Earnings Call: Q1 2021

May 7, 2021

Welcome to the Enbridge Incorporated First Quarter 2021 Financial Results Conference Call. My name is Julie, and I will 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. 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, Julie. Good morning, and welcome to the Enbridge Inc. Q1 2021 earnings call. Joining me this morning are Al Monaco, President and Chief Executive Officer Colin Grunding, Executive Vice President and Chief Financial Officer Vern Yu, Executive Vice President, Liquids Pipelines Bill Yardley, Executive Vice President, Gas Transmission and Midstream Cynthia Hansen, Executive Vice President, Gas Distribution and Storage And Matthew Ackman, Senior Vice President, Strategy and Power. As per usual, this call will be webcast, and I encourage those listening on the phone to follow along with the A replay of the call will be available later today and a transcript will be posted shortly after the call. We will try to keep the call to roughly 1 hour this morning. And in order to answer as many questions as possible, please limit your questions to 1 plus a single follow-up if We'll be prioritizing calls from the investment community. So if you are a member of the media, please direct your questions to our communications team, who will be happy to respond. And now as always, our Investor Relations team will be available for any detailed follow-up questions after the call. On to slide 2, I'll remind you that we'll be referring to forward looking information on today's presentation and Q and A. 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 filings. We'll also be referring to non GAAP measures summarized below. With that, I'll turn it over to Al Monaco. Okay. Thanks, Jonathan. Hi, everybody. I'm going to start today with an update on our three priorities that you see on the slide here. Then Colin will recap our capital allocation priorities, review the results and how we see the year shaping up, and as you saw, a good start with Q1. Before we do that, as usual, I'll spend a minute on the bigger picture industry context and how we're positioned. While the economic recovery is really gaining steam here, global energy demand is accelerating and should exceed pre pandemic levels next year. The vaccine rollouts globally have been slow but stronger in some areas with the U. S. Leading the way. Massive stimulus is starting to take hold. Interest rates should remain in check, but the threat of inflation is out there as you see, But we're well protected there. Gasoline, diesel and petchem demand is back and heading beyond pre COVID levels as is natural gas. The resiliency of our business was tested again with the Texas storm, millions without power, heat and access to clean water. We had a few disruptions there, but we reliably supplied energy to the region when they needed it most. In the face of a global pandemic and the storm, our franchises withstood the test again, operating near max. Liquids volumes have been steadily climbing, and we should hit roughly 2,800,000 barrels a day on average this year. Wenner Gas Transmission volumes were above 2020 level, which illustrates again the rock solid demand for space heating, Commercial, industrial and power gen load in our markets, and same goes for our gas utility in Ontario. What this picture here shows is that the 3 franchises and the low risk model that underpins them drive out Highly predictable cash flows even in the worst downturns. These businesses have great longevity in any energy scenario and are well positioned for the future. We've talked about our views on the pace of energy transition in the past. So let me focus on our strategy on that front. We see the transition as an opportunity on several fronts, and here's why. First, global energy demand is going up, led by Asia and developing nations. We think that North America's tremendous low cost resource potential, Combined with a clear pathway to reducing emissions will be a true differentiator in terms of supplying reliable energy to feed global energy growth. That's why we're focused on expanding export infrastructure, and I'll come back to that later. For us, reducing emissions provides an opportunity By modernizing our assets, we've developed a strong renewables platform with a big portfolio of opportunity. We're excited about the next frontier of low carbon growth as well. And the one thing that's common to these opportunities on low carbon is transportation, Distribution and storage. So our assets will remain critical. And the key to being a differentiated Service provider in the future is leading on ESG, which is foundational to how we've operated the business for many years. Moving to the priorities update, starting with strengthening the base. Good progress on the regulatory front, the settlements we reached actually on the 3 largest gas pipes added roughly $160,000,000 of EBITDA. And in Q1, we landed 3 more settlements. On On the liquids mainline, we're through the evidentiary part of the CER's review and oral hearings will begin on May 19, so we expect a decision this year. We continue to have strong customer support, and that's because our offering provides the toll and capacity certainty that they want. In contracting, let's remember, we'll assure a strong demand pull for Western Canadian barrels for a long time. Another source of growth is productivity. Last year, we