Welcome to the Enbridge Inc., First Quarter 2020 Financial Results Conference Call. My name is Patrice, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session for the investment community. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Jonathan Morgan, Vice President, Investor Relations. Jonathan, you may begin.

Thank you, Patrice. Good morning and welcome to the Enbridge, Inc. earnings call for the first quarter 2020. I hope you're all doing healthy and well. Joining me this morning are Al Monaco, President and Chief Executive Officer; Colin Gruending, Executive Vice President and Chief Financial Officer; Vern Yu, Executive Vice President, Liquids Pipelines; Bill Yardley, Executive Vice President, Gas Transmission and Midstream. As per usual, this call is webcast and I encourage those listening on the phone to follow along with the supporting slides. A replay and podcast of the call will be available today and a transcript will be posted to the website shortly after. In terms of Q&A, we will prioritize calls from the investment community. And if you are a member of the media, please direct your questions to our communications team, who will be happy to respond immediately. Generally we target to keep these calls to roughly one hour. However we recognize there is a lot of information to cover during these unprecedented times, so we'll be a little more flexible this morning. That said, in order to answer as many questions as possible please try to limit your questions to one plus a follow-up. As always, our Investor Relations team is available for your detailed follow-up questions afterwards. On to Slide 2, I'll remind you that we will be referring to forward-looking information on today's call. By its nature this information contains forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure documents. We'll also be referring to the non-GAAP measures summarized below. With that, I'll turn it over to Al Monaco.

Thanks, Jonathan. Good morning, everybody. I'm going to open this up with a few comments on the COVID crisis and how we're approaching it. Everybody is searching for analogues to figure out where society, the economy and capital markets are headed. The reality is we've never lived through something like this and certainly not in energy, at least in my 35 plus years in the industry. COVID has threatened millions of people and has hit fast and wide. One of my best days recently was the news that most of our few staff impacted by COVID were fully recovered. We all recognize that healthcare workers and emergency responders are the heroes. In the same way, I'm extremely proud of how our own front lines have responded, the women and men at Enbridge who've kept our systems running normally in the face of their own anxieties. That's especially true for our people who remain on the job site. Like in control centers, operations, field staff and support functions. I want to thank our people for their sheer dedication they've shown to their work, our customers and to the people that consume energy every day. In terms of our response, we implemented our business continuity plans very early on with the priority of protecting our people. For critical functions, we put in an additional safety protocols to maintain full service. On our approach to managing this downturn, our resilient business model and the actions we took over the last three years put us in a strong position coming into the year. That's going to allow us to weather this storm, as the vast majority of our EBITDA is unaffected and that's why we're maintaining our guidance. And we're stressing that outlook with various scenarios. Even though, we're resilient we're staying ahead of…

Thanks Al, and good morning, everyone. I'll start off with our financial results, discuss our financial position, including bolstering actions and then finish with our outlook. Pick up on Slide 20, our financial results came in better than expected. The results highlight the resiliency and diversity of our business. I'll run through the results in an abbreviated manner. Liquids pipelines had a very strong first quarter. Adjusted EBITDA increased $190 million. The mainline system was once again full and oversubscribed, delivering an average of 2.84 million barrels per day reflecting, the capacity optimization work conducted in 2019, in which we talked a lot about last year. We also benefited from a full quarter of the $0.20 tariff surcharge from the Line 3 Canadian segment which entered service in December. And as well the Gulf Coast and Mid-Con systems and the Bakken system all had another strong quarter as well, continuing the trends over the sequential quarters. In gas transmission EBITDA was up around $60 million. Most of this is from incremental revenues on Texas Eastern from its recent rate settlement effective June of last year. The settlement provides approximately Canadian $120 million of annualized EBITDA, uptick to us, which is a little better than we previously guided. Gas distribution EBITDA was down at $84 million compared to last year. This is largely a function of warmer weather this year and colder than usual weather last year. Further, we continue to grow the utility rate base through customer growth in the area of 40,000 to 50,000 new customers per year, and we're achieving our targets synergies from the amalgamation. Our power business was down slightly for the quarter. EBITDA was positively impacted by our German offshore wind farm being placed in the service late last year, and its adjacent expansion placed…

Okay. Thank you, Colin. So, what is in the face of probably the worst economic and energy downturn in history, our resilience has once again protected us. The diversification of assets, cash flows and commercial underpinnings allow us to weather this storm well. But we haven't just been standing around watching this, we've been taking action to preserve our flexibility, no matter how long the downturn last. Given the strength and stability of our business and the factors that Colin just reviewed, we are maintaining that DCF guidance range of $4.50 to $4.80. Finally, we are not losing sight of the future either we remain very focused on executing our secure capital program, that will drive near-term and medium-term growth in EBITDA and a growing dividend. So we're now into the Q&A. Just given we're not on the same location here and to keep things moving, I'll do some handoffs where needed on the Q&A. So onto that section, please.

