Enbridge Inc. (ENB) Q2 2012 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Welcome to the Enbridge Inc. Second Quarter 2012 Financial Results Conference Call. I would now like to turn the meeting over to Jody Balko. Please proceed.

Thank you, Clarissa. Well, sorry for that delay. For some reason, we were unable to call into our own conference call here, and then we were on hold for a bit of time. So, anyway, we'll get things underway. Good morning, and welcome to Enbridge Inc. Second Quarter of 2012 Earnings Call. So with me this morning are Pat Daniel, Chief Executive Officer; Al Monaco, President; Richard Bird, Executive Vice President, Chief Financial Officer, Corporate Development; and John Whelen, Senior Vice President and Controller. 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 podcast 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. We're going to take questions from the analyst community first, and then invite questions from the media. [Operator Instructions] And lastly, I would also remind you that Jonathan Gould and I will be available after the call for any follow-up questions that you may have. So 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 ours. This slide includes 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[ph] filings available on both SEDAR and EDGAR systems. With that, I will turn the call over to Pat Daniel.

Thank you, Jody, and good morning, everyone. Thank you for joining us for a review of our second quarter results. Earlier today, we were very pleased to announce that our adjusted earnings for the second quarter were $277 million or $0.36 per share. This is an increase of 7% relative to the second quarter of 2011. And cumulatively, it puts us a the year-to-date increase in EPS at 10% over 2011. Richard, of course, is going to provide a more detailed discussion in a few moments of each segment's performance in his comments. So based on this performance, we continue to be well on track to achieve adjusted earnings within our guidance range of $1.58 to $1.74 per share. Reaching the midpoint of this range would represent a 12% earnings per share increase over our actual results in 2011, and that's generally consistent with the 10% annual earnings per share growth rate that we're confident in achieving through middle of the decade. As you know, we've had very strong business development success over the past year. The major accomplishment in the second quarter that I'd like to highlight is the addition of our Eastern Access initiative announced in May of this year. This now takes our enterprise-wide secured capital project inventory to $17 billion. Needless to say, of course, execution of that project backlog will be one of the company's main focuses in the coming years, and Al is going to provide an update on that shortly. Also, financing a suite of project this size is no small feat, and Richard is going to update you on the recent funding initiatives in his section of the results also, in a minute. Just let me change gears for a moment and discuss the oil release that we experienced last week on…

Okay. Thanks, Pat, and good morning, everyone. At the first quarter conference call, you recall, I shared with you my priorities going forward. So many of you will recognize the 5 points on the slide you see here, which I've been communicating as Pat and I have progressed through the transition, and visited with investors and other stakeholders. Now this morning, and in light of recent events, I'd like to focus on the first 2 of those priorities followed by the project update. On safety and in operational reliability, we've implemented what we referred to as our operational risk management program or ORM, and that's what Pat was talking about earlier. The objective of the ORM is pretty simple, for us to be the industry's leader for safety and operational reliability of our pipelines and facilities across this company. The ORM covers the 6 key areas you see on this slide. Let me just highlight them briefly. Enbridge, as you know, has always taken an aggressive, proactive approach to pipeline integrity management. We've been one of the largest users in the world of high-tech, in-line inspection tools. And in 2011 and '12 alone, we've perform more than 200 in-line inspection tool runs. In addition to that, nearly 3,000 pipeline excavation, and this is an unprecedented level of activity by any measure in our industry. Looking ahead, we will further increase the frequency of in-line inspections and invest in promising pipeline inspection technology. We've reviewed and strengthened public awareness programs to minimize the potential for third party damage to our facilities. We've enhanced our procedures for leak detection and analysis, and importantly, we've established a pipeline control systems and leak detection department. We've planned a significant new spending, as Pat referred to, to improve our equipment, training and incident response capabilities…