delivered on the $300,000,000 we promised, and we're on track for another $100,000,000 this year. I think there's more to be had here, and digital technology will play a big role in unlocking more value. And recall that the vast majority of our revenues, we show this on the chart here, have inflation escalators or contracted toll growth. So there's further built in Our second priority is executing our secured capital program. So you see our updated chart here. We've got $17,000,000,000 underway, which drives $2,000,000,000 plus in annual EBITDA growth through 2023. Projects cover the gambit here from gas, liquids and renewables with low commercial risk underpinnings. We expect to put roughly $10,000,000,000 in the ground this year, the largest project being Line 3 in the U. S. So 2021, which is the bottom line of this chart, is really a pivotal year for us. We'll put a major portion of our capital program behind us and we'll be in less capital intensive mode after that. The capital will drive DCF and DPS growth And we'll have a lot of financial flexibility to extend growth beyond 2023. On to the program itself and gas transmission, dollars 3,000,000,000 of our $5,000,000,000 3 year program is slated for this year, And most of that is in our BC system and Texas Eastern modernization. We've completed all 5 compressors now on the BC Key South expansion and the first two loops are done on Spruce Ridge. Both of those should be ready in Q4. In the gas utility, everyone knows that new home demand is up, so we're nicely on track to add 45,000 customers this year. On Renewables, we're well into construction on our 2 large offshore wind projects in France. We're getting ready to stand up the first turbines on Saint Nazaire and foundations are underway at FEECOM. So good progress on those and those two wind firms Should be in service in 2022 and 2023. On to liquids in Line 3. The Minnesota program, as you know, came in as planned. And we paused construction now for spring thaw, but the station work will continue. Pipeline construction will ramp back up in early June, so we're on track to hit our Q4 in service target. Community support continues to be very strong here. And one of the success stories is the collaboration with local tribes on the cultural survey, Environmental measures that we worked on with them and our economic partnership. We've not only hired hundreds of local members to help build this segment, But the tribal business opportunities have hit $180,000,000 well, what we thought we would achieve. Once the U. S. Segment is in service, we'll start collecting the $0.935 per barrel surcharge on mainline volume. And that translates to about $200,000,000 in Q4 this year, and that should ramp up further in 2022. Moving to Line 5 and the associated Great Lakes Tunnel. Now it's important to remember how Line 5 originally It was built in 1953 to avoid moving crude on the water. The 540,000 barrels Per day that we move is essential to Michigan and the entire region. It heats homes, fuels airports and provides petchem feedstock That industry and consumers ultimately rely on and you get a sense of that with the picture we're showing here with all of the attachments The pipeline is the safest way to get that energy to the region. There's no practical alternative, And that's been studied over and over by independent experts, including the state's own report in 2017. Even if they were available, adding trains, trucks and barges doesn't make sense, especially from an environmental and safety point of view, Not to mention reliability and higher consumer costs. We understand the need to protect the Great Lakes, and that's why we've committed To build the tunnel, to reduce the risk to as near 0 as humanly possible. And just to reiterate, We intend to continue to operate the line, and certainly, we're in compliance with the easement and the law. DHMSA has validated the safety of the line, and both the court and the state have agreed with that as recently as last year. Courts are reviewing the state's challenge to the pipeline, and that's going to take a while, so no decisions in our view are imminent. Affected parties, including surrounding states, industry and governments are supporting our position. And we've finally been able to reengage the state through the court ordered mediation. Now the obvious solution here again is the tunnel, which we've been moving forward on diligently despite these challenges from the state. We filed regulatory applications On the tunnel, and we've received 1 and the other 2 are in progress. We finalized the design, and we're now Bidding out construction. The next slide brings all of what I've said so far together in our 3 year outlook. Embedded revenue, productivity and optimization measures will drive 1% to 2% annual DCF per share growth. The secured program Adds another 4% to 5%, so call it 5% to 7% growth through 2023 on average. Beginning in 2022, the increased EBITDA from these two categories should give us $5,000,000,000 to $6,000,000,000 of invested investable capacity annually. So that's the story through 2023. So let's summarize the growth hopper beyond that. This map you see here, inventories are organic opportunity set across the footprint. I won't go through each of these, of course, but there's 2 main takeaways. First, our diversity and positioning of assets gives us multiple avenues to grow, whether it's liquids, gas transmission, Gas utility and gaining more traction renewables. 