[Operator Instructions] Rob Hope from Scotiabank is online with a question.

Good morning, everyone. First question is just on the movement of capital from 2020 into 2021 for Line 3. And I just want to get a sense, is this being driven by a view that permitting is going to take longer in the COVID-19 world? Or is it that you're baking in some additional contingency on the construction side there?

Hey, good morning, Rob. It's Colin. Yes, it's fairly mechanical. So we favorably received the Minnesota PUC written order here last week, although, it took a little bit longer. So as you recall, we had budgeted and guided for the full span during this year on what I'll call the best plausible timeline. And recognizing that six week delay if you like in the order, we're just basically moving that six week spend from '20 into '21 mechanically. $300 million. Yes.

Alright. And then when we take a look at $300 million of cost savings, were any of those realized in Q1? And do you have a sense of how much could be also being able to be sustained into 2021?

Yes. And the first part of the question zero basically in Q1. These programs are all coming into effect here immediately. On the sustaining question, I think a good part of it could sustain. We'll have to see some of it. But I would ballpark it at about two-thirds at this time.

All right. That's helpful. Thank you.

Thanks, Rob.

Patrick Kenny from National Bank Financial is online with the question.

Yes. Good morning, everybody. Just with respect to the Army Corps permits still required for Line 3, and I guess the Line 5 tunnel as well, any concerns on being able to obtain these permits, just given the recent decision in Montana on Keystone? Just wondering if you see any negative read through there for your approvals?

I'll hand that one to Vern.

Okay, thanks. We don't see any material impact on the nationwide - based on this decision on the nationwide 12 permit. Each project has different permitting requirements by the Corps. So the Corps can either choose to use a local permit or a nationwide permit. For the vast majority of everything that we're doing, we're all under local permit. So this decision from the Montana Corps doesn't impact schedule.

Okay, great. And then just looking at the Mainline volumes here, I appreciate the detail, quarterly outlook here. Just wondering if you could provide an update on what the split is between lights and heavies moving down the system? And how you might be able to optimize volumes through any blending opportunities given the current space right now?

Vern?

I think as we always are on a proportionate basis moving more heavy than light and we expect that to continue over time. And as refinery demand picks up in the U.S. Midwest and elsewhere on our system we expect that the demand for heavy will pick up first. So there are some opportunities for us to move more medium grade crudes by blending lights and heavies as the economy recovers, if we see a slower pickup in lights, so that is a slight benefit for us as we move forward.

I think, Pat, if you just look at the crack spreads over the last month or two here to go to Vern's point, the heavies have held up pretty good. And so that's why we were saying earlier on that when things return, those should even be in better position. So that's how we look at them.

And on this recent initiative to store barrels down the Mainline, any other near-term opportunities for downstream storage? Or perhaps if storage congestion does last into 2021 after the old Line 3 is decommissioned. how are you thinking about optimizing storage later into 2021?

Maybe I'll go first on that, Pat. We've got basically two segments of storage in the business. It's a fairly large storage position overall, but the majority of it relates to operational storage that we need to manage the Mainline. And I think we're in very good shape there, and it's critical that we maintain that flexibility in that operational storage. On the other parts of it though, we do have, let's call it commercial storage within the energy services business, a good chunk of that, though, is contracted for term at fixed fees. But there are parts of it though, that we do have some opportunity to gain from the contango that you're seeing right now. And we'll see what happens this quarter on that. We should do okay, I think. But, in the bigger picture of Enbridge, of course, it's not a huge business. But yes, there are some opportunities that we're trying to capture in energy services.

Okay, that's great. I'll jump back in the queue. Thanks.

Okay. Thanks.

Robert Kwan with RBC Capital Markets is online for a question.

Good morning. Maybe just to start on the Mainline, just wondering if you could talk about what the current flows and what the main nominations are, but just even higher level as you think about contracting? Can you reconfirm with the 13 shippers that submitted the letter of support that they are still absolutely on-board and specifically as well that there is potential as they initially stated to take even more volume than they're currently shipping?

Go ahead, Vern. You want to take the first shot at that?

