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In wake of oil spill, Enbridge CEO makes right moves

Enbridge President and CEO Patrick Daniel leaves Marshall High School following a press conference in Marshall, Mi.

Kevin Van Paassen/The Globe and Mail/Kevin Van Paassen/The Globe and Mail

Enbridge Inc. chief executive Pat Daniel swapped his tailored suits for jeans for much of this summer, and left his office in a Calgary skyscraper for living room meetings in small-town southern Michigan.

Door knocking may not be part of an oil executive's official job description. But the lanky, soft-spoken executive spent most of August around the town of Marshall, Mich., meeting with local residents after the July 26 break of an Enbridge pipeline in the wetlands of Talmadge Creek.

The broken pipe spilled about three million litres of thick Alberta crude into the creek and eventually the Kalamazoo River, sparking an evacuation of nearby residents and disrupting the recreational businesses that line the waterways.

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The oil itself was quickly contained and cleanup had already begun within days of the leak. But containing the public-relations problem it created -- that's a longer process, and one that has been made ever more complicated by the acute public sensitivity to oil pollution that followed BP PLC's catastrophic blowout in the Gulf of Mexico, the largest oil spill in U.S. history.

Though the Enbridge leak was small by comparison -- it spilled less than one-half of 1 per cent of the oil that the BP disaster did -- it threatens to exact an even greater cost than the estimated $400-million (U.S.) the company and its insurers will have to shell out to fix the damage, remediate the area, and compensate residents.

The Calgary-based company owns the largest networks of oil pipelines in the United States and its operations are heavily regulated by federal and state agencies that can drive up costs by imposing onerous safety rules. Enbridge is still awaiting regulatory approval to reopen the repaired line, which delivers 190,000 barrels a day of Alberta crude to Great Lakes refineries. And it will need political and investor support on both sides of the border if it wants to execute its ambitious plan for a new multibillion-dollar pipelines to carry Alberta crude to export markets.

All of which serves to explain why Mr. Daniel would delegate many of his regular CEO duties and spend much of his summer in an economically-depressed part of Michigan, thousands of kilometres from home. An angry populace could cause plenty of trouble for the company during the regulatory process.

But for many of the residents of communities affected by the Enbridge spill, Mr. Daniel has made all the right moves.

Throughout the noise, smell and disruption associated with the spill and cleanup, he has been a visible presence, offering reassurance that the company will repair the waterways and pay for any damage.

"He's sincere, you know?" said Marshall resident Terry Mahrle, who recently met Mr. Daniel to talk about the spill. "In this small community, we grew up on our handshake and our word, and that guy has definitely proven that to a lot of people. He's here to keep it clean."

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"People are still mad, but you've got to respect him for hanging in here and for dealing with the folks face-to-face rather than from afar," said Matt Davis, another Marshall resident. "We're appreciative of the fact that Enbridge has made themselves and higher-level folks accessible to people in the community."

It's unusual for the CEO of a company to be on the ground for so long during an incident such as the Kalamazoo River spill, said David Waymire, a partner in Lansing-based Martin Waymire Advocacy Communications, which works with energy companies in Michigan.

"For a seriously long period of time, this little piece of pipeline in southern Michigan has been the most important thing to Enbridge and that's a signal they meant to send. I think they did a very good job of it," Mr. Waymire said.

Enbridge has even offered to buy houses from homeowners who feel the spill devalued their property - and has already purchased several.

Mr. Daniel's efforts present a stark contrast to those of BP PLC's former chief executive Tony Hayward, who became a lightning rod for anger for some of his remarks and taking time off to attend a yacht race while oil was still spewing from the blowout in the Gulf of Mexico.

"This is the top priority issue within our company right now, and I've made some personal commitments to people in Marshall, Battle Creek and area to ensure that this response and cleanup is done to the highest of standards," Mr. Daniel said in a conference call. "I think it's very important for me to personally follow through on that."

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While the Enbridge CEO's presence has helped in the company's public relations image, the battle isn't over. Last week, U.S. officials began an investigation into complaints from members of the House of Representatives transport committee that Enbridge coerced residents to give up their rights to sue in exchange for things such as hotel rooms and air purifiers.

Reports also surfaced that a subcontractor hired illegal immigrants to help clean up the spill. Enbridge officials said all the workers had documentation, but added that the principal contractor had nonetheless ended its relationship with the subcontractor.

The spill came at a sensitive time for Enbridge and other pipeline companies such as TransCanada Corp., which are on the cusp of expanding their pipeline networks.

Concern from lawmakers, environmental groups and the general public over the risks and environmental consequences of oil pipelines has grown on the heels of the spill, even though the industry maintains pipelines are still the safest way to move oil around.

On July 26, the same day as the Michigan spill, U.S. Secretary of State Hillary Clinton extended by 90 days her department's review of Calgary-based TransCanada Corp.'s $12-billion (U.S.) Keystone XL pipeline project.

The extension, which may drag on, came as the U.S. Environmental Protection Agency recommended that the State Department consider alternatives to Canadian crude oil and raised questions about the need for and impact of the pipeline.

"From an industry perspective, there is no worse time or best time for these types of things to happen," said Kim McCaig, vice-president of the Canadian Energy Pipeline Association.

The quality of Enbridge's response was crucial for the company's operations, said crisis management consultant Richard Martin, founder of Montreal-based Alcera Consulting.

"If [the company]had reacted poorly to this, the public response could have been much more negative and then there could have been even more of a protest or more of a questioning of these other pipeline projects," Mr. Martin said.

"I think there's already a negative impact - it's a question of, can it be managed?"

After completing pressure tests on the repaired pipeline last week, Enbridge is awaiting approval from the Department of Transportation's Pipeline and Hazardous Materials Safety Administration to reopen the line. But in a meeting with local residents, Department of Transport under-secretary John Porcari said it was an "open question" when - or if - the pipeline would resume operations.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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