Thanks, Al. Good morning. I'll pick up on Slide 14 with a review of the segmented earnings, and as Pat indicated, on an overall basis, we are quite pleased with the quarter and the year-to-date performance. The second quarter was expected to be soft, but it actually turned out to be stronger than we had expected. Liquids pipelines earnings, in particular, continued to run above our expectations. Both volumes and tools have been favorable on the Canadian main line, and I'll come back to that in a few minutes. The resulting higher revenue was partially offset by higher expenses due to several factors, which are more specific to the quarter as opposed to being indicative of the run rate, which is going to be closer to the year-to-date rate. The other notable source of strength in Liquids pipelines is Spearhead, which benefited from a high demand to move barrels from the upper Midwest to the less discounted Cushing Hub, and this should continue as the Seaway pipeline begins to drain Cushing's crude inventory. Gas distribution earnings for the quarter are beginning to reflect the drag from the Gas New Brunswick government imposed rate reduction, but otherwise, earnings are consistent with our expectations of a relatively flat year for EGD. The Gas New Brunswick regulations will knock approximately 60% or $12 million off last year's earnings from this source, part of that was anticipated in our guidance. Gas Pipelines, processing and energy services, as a whole, is performing ahead of our expectations, so far, with Enbridge services much stronger than expected, even exceeding last year's strong performance, but largely offset by a smaller than expected contribution from Aux Sable. Over the balance of the year, we should see the usual stronger second half for Aux Sable, but not the banner year…

Thanks, Richard. So maybe what I can do is just very quickly summarize. This has been another steady quarter, and has us well on our way to achieving our earnings guidance target for the year, which is centered on a 12% increase in EPS over last year. Secondly, we plan to incorporate any additional findings that PHMSA and the NTSB may have identified in our practices to ensure operational excellence. Thirdly, our major projects group continues to do an excellent job at managing our large suite of projects under construction and moving that towards successful completion. And of course, the funding activities continue on many fronts to finance these projects. And lastly, we remain very confident that we can achieve an annual growth rate and EPS averaging 10% through 2015, and we're increasingly confident in being able to continue that growth trajectory into the latter half of the decade. So that concludes our prepared remarks for this morning. I'd now like to ask the operator to open the phone lines to take questions. Operator?

[Operator Instructions] And your first question comes from the line of Paul Lechem of CIBC Capital.

My questions are about the Regional Oil Sands System. So the earnings were slightly down year-over-year, the commentary in the text was about higher operating and admin costs. Just wondering if you can give some color on that. And secondly, with regards to the Regional Oil Sands System, there's been competitive announcements about new projects in Alberta. Just wondering if that has any implications to some of your planned expansions such as the Athabasca Twinn project and Norealis expansion or project? Can you maybe talk about your ability to continue to grow the Regional Oil Sands Systems?

Paul, it's Al here. I'll take a shot at that last part of your question, then I'll turn it over to Richard for the first part. In terms of our regional oil sands position, I think we're in very good shape there. The 2 big pipes that we have coming out of the oil sands give us a very good position from a competitive point of view. You mentioned some other projects that were recently announced by others. I think that from our perspective, Paul, we're certainly not going to be able to win every project out there, and nor would you expects us to, I think. So we are in good shape right now. We feel confident about our position there. The Norealis project is on track. Certainly, the other expansions related to Wapasu and the Twinning are on track, so I think we're good shape there, and we've got a lot on our plate in the regional oil sands position, so we feel very confident about how we're situated there. So for the regional side, I'll turn it over to Richard.

Sure. So just in terms of the year-to-date performance, Paul, yes, we've had higher operating and administrative expenses. Probably the most significant factor there was cleanup costs and repair costs associated with a leak on that system. So not something we would expect that's going to have any effect going forward. And generally speaking, we would expect to continue to see earnings growth on that system as we bring new assets into service.

Okay. Could you give us an order of magnitude in terms of what cleanup costs or unusual costs in the quarter might have been?

I don't think we're going to get that granular in our disclosure, Paul. They weren't huge, but they were enough to affect the run rate.

And next question comes from the line of Andrew Kuske of Credit Suisse. Andrew M. Kuske - Crédit Suisse AG, Research Division: Just on the NTSB report, the final version of that, that came out. There's actually some scathing commentary in there, not just on Enbridge, but on PHMSA itself. So given the nature, your industry is very specialized, there's very few players that actually are involved in large-scale oil transport, do you see any kind of need to form some kind of self-regulatory organization to really help drive the regulation of this industry on a go-forward basis?