Okay. Sure. Hi, Robert. With respect to May volumes, I think we don't generally talk about what we're seeing [interim] [ph] month just because of commercial and market sensitivities. But I think it's fair to say that you're seeing refinery utilization tracking upwards, as we progress through April and into May. With respect to Mainline contracting on our 13 shippers, we have absolutely reconfirmed with them, that they are still highly interested in Mainline contracting. In fact, all of them have reconfirmed and most of them did provide commentary at the CER on April 24, to that effect, saying that they would like the Mainline contracting hearing process to continue and pick up the pace. And I think your second part of that question was, there are a number of those shippers who are interested in even more space than they are currently shipping, just because of volume ramp-ups or changing refinery configurations.

And Vern, they've reconfirmed that they're still interested based on what they said in the original letters of support in terms of more than what they're shipping?

Yes. It will vary customer-by-customer, but the support and the levels are very strong.

Great. If I can just finish with a question on the guidance, I guess in typical Enbridge forum, you've got the arrows, both tailwind and headwinds are about the same. So overall, kind of still tracking roughly to the midpoint of guidance and at a higher level, what's the biggest risk or uncertainty in your view? Is it really Mainline volumes or is there something else?

Hey, Robert. Yes, it's Colin. So there is some artistic depiction there, but it's intentional. It's a fairly narrow range, honestly to begin with right? It's basically a $13.5 billion EBITDA business with a guidance range of plus or minus 3%. So we feel that's fairly tight already. I'm not going to make specific commentary on where in the range, we have a range. And I think you put your finger on it, I think Mainline volume sensitivity is probably obviously the biggest moving part there. So we've stress tested it as is noted.

Great. Thank you very much.

Shneur Gershuni from UBS is online with a question.

Hi, good morning, everyone. Good to hear everyone is safe and well. I really appreciated the detailed outlook on the Mainline that you tried to present today. And the explanation about rail being impacted first and coming back last definitely makes sense. But, I’m trying to navigate these unprecedented environment for North American crude markets. Typically, investors have looked at transportation differentials to figure out when the call on crude actually will occur and so forth. But I'm wondering if you can sort of talk about how this could be different or how you're thinking about it from a modeling perspective? But when the refiners start up and they get to closer to full utilization, is there a scenario where the heavier crudes are actually favored by the refiners and there can actually be a bigger pool out of the Western Canadian production than you would typically expect in normal circumstances? And I’m trying to understand how that impacts or colors your outlook for Mainline volumes for this year?

Well Shneur, its Al here, and I'll hand it off to Vern, and I'll go first. I think the answer is yes. Where they've got some capacity to move heavy processing up they'll do that. I think as we referred to, that's where the margins are greatest. And that's where, just given where we are on throughput today is probably a good opportunity for them to ramp up and fully utilize that access to heavy barrels. So I think that's one angle. The other one is of course, as I said, production is likely to lag here, the demand part of the curve. And so given that we've got a lot of storage pent up in Western Canada, I think we'll be able to utilize as much of that increased demand that refiners want through this period here. So that's how we see it at a high-level. But Vern, you can add if you like.

Sure. I think the big issue is with COVID, it's really been a refinery and transportation fuel demand issue for what crude is required where. So as the economy picks up and as transportation fuels begin to return to normal, you will see refinery demand go up. And you're absolutely right, heavy crude will be the first crude pulled, because that type of crude provides the best refinery margins or crack spreads for each of our refineries. So we'll see the PADD II and PADD III heavy refiners move up in utilization a lot quicker than you'll see light crew refineries move up in utilization.

Perfect. That makes perfect sense. And then maybe as a follow-up question. With the Keystone XL approval, and so forth, I’m trying to understand if and how it could potentially impact your Mainline recontracting process. At a high-level, are you able to share with us whether you believe your proposed rates are competitive with the Keystone XL rates moving forward? And so, shippers would continue to support your process. Is that a fair way to think about it? Any color on that would be helpful?

Well, maybe I'll go first and then on the rate comparison Vern you can address that, I think. But firstly, I would say Shneur that I think you're aware, we've always assumed that XL would go forward in our projections. And I think that was the prudent thing to do. And our view is that even in that scenario, we still see a lot of demand for access to our system and to be contracted. And it goes back to what we were saying about direct connections and minimal alternatives. And that's the 3 million barrels a day that we were talking about that is directly connected or as downstream toll. So, the combination of that with our lower tolls and us accessing the most competitive markets, I think that puts us in very good position. The other part of this, of course, is after -- whether it was three or four or five years of lack of e-gas, I think one thing that that XL coming on, on its schedule and TMX does, it does allow for additional production volumes to come on. Obviously, investment has been curtailed, particularly over the last two, three months in the oil sands, just like the Permian and other spots. But I think that could unleash some new volumes coming onto the basin that would certainly, further bolster what we're doing on contracting. So that's the big picture. And then on rates Vern?