2nd, a good chunk of our organic capital is ratable. Gas utility growth at $1,000,000,000 to $1,500,000,000 a year gas transmission, call it $1,000,000,000 or more And low capital intensity expansions on our liquid system. There's enough organic opportunity in the hopper to absorb most of the $5,000,000,000 to 6 On that though, we'll be disciplined on how we allocate capital between businesses and other options, including share buybacks. Colin will take you through how we'll prioritize that in a minute, but here's a bit of a flavor for the opportunity set first. On exports, we've got great connectivity to low cost supply for both liquids and natural gas. On the crude side, our heavy oil full path from West Turkana to the Gulf allows us to capitalize on growing heavy demand And of course, the declining global heavy supply outlook for heavy. We're developing a terminal to aggregate barrels and Provide bundled full pass service to the Gulf. Interest is building on our Houston terminal, and we recently acquired prime storage assets that link And we'll leverage the Seaway distribution system into the Gulf refineries. Spot is moving along. There's an anchor customer, as you know, and Murad's approval is expected later this year. On the gas front, we're very bullish, as you know, given its load following capability and baseload capability for that matter. But we also see it as a great enabler of society's lower carbon goals. Gas will be critical to achieving renewable targets and with that Green Hydrogen. We're already a major player in LNG exports, Feeding Sabine, Freeport and Cameron. Venture Global is progressing their Calcasieu Pass facility, which will feed through our Cameron extension, and that's on track for Q4. We're set to supply the Plaquemines project off TETCO once they FID. NextDecade has now differentiated their Brownsville project From an ESG perspective, and that was great to see. And they could reach FID on Rio Grande as early as this year. And of course, we acquired the Real Bravo pipeline project that will feed the terminal. Also in Brownsville, Texas LNG received their FERC approval recently. We're working with them on providing supply via Valley Crossing. Turning now to renewables. Over the last two decades, we've built up a solid renewables business with development and operating capabilities. We've got 3,600 Megawatts Gross of North American Onshore and European Offshore Renewables. In addition to St. Nazaire and FICOMF in construction, we've kicked off Calvados in Q1, so that's another 1400 megawatts underway. To recycle some offshore wind capital by monetizing interest at good value to the Canadian pension plan, and they're a very strong partner for us. So we're focused on expanding the footprint in Europe anchored by Maple Power Development and our EDF partnership. There's over 3 gigawatts under development, you can see that in the chart here, including late stage projects in France and a very large expansion of our Rampion facility In the U. K, we're also developing floating wind, which will be the next offshore frontier. France itself has big plans to grow offshore wind and floating will be part of that. We're going to pilot actually the Provence project on the south coast of France, And it's moving through regulatory process right now. Another growing part of our renewables business is self powering in North America. This does excite us because it marries up our liquids and gas business with our renewable capability. A couple of weeks ago, we put Alberta Solar 1 into service, that's a 10.5 Megawatt plant, which will provide 0 emission power To the mainline. And earlier this week, we sanctioned Phase 2 of our liquids program. So that's another 4 projects along our system in the U. S. Midwest. And recall Texas Eastern, our Lambertville project went into service last year and this month Heidlersburg Solar will go into operation. There's 3 more gas solar projects on Bill's system in the queue, which should FID later this year. So we're really pleased with how our renewables business has developed. You've got more than enough in the hopper where we don't need to chase projects in this frothy market. I'll close off my update on longer term strategic investments Now this is not about taking flyers. It's about developing our capability, proving our technology within our low risk business model. And our early start a few years ago in our utility has put us ahead of the curve. In Ontario, we're in the middle of a 2 stage pilot. On Stage 1, we built a power to gas facility that converts off peak renewable power to hydrogen to manage grid stability. Stage 2, which we're now starting up, blends hydrogen into our gas stream. More recently in Quebec, we'll source renewable power to generate hydrogen and blend into the network there. On RNG, we have 6 projects in operation or in construction. And as you saw, we just entered a partnership with Concor and Walker Industries to develop projects across Canada. Finally, the biggest opportunity may in fact be on CCUS. We're very encouraged by both the U. S. And Canadian government policy actions. It's a perfect example of where public and private partnerships We do have our eye on a potential CO2 trunk line in Northern Alberta to support our customers' capture efforts. So all in, still in early stages on this one, but lots of interest. So I'll hand it over to Colin for the financial review. Thanks, Al, and good morning, everyone. I'll start with a recap of our capital allocation priorities and then run through our financial results and outlook for the rest of 2021. So this initial slide summarizes our capital allocation framework and importantly it remains unchanged. Our first priority is maintaining a solid foundation, a healthy balance sheet. We're targeting our debt levels between 4.5 to 5 times Debt to EBITDA, which given our low risk model maps strongly to BBB plus credit frameworks across all of our agencies. 