Calgary-based Enbridge recently declared it is North America’s largest pipeline company, but now it’s moving from downtown Houston as it stabilizes near the Galleria.
Last week it closed on a $28 billion dollar investment as it acquired Houston’s Spectra Energy. Enbridge plans to consolidate into Spectra’s old headquarters on Westheimer Court, said Enbridge Chief Executive Al Monaco on Monday in an interview at the CERAWeek energy conference in Houston.
Enbridge leaves behind eight floors of real estate located in the heart of downtown in the 1100 Louisiana Street building, also known as Enterprise Plaza.
“That’s the plan. We’re not totally certain of the timing, but for sure we want to get that done by the end of this year,” Monaco said.
Job cuts are coming, including in Houston, but timing and numbers are still undecided, he said. Monaco emphasized the importance of growth and it being the overall goal, he also stated that cutbacks are mostly coming from duplicate corporate positions. Several of Spectra’s upper management have already left, but former Spectra CEO Greg Ebel is the new chairman of Enbridge.
“Whenever there is a combination of this magnitude, there’s going to be some duplication,” Monaco said. “We’re really focused on making sure we continue the growth momentum that we have and that’s going to take people.”
Enbridge predicts it will generate $540 million in pre-tax savings from the merger, about half of which is through personnel reductions. The merged Enbridge currently has nearly 17,000 employees of which about 1,750 are located in Houston.
Enbridge’s three tax-advantaged partnership businesses, Enbridge Energy Partners, Midcoast Energy Partners and Spectra Energy Partners, will all remain headquartered in Houston without plans for name changes or consolidation.
“It (Spectra Energy Partners) has a good business model, so we see no need to change that,” he said.
Touting its new position as North America’s largest energy infrastructure player, Enbridge’s goal in making the Spectra deal was to enhance its gas pipeline position in the U.S. Enbridge’s assets were about 80 percent focused on crude oil and other liquids, the Spectra deal creates a nearly 50-50 balance between oil and gas. Spectra adds a 90,000-mile network of gas and natural gas liquids pipelines.
“Natural gas, we think, is going to be a huge part of the future,” Monaco said, citing the United States’ massive shale gas resources, as well as gas’ environmentally cleaner reputation compared to crude and coal. That also includes North America increasingly taking a leading position in liquefied natural gas exports.
The goal is to increasingly focus on North American energy, and not individual nations, including shipping more gas to Mexico as well. “To me, there’s no border,” Monaco said.
The Spectra deal helps Enbridge grow when it’s increasingly harder to build pipeline because of the opposition from environmentalists, communities and indigenous populations as well. “The transportation conduit really has become the point of attack,” Monaco said, emphasizing the increased focus on community outreach even before projects are designed.
Article written by HEI contributor Lydia Ezeakor.
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