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Trouble in the pipelines Consequences of Enbridge rupture could be far greater than barrels spilled; concerns build about corrosion in Canada’s aging lines Gary Park For Petroleum News
BP’s Macondo well blowout in the Gulf of Mexico spewed 1.9 million barrels of crude before it was choked off on July 15. Or was it 3.3 million? The full and final count is awaited.
Enbridge’s pipeline rupture in Michigan spilled an estimated 19,500 barrels.
No contest. Right?
For the public and politicians, BP’s reputation will be sullied for decades and, fairly or not, associated forever with the Deepwater Horizon explosion, just as ExxonMobil will have to wait many more years to shake off what the Exxon Valdez did to its image.
What’s in store for Enbridge needs time to evolve. What does seem likely, however, is that the consequences could be far greater than the simple numbers.
Exclude the Macondo events and it’s likely Enbridge would have stirred a brief flurry of concern and negative publicity before the blog media found something else to chase.
Right now, Enbridge is doing its utmost to avoid the blunders by BP and its departing CEO Tony Hayward.
It has pulled a page from the Johnson & Johnson strategy book of 1982 when the drug maker set the standard for crisis management after seven customers died from cyanide-laced Tylenol.
Daniel to Michigan In Enbridge’s case, the boss Pat Daniel headed to Michigan to oversee the response, apologized to residents for “the mess we have made,” mobilized an army of cleanup workers and promised to cover the costs, which have been estimated by one analyst at US$40 million.
Michigan Gov. Jennifer Granholm, who initially accused Enbridge of taking an “anemic” approach to the spill, ended the week by praising the Calgary-based company for its aggressive efforts.
D’Arcy Levesque, Enbridge’s vice president of public affairs, told the Globe and Mail: “It’s about communications, communications, communications. People have been impacted and are upset and we need to provide factual information about what we are doing to respond.”
What might trouble Enbridge and its pipeline peers and oil and natural gas shippers even more is how governments and regulators respond.
Aging pipeline system In Canada, an aging pipeline system poses constant worries about corrosion, creating a possible temptation to impose a much stricter regulatory regime, from the approval stage, through inspections and penalties.
Daniel acknowledged that prospect by telling reporters on July 30 that Enbridge will work with the industry and federal regulators to introduce new technology that would better detect flaws in pipelines to reduce the odds of ruptures.
But he dismissed a report in the Detroit Free Press that Enbridge had been warned in January by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration that the company had likely violated federal regulations relating to corrosion in Line 6B, which starts in Alberta, enters the U.S. and crosses back into Canada.
He said the warning affected a different section of the pipeline and the matter had been handled.
Far more troubling to Enbridge is the fallout on its heavily contested plans to build the Northern Gateway pipeline from the Alberta oil sands to the British Columbia coast — crossing 1,000 streams and rivers in the process — for tanker shipment to Asia.
Nikki Skuce, senior energy campaigner for ForestEthics, essentially said what was on a lot of minds that the Michigan spill “reinforces a lack of trust and also the incredible risk this pipeline poses to British Columbia in particular.”
Those issues are destined for an early airing before a Joint Review Panel, entrusted with conducting an environmental assessment of the project.
There’s been no rush by Enbridge’s peers and rivals to gloat over its misfortune.
Russ Girling, newly installed chief executive officer at TransCanada, told analysts July 29 he had no idea how the Michigan events would affect the review process for his company’s proposed and opposed extension of its Keystone pipeline from the oil sands into the Lower 48.
“I don’t know the answer to that question,” he said. “It’s a very unfortunate circumstance and I’d say it’s premature to say whether it has any impact on the permitting process for our pipeline system.”
Pipeline network immense What Michigan has done is open the door on a little-examined aspect of Canada’s immense pipeline network — more than 60,000 miles and generating export revenues of about C$70 billion a year.
Partly that’s because safety has been such a high priority.
Of the latest statistical reports, the Alberta Energy and Utilities Board has reported a 30 percent drop in pipeline failures in the province over the last decade, with the number of failures for every 600 miles of pipeline at 2.1 in 2008 compared with 3.3 in 2000, most of them in small-diameter gathering lines.
Spills in 2006 rose to 1,516 from 1,429 in 2005, only 5.5 percent of them listed as “priority one” that amounts to a serious impact on the environment and the public.
Canada’s National Energy Board said the six-year average to 2006 of releases from pipe bodies was 0.05 per 600 miles of line.
One source estimates that 3.5 barrels are spilled annually from Canadian pipelines for every 1 million barrels carried.
In 2008 the number of spills reported to the NEB dropped to 1,461 from 1,508 in 2007, with more than 75 percent at low volumes that were contained on lease.
The federal agency, which regulates 9,000 miles of pipeline, has constantly pressured the industry to step up the “detectability and accuracy” of in-line inspection tools used to scan the inside of pipelines and recommended improvements in the selection of coatings for new and rehabilitated pipelines.
The NEB’s goal of zero ruptures per year was attained in 1984, 1988 and 2003, with the annual average edging down over the past 20 years to 1.4 from 2.3.
Regardless of how solid this record appears, there’s an expectation that the pressures on pipeline companies will intensify as the public spotlight on all aspects of the industry intensifies.
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