2nd, sustainable dividend growth will remain a core tenet of our value proposition. We intend to grow dividends up to the level of DCF per share Growth, which is projected to be 5% to 7% through 2023, of course, while minding a prudent payout level. 3rd, we continue to carefully steward capital and focus on value maximization and equity returns. All the capital we're putting into service here will support $5,000,000,000 to $6,000,000,000 of annual investable financial Capacity starting in 2022, dollars 3,000,000,000 to $4,000,000,000 of this is designated for utility and utility alike investments, Capital efficient optimizations and in corridor expansions. So that leaves us about $2,000,000,000 of annual capacity for other investment opportunities as listed here. Or said another way, we'll dynamically deploy this $2,000,000,000 of capacity to maximize long term value creation And yes, share repurchases continue to be an option. Now a quick update on our financial position. We exited 2020 with a great balance sheet, and we continue to guard it and build even more flexibility. While 2021, as I mentioned, reflects an outsized CapEx program, it's being contemplated in our self funded equity plan, and we expect to exit The year within our target range. This project execution should create significant 2022 EBITDA growth, which will strengthen our metrics to the low end of our target range or even below it. A quick comment on 2 of our recent financing innovations, which we're excited about. During the quarter, we issued our 1st sustainability linked loan, tying our financial performance to our ESG goals. And second, we also issued What we understand is the world's 1st non bank sulfur linked floating rate note as global financial markets transition away from the traditional LIBOR Anyways, I think the main message on this slide is that our financial position is strong and we are on the cusp On to Slide 19. Before I get into the results, I'll provide a few big Picture comments on our Q1 performance broadly and how it positions us for the full year. Despite the Texas storm and another wave of COVID restrictions, Asset utilization across the board has been strong. Also as I was illustrated, we're executing on all fronts, Which gives us great visibility to our 3 year plan growth objectives and confidence that we'll hit our 2021 financial guidance yet again. As you look to the balance of this year, economic activity should continue to strengthen, which will support a return of energy demand growth. Inflation should remain largely in check-in the near term, which we expect will give central banks cover to keep interest rates low and support the economic recovery. In any event, we're well protected against rising inflation should it occur with more than 65% of our EBITDA Streams benefiting from built in escalators commercially. Foreign exchange, the U. S. Dollar Exchange rate that is, is likely to remain a headwind for the remainder of the year, but our hedge program gives us very good protection there. In 2021, for example, we're about 90% hedged on an earnings basis and about 65% on a DCF basis In the $128,000,000 exchange rate area. And we saw the benefits of this program in Q1, which is a good segue to the quarter results on Slide 20. Adjusted EBITDA It was $3,700,000,000 while DCF was $1.37 per share. And we think that's a great outcome considering Q1 of last year was a tough comp With exceptionally strong and largely unaffected results, pre pandemic, whereas this quarter endured the pandemic, The February Texas storm and weaker exchange rate. In terms of the storm effects, briefly, if you're interested, our utility like Business model once again shone through and insulated us from significant impacts. We had puts and takes around the edges, I would say, on a handful of assets With the net result being immaterial, albeit slightly negative, that's mostly due to 2 things. First, we have a weaker EBITDA pickup from our DCP investee was reported yesterday. However, there was no cash impact to our distributions here. And secondly, the impact of adverse price movements impacting our Energy Services business or about $20,000,000 of the Q1 Loss reported in that Energy Services segment. Moreover, our liquids pipelines and gas transmission assets were Substantially uninterrupted and sold out as Bill says on a reservation basis. We did benefit marginally at our gas storage facilities, but again, we've contracted out the majority of this capacity, which reflects our business model preference. And lastly, on the storm, our 3 Texas wind farms experienced some ice buildup, but the team returned those to service quickly So I think the message is here, once again, our business has proven highly resilient to the most challenging situations. Okay. Let's look at the segment