Maybe I'll take the first crack at that, Andrew. I think the point here is that we need to cooperate with the rest of industry, for sure, in advancing the technologies around, in particular, in-line inspections. So I think that we're going to make progress in that area with industry. At this point, PHMSA is the regulator. You're right that out of the 19 conclusions and recommendations in that report, we were focused on 6 of them and on the rest were allocated, I guess, to others, including [ph] the regulatory agency. I think, from an industry perspective, we'll continue to work cooperatively together, and that's the main focus going forward, I think. Pat, anything to add on that?

Well, I guess maybe to your point, Andrew, we're very large, and in fact, just to give you one statistic in terms of the use of in-line inspection, our numbers over the years put us in a position where we've run more in-line inspections than the rest of the world combined in many years. And therefore, it's not a big industry group. So it's very important that we work cooperatively with PHMSA, as Al indicated, but recognizing the difference in the roles of the regulator versus the regulated company. Andrew M. Kuske - Crédit Suisse AG, Research Division: That's helpful. And then just on the financial side of things. How much do you anticipate integrity programs and increased use of in-line inspections, and really kinds of things, increasing from a financial perspective over the next few years?

Well, Andrew, we've spent in the order -- in the last couple of years of about $500 million on integrity. I'm not going to get any more granular than that in terms of the operational risk management program that we have. We'll provide some more details around that, in terms of each of the programs, the 6 that I talked about, and the capital that's related to that, and we'll give some more detail on the numbers. As I said to you, though, the important thing is that the amounts have been included in the forecast, as [ph] capital within our long range plan.

And your next question comes from the line of Matthew Akman of Scotiabank.

Staying with the pipeline leaks. I mean, there's a much longer less than you'd normally see from Enbridge of updates on leaks in your MD&A. Obviously, there is much more press on it. But I'm wondering if you put the Michigan spill aside, are you guys actually seeing more leaks than you have historically, or is it just getting more profile than it has historically?

That's a good point, Andrew. I think you're right in your conclusion that it's getting a lot of profile, and in particular, some of that profile is being amplified by some of the bigger picture issues, let's call them, in the industry to date, particularly people's views on the oil sands. So I think it is getting a lot more play than in the past. If you look at our history, actually, it's been very good on the safety front, and we're proud of that history. And in fact, I think the record that we have compares very well with the rest of the industry. So, you're right, it's getting a lot more play out there.

But I guess I mean you guys must have done some benchmarking, and I've looked at the leaks over time, and there are periodically small leaks of a few hundred or a thousand barrels. And I'm just wondering in your benchmarking is showing that there's actually something going on in your systems where you're getting more leaks than you have historically, putting Michigan aside.

I think if you look at the trend, the trend is declining in terms of our leaks. And as I said before, we're about half of the rate of industry in terms of that particular benchmark. So I think what we have to recognize is that any leak is not something that we want, and we are targeting to have 0 leaks. So that's the goal and that's the aim of our operational risk management program is to even do better on that front going forward.

Okay. If I could just follow-up with a quick question on Spearhead with the strong earnings. Do you guys -- I guess this is for Richard. I mean, I would expect that to get even stronger as you drain more oil kind of upstream of the Seaway pipeline. Is that a proper assumption? Do you expect Spearhead to do even better over time?

I think the better way to look at that, Andrew, is that it's -- or Matthew rather. It's likely to be sustainable at its recent performance level. We're pretty well maxed out on capacity at Spearhead, every barrel that can is going down that, so until we complete the Twin in mid-2014, it's going to be sustainable as opposed to increasing.

Okay. So we'll see earnings ramp up as you put more capital on the ground there then?

As we complete the Twinning in 2014, then we'll earnings tick up, yes.

And your next question comes from the line of Robert Kwan of RBC Capital Markets.

Just first question here, I sensed a bit of directional weakness in the guidance for 2012. You moved kind of the firmly on track language, although Richard, you did mention it in the remarks. I'm just wondering if that's -- am I reading too much into that, but I'm not, what are the major drivers, whether that's just the EEP guidance? And then over the medium to longer-term in Slide 13, you've removed the plus language. Just wondering what you're seeing as maybe just slight drag on what it was, otherwise strong growth?

