Enbridge CEO Daniel set to retire
‘We’ve got such great young talent in this company, I just don’t want to stand in the way’
Pat Daniel chuckles when asked, while discussing his pending retirement, if his vision for Enbridge Inc. has come to fruition during his 11 years as the company’s chief executive.
In 2001, Daniel took over an oil pipeline company during a dark period for the industry and said he would double the company through acquisitions.
“We thought the crude oil business was dead,” he told reporters Monday in Calgary.
Fast forward a decade and Calgary-based Enbridge has grown from a market capitalization of $6.8 billion to more than $30 billion on mostly organic growth, and plans to build a massive bitumen pipeline to the Pacific coast of British Columbia.
Daniel said Monday that he would retire by the end of the year and named senior execu- tive Al Monaco, 52, as his successor. Monaco will join the Enbridge board and become president immediately.
Now 65 years old, Daniel said it was time to let younger blood take over leadership of the pipeline and energy corporation and its projects, including the $5.5-billion Northern Gateway pipeline that’s now the subject of National Energy Board hearings. “I feel very, very committed to it personally,” Daniel said.
“It’s been 12 years since we started the concept, but it’s going to take some time to work its way through . . . and we’ve got such great young talent in this company, I just don’t want to stand in the way.”
Enbridge now has a $13-billion slate of projects, including expansions in major crude plays on both sides of the border.
The company also boasts more than 1,000 megawatts of power projects, on and offshore natural gas pipelines, and most recently, a majority stake in a natural gas processing plant in the Horn River play of British Columbia.
Daniel took up the top position when Enbridge believed it would either face a slow demise along with the thenfaltering oil industry, or make a major change in direction.
“We thought the oilsands would never be economic and conventional production was in significant decline. There were no resource plays or tight oil plays even envisioned at that point,” he said.
Tight oil plays will change the direction of North American pipelines — and markets — as shale gas has to the natural gas industry, he said Monday.
The company has expanded its network to become a key player in the Bakken oil play in the U.S. and Canada, as well as increased its oilsands system.
The company has also taken on projects to flow more oil to Ontario, and reach refiners in the U.S. Gulf Coast through its Seaway project with Enterprise Products Partners.
Enbridge’s initiatives have mostly been unregulated but low risk, with long-term contracts secured by major customers, said analyst Steven Paget, with Firstenergy Capital Corp.
“There’s a big world out there of businesses that are not regulated per se, but they are contracted with great counterparties so they behave as if they were regulated assets,” Paget said.
“Wind power projects in Ontario with long-term government contracts are secure. The midstream project in the Horn River, too. Nobody’s regulating that return, but it’s still a contracted return,” he said.
Paget characterized Daniel as a determined and unflappable leader who will be leaving the company in experienced hands. However, the analyst wondered if Enbridge was headed toward more regulated gas or power distribution asset market under Monaco than it might have under Daniel.
A certified management accountant, Monaco has headed natural gas pipelines, alternative energy and international divisions of Enbridge.
Like a number of senior Enbridge executives, he has worked in several divisions since joining the company in 1995, including a stint in investor relations, getting a broad view of the company and a feel for what investors want.
“Al has headed up major projects and green as well as gas distribution, international, etc., so he has experience in very senior roles,” said analyst Juan Plessis, with Canaccord Genuity. “We had heard his name mentioned over the past few years when discussing succession.”
Plessis was not surprised at Monday’s announcement, noting Daniel had been at the helm for more than a decade. The surprise for some was that Monaco was chosen over Steve Wuori, Enbridge’s president of liquids pipelines, and chief financial officer Richard Bird.
“Enbridge has a deep bench of executives, rotating people through their jobs, so whoever they pick will do a good job,” the insider said. “The most interesting thing now is what will happen with Wuori and Bird.”
Wuori has been with Enbridge since the mid-1980s, and stood alongside Daniel in 2010 after the Enbridge Line 6B ruptured in Michigan, spilling 20,000 barrels of heavy crude into waterways leading to the Kalamazoo River.
The company currently faces heated opposition to its Northern Gateway project over concerns about spills. The proposed line would ship 525,000 barrels of bitumen per day to a marine terminal in Kitimat, B.C.
Daniel has argued the line would be critical for Canada to access markets outside of the United States, currently its sole export customer.
The development of tight oil reserves in the U.S. increasing domestic volumes at the same time consumption declines makes the argument in favour of the project even stronger, he said.
Development of reserves in the Niobrara play in Colorado, the Eagle Ford in Louisianan and the Uttica shale in Pennsylvania could seen volumes from tight oil soar to 1.4 million barrels per day from current production of 600,000 bpd by 2020, according to international energy consultants Purvin & Gurtz.