Enbridge has reported a continued growth in its earnings through the first quarter of 2018, and expects the year to continue strong as it executes a number of key projects in a number of different areas.
Adjusted earnings in the first quarter of 2018 increased by $700 million or $0.25 per share compared to the same period in 2017. The 2018 increase was primarily driven by strong operating results, including higher contributions from Enbridge's new natural gas, liquids pipelines and utilities assets, stronger crude oil throughput on the Mainline system enabled by capacity optimization initiatives, new projects coming into service in the Liquids Pipelines, Gas Transmission & Midstream and Gas Distribution segments, lower operating and maintenance costs and more favourable realized settlements on foreign exchange hedges.
"We're very pleased with the significant progress that we've made in the first quarter of the year towards achieving our 2018 strategic priorities," commented Al Monaco, President and Chief Executive Officer of Enbridge. "Our earnings and cash flows have grown significantly year over year, we've raised over $3 billion of hybrid securities and have now announced over $3 billion of asset sales, all consistent with our strategy to focus on a low-risk pipeline and utility business model and to accelerate funding of our secured capital program.
"Our strong financial results for the first quarter of 2018 clearly demonstrate the quality of the assets, predictability of cash flows and the accretive nature of the Spectra Energy merger that we completed last year. Adjusted earnings per share is up over 40% this quarter relative to the first quarter of last year. We're now benefiting from the significant financial synergies that we have captured to date from the deal and other efficiency efforts, and, as expected, we are seeing reliable and growing cash flow and earnings from the $12 billion in new capital projects that we brought into service through 2017," Monaco continued.
In the first quarter of 2018, the Company brought $0.8 billion of commercially secured projects into service, substantially on time and on budget. This included the US$0.2 billion Stampede Offshore oil lateral in the Gulf of Mexico that extends the Company's offshore footprint in the Green Canyon corridor and the $0.4 billion High Pine and the $0.2 billion Wyndwood pipeline expansions, to enhance the natural gas transmission capacity on the T-North section of the B.C. pipeline system.
In total, $7 billion of projects are expected to come into service this year, including three of significant size. The $0.8 billion Rampion Offshore wind power generation facility in the UK is substantially complete and will begin delivering full power to the grid in the second quarter. The US$1.3 billion Nexus natural gas pipeline that will transport gas from the Marcellus and Utica basins to the upper Midwest and Canadian markets is progressing well with construction under way in Ohio and remains on track for completion late in the third quarter. Finally, the US$1.6 billion Valley Crossing project which will supply 2.6 Bcf of gas into the Mexican market has substantially completed its onshore pipeline installation and continues to advance the offshore portion for a fourth quarter 2018 in-service date.
The $9 billion Line 3 Replacement project is a critical integrity replacement project that will enhance the safety and reliability of the Enbridge liquids Mainline System and provide incremental export capacity to Western Canadian producers and increased security of supply for key refining markets along the Mainline system as well as to markets further downstream.
The project continues to progress well on several fronts. In Canada, the first phase of pipeline construction is now complete, with approximately 40% of the pipe now laid. In the U.S., the pipeline replacement work in Wisconsin is complete and that segment of the line is expected to be commissioned in May.
In Minnesota, on April 23rd an Administrative Law Judge issued Findings of Fact, Conclusions of Law and Recommendation to the MPUC in connection with the Company's applications for a Certificate and Route Permit. The ALJ recommended that the MPUC grant the Company's application for a Certificate of Need, but only if the MPUC also selects a route that would require in-trench replacement of the existing Line 3, which is not the Company's preferred route. The ALJ's recommendation is not binding on the MPUC.
The Company continues to believe that its preferred route remains the best solution for Minnesota and intends to continue its effort to secure approval of its preferred route by the MPUC. On May 9, 2018 Enbridge filed its exceptions to the ALJ Report with the MPUC, setting out its proposed revisions to the ALJ's summary of the evidentiary record, as well as Enbridge's points of disagreement with the conclusions on route recommendation. The MPUC is expected to issue a ruling on the Certificate of Need and Route Permit dockets at the end of the second quarter of 2018. Management continues to anticipate an in-service date for the project in the second half of 2019.
"In summary, we're making good progress towards delivering on the priorities that we set out when we announced our strategic plan in December last year. We're on track to deliver full year financial results within the guidance range, and we're well ahead of the game with respect to funding initiatives for 2018," Monaco said. "We believe that we have the right strategic plan in place to position the Company for success and surface the significant value from what we believe are the premium energy infrastructure assets in North America, and we remain keenly focused on executing that plan over the remainder of the year."