Published | PubliÃ©: 2012-08-03
Received | ReÃ§u: 2012-08-03 2:44 AM
GLOBE AND MAIL (METRO)
REPORT ON BUSINESS, Page: B1
U.S. regulator raps Enbridge on safety
In a second rebuke, watchdog tells company it must hire third party to oversee plan before it can restart troubled pipeline
Enbridge Inc.'s regulatory woes are deepening in the wake of its most recent oil spill, with a U.S. watchdog telling the company it must hire an independent party to supervise a new safety plan for a 3,000-kilometre pipeline network. The Pipeline and Hazardous Materials Safety Administration said Calgary-based Enbridge must examine procedures on its entire Lakehead pipeline network before it will allow the company to restart Line 14, which is part of the system that leaked last Friday.
The stepped-up restrictions - not a standard move, the regulator said - come as Enbridge loses support in British Columbia for its Northern Gateway oil sands pipeline and garners criticism from Ottawa, which has to date voiced support for the project.
Federal Heritage Minister James Moore says Gateway will fail unless the company does a better job engaging the public.
The PHMSA said the additional measures were necessary given Enbridge's past record and behaviour. Enbridge knew the line had defects when it was built in 1998, the regulator says, and it leaked in 2007.
In a letter issued Wednesday to Enbridge, the PHMSA said it has "long-standing concerns about this pattern of failures" by the company over the past several years, adding that because of the nature, circumstances and gravity of "this pattern of accidents," it needed to take additional corrective steps.
A third-party expert must review and assess Enbridge's comprehensive safety plan, then "oversee the creation, execution and implementation" of the steps identified in it, the PHMSA said. The outsider must provide monitoring summaries to Enbridge and the regulator, while the Calgary-based company "must commit to address any deficiencies or risks identified in the third-party's assessment, including repair and replacement of high-risk infrastructure."
Late Thursday, Enbridge said it planned to submit all the information PHMSA requested within hours.
"The Lakehead plan describes improvements that will be made in operational areas on the Lakehead system, many of which were already under way," the company said in a statement.
Federal cabinet member Mr. Moore criticized Enbridge's approach to explaining the spills in the United States, and its attempt to convince British Columbians that the Northern Gateway line would be safe.
"This project will not survive scrutiny unless Enbridge takes far more seriously their obligation to engage the public," he told a radio show Wednesday. Mr. Moore did not agree to an interview on Thursday.
The federal government staunchly supports Northern Gateway, and the opposition New Democratic Party said Mr. Moore's comments may have been designed to keep B.C. voters happy.
"It's damage control," said NDP MP Peter Julian, who is the party's natural resources critic and represents the B.C. riding of Burnaby-New Westminster.
"The Conservatives have been pushing this for months, and now that opinion has turned against it in B.C., they're looking to shift the blame to Enbridge."
Sixty-five per cent of British Columbians disapprove of Gateway and the increased oil tanker traffic that would come with it, according to a recent poll conducted by Forum Research Inc. This is up from 59 per cent disapproval last month.
Outgoing Enbridge chief executive officer Pat Daniel countered Mr. Moore's criticism Thursday, saying his company has had an "astounding" level of engagement with Canadians over Gateway over the past dozen years.
"I look at it right now, I don't know that there isn't somebody, anyone in this country that's not engaged on Gateway and very aware of what's going on," Mr. Daniel said on the second-quarter conference call.
Enbridge made $11-million or 1 cent a share in the second quarter, down from $302-million or 40 cents a share. Enbridge said a drop in fair value of its derivatives used to manage risk cut into its profit.
Al Monoco, Enbridge's incoming CEO, said his company takes public engagement "very seriously," and that the project does have its backers.
"Alberta government support, federal support, and obviously there's a good degree of public support and First Nation support," he said on the conference call.
With files from reporter Shawn McCarthy in Ottawa.
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