results. First, a comment on foreign exchange, which permeates a few segments. As you know, we have a Continental footprint and about 2 thirds of our business earns U. S. Dollar denominated income, which we substantially hedge. Geographically, in our results, in the business segments, we report the U. S. Dollar EBITDA translated at spot rates, But this is materially hedged and offset with settlement gains reported in our corporate segment. In our Liquids segment, mainline volumes were again right where we expected them at, slightly better than 2.7 1,000,000 barrels per day for the quarter, that's about a 92% utilization rate, which combined with higher Tolls and improved foreign exchange rates on our specific IJT tolls led to a strong reported quarter. In Gas Transmission, our results were right on target also. But year over year, changes were impacted by a weaker foreign exchange rate and The positive impact from the Texas Eastern prior period settlement as reported in last year's results. In the utility, results benefited from colder weather relative to last year, higher rates and a growing customer base. Relative to normal or our guidance, weather was about $24,000,000 warmer. Renewable power had a few moving parts, but overall a positive result supported by strong offshore wind contributions year over year. Energy Services continues to be challenged by underutilization of certain of our fixed commitments, which is due to primarily weak Geographic basis differentials affecting light crude demand as well as the $20,000,000 storm one time loss I mentioned a few minutes ago. Eliminations and Others contains the offsetting hedge settlement gains I mentioned as well as strong corporate cost management performance. Maintenance capital is expected to pick up seasonally through the balance of the year weighted to Q3 and Q4 as usual. The 2020 reported number here was a bit of an anomaly. Okay. On to Slide 21 for the bigger picture and how we see the full year shaping up. Because of a strong start, we're definitely ahead of plan for the Q1. And while we're still cautious on the pace of recovery, we remain confident that we'll achieve our full year guidance. As we look at the balance of 2021, we have tweaked our own quarterly forecast slightly, but importantly, no change to the full year outlook. I'll touch briefly on a couple of these tweaks. First, we're seeing a more concentrated crude oil customer turnaround season in the second quarter As producers and refiners advance their maintenance in anticipation of continuing demand pickup in the second half. This just boils down to timing, With the mainline volumes expected to dip a little to about 2,600,000 barrels per day, mostly impacting light volumes, Then ramping back up to achieve the same full year outlook of approximately 2,800,000 barrels per day on average for the year. And second, lower energy services contributions will likely persist in Q2 and Q3 on weaker regional light demand and margins. Big picture, however, energy demand is picking up nicely. Our businesses are performing well and we're confident in our full year guidance. With that, Al, I'll pass it back to you. Okay. Thanks, Colin. Just a quick recap here to end it off. 1st quarter came in strong and on track for guidance, as Colin just mentioned, execution wise, big year at $10,000,000,000 going into service, which is going to generate a lot of free cash flow. And after 2023, very good hoppers you saw of in franchise growth opportunities. Just more broadly here though, the best in class franchises we've got here have very good longevity and transparency to future cash, But they also position us to capitalize as we transition to a lower carbon economy over time. We'll continue to ensure a Strong balance sheet and great flexibility. And finally, as we like to conclude, the combination of yield growth and capital appreciation here provides investors with a very attractive value proposition, especially as we move into a very robust economic outlook. That concludes what we want to say. Formally, we'll move to the Q and A. And given we're in different locations, I will quarterback this and I'll hand off questions as required. So over to the operator. Thank you. We will now begin the question and answer session. And Robert Kwan From RBC Capital Markets is online with the question. Hey, good morning. I wanted to talk about Strategy around the energy transition and ask first here just about the business mix. So post 2023, The numbers you put out heavily gas driven. Do you see that as being more specific to your footprints on the gas side or Is there a higher kind of level macro view that's actually driving gas? And if it is macro, Do you see an opportunity to reduce your exposure in slower growing segments and acquire more gas platforms? Okay. Robert, it's Al here. So I think it's probably a combination of both, Robert, obviously, we've got a great platform, likely one of the top 2 or 3 perhaps in the United States. So we're very pleased with that. And as Bill will tell you, you've got lots of Fundamentally though, we're big fans of natural gas. We've been moving in that direction For quite a while, very positive on the fundamentals for a bunch of reasons. The obvious ones are replacing coal generation. More importantly, though, as I mentioned in my remarks, it's about supporting renewables. If we want to hit renewables targets, Natural