Yes. I would say that we are very competitive to all markets. We feel like we'll definitely have the lowest toll into the U.S. Midwest and Eastern Canada. And in fact, from both of those markets are almost no alternatives but the Enbridge system. And then to the downstream markets and Patoka, Cushing and the U.S. Gulf Coast, we are very, very competitive. In fact, our U.S. Gulf Coast tolls should be the lowest tolls available.

Okay. So what you are effectively saying is that it wouldn't be an impediment and in you have a very good offering for your shippers?

Absolutely.

Perfect. Thank you very much, guys. I really appreciate the colors today and stay safe.

Thank you.

Linda Ezergailis from TD Securities is online for a question.

Thank you. I appreciate all the fulsome update today on the Mainline especially. I realized there's still a lot of uncertainty and a lot of moving factors. But I'm just wondering how the Management and Board is revisiting? How you're going to execute on your strategic priorities over the next couple of years? And specifically, I'm wondering if there might be some sort of a shift in how you approach your U.S. Gulf Coast and export strategy. I know that was a focus and an interesting possibility, still that that is unfolding for you. And also, I'm just wondering, with, your $5 billion to $6 billion of capital capacity for investment annually. I know your priority is to grow organically. But I'm just wondering, at what point to the extent that organic growth might dissipate in this environment? Whether or not -- like what factors would need to change? And what would need to be in place for Enbridge to consider acquisitions?

Okay, it's Al here, Linda. So, first of all, great question on the overall strategic priorities that Management and the Board's thinking about. I think, I would break it down into two pieces, Linda. For sure, we're very focused on the near-term and medium-term in terms of protecting the business. So, as I said earlier, the cornerstones are in this next -- rest of the year, let's call it, the safety of the people and reliability of the system that's critical, making sure that the balance sheet is strong, and at the same time, making sure that we continue to move our execution program along. So, I think it's making sure that we keep resilient is the first priority. But I think at the same time, we also have an eye on making sure that we continue to sustain the growth in the business. And you mentioned the export strategy, at this point, unless you believe that we're not going to return to the basic fundamentals that we’re driving exports in the first place, which is global demand for energy, and that's stemming from, as you know, very well population growth, urbanization, standards of living. I think, we could see a bit of a slowdown, let's just say in growth. But generally speaking, I think our view is that we're going to get back on track. As to the capital investment you referred to the $5 billion to $6 billion. Again, I think, obviously, with potentially a slowdown in the economy, you could see overall growth slowdown in energy. I think from our point of view, in that environment if that happens, we're not going to be chasing growth at all costs if things don't fit we won’t pursue them, but that being said, I actually think we’re very well-positioned…

Thank you. And just as a follow-up, with your sale of your interest in your off shore French win to CPP, shows a discipline in capital allocation and high grading. I'm just wondering, if there are opportunities to continue to do that, what might be possible on that front, with potential financial partners maintaining partnership with you, or other ways that you could continue to high-grade and take advantage of strong demand for other types of assets that you hold?

Yes, that's a good point. Again, it's another thing we're scouring and making sure we're always investigating. We certainly look at the three year plan and we always evaluate whether we can bring in financial partners. Maybe a little bit tougher in this current environment, just given some of the debt markets and so forth that are maybe less applicable for private equity these days. But we'll continue to do that. This, as you're pointing out was a very good example. There maybe a few more opportunities to do that throughout the entire business. We'll keep track and see what's out there for us to capitalize on this year.

Great. Thank you.

Okay, thanks Linda.

Jeremy Tonet from JP Morgan is online with the question.

Hi. Good morning. Just wanted to take a step back here and looking at the first quarter. It looks like, operations came in pretty good, better than we were expecting. And I appreciate that there's kind of these headwinds ahead of us as you’ve talked about in the call. But if I'm just kind of thinking through this on the other side, when we get back to like kind of a normalized world and potentially when Line 3 eventually gets in line in effect, gives you to a full year contribution in 2021. Maybe I'm getting ahead of myself too much here. But just wondering what do you think the business looks like in that environment? And how that compares to I guess, some of the prior guidance you had put out there, given how well things went in the first quarter?

