Jordan Blum, editorial director, Hart Energy: We are here at the massive Gastech Exhibition & Conference 2024 in Houston. I'm joined by Allen Capps, the senior vice president and chief commercial officer for gas transmission and midstream at Enbridge, the largest North American midstream player. Thank you so much for being here. I really appreciate it. You all are in the midst of a pretty transformational deal with Dominion growing a lot in the gas transmission space. [You] just closed East Ohio Gas, Quest Star and PSNC (Public Service Co. of North Carolina) will be closing very soon. If I can get you to just talk a little bit about just how big a deal this is for Enbridge and for the North American energy space and how you see things playing out right now.

Allen Capps, Enbridge: Yeah, thanks Jordan. Really what this shows you is our bullishness on natural gas. So if you will, before this transaction, we were probably roughly 60% liquids and then we had a large gas transmission business, an LDC in Ontario, and then some renewable power business. Now what we've done is kind of 50/50 where we're 50% liquids, 50% natural gas, with the advent of these three LDCs that'll come in. It makes our LDC be about 23% of the business and makes with our GTM business close to 50%.  

The reality of it is that we believe in the long-term viability of natural gas. It's safe, it's reliable, it's affordable and we think it's going to be a part of not just [the] energy transition, but the energy solution we're going for.

JB: So for several years now, when we talk about gas bullishness, all the talks about LNG exports and everything to do with that, but right now the main focus or the main scuttlebutt is all about domestic North American demand growth for the first time in essentially decades with AI and data centers and everything else. I just wanted to get your take on how you see this playing out now and longer term.

AC: Yeah, we think the AI and data centers will play a role because they're going to need dispatchable energy, and the most efficient, affordable and reliable energy source will be ultimately a natural gas that supplies that electricity. I will say though that you're also just seeing overall demand growth both on the electric side that's just driven by other things other than data centers, population growth, electrification, but also usage of natural gas has come up certainly from an LNG perspective. But domestic usage has continued to increase, and I think it is because despite some hurdles that we're seeing for a regulatory and political and sometimes judicial perspective, the reality of it is that economics are going to rule today, fundamentals are going to rule today. The market sees the value in natural gas and how it can help reduce the poverty line, help with inflation and also is a reliable form of energy.

JB: You mentioned electrification playing a big role too. Obviously, EV (electric vehicles) infrastructure in this country in North America is going relatively slowly, but do you still see it on that same trajectory though?

AC: There's a little bit of that. We're not sure that EV's going to play quite as much on the electric demand as some of the other things. And look, we believe in all of the above solution where we have to look at battery powered things, we have to look at renewables, we have to look at new energy technologies like hydrogen and RNG (renewable natural gas), and we're looking at those things. But the reality of it is natural gas is going to play an important part in all of those, whether it be a backup, whether it be an actual source of energy. Also, with the coal to gas switch that you're seeing, continuing to see — which this started back in the ‘90s—that was really the only thing that you've seen that has had a real impact on GHG (greenhouse-gas) emissions since the 1990s. The biggest impact has been that coal to natural gas switching, we're seeing more of that as well.

JB: Switching back to the LNG side, obviously there's been a bit of a hiccup with the, so-called Biden pause or however you want to call that, but that's more of a temporary thing. Can I get your take on just how you see LNG demand?

AC: So you should see about, even with the pause, about 30 Bcf of LNG. By the time you get to 2030, we believe there will be more.  GHG emissions and energy is a global issue, it's not [just] a North American issue. We think that given the proliferation of natural gas that we have in this country, we have to be an important part, and in Canada as well, of the solution. So we think you're going to see a lot more LNG in the future. We do believe that this is a temporary ban. It certainly doesn't affect us from a long-range planning perspective, just from an investor perspective. But on a market-based perspective, we absolutely do believe you're going to see a lot more LNG going forward and we're ramping up for that. The thing that we have to get over is the permitting process, the regulatory process, some of the political process, those are the hurdles that we have to get over in order to be successful

JB: From a direct investment standpoint, Enbridge is doing the Woodfibre LNG project in western Canada. Do you see this as, well, it's much more than a pilot project, but kind of maybe a pilot project for more to come?

AC: If for us, we do see direct investment and LNG infrastructures and opportunity. We kind of take a value chain approach and this is just an extension of that value chain. What our strategy has been is being that last mile of pipe to the LNG facility, but we stepped out a few years ago and decided that we were going to invest directly in an LNG infrastructure facility and we're looking at more of those opportunities and had a lot of discussions on that front. For us, it's all about the commercial construct where we're a very stable cashflow company, we don't take a lot of commodity exposure. So it just has to have the right structure like the Woodfibre deal did.

JB: And obviously when it comes to LNG and crude exports as well, but all kinds of exports from here on the Texas Gulf Coast, Louisiana Gulf Coast, that's a big part of Enbridge in the future as well.

AC: It is, and right now I'd say that on the natural gas front of the natural gas we export, two-thirds of it goes to LNG, one-third of it goes into Mexico. So we can't forget about the fact that we believe also there'll be a lot of industrial increase in Mexico that's going to necessitate a lot more natural gas as well. We're not in Mexico, but we supply a lot of the gas that goes into Mexico.

JB: Right. So I guess just the last thing I wanted to ask, obviously lots of bullishness on gas LNG now and in the future, but I guess we have that dichotomy a little bit of low natural gas prices right now, and I just wanted to get your take on the kind of disconnect and when that might flip.

AC: So I'll tell you this, that with the amount of natural gas that we have, what we've seen is that production will ramp up to meet the demand and there's the ability to do that. I mean, we have some of the most prolific basins in the world and certainly the Permian and the Haynesville and also the Appalachian and there's gas there that is dying to get out. There have been restrictions in moving that gas to the Northeast for growth in the Northeast. We believe some of that gas will come to the south for LNG ultimately. So we have these large basins, a lot of natural gas, we have producers that can ramp up production and so that should create price stability on the natural gas side, we believe.

JB: Great. Well again, thank you so much for joining us here at Gastech. I really appreciate it. To read and watch more, please visit online at hartenergy.com.

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