Calgary-based Enbridge recently staked its claim as North American’s largest pipeline company, but now it’s moving out of downtown Houston as it consolidates near the Galleria.
After closing on its $28 billion acquisition of Houston’s Spectra Energy last week, Enbridge plans to consolidate into Spectra’s old headquarters on Westheimer Court, Enbridge Chief Executive Al Monaco said Monday in an interview at the CERAWeek energy conference in Houston.
Enbridge will vacate its eight floors of prime downtown real estate in the 1100 Louisiana Street building, known as Enterprise Plaza.
“That’s the plan. We’re not totally certain of the timing, but for sure we want to get that done by the end of this year,” Monaco said.
Some job cuts are coming, including in Houston, but the timing and numbers are still being determined, he said. Monaco stressed that growth is the overall goal, and cutbacks are mostly coming from duplicative corporate positions. Several members of Spectra upper management have already left, although former Spectra CEO Greg Ebel is the new chairman of Enbridge.
“Whenever there is a combination of this magnitude, there’s going to be some duplication,” Monaco said. “We’re really focused on making sure we continue the growth momentum that we have and that’s going to take people.”
Enbridge has estimated it’ll generate $540 million in pre-tax savings from the merger, about half of which is through personnel reductions. The merged Enbridge currently has nearly 17,000 workers, including almost 1,750 in Houston.
Enbridge’s three, tax-advantaged partnership businesses all will remain headquartered in Houston with no plans for name changes or consolidation – Enbridge Energy Partners, Midcoast Energy Partners and Spectra Energy Partners.
“It (Spectra Energy Partners) has a good business model, so we see no need to change that,” he said.
Touting its new position as North America’s largest energy infrastructure player, Enbridge made the Spectra deal to enhance its gas pipeline position in the U.S. Enbridge’s assets were about 80 percent focused on crude oil and other liquids, and the Spectra deal creates a roughly 50-50 balance between oil and gas. Spectra adds a 90,000-mile network of gas and natural gas liquids pipelines.
“Natural gas, we think, is going to be a huge part of the future,” Monaco said, citing the United States’ massive shale gas resources, as well as gas’ environmentally cleaner reputation compared to crude and coal. That also includes North America increasingly taking a leading position in liquefied natural gas exports.
The goal is to increasingly focus on North American energy, and not individual nations, including shipping more gas to Mexico as well. “To me, there’s no border,” Monaco said.
The Spectra deal also helps Enbridge grow when it’s increasingly harder to build pipeline because of the opposition from environmentalists, communities and indigenous populations. “The transportation conduit really has become the point of attack,” Monaco said, emphasizing the increased focus on community outreach even before projects are designed.