Yes, I think Jeremy, I'll start then Colin can add. I think I'll take it back to Enbridge Day here, which wasn't that long ago, really it feels longer. But we had a three year plan there that we unveiled and you're familiar with it. I think we're pretty comfortable that under that three years scenario we can still deliver on what we thought. I'm not sure the first quarter is going to tilt the balance either way on that three year plan. I think as you're pointing out, Line 3 is a big part of that because it generates a lot of EBITDA. But I think that's the way we're looking at this. Good first quarter, we've got some bolstering actions that have helped us stay in the range. I think that's important. And then from there, I see more or less a progression in execution of that three year plan that we laid out. So I think we're pretty much on track with what we thought.

The only thing I think I'll add, Jeremy, you're very close to this as in sales business. I think it's a subtle point, but he and his team have been advancing a number of rate cases on the various gas systems, which is quietly bolstering and stepping up our return on that business kind of a boring way. But I think you're right. It should be diversified solid contribution yet, we had a pretty good Q1 hitting all the trends that you've seen. So we'd like it to return to that world as soon as we can.

Actually, that's a very good point. And, given it's boring and so forth, as Colin just said, I might just ask Bill, to comment a little bit on that. Because I think the rate cases are a great point. But, the gas guys are working on so many there are other opportunities right now. So maybe, Bill, can you maybe just expand on this? I think it's a good point.

Yes. I think, I appreciate the boring comment. The business really has started to turn a little bit towards its roots, which is a regulated entity. And we've got an awful lot of capital going into the business. And so you see from the Texas Eastern rate case, that provides some -- I wouldn't -- I guess you'd call it a growth opportunity here on. And then the business even in this environment, Jeremy, we're only down maybe 5% on a demand basis. And as you know, it doesn't affect us because we're all reservation-based system. And most of our areas be it Gulf export, whether it's Mexico or LNG, even some of the Northeast utilities where it's challenging to build anything new small increments of growth crop up. So I feel as though from protecting that base with re contracting, which hasn't been that challenging to investing in the bones of the system to then these expansion opportunities that we still see even in this environment. I do feel like that's fine, we'll be boring and under the radar, but turnout some nice growth.

That sounds great. I mean, if Boston didn't prefer a rush in LNG, it seems like you'd have some nice opportunities there. But just want to follow-up to my second question real quick. With regards to DCP, I'm kind of on the other side there. With them retracting the guide here, just wondering updated thought there as far as portfolio management. Is that something that after write down here is something to kind of exit at this point? Or are they going to need any help? I appreciate them, extremely small part of your business, but just wanted to get any thoughts there?

Yes. You've got it right there. It's not huge for us. But on the other hand, we pay attention to all of our businesses. And we're certainly not happy about taking a distribution reduction there. I'd say at this moment, the exit part of your question, I mean, it would be consistent with the fact that we sold the rest of our G&P businesses. But I think as you'll recall, we've got a bit of a tax basis issue there that makes that more challenging. I would say though, Jeremy, at this point we're very supportive of management's actions. I mean, they move forward pretty quickly on reducing capital. They're making inroads on the operating costs and certainly on overhead. So I think that's the plan right now and we're supportive of that.

That's helpful. That's it for me. Thanks.

Okay. Thanks, Jeremy.

Ben Pham from BMO is online with the question.

Okay. Thanks, and good morning. On the renewables business, I'm curious, where does that fit in your overall strategy now long-term? It seems like that business is getting smaller over time and the other segments are getting bigger here, as well as they're just a bullish on renewables and how it fits in your portfolio?

The short answer is yes, Ben. And the reason for that being -- and I think we've been talking about our view about energy transition, which is obviously going to take a number of decades here moving forward. But we think this is a very good way to focus on some part of our business on lower carbon. It's been a very good business for us. We've built up a very good capability. And I will say we have a pretty good inventory of projects in development in Europe. And that's our focus right now. The fundamentals there are very strong. And what I mean by that is, obviously people have a big demand for renewable power in Europe. But bigger thing these days I found is that the supply chain is really well-developed. We've joined this partnership with CPPIB. And I do feel that, the fact that we've built up our capability here with them, and make us a real player and developer in this space. So, I think if you're referring to the transaction we were talking about, that was purely about boosting the return on assets. And frankly, I like the idea of us developing projects, bringing people in and then having some promote value in that. I think that's a good spot to be in. You've seen other large players in renewable use similar models. And I think that's a good capital allocation move, but it does not indicate whatsoever that we want it to be a smaller part of the business. I think we're very keen on developing and growing it.

Okay, that's great to hear. And then my second question maybe a clip on the Mainline sensitivities and unpeeling Q2 that on that variance you put out there that range 400,000 to 600,000. Can you confirm looking at 600,000, is that – it looks like you're feeding in 1.5 million barrels a day. I wanted to check that and I guess that suggests that at June you're probably looking at a million down on Mainline volumes.

