In a riff on U.S. President Donald Trump’s “drill, baby, drill” mantra, Canadian Prime Minister Mark Carney proclaims we must “build, baby, build.”
But build what? Mr. Carney is assembling a team to work on that but in any discussion on the subject, pipelines are near the top of the list. Resurrect Northern Gateway. Revive Energy East. Restart Keystone XL. Build a pipeline to transport oil/natural gas to Churchill, Man., for overseas shipment via the unfreezing Arctic Ocean.
Conservative leader Pierre Poilievre wants us to build two new pipelines even if protestors “chain themselves to a tree.”
There’s just one small problem. Neither of our two major pipeline companies is showing much interest in any of these ideas.
In recent weeks, the reaction of both TC Energy Corp. (TRP-T) and Enbridge Inc. (ENB-T) to new Canadian mega-projects has been tepid at best. Both seem more interested in looking south. East, west, and north are not on their radar screens. The U.S. and Mexico offer much more in the way of risk-adjusted returns. Maybe the time will come for a new pipeline to Canadian tidewater, but it doesn’t seem to be on their priority lists right now.
Francois Poirier, CEO of Calgary based TC Energy, made this very clear during a conference call to discuss the company’s second quarter results.
“It’s nice to see a federal government that understands the sense of urgency around deploying capital to help make Canada an energy superpower,” he said. But it appears he’s not interested in being part of that plan, at least at present. The U.S. market is simply more attractive.
“Canada gas has to compete for capital with the other business units in the company. And currently, the risk-adjusted returns in the U.S. are meaningfully higher than in Canada,” Mr. Poirier said.
After spinning off its oil pipeline business to South Bow Corporation last year, TC Energy now focuses on natural gas. The company has about $8.5-billion in assets expected to come on stream this year. One that they’re excited about is the Southeast Gateway pipeline, which was completed in the second quarter on schedule and under budget. It will deliver natural gas to underserved regions in southeast Mexico.
Our other pipeline giant, Enbridge, is also more interested in looking south than in revisiting projects like Northern Gateway, which would have carried diluted bitumen and condensate to the B.C. coast. It was killed by a combination of First Nations and environmental 0pposition and a federal government ban on tanker traffic off British Columbia’s north coast.
While Northern Gateway is history, Enbridge has not ruled out building a new pipeline to the West Coast, but only if Ottawa makes major policy changes. These include declaring a project to be in the national interest, significant regulatory changes and meaningful Indigenous participation.
Another possibility that has been mentioned is the replacement and perhaps extension of the aging Line 5 (built in 1953), which carries oil from the West to Michigan, Wisconsin, and Ontario. The state of Michigan is trying to shut it down, claiming the section under the Straits of Mackinac poses an environmental risk. Enbridge is fighting the move in court.
For now, Enbridge is more interested in its proposed Flanagan South pipeline, which would transport oil from Canada to the U.S. Gulf Coast. In a recent survey, it received a positive reaction from potential shippers.
Enbridge has some minor Canadian projects in the works, but the company is prioritizing smaller, faster developments in the U.S., where the regulatory conditions are less onerous.
Neither company has excited investors with their growth plans. Both stocks are underperforming the TSX Composite year to date, despite the high yields they offer. Updates follow.
Enbridge Inc.
Originally recommended on Aug. 23, 1999 at $8. Closed Friday at $64.69.
Background: Calgary-based Enbridge is one of the largest energy infrastructure companies in North America. It operates an extensive network of crude oil, liquids, and natural gas pipelines as well as regulated natural gas distribution utilities and renewable power generation.
Performance: The stock has been bouncing around like a yo-yo all year, with big drops in February, April and July, followed by strong rebounds. As of the close on Thursday, the net result is a year-to-date gain of 6 per cent.
Recent developments: The company released second quarter results on Aug. 1. GAAP earnings attributable to shareholders was almost $2.2-billion ($1 per share), compared to $1.8-billion (86 cents a share) in the same period of 2024. Adjusted earnings were $1.4-billion (65 cents per share), compared with $1.2-billion (58 cents per share) in 2024.
For the first six months of the fiscal year, Enbridge earned $4.4-billion ($2.04 per share), a significant gain from $3.3-billion ($1.53 a share) last year.
Adjusted earnings before interest, income taxes, and depreciation and amortization (EBITDA) were $4.6-billion, an increase of 7 per cent compared with $4.3-billion in 2024.
Dividend: The quarterly payout is $0.9425 per share ($3.77 a year) for a yield of 5.8 per cent.
Tariffs: The company said it does not expect tariffs to have a material impact on its operations or deployment of capital.
Outlook: Enbridge affirmed previous guidance and said it will meet its goals for the 20th consecutive year.
Action now: Buy for income.
TC Energy
Originally recommended on April 23, 2006 at $34.07. Closed Friday at $67.97.
Background: TC Energy is one of North America’s biggest pipeline companies, with 93,300 km of natural gas pipelines. It also owns or has interests in seven power generation facilities, including the Bruce nuclear facility in Ontario.
Performance: As with Enbridge, there has been a lot of up and down movement in the share price this year, but the end result is basically flat.
Recent developments: The company recently announced good second quarter results. Net income attributable to shareholders was $862-million (83 cents per share). That was up from $804-million (78 cents a share) in the same period last year. For the first six months of the 2025 fiscal year, the company reported earnings of $1.84-billion ($1.77 per share), compared to $1.79-billion ($1.73 a share) in 2024. U.S. natural gas pipelines were the main segmented earnings contributors.
Dividend: The stock pays a quarterly dividend of 85 cents a share ($3.40 a year) to yield 5 per cent at the current price.
Outlook: The company expects comparable EBITDA for 2025 to be higher than the original forecast, in the range of $10.8-$11.0-billion. Comparable earnings per share guidance remains the same and is expected to be lower than in 2024. Net capital expenditure guidance was reaffirmed at $5.5-$6.0-billion.
Action now: Buy for income.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.
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