Enbridge can prove it’s no Keystone Kop
If ever there was a company that needed thirdparty validation, it’s the suddenly much-maligned Enbridge.
Its once-sterling reputation has been under assault just as it looks to build a much-debated, highly politicized pipeline to move bitumen from the oilsands to the West Coast.
Critics have had a field day with the “Keystone Kops” characterization of the company by a top U.S safety official over a 2010 pipeline rupture in Michigan while Tuesday brought another rebuke from U.S. authorities for a fresh oil spill.
After all the criticism, when 1,200 barrels of oil spilled into Wisconsin farmland over the weekend it prompted another comedy of errors. Enbridge said Tuesday a section of its Lakehead pipeline system was ready to go back into service only for the U.S. Department of Transporta- tion’s Pipeline and Hazardous Materials Safety Administration to issue what amounted to a not-so-fast order.
The regulator sent Enbridge a letter to note long-standing concerns with the 14-year-old line. In outlining a series of actions it wants undertaken, it said: “The continued operation of the pipeline without corrective measures would be hazardous to life, property and the environment.”
All of this is playing out against a high-stakes battle over Enbridge’s Northern Gateway project.
A West Coast pipeline has been touted as a much- needed piece of infrastructure for Canada to export growing oilsands production beyond the traditional market in the U.S. Midwest. Prime Minister Stephen Harper’s government has deemed it to be in the “national interest.”
With every incident — Enbridge also had a small spill in northern Alberta in June — detractors come out of the woodwork to denounce the company that runs the world’s longest network of crude oil pipelines. The calamitous 2010 Kalamazoo River spill has become their rallying point.
Enbridge is the “last company in North America” that should build a pipeline through the northern B.C. wilderness, warned David Anderson, a Vancouver Island resident who was environment minister for five years under Prime Minister Jean Chretien.
The Calgary-based company has “a cowboy culture,” he said.
Plain-speaking regulators may be helpful. Outspoken actors, athletes and yesterday’s politicians are less so.
Apparently, Anderson has a pet schnauzer named Kyoto so it’s a fairly safe bet where he comes down on oilsands development.
It does feel — to borrow a football term — that some people are “piling on” Enbridge.
Fortunately for its shareholders and other stakeholders, the company has opportunities to address what have been largely self-inflicted wounds and repair a tarnished image.
On Thursday, Enbridge will announce its second-quarter operating and financial results. Next week it hosts inspectors from the National Energy Board at its Edmonton Control Room to visit the site following the scathing review by the U.S. National Transportation Safety Board.
It’s hard to overstate the significance of the two-day visit.
The NEB is the same agency reviewing the $6 billion Northern Gateway project. Interestingly, another $500 million in safety features were added days after NTSB chair Debbie Hersman cited “Keystone Kops” to describe the Edmonton control room during the spill of 20,000 barrels of bitumen into the Kalamazoo River. The cleanup has cost Enbridge more than $800 million. The events this week and next are opportunities for Enbridge to change the narrative on this story. Both offer a critical element in a PR campaign; third-party endorsement.
The investment community has largely weighed in on Enbridge after this protracted run of bad press. Its shares fell 80 cents to $41.03 on the Toronto Stock Exchange as most energy stocks declined Tuesday. However, Bloomberg this week noted Enbridge is actually trading at its highest level since January 1983.
In its letter to Enbridge, the NEB said it “will take all necessary actions to protect the environment and the public.”
It’s fair warning. Recent missteps aside, Enbridge is hardly some fly-by-night operator. The company has decades of history in Canada, a market capitalization of $33 billion, 6,900 employees in North America and is rated among the Top 100 Employers in Canada.
If Enbridge can’t have its control room operating above the call of duty for an inspection it has two weeks to prepare for, then it deserves the censure it has received. Enbridge is keen to show off a “world class” control centre that opened in December.
“It significantly enhances the work environment for operators and it allows greater interaction and support for 24-7 monitoring of our systems,” said Enbridge spokesman Graham White. “It’s something we look forward to presenting to the NEB.”
The truth about Enbridge, like most companies, lies somewhere between what its critics say and what its TV ads would have people believe. Addressing its safety performance is its best chance to shift perception further from the former and closer to the latter.