Go ahead, Vern. Yes.

Hey, Ben, can you explain your question again? I'm having trouble following it.

Yes, sure. Absolutely. I'm trying to clarify or confirm with you guys that you guys are also feeding in that 1.5 million production shut ins in Canada, as you triangulate down to your variance for Q2. And the way I'm thinking about it specifically is you got April in the bag, 400,000 to 1 million and you probably have a good sense of May and then you put up 600,000. So, I'm just solving for June?

Okay. I see your point is, I think the 400,000 to 600,000 is in range for the average on the quarter. And there's no real midpoint for that range. It's designed to be something that's possible. And again, that's dependent on whether it's a million to a million and a half in overall Western Canadian basin production declines. So at this point, in April and May we're not close to that 1.5 at this point.

Okay. And I guess in that range you have sensitized down to 1.5?

It's designed to be a range and our outlook would be within that range.

Okay. All right. Okay. Thanks, guys.

Hey, thank you.

Robert Catellier from CIBC Capital Markets is online with a question.

Hi, good morning, and thank you for the very detailed comments this morning, especially on the Mainline. Most of my questions have been answered at this point, but maybe just a couple quick clarifications. We have a very similar path from the Mainline volumes that you've described, but maybe a deeper decline. I'm more curious, though, about what you're assuming in the throughput recovery that you've outlined on Slide 14. I think you mentioned reopening the border and lifting travel restrictions. Are there are any other economic or policy guideposts, you're looking to there? I'm thinking maybe is there a refinery utilization recovery or rate you're expecting or a GDP recovery that's baked into your assumptions?

Vern, do you want to address that?

Sure. I think Robert, the big thing you should be looking at is gasoline demand. And I think gasoline demand right now is down 3 million barrels a day in North America. That will be the factor which will drive the rate of refinery utilization and then which will derive the rate of throughput pickup for us. So, we're already up a million barrels a day and gasoline demand since the lows in early April and it's trending in the right direction. So, our expectation is as our transportation fuel demand goes up, refinery demand will go up and then Mainline throughputs will go up. I don’t think we’re looking at anything about opening of borders or anything like that. But it’s really driving patterns, I think that will be the biggest into watch.

Right. And in that sort of that group of things you’re looking at, are you expecting a full recovery in those metrics to get to your yearend volume outlook?

No, we are not forecasting a full recovery.

Okay. Thanks for that. Just lastly on Line 3, what I heard from the comments is there's a little bit of a mechanical shift in the CapEx for 2020, seemingly based on the permitting timelines. But I'm wondering, if that also includes the impact of COVID and what that might have on your practical realities that has on construction or has not been included in your comments and your shift in capital timing?

I think, Rob, from a construction point of view, obviously that's not happening today and will happen later on, depending on when we get the permits. I'm not sure we see much of a construction impact. In fact, in most of the projects we're running right now in the field, those are generally working to schedule obviously a few more complications and how you work. So it's not so much the construction. I think really it has more to do with this eight week or so delay in getting those PUC orders. I suppose there could be some further COVID related issues through permitting, but we haven't really seen much of that yet. So I mean, hopefully, I'm answering your question but that's the big picture.

Yes, that was that. I just wondered about any construction changes to the construction activity that might result. But you answered the question. Thanks.

Matthew Taylor from Tudor, Pickering, Holt Company is online with the question.

Hey, thanks for taking my question here. On Slide 14, you highlighted the recovery in volume tied to demand outlook. And I think you've done a good job addressing that. I'm just wondering on the supply side, if you're anticipating barrels that were previously on the system to be structurally shut in or it would just be helpful to hear your comments on how you're thinking about supply ramping back up?

Vern?

Okay. Matthew, I think really our system and the demand in the near-term is going to be refinery demand pool driven, because prior to the COVID situation we were 40% or 50% apportioned upstream. So, we don't expect the supply situation to impact our volumes once demand picks up again. I think it'd be fair to say we would likely see storage in Western Canada to be drawn upon and then after that is drawn down a bit, then we would likely see a price increase in Western Canada and that would then result in more supply being brought back.

That's great. Thanks, Vern. And then maybe just one last one here for Bill. On natural gas, prices improve or potentially looked at three bucks at Henry Hub in 2021. I'm just curious, your expectation for customers. Do you think higher pricing will be for them to grow or for the delivery the way, I mean it seems constructive for your business, either more gas flows or healthy customers? Just wondering what types of opportunities you're seeing in the future in a better pricing environment.

