Why Enbridge's new CEO isn't sweating inflation

The new boss at Canadian pipeline giant Enbridge (ENB.TO)(ENB) is not among the executives wringing their hands over stubbornly high inflation as rising costs rip through balance sheets.

Greg Ebel, who replaced Al Monaco as Enbridge's chief executive officer on Jan. 1, struck a reassuring tone on the topic as the Calgary-based energy infrastructure company reported fourth-quarter financial results earlier this month.

Enbridge, he says, is in "a good spot from an inflationary perspective," bolstered by long-term contracts, favourable commodity prices, and the ability to grow without spending on costly new projects.

A self-described "glass-half full" guy, Ebel's comments come as Canada's central bank takes a "conditional pause" to decide if more rate hikes are needed to tame rising prices. On Tuesday, Statistics Canada said the inflation rate eased to 5.9 per cent in January, still well above the Bank's two per cent target.

For Ebel, this is no time to build from scratch.

"In an inflationary environment, when it comes to infrastructure, you want to do brownfield projects, not greenfield. In other words, going over ground that you've gone over before. You want to be building on your existing right-of-way," he told Yahoo Finance Canada in an interview. "That's what we're doing for a lot of our projects."

Enbridge's vast footprint includes the world's longest crude oil and liquids transportation system, a pipeline that moves roughly 20 per cent of all natural gas consumed in the U.S., a growing portfolio of renewable energy assets, and a gas distribution and storage business. Ebel aims to spend $18 billion on projects through Enbridge's secured multi-year capital program, with planned in-service dates stretching into 2028.

Energy and resource-related projects in Canada were notorious for delays and cost overruns prior to the current inflationary flare-up. Today seems no different.

Earlier this month, TC Energy (TRP.TO)(TRP) upped the expected price tag for its Coastal GasLink pipeline project to $14.5 billion, more than double its original estimate from 2018. Upon completion, the artery will feed the Shell-led LNG Canada plant on the British Columbia coast. More cost increases have not been ruled out.