gas is going to have to be very important to that. We like our position on LNG exports, and we have very favorable view of LNG trade going forward. And that's going to spawn, I think, a lot of opportunities to modernize our gas system. And I think distribution utility is probably in the same category. In terms of the I guess maybe the implied capital allocation question there. We're in a good position here because the liquids business, As you know, it's world class franchise. That's going to continue to grow, but the capital intensity of that's Likely going to decline for a bunch of reasons. It will grow through optimizations and efficiencies that Vernon and his team are working on, Optimizing the system, we've had a great record of doing that so far. So it will be lower capital intensity, and that will allow us to Perhaps deploy a greater proportion of future free cash flow into the gas business and into the renewables business. So that's how we see it. Hopefully, that gets to your question. So more organic versus anything where you can accelerate your gas platforms On the acquisition front? Yes. I mean, the base case is organic. And as Bill will tell you, there's lots of opportunities there. If you look at the markets and where we feed gas into the U. S. Northeast, the Southeast, We really like the Gulf Coast opportunity given where we're situated along the coast and how that's going to feed LNG, even if you look at the BC system, good opportunities for organic growth. We wouldn't hesitate though actually if we could Find assets that extend out the franchise and give us some more opportunity to grow accretively from that platform. So I mean, that's on the table. If we can find a good asset opportunity, we'd certainly look at it closely, and the team is looking at those opportunities. Nothing front burner on that right now? Well, probably not front burner, but it's certainly on the stove. Okay. Thank you very much. And we have Jeremy Tonet from JPMorgan online with a question. Good morning. Good morning. I just want to start off with the carbon capture if I could here. Just want to see a lot of new good information there. The focus seems to be largely on Canada, but just wondering if you see opportunities in the U. S. As well. And just kind of curious about how you see project Do you see the 45Qs and other initiatives kind of helping make it attractive? Or would you look to use 3rd party capital and joint ventures Here to move forward, just trying to think through the different possibilities. Thanks. Maybe we'll get Vern to talk about How we see the U. S. And the opportunities there. And we'll come back to the last part of your question after. Okay. Thanks Al. Obviously, carbon capture is going to be very important in the energy transition as there's many industrial processes that People are going to need for the future that are highly carbon intensive, refining being one of them. So I think some of the announcements that you've seen out of Exxon and others are highly informative where people are thinking about that we Need to be in carbon capture a big part of the mix. Obviously, this is all relatively new and we're in discussions with multiple parties In the U. S. About potential opportunities, I think we bring a lot of expertise to building these types of projects. So we're talking with customers in the Gulf Coast, customers in the Midwest and the Rockies as well as what we're doing in Canada. I think it's still as these projects are very early in the conceptual stage, hard to comment on whether we want to bring 3rd Yes, maybe I'll just add one point to what Wern said around that last part. Obviously, at this point, as you know, Jeremy, the economics are still challenged on CCUS. So I think what's going to be important here, and you mentioned 45Q, I think we'll have hopefully a similar Structure in Canada in the not too distant future, that's really going to help. And point being that I think at this Stage of the cycle, we definitely need good partnerships between government and industry To move this along quickly, and I think that will naturally evolve and we'll have some good opportunities there To jointly fund and provide incentive for this very important area. If you look at it, CCUS is probably the key To at least 1 of the 2 to 3 keys to achieving lower carbon emissions in accordance with the goals. Got it. That's very helpful. Thanks. And maybe just switching over to RNG, appreciate the new partnerships You formed there. I don't know if you're able to share more detail on what that could look like exactly in Canada, but also curious, I guess, In the U. S, do you see similar opportunities emerging or any thoughts on south of the border there? Well, Cynthia, why don't you Tak that question, at least on the Canadian front and then add on. Thanks, Al. Yes, Jeremy, the partnership that we announced with It gives us an opportunity, as Al mentioned, to build out facilities across Canada. Walker Industries has A very large presence in the landfill space and obviously has the opportunity to Involve Us and Comcore has the experience and expertise. We have the one project that was announced That is under construction in Niagara. And we have 10 to 15 kind of projects that we're looking at. So There'll be an opportunity for us to expand in that space. There's over 10,000 landfills in Canada and they account for about 20% of the annual