Yes. I think Matthew, it'll be interesting to see the LNG dynamics for one for sure. I think we were already seeing the fundamentals for the projects that we're looking at for 2024 and beyond. They're pretty darn good. And, it doesn't feel likely to me that that type of a price change would really impact that. In an odd way, sort of shifting gears a bit, a slightly higher gas price strengthens a number of the producers that are contract holders on our system, especially in Appalachia, which is we had a fair presence in Appalachia. So, in an odd way, it's kind of good from a contracting perspective. And yet, we're not seeing the $7, $8, $9, $10 prices that might scare away demand. So, I think the outlook is pretty good when you're between the high $1s and $3.

Great. Thanks for the color there, Bill.

Andrew Kuske from Credit Suisse is online with the question.

Thank you. Good morning, guys. I think the question is probably for Colin. And historically, you've always maintained ample liquidity and it's no different this time around you bolstered liquidity during the quarter. So I guess, just the confirmation on where your liquidity is right now. And then would you be able to if the markets completely froze access to Bank of Canada's commercial paper purchase program plan?

Yes. Thanks, Andrew. So we're at $14 billion, that's end of April number effectively here last week number. But current, basically as of today, that's a big number. And it translates calendar wise into funding access efficiency through the end of '21, which is, basically by design it's a conservative outlook that potentially debt capital markets could be frozen until then they're not. They're basically back open, which is good. We'll see how that progresses. And I can confirm that that Enbridge as a strong rated commercial paper issuance work could access the Canadian program. I don't think we have really -- to-date we are issuing commercial paper. The market is fine. So I've been, I guess pleasantly surprised by the collective actions of central banks right? And so far, it looks like debt capital markets are thawing and reopening in a constructive manner. So, I feel pretty good about funding our plan through next year, Andrew.

That's great. I appreciate the color, and then maybe one more narrow question just with the write-down, the non-cash write-down on the DCP position. How do you think about the tax attributes and the benefits you have in the future either against income or capital gains? How do you think about using that?

Could you clarify that a little bit? Specifically in DCP or more broadly.

Just on the DCP position itself, is there any tax benefit that you anticipate rolling off that at this point in time?

Yes. No, the answer to that is not really, Andrew. I think we still have a generally a pretty low basis in our DCP tax position. So that's unchanged by the impairment down to market value.

Okay. That's great. Thank you.

Thanks Andrew.

Asit Sen from Bank of America is online with the question.

Good morning. Thanks for the interesting details on Slide 12 detailing PADD II and PADD III dynamic over the near-term, PADD III lacking storage, while PADD III has storage and export capacity. My question is on storage, thoughts on what you're seeing in the storage market both at the Cushing or PADD III or WCSB? How close are we to the tank top? That's number one.

Yes, I'll go first. I think probably a couple of weeks ago, maybe three, we would have been thinking that may looked like we could see getting pretty close to tank tops. I think you saw the inventories come out yesterday. There was a couple good numbers in there. So, I think our view right now is we probably don't see us getting close to that in May, probably think of it as a shift out into June. And few reasons for that, one I mentioned. But, we are starting to see a few more barrels headed out a Cushing down into the Gulf. And part of that is Strategic Petroleum Reserve has helped that out. So generally, we think of it as a shift about a month out in terms of criticality, let's put it that way to tank tops. Vern, I don't know if you want to comment on Western Canada or our own operational tankage at all?

Sure. I think Western Canada is not expected to fill in May as well. Western Canada, I think if you read the published stats we will be in that 75% full level by the end of May. For us, I think like many storage operators we have, as Al mentioned previously, operational storage and merchant storage. We've been actively looking to add storage to our system over the last month or so. In fact, we figured out ways to add 3 million barrels of incremental storage to our customers. Really, that comes from deferring some API tank and inspections and working with the regulator to do that. Changing our operating parameters or how we fill specific storage sites so that gives us more flexibility for our customers. And then finally, we're in the process of getting a piece of deactivated pipe associated with legacy Line 3, approved by the CERO. We could put that into surface as temporary storage for our customers as well. So, we like other companies are actively looking at our assets to see what we can do to help customers out with more storage.

Thanks for the color. And from a broader industry perspective as we emerged from this pandemic situation and assuming a lower demand curve. How do you see North America pipeline utilization evolving out? And does it essentially price out crude by rail for the medium-term? And is it really a call on the export market at some point?

Do you want to take that Vern?