First of all, if that's the impression we created around the guidance, that's certainly not our view of what 2012 looks like. I think, as Richard alluded to, there was some pluses and minuses. But, no, we're firmly on track with the guidance range. With respect to the language around the plus, I think we just felt that there was just a bit too much granularity or specificity in the plus. We haven't really changed our outlook whatsoever, so it's really just how we framed the picture, if you will.

Robert, it's Pat. Just looking back at my remarks and I guess I said we continued to be well on track, and we'll upgrade that to firmly.

Okay. Just last question on funding. As you look forward here and thinking more about the kind of, quote, "equity bucket," it kind of looked like you were with a common equity done, you were technically done on that side, so prior to the last press [ph] deal you did. Are you seeing more of that risk bucket becoming more likely to come to fruition, or are you becoming a little more conservative around the EEP funding plan? Just kind of wondering how to think about no more preferreds or equity type, maybe, drop-downs going forward than what you're thinking with respect to the capital coming to fruition?

Let's Richard handle that one.

So I think we are continuing to see that secured capital inventory build, as one of Pat's slides indicated. And we're continuing to want to stay, if anything, a little bit ahead of that in terms of our funding. And so, hence, I think you can expect to see additional pref [ph] share action. You can't expect to see additional drop-down action. But I think pretty much keeping up with where we need to be, and so that will be normal course just as we move ahead into the future.

Rob, just a general comment to add there. If you go back to one of the slides, I talked about financial strength, and certainly with the capital program that we have, it's very important to keep up with Capital Market funding, and I think Richard's team does a very good job of that and staying ahead of the game.

Okay, just any directional concerns about needing to backstop more down at EEP?

Well, we have assumed, at this point, that our Eastern Access projects that we are funding 60%. There is an option for EEP to elect to move that down to 25%, or move it up to a higher level by 15%. So at this point, we're comfortable that they are well able to fund that.

And your next question comes from the line of Linda Ezergailis of TD Securities.

I realize there's a lot of moving parts in your Energy Services business, and one of them being considerable volatility in oil prices, the differentials, the geographically and in different grades of crude. But I'm just wondering what you're seeing so far in terms of Q3 and the balance of the year, and the moving parts on that front?

I guess, Richard, do you want to take that?

Sure. Well, as we've seen so far this year, Linda, the very attractive arbitrage opportunities that we were riding last year to a record Energy Services earnings last year have persisted. We didn't think they necessarily would. So, Energy Services was running a bit above our expectations, year-to-date. And I think there's a reasonable prospect that, that will continue to be the case. And where we have the opportunity to do so, we're trying to leg into a few longer-term deals to support that, potentially even beyond 2012.

Yes. And I think, Linda, that really is supported by this continuing price disparities we see at the various pricing points. And certainly, our Energy Services guys are positioned to manage around the assets to capitalize where they can, obviously, would not -- without speculating in the market.

That's helpful. And then maybe we can move to your scale factor trend on the CTS. How might we think of the seasonality of that number within a year, and then how that might trend over next few years? And then, I guess, based on your outlook of product mix and geographic mix, how that might look to the end of the CTS?

Well, Linda, you've managed as a question that is even more detailed than Richard went through on his slide show. So, Richard is going to take that.

Sure. So I think, generally, we would expect over the long-term to continue to see that scale factor drift off gradually, probably not as significantly as it has in this past year. But I think the 1.14 on an annualized basis is probably good for this year, it's probably good for next year. And seasonality, there isn't a well-defined seasonal pattern. It's much more just the ups and downs that we see in the production quarter-to-quarter, which will tend to be a little more volatile than the annual run rate will be. And then of course, we have the tolls that tend to move around a bit on a quarter-to-quarter basis, in part because of the annual escalation in the IJT, that ticks in July 1 in every year. And than we've got the effect of the Lakehead tolls, which tend to move on one front, April 1, and then tend to move again on July 1. So those toll movements are probably the only sort of quasi-predictable element of the seasonal pattern.

And your next question comes from the line of Juan Plessis of Canaccord Genuity.

