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Enbridge in a sticky fix after pipeline rupture
Gary Park For Petroleum News
Listen closely and you can probably still catch an echo of the groaning in the downtown Calgary headquarters of Enbridge.
There’s no good time for an energy carrier to fess up to a pipeline rupture, resulting in a spill of 3 million liters into a tributary, then into Michigan’s Kalamazoo River and prompting Gov. Jennifer Granholm to declare a state of disaster. But, can anyone think of a worse time?
It didn’t help that Granholm chastised Enbridge for an “anemic” response.
Enbridge Chief Executive Officer Pat Daniel — needing no reminders from ex-BP boss Tony Hayward of how not to handle a crisis — made a hurried trip to Battle Creek, Mich., the epicenter of the spill.
From there, first thing on July 28, he had the awkward job of trying to remain upbeat during a conference call on Enbridge’s second-quarter earnings.
What he carefully didn’t do was downplay the incident.
Daniel: ‘serious … significant matter’ He said the July 26 spill is a “very serious and significant matter,” and put himself in the front lines of the emergency response efforts, doubling the number of people involved in cleaning up the mess at the same time the operations were having to contend with rising floodwaters.
The longer-term impact of the Michigan events is an even greater challenge as Enbridge steps up efforts to deal with opposition from First Nations and environmentalists to its planned Northern Gateway pipeline to carry 525,000 barrels per day of bitumen across Alberta and British Columbia to the deepwater post at Kitimat for tanker shipment to Asian markets.
Already faced with opponents who have vowed to prevent the construction of the pipeline across streams, rivers and the traditional lands of about 50 Native communities and to make permanent a moratorium on oil tankers in British Columbia’s coastal waters, Enbridge has just seen the road ahead grow even more daunting.
Daniel said the Northern Gateway application, now before Canada’s National Energy Board and targeting a 2015 in-service date, is now faced with an even tougher job to convince First Nations and “other interested parties” of the “national significance and importance” of the project in opening up markets outside the United States for Alberta bitumen products.
He said Enbridge will waste no time explaining to its opponents what caused the Michigan accident and what the company will do to prevent a repetition by refining its line inspections, inspection periods and pipeline control.
Rail under consideration The spill also coincided with word that the Alberta government, producers and railway companies are again exploring the possibility of delivering bitumen by rail to British Columbia ports.
Alberta Energy Minister Ron Liepert said his government is open to all means of accessing Asian markets, while Don Thompson, president of the Oil Sands Developers Group, said rail is viable and competitive with pipelines and is worth exploring as the U.S. market for Canadian crude “becomes constrained.”
Brenda Kenny, president of the Canadian Energy Pipeline Association, was less enthusiastic, rating pipelines as “by far” the safest, most economical option.
Daniel said rail might help producers over the short-term to open up new markets, but said the option could not carry crude in sufficient volumes “to improve pricing for Western Canadian producers.”
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