pipeline opportunities associated with it. We don't have anything, of course, at a significant stage of development at this point in time, but that's a very good example of the kind of thing that we are considering.

Great, thank you.

Thank you.

(Operator Instructions) Steven Paget, First Energy.

Well, still an analyst and not a member of the media, but my question is on Southern Lights. What capacity is Southern Lights running at right now?

Throughput on Southern Lights, Guy, do you have that?

It's below 100, about-- below 100,000 barrels a day.

Bearing in mind that the level of capacity utilization, Steven, really has very little impact, in fact has no impact at the moment, on our earnings from Spearhead, because the capacity is effectively all underwritten by those contracts that are in place.

Right. You mentioned Spearhead, there is -- Southern Lights, the earnings, could they be increased with an aggressive program of seeking uncommitted capacity as well?

Oh, yes.

I believe there are upside opportunities for us on Southern Lights for volumes brought beyond the committed volumes. So, the answer to that is yes, Steven, there is some upside there.

My next question would be a more general question. There's, as you know, a significant bottleneck between Cushing and the Gulf Coast. It sounds like you may have a plan to alleviate that through the working with the CTS toll. I'm curious, where's the next bottleneck? Where's the next Cushing to Gulf Coast bottleneck? Are you seeing it between PADD II and the US East Coast perhaps?

Yes, I think you put your finger on what we think the next bottleneck will be, and it'll be a bottleneck for light and synthetic that wants to move further east. Largely, as a result of a number of factors. The increasing production, of course, out of the Bakken, but also the fact that with conversion of some of the refining capacity in the US Midwest to a heavier slate. There is some light capacity that will no longer be available, meaning that we need to expand markets for synthetic and light. And so be able to push them onto the East Coast in PADD I and possibly into Eastern Canada is, we think, a developing bottleneck area.

I seem to recall that you've been mentioning this for several years, and so I'm curious whether you've been able to get shippers to be more interested in this idea of moving light crude eastward. Are you seeing more interest now versus previous years?

Yes, we are. And as you know, there was a great deal of interest when we talked about this back about 2.5 years ago where we were working quite hard on initiative. Then, the dramatic downturn in crude oil prices slowed that, but it has come back again. And yes, we are looking at it actively right now.

Excellent, thank you, those are my questions.

Thanks, Steven.

(Operator Instructions) Scott Haggett, Reuters.

I'm wondering if you could just tell us what the future of the Monarch pipeline is and whether or not that can go with the Enterprise proposal and Keystone book?

Yes, Scott, it's a very good point. We have spent a lot of time recently working on Monarch, and as yet, don't have the level of commitment that we need to proceed with the project. However, as I implied earlier, the fact that we now are able to put forward a fixed toll on our Main line, it means the shippers can negotiate on that knowing what their toll would be, effectively all the way to the Gulf, using our system. And therefore, we're in a renewed series of discussions on it right now.

The Enterprise Energy Transfer Proposal of course is out there, and at this point, I'm not aware of significant committed volume to that. Realizing, of course, that we are aiming at light volumes primarily South from Cushing. Our estimate is that it may take two pipelines to address the ultimate need to clear that Midwest market. In part for the reasons I just went through in discussing the point with Stephen about the growing [glut] of crude oil in the US Midwest.

If I could, just on Stephen's question, can you just elaborate further on the renewed interest in Pathfinder or if it's still Pathfinder and when that will be firmed up?

It was called Trailbreaker, but no, there's really not a lot more I can say, because it's part of confidential discussions that we have underway and too early yet, we don't have the level of commitment that we need to announce a project. Did that answer your question, Scott?

He removed himself from the queue. Ladies and gentlemen, that concludes today's Q&A session. I would now like to turn the call back over to Mr. Jarvis for closing remarks.

Thank you, everyone, for joining us and I think that's all we have from our end. Have a good morning.

Ladies and gentlemen, that concludes today's conference. You may now disconnect. Have a great day.