Enbridge did not gain a place among North America’s top energy transmission companies by tying its future to a mere handful of projects.
In fact, the Calgary-based company has skillfully hedged its bets over the past 60 years by weaving a long-term web that includes a capital growth program for 2013-17 worth C$36 billion, with C$26 billion commercially secured.
But Enbridge is currently entangled in what could be a turning point in its history and the peak showdown over hopes by oil sands producers and the Canadian government to open a route to Asian markets for Alberta crude.
The heavyweight contest is rapidly turning into a donnybrook as Enbridge prepares to spend millions of dollars on a public media campaign in a battle it shows every sign of losing. This final effort to sway an antagonistic public comes just weeks before a Canadian government ruling expected before the end of 2013 on the Northern Gateway application.
And Enbridge has decided it can no longer count on its version of logic and reason to carry the day, especially as it faces a counterattack from emboldened environmental activists, who are believed to be financed by unknown sources in the United States.
Facing unprecedented setback
More than at any other stage in its 60-year history, the company is facing an unprecedented setback after a continuous string of successes before regulators.
“We have secured every permit we’ve ever applied for,” said Byron Neiles, senior vice president, major projects.
What happens to Northern Gateway — designed to export 525,000 barrels per day of crude bitumen to Asia and California and import 193,000 bpd of condensate — is also seen as crucial to Kinder-Morgan’s plan to triple capacity to 890,000 bpd on its Trans Mountain pipeline system to the Pacific Coast and to TransCanada’s push for a possible 1.1 million bpd Energy East pipeline to Ontario, Quebec and New Brunswick refineries.
The rail option
The premiers of Alberta and British Columbia, Alison Redford and Christy Clark, acknowledged Oct. 15 that if the Northern Gateway and Trans Mountain pipelines are not built, rail will fill the void to the Pacific Coast.
But they made no attempt to explain what infrastructure would be needed to handle at least 14 unit trains of 120 cars each on a daily basis to carry the incremental volumes of about 1.1 million bpd on the two pipelines projects.
Such a logistical challenge would rapidly become a nightmare if even one train derailed into either the Fraser or Skeena river, British Columbia’s two major salmon rivers.
The Fraser Institute, a conservative think tank, in a study published earlier this month underscored the superior safety record of pipelines over other modes of transportation.
It said road transport in the United States during 2005-09 had almost 20 incidents per billion-ton miles, while rail recorded two and pipelines 0.6.
Project unveiled 11 years ago
It’s now 11 years since Enbridge unveiled Northern Gateway, a proposal that initially attracted little or no attention.
The road ahead seemed clear cut-for Enbridge — simply match up producers and refiners, sail through the regulatory process, obtain export permits and arrange financing. That’s the way it had always been in the pipeline business.
Few outside the industry had a clue about the esoteric world of building pipelines or dealing with regulators. Besides, once the pipelines were in the ground they were usually out of sight and mind, except for the occasional rupture or spill that usually passed without notice.
But Enbridge got caught up in a complex web, some of its own making, especially when it was at the center of a 2010 rupture of a crude pipeline that spilled more than 20,000 barrels of heavy Canadian crude into the Kalamazoo River in Michigan, the largest onshore spill in U.S. history.
The company now estimates the cleanup costs are approaching US$1 billion and has warned that the total bill could be pushed beyond the limit of its insurance coverage.
The crusade
That incident and the furor over Keystone XL have quickly turned opposition to oil sands development into a crusade, led by British Columbia First Nations and U.S.-financed environmental activist groups.
Chief Executive Officer Al Monaco freely admits the “the public’s expectations (on the whole chain of energy projects, including safe, reliable operation of pipelines) have evolved very dramatically in a very short period of time. Demonstrating the need or the economic benefits and getting through the regulatory process is not enough to get public support today.”
Mark Maki, an Enbridge pipeline executive, has conceded that even if Northern Gateway receives a go-ahead later this year the project “still has a long way to go.”
Vern Yu, senior vice president of business and market development, candidly describing Northern Gateway as a “lightning rod project,” said the company is counting on Canada’s federal cabinet ratifying the project by mid-2014, probably with a long list of conditions, and hoping that anticipated appeals will be resolved by early 2015.
Even that timetable is beginning to look optimistic. Otherwise a “yes” from the federal government does not necessarily mean “yes” to the aboriginal and environmental opponents who seem prepared to carry their fight to the point of civil disobedience — in other words blockading pipeline construction at the minimum.
The open hostility aimed at Northern Gateway and the Trans Mountain expansion has now moved up a notch, with oil sands opponents, many suspected of being financed by U.S. sources, turning their sights to the two projects because of concerns to Americans about 700-plus tankers moving in Pacific waters, while Enbridge has launched its own campaign that is expected to cost millions of dollars.
Real-time tracking
Forest Ethics has launched website tarsandssos.org in Washington State, featuring real-time tracking of all tankers in and out of Kinder Morgan’s Westridge terminal in Port Metro Vancouver, the terminus of the Trans Mountain system in British Columbia.
Forest Ethics U.S. spokesman Matt Krogh said the website is the start of a cross-border campaign to oppose the Canadian projects.
Enbridge, meanwhile, is trying to put a human face on Northern Gateway by focusing on project boss Janet Holder, born and raised in Prince George, on the pipeline route.
“This is Janet Holder,” says the TV ad voice-over. “She wants to build the safest pipeline Canada has ever seen.”
Coastal First Nations, an alliance of eight aboriginal communities in northwest B.C., uses its own TV spot to depict an aboriginal toddler “who would like Janet Holder to respect the wishes of her community and 80 percent of British Columbians who oppose tankers in our coastal waters.”