I believe, last quarter, you spoke about wanting to be fairly aggressive on pursuing more midstream opportunities in Canada to build on the cabin gas operations. Can you update us on what you're looking for there? And I noticed that there was no reference to the expected in-service date of Phase 2 of Cabin Gas. Is it still expected to be ready for service in Q3 of 2014?

On the last part, Juan, at this point, we have a commitment to build Phase 2 for the producers in that area. So that's what we're going to do and there's been no change in that. In terms of the first part of your question around midstream opportunities, yes, we're seeing a very strong fundamentals still long term in terms of, particularly, the liquids-rich area of the gas business. Our team is working on several opportunities now, and we're focused on it. Nothing recent, obviously, to announce, but we're working hard on it.

And your next question comes from the line of Chad Friess of UBS.

You kind of gave us a bit of a teaser about the potential of expanding your Line 9 reversal project. Would such a project involve new pipe east of Montréal to Quebec City, and do you see the potential of supplying refineries further east in the Maritimes and/or the U.S. East Coast?

It's not the plan right now, Chad, to replace or add new construction to Line 9 pipe. We are, as I said, pretty encouraged with what we saw in the open season. It's a little bit early to tell. I think, as far as the market further east, I think producers are certainly looking for other outlets, and you've heard about their interest in those Eastern markets. Right now, to be honest, we are pretty happy with the project and that is fully committed, and we're going to proceed with it, and we'll see what happens after that.

Okay. So fair to say the if there was extra volumes, they were going to head east of Montréal and be supplied, either by the existing pipeline to Portland, or by a barge or a tanker to the Maritimes. Is that fair to say?

There's a couple of ways for it to get there. We -- at this point, we are planning for the crude to move into Québec, the two refineries there. We haven't really set on any plans further East from than that.

So maybe just to clarify on that, Chad. The potential for additional volume into Montréal would be really supported by the Québec-based refineries.

And we will now take questions from the media. Our first question comes from David McColl of Morningstar.

Accepting that there's a bit of a heated political situation in kind of BC and the U.S., I'm just wondering if you can elaborate a little bit more on the ORM and how it kind of is relating in to the corporate culture changes within Enbridge, and a focus on safety? And if you can build on that, how you're maybe dealing with public education versus public awareness, because there seems to be pressure growing against Line 9, obviously, Gateway, and now these delays in Wisconsin?

Let me start maybe with ORM plan and what it means in the bigger picture, I guess. First of all, let me clarify that Enbridge has always been very proactive on the 6 areas that I outlined in my slide. We have had a very good record of safety over the years, and frankly, we're proud of it. The reality is that when you have a major incident, as we did in 2010, you have to look at things and kick things up a notch. So frankly, that's what the ORM is all about. And it's very important. We're putting new capital towards it, and we do want to be the industry leader. So that's what's behind the ORM plan. Pat, do you want to comment on public awareness?

Well, I guess, David, there are a couple of different ways to look at the public education awareness thing. One, of course, is ensuring that the public is aware of the existence of our system, and emergency responders are aware. And I'm not sure whether it's from that perspective you're asking your question. But we have, again, ramped up our initiatives. And of course, it's very, very difficult, if I go back and use Marshall, for example, where we'd operated for 42 years in that community with no incident, to expect people to be able to respond to an emergency immediately. So it's really challenge for our people to get out, to help ensure that responders are aware and the public is generally aware. But I will tell you, it worked perfectly with regard to Line 14, So we're very, very happy there.

Could I just maybe come back to the original question around the ORM and corporate culture? As I referred to earlier, I think we've always been very focused on safety and operational reliability. And that's simply because we carry huge responsibility for delivering product to markets that need it. So our staff has always been focused. What this is about is, as I said before, further reinforcing our focus on safety and reliability, and something that we're very keen on progressing.

Our next question will come from the line of Steven Paget of FirstEnergy.

On the NEB audit of Enbridge that was announced, have you been in contact with the National Energy Board? What's the plan and the timing of this audit?

The timing will be pretty quick, actually, I think within the next week or 2 as I recall the letter from the NEB. Let me just say, Steven, on that one, that we actually welcome this. We've got a state-of-the-art control center in place now, which we're very proud of. And frankly, we're looking forward to their thoughts on it.

Richard, you talked about drop-downs, what might be the timing of those drop-downs?

