Big Loser: Enbridge

Enbridge bled credibility this year.

 

Martin Louie, a First Nations leader from Nadieh, B.C., speaks to first nation protesters and their supporters as they gather outside the Enbridge AGM during their continuing protest against proposed oil pipelines in Canada’s west coast, on Wednesday May 9, 2012. (Photo: Chris Young/CP)

For decades, Enbridge built the world’s largest network of oil and liquids pipelines without the public even noticing. In 2012, they finally paid attention—and it was bad news for the company. Controversy over the Northern Gateway project, the fallout from a massive oil spill in Michigan, and a poorly considered public relations campaign combined to drag the company’s reputation into the muck. Like crude oil gushing from a ruptured pipe, Enbridge bled credibility.

Even as the company’s stock price held steady, its reputation fell apart. As pipeline politics came to dominate the North American energy debate, uncertainty over TransCanada’s Keystone XL project gave new urgency to other efforts to expand Canada’s oil market, including Enbridge’s Northern Gateway project. Prime Minister Stephen Harper lent support to the 1,200-kilometre, $6-billion pipeline that would carry more than 500,000 barrels a day of crude oil from Edmonton through the Rockies to Kitimat, B.C., where it could be transported by tanker to markets in the U.S. and Asia, including China.

But as the project’s profile increased, Northern Gateway itself became a target for the same sort of hostility that befell Keystone. British Columbians rallied against a company increasingly viewed as an irresponsible intruder into the province’s fragile wilderness. Enbridge’s then-CEO, Patrick Daniel, lamented the company’s sudden disrepute. “We don’t like being in the public eye the way we are,” he told CBC News in August. Harper dismissed the noise as the work of American environmentalists. But he clearly underestimated the apprehension to Northern Gateway in British Columbia itself. So did Enbridge.

In the public arena, the company did little right. It ran the project out of Alberta and failed to properly engage those who would be affected by the development, including aboriginal communities, says Tex Enemark, a Vancouver public-policy consultant and former president of the Mining Association of British Columbia.

The company’s long history might have given it some goodwill among the public to help it push forward with Northern Gateway. But that disappeared in July when the U.S. National Transportation Safety Board admonished the company for its handling of a Michigan oil spill in 2010. The board called the incident a “complete breakdown of safety,” and likened Enbridge employees to “Keystone Kops.”

That judgment renewed conviction in British Columbia that Northern Gateway posed a threat to the province’s environment. The provincial NDP, which has a commanding lead in the polls in the run-up to a spring election campaign, has taken a hard line against Northern Gateway. Yet even if Northern Gateway is doomed, Enbridge stock has held up fairly well through 2012. “It’s actually been a very good business development year for the company,” says Paul Lechem, an analyst at CIBC World Markets. “The reality is that they have billions, if not tens of billions, in other projects under development that are equally or more important than Northern Gateway.” Still, solid finances won’t repair the company’s scarred reputation, nor can they restore Enbridge’s invaluable low profile.

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