Methane emissions. And so the studies say that up to 10% of the gas blend in North America Could be from RNG by 2,040. So it's a great opportunity. The project sizes are Just for the blending facilities are in the $30,000,000 to $40,000,000 kind of per project, And then there's the cost of the biodigester. So it is a significant opportunity with our partners, and we're excited about that. We're on the U. S. Side, I think there are similar opportunities, and we can continue, as Vern mentioned with the opportunities on carbon capture, there are Future opportunities and we'll see how the market grows. Got it. Thank you very much. Okay. Thanks, Jeremy. Rob Hope from Scotiabank is online with a question. Good morning, everyone. I want to circle back on the carbon discussion you had there. Maybe some just some additional Color on where eventually you would like to dabble into the value chain, whether it be largely On the trunk line, as you mentioned in Northern Alberta or if there is sufficient government support, could you go upstream or downstream there on the carbon side? Well, Rob, Verint can add on here. But essentially, the way we're looking at it is you got it, I think. I mean, The trunk line is probably where we're naturally fitting, and we've got expertise in that area. And so there's really no issue there. That's the obvious one. But I do feel that we have the capabilities well to move upstream. And so Collaborating with governments and importantly our customers on the capture side is a possibility. Certainly, on the downstream end of it, on the storage side, that's also something that we have great capability at. So we actually see it as probably a full value chain investment opportunity anchored by our expertise initially on the pipe side. So I think it's a full value chain play for us. But I don't know, Veron, anything else on that? No, I think you've captured it well, Al. That I think our customers are looking for potential partners to take part in the full value chain. I think they find that more attractive than just being a pipeline operator. All right. Appreciate that. And then, yes, I appreciate the comments on Line 5 and acknowledging the kind of the deadline next week. Could you just remind us How much flexibility you have in the system to move some volumes on the southern end and then back up into the Sarnia region In the off chance that there is an injunction against the pipeline? Yes. Rob, maybe just To reiterate Al's point, obviously, we believe the pipeline is safe. It's been reaffirmed by both PHMSA and the state court last year. Obviously, the tunnel is the perfect solution to make the pipeline even safer. And the fact is there is no alternative meaningful alternatives To line 5, it provides roughly 50% of the crude oil and propane to the Great Lakes states As well as Central Canada. So a shutdown would be very impactful For the energy security of the region, we do have a little bit of capacity that we can provide through Line 78, But it's not going to be enough to meet the energy needs of the Great Lakes region. So I think that's why we believe it's in the best interest of everyone For us to get on with building this tunnel. Yes, Rob, just to add on one quick point to that. That whole area in the corridor is pretty full up. And if you look at capacity I mean, you just can't take 540,000 barrels a day out of the market and not have bad things happen, Ultimately, to consumers and pet chem and refineries, it's just a very bad outcome. So like you said, Maybe at the very small margin, there's a few things that you can reroute, but it's not going to make a difference to shutting down the line. Thank you. Ben Pham from BMO is online with a question. Hi, good morning. I have a couple of questions on the carbon tax and curious more high level Impact that would have on any business, particularly maybe first off in Canada, the net impact and then My follow-up is, if you see carbon prices starting to get reflected in, say, European power prices or the U. S, doesn't that have Some of the benefit on your renewable offshore business? Do you want to take the CCUS part? Yes, I can take the CCUS part. So obviously, with the recent federal budget here in Canada, the federal government is Tax credits associated with carbon capture and we're at the table in those discussions. So I think it's until we get that finalized, it's probably difficult to say how meaningful these tax credits will be. But having said all that, it's obviously critically important that these tax credits exist. But just because by the The level of carbon pricing we see today in Canada, there isn't sufficient economic value to go ahead with CCUS without the tax credits. Maybe I'll turn it back to Al or Matthew to talk about European wind. Go ahead, Matthew, if you want to Sure. Hi, Ben. Thanks. Yes, I think you're right. I think indirectly, it does. What you're really seeing in Europe is very aggressive targets for offshore wind being established by most of the governments, Especially where we're operating. So for example, in France, about a gigawatt a year of offshore wind, The U. K. Is targeting 30 by 2,030, 30 gigawatts. And so, I think that rather than the carbon Value or tax itself playing into our business, what we're seeing is a growing number of opportunities because of the targets and, just the lack of supply of offshore wind. And just as a reminder, we are