I don't think that we can assign a specific time to do that now, Steven. My comments were more intended to be, I guess, strategy-wise, that we continue to see a drop downs to the income fund as being a potential low-cost source of funding for some of our stable cash generating assets. So no specific timetable on that, but just a general financial strategy direction.

Your next question comes from the line of Carrie Tait of Globe and Mail.

James Moore was on the radio this morning talking about he has doubts around weather Gateway will proceed. And one of the things that he said that Gateway, and then his words were, "will not survive scrutiny unless Enbridge takes far more seriously their obligation to engage the public." How do you go about proceeding with Gateway, where you have your fiercest supporters publicly doubting and criticizing the company in the way it's handled spills in the United States?

Well, first of all, I'll just say that we do have a lot of support for the project. I think there's a notion out there that nobody supports it. We certainly have producer support, Alberta government support, federal support, and obviously, there's a good degree of public support and First Nations support. So I think that you're right, it's a challenge. We have actually been consulting and engaging communities including First Nations for a number of years on this project. So we are heavily engaged in that, and we're going to continue to do that, actually, through the regulatory process.

Carrie, if I could maybe just add. I think, if you look and I believe in the last call, I quoted the number of meetings and consultations that we've had over the 12 or 13 years that we've been moving along on Gateway, and it's absolutely astounding, the level of engagement. As a matter of fact, as I look at it right now, I don't know that we -- that there isn't somebody, anyone in this country, that's not engaged on Gateway and very aware of what's going on. We continue to do our very best to get the story out with regard to the importance to the country, to make sure that people realize that we recognize the value and critical nature of First Nation's support and input, and of all communities along the Right of Way. So we're doing our very best and we'll continue to engage as we go forward through the regulatory process.

Is Mr. Moore then, off base when he's saying that you're not taking this seriously enough?

I would say we're taking it very seriously. I don't want to comment on what Mr. Moore's motivations are, but certainly, we are, as Pat said, heavily engaged in this. I think the number of meetings that we've had, direct face-to-face have been in somewhere in the order of 17,000. So this is, by far, the most engagement we've ever had directly with communities of all sorts, and frankly, it's appropriate. It's appropriate because there is concern about the project, and it's our job to make sure that we are explaining the benefits, and ensuring that we address the risks that people are raising.

With respect to the report this week on Line 14, part of Enbridge's response was to say that it was normal for such an order to come out. I'm wondering if you can talk about whether it's normal for an order to come out as quickly as is this one did, and to be as harsh as this one was?

Maybe I can respond to that and I'm sure Al will add. But I think -- I don't think there was anything unusual with regard to the timing or the language. Corrective action orders are always worded, in my experience, pretty much as this one has been, and we're not in disagreement with the order. We're proceeding to meet the obligations indicated under the order.

Yes, I think the order is very clear as to what's required. And our job is to work with the regulator to go through those items to make sure that we're addressing the requirements. So, we're certainly not taking any offense to it. We just need to work through it.

All right. I just have one last question. I'm wondering with the 2 spills, the high-profile spills, and the reports that came out of it. Is this a streak of bad luck for Enbridge or are there reports sort of -- they point to a corporate culture problems? Do you think part of it is just bad luck?

I think what it relates to in the bigger overall picture is the focus on other policy debates going on in North America, with respect to oil sands, with respect to getting crude into the United States. So I think, as I've said before, those issues are really amplifying what's happening. Having said that, we are focused on these 2 incidents. And as Pat said, we've made excellent progress in terms of enhancing all of our systems and processes related to the initial Marshall event 2 years ago. And in terms of this most recent event, as it's important to know, that we responded very well. And I think what it did for us is confirm that the things that we had put in place, the enhancements worked very efficiently.

Sorry I just want to sneak one more in. What -- you talked about how you're emphasizing safety and continuing to emphasize safety. Is there one example that you could give of how you are, perhaps, trying to change the corporate culture? Which is something that the 2 regulatory bodies went after you quite -- they were quite harsh on, is there an example?