Sure. Yes, I think out of Western Canada, for sure, crude by rail will be the first to be hit. And given that crude by rail is moving at about 400,000 barrels a day, prior to demand destruction with COVID, we expect that pipeline utilization will come back first out of Western Canada, for sure. And then we expect our heavy system to be very full but when economic activity recovers just because as we mentioned before, heavy crude oil provide the best margins for refiners across North America. I think you are right. The lighter crudes will have a longer ramp up to come back. And they're at more risk of not being entirely full. And it has knock on effects to the export markets just because the excess like crude out in North America has been exported and then to some degree is continuing to be exported as well.

Thank you.

Michael Lapides from Goldman Sachs is online with the question.

Thank you for doing this extended call and obviously for taking my question [indiscernible]. I'm looking at Slide 10, and I'm looking at kind of some of the other pipe gas out of the Mainline. Just curious, refer to them and I'm thinking pipes like Dapple or Gray Oak and expressing Platt. When you say there are take or pay, are you saying there are 80% to 90% take or pay and just the 10% walk up it is open? Or are they partially take or pay significantly less than any percent in the rest is more volumetric?

I don't know, Vern do you want to take that?

Yes. I think it's the latter where it's -- sorry, it's 80% or 90% take or pay and about 10% to 20% is spotter walk up. So, those pipelines will see a minor impact on their revenues, but nothing significant.

And Michael, just as a reminder, that spot capacity the 10%, for example, that's usually by regulatory requirements. So, we don't have a lot of choice in that one.

No, understood, that's a walk up. And Vern, can you talk a little bit about what you're seeing volume wise? Meaning, have you seen dramatic volume changes on Dapple or in Gray Oak? Gray Oak has not been operational that long. But just in the last month or so what you guys have seen in the near-term?

Well, I think, so Gray Oak obviously as a new pipeline. And again, it's predominantly take or pay. There is obviously, probably a small decline in the spot volume versus our expectations, similarly in Dapple where the walk up volumes will be lower.

Got it. And then last and this may be a Colin question. Can you just clarify what is growth CapEx for 2020?

Yes. Michael, thanks. So at Enbridge Day this slide had a total CapEx of $6.5 billion of which $1 billion was maintenance of $5.5 was our gross CapEx spend projection for this year. So that's now down to $4.5, so $4.5 plus one.

Got it. The $1 billion that you're deferring, can you put that and you may have done this already? And apologies if I misunderstood it. Can you put that $1 billion into buckets? Meaning what percent is for X business or X type of asset? What percent is for Y?

Yes. I’ll give you a little bit more there. So I think we talked about probably the biggest piece, which has about $300 million of the $1 billion, which was mechanical, just best case time shift for Line 3 U.S. The rest of it is $50 million here, $100 million there. The next biggest is, also probably in the permitting bucket would be around PennEast and some permit delays we've seen there that's probably $200 million. So that's about half of the $1 billion together there, Line 3 in PennEast. And then the rest are smaller like I mentioned a little bit at the utility call it a $100 million or a little bit more, a little bit of compressor modernization in Bill's business, maybe another $150 million there. And then the rest is pretty small. So it's probably about half in the permitting bucket and maybe half in the call it COVID construction delay bucket.

Got it. No, that's super helpful, Colin. And I hope you don't mind, I’ll cheat. I'd like to ask one more, and it's a Bill question, which is bill, after getting the successful TETCO rate case, do you have other pipelines you're looking at where you see a significant filing ahead because of kind of undermining your expectations at that pipe in the U.S.?

Well, I wouldn't want to front run any of them, Michael. But I would say we're very close to a settlement on Algonquin. And we would expect that could be a positive impact. It's just too early to say what that could possibly be. We also have filings or settlements that we would like to pursue over the next three months. East Tennessee Alliance, Maritimes, Northeast, you got to keep in mind these all pale in size and scope by comparison to Texas Eastern. So while we may see positives, the Texas Eastern rate case and getting that behind us was by far the largest. I hope that's a little enough color. Maybe I'll add one more thing in it, all of these pipeline systems, except for the very newest ones, the integrity work and the modernization emissions work that we're doing is significant. So I said boring earlier, but it's a very important part of our growth story.

Got it. Thank you, Bill. Thank you all for taking my questions.

We have reached our time limit and are not able to take any further questions at this time. I would now turn the call over to Jonathan Morgan for final remarks.

Thank you, Patrice, and thank you to everyone, for your time and joining us this morning. We appreciate your ongoing interest in Enbridge. As always, our investor relations team is available to address any additional questions you may have. And so once again, thank you and have a great rest of your day.

Thank you, ladies and gentlemen. We appreciate your participation. This concludes today's conference. You may now disconnect.