Enbridge-Spectra deal part of a bigger North American trend, says analyst

More Canadian energy companies are likely to follow in the footsteps of Enbridge by buying up major American energy assets,predicts one business analyst.

Bill Harris with Avenue Investment Management said the announcement by Calgary-based Enbridge to purchase Houston-based Spectra Energy Corporation came asno surprise, and is actually part of a bigger North American trend.

• Enbridge buying Spectra Energy for $37B in stock to create pipeline giant

He said more and moreCanadian companies are being driven to the U.S. because ofpoor rates of return in Canada andthe increasingdifficulty of getting new projects approved.

"As everybody is aware, it's very difficult to build pipelines in Canada right now," Harris said.

Yet from an economic standpoint, this "extraordinary trend"runs counter to conventional wisdom.

"When the Canadian dollarfell dramatically, what you're supposed to do is take your foreign investments, come back to Canada, and look for great Canadian businesses," he explained.

"What we kept finding, over and over again, is over the last couple of yearsour great Canadian businesses have consistently gone to the U.S."

Harris said companies such asFortis, Emera, Interfor andTransCanadahave already begun acquiring assets in the U.S.

'Real genius,' says econ prof

MichalMoore, economics professor at the University of Calgary agreed that it was a smart strategic move on Enbridge's part, given the current political climate in Canada.

Econ prof Michal Moore explains what the Enbridge-Spectra deal says about the state of the energy industry

8 years ago

Duration 2:49

Calgary-based Enbridge announced plans to purchase Houston-based Spectra Energy Corporation.and create a North American energy infrastructure giant headquartered in Calgary.

For example, mounting public opposition to projects like Northern Gateway,andthe prevailing uncertainty surrounding the NEB approval and hearing process have greatly slowed energy development progress, he said.

• NEB & pipelines: Time for tweaks or an overhaul?
• Court overturns Northern Gateway pipeline approval

"When they're cash-rich and they've got a position that they can take looking to the future, then the real genius is to strike now and perfect a deal where you gather together more resources ... so that you're ready when the market turns around," he told CBC Calgary News at 6.

Moore said this move indicates that Enbridgeis "probably pretty bullish" with respect to theirmarket outlook.

"Frankly, they should be," he added.

"There will be a need for hydrocarbons worldwide, especially in the U.S."

With files from CBC Calgary News at 6