Well, maybe the broadest example is simply our focus on the operational risk management plan that we've implemented. And it covers all of the key areas of safety and reliability, because as I said earlier, we have a big responsibility to make sure the product gets to market in a safe way. So I think that, that plan has been very well accepted internally, and we'll move forward here and hopefully get better.

Your next question comes from the line of Jeff Jones of Reuters.

I was just wondering if you could give us a few details of what some of the requirements might be in the corrective action order? And then secondly, I'm wondering if the outage of Line 14 will require a reapportionment for August?

On the corrective action order, I believe that the corrective action order is public. But in general, it focuses on various items, including reassessing some of the line, and in particular, looking at it the longer term, training, assessing the long-term integrity plan that we have. So those are the things -- some of the things that are in the plan. The second question was on apportionment. That really depends, I think on the timing of the restart of the line. At this point, we've been successful in rerouting some of the crude and talking to customers, both on the refinery side and producer side, to deal with the outage. And I think, so far, we're in good shape, but we'll have to assess this as it goes forward and we get clarity on the timing of the restart.

Our last question will come from the line of Cindy Pom of Sun News.

I'm calling -- my question is about the Northern Gateway Pipeline Project, a question and a follow-up. First of all, how do you respond to calls from environmentalists, in particular, in British Columbia, who are calling for you to withdraw your application for this?

I'm sorry, Cindy, could you just repeat that, the first part of your question was what?

I said, how do you respond to calls from environmentalists in British Columbia who are calling on Enbridge to withdraw its application to build the Northern Gateway Pipeline?

I'm not aware of any such calls. Al, are you?

No.

We are not aware of any calls for us to withdraw the application, Cindy.

Okay. Well, there are a lot of environmentalists in British Columbia who do oppose the Northern Gateway Pipeline, for example, a new Angus Reid poll is that finding many people in BC still oppose it. But 51% actually say that their mind can be changed if you abide by the Premier's demands. Do you believe you can meet the Premier's conditions, the ones that she laid out?

Maybe I can just comment on that first, and then I'm sure Al would like -- I know what you're referring to, and I did see that recent survey as well. But to answer the specific part of your question, I think that the Premier's demands were aimed more at discussion between the provinces, which is really beyond the jurisdiction of Enbridge. With regard to meeting all of the safety requirements implied by the Premier's remarks, we feel absolutely confident that we can do that.

And so some of the conditions that were laid out, though, include establishing marine oil spill prevention and response system, completing an environmental review process, enhancing on land spills response. So you're saying you're confident that you can meet all of these demands that the Premier is asking?

Yes, we are.

Okay. Now because of the opposition that some environmentalists in BC, I mean, it's very evident that some of them are opposed to this. How do you respond to them in this case?

Well, first and foremost, we are absolutely focused on ensuring the safety of that pipeline, as we develop our plans to construct it, and then in the design, as you've heard, over the last little while, we've made several enhancements to that. So our primary goal in that project is to give people comfort that it's going to be a safe project. And I think that will address the concerns. And remember that we have a very thorough regulatory process that focuses on that exact question, and assessing whether or not the project meets the conditions that they set forth. I will say, generally, about the project, I think we have to keep in mind the bigger picture perspective here. The project really is focused on addressing what is a combination of very important factors. First of all, Canada is flushed with strong reserves, and we need to get those reserves to market. We have the technical capability to produce those well, and as far as I'm concerned, we have the capability as a company better than anyone to make it happen in a safe way.

I'm sorry, who is speaking right now? I apologize I can't see.

Al Monaco.

Okay. Great, thanks, Al. And one more question in regard to that oil leak in Wisconsin. That, perhaps, may have instilled some fear in some people and concerns because of that leak in Wisconsin. So how would you alleviate those concerns? I mean for those who are opposed to the Northern Gateway Pipeline?

We can understand the concern, first of all. We ourselves are very concerned about it whenever this kind of incident occurs. But I think I'm comfortable that, given the way we responded to that particular leak, it really confirms that the enhancements that we've made have worked well, both in terms of how we responded initially, and importantly, a very quick and effective cleanup.

At this time, I'd like to turn the call back over to Jody Balko for closing remarks.

I have nothing further to add at this time. But I'll remind you that Jonathan Gould and I are always available for any follow-up questions that you may have. So thank you and have a good day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.