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Sunday, October 21, 2012

Enbridge: Dead Pipeline Walking, by Tex Enemark

by Tex Enemark, Special to the Financial Post | Oct 18, 2012

Northern Gateway dead as Enbridge had no grasp of B.C. reality
I told a friend of mine — a retired pipeline executive — that I was writing a column on why the Enbridge pipeline project failed. He responded, “A column? You could write a book!”

Enbridge ought to have studied the history of large B.C. projects that failed when faced with the combined influences of native unhappiness and British Columbia’s environmental protest industry. The Alcan expansion project of the 1980s was killed by the Mulroney government after more than $2-billion had been spent over about eight years.

The huge Windy Craggy copper-cobalt mine in northwest B.C. was sidelined into limbo by the Social Credit government in 1989, then neutralized by park designation by the NDP in 1993. Northgate’s Kemess North copper-gold mine was turned down by the provincial Liberals in 2007. These project cancellations were not associated with any one political party.

In each case, company executives located outside the province and with no grasp of B.C. political reality were warned by their B.C. consultants and each was given a strategy for addressing the issues. They all ignored the advice. Enbridge could also have benefited by studying the forest industry’s smaller, less spectacular failures involving environmental issues and native protests — everything from Haida Gwaii to the Great Bear rain forest to the west coast of Vancouver Island to the Flathead Valley. The list goes on.

Because native land claims are not being dealt with in good faith, and there is a strong environmental movement, B.C. can be a treacherous place for ill-thought-out projects.
Enbridge then ought to have consulted widely among people in B.C. with some experience in such matters, including B.C.-based pipeline companies. They would have learned to run the project out of B.C. and, if the office had to be in Vancouver, a very large satellite office should have been located in Prince George. Small storefront offices, staffed by local people, should have been established along the pipeline route to listen, to educate, and to reach out.
And Enbridge would have learned that the very fewest Albertans, with their oil-industry, Calgary-centric thinking, should be involved, other than in a technical capacity.

At that point, it would have been clear to them five years ago that, until the native land claims in at least Northern B.C. have been addressed, and there is a framework for engagement, and until there is certainty of aboriginal rights and title, this project was just not going to happen. Also, the company would have learned that there has to be public confidence in everything environmental.

At that point, Enbridge should have gone to Victoria and Ottawa and asked that governments get serious about land claims negotiations. Would the Campbell Liberals have begun to negotiate in good faith to get a resolution of the land claim issues or not? Would Harper, likewise, have increased his priority for B.C. negotiations, and actually deliver?
From this everyone, including Enbridge, could have profited.

Natives might possibly have seen Enbridge as being helpful in the 100-year-long struggle for justice and as a catalyst for progress, and as being willing to work with communities and aboriginals alike.

On the other hand, if governments were not prepared to get serious, a clear message would have been sent to Enbridge and, indeed, to Alberta and the whole oil patch, and it would be understood by Alberta and its oil industry where the responsibility lay.

Nothing new was required other than political will.

At that point, the province could make its revenue demands for B.C. hosting the project by linking the cost of settling land claims and assuring the environmental integrity of the pipeline to its revenue demands. The result would have been billions in extra profits to the oil industry, clear direct benefits to First Nations rather than more vague promises, beads, and postage-stamp reserves, and money to address environmental issues. There would have been a rationale for a financial benefit for B.C.

Instead, Enbridge’s Alberta executives made appallingly bad presentations across the planned route and did not get the message even when it was plain there was absolutely no support for the project in a room full of businesspeople.

Subsequently, Enbridge has suffered what might be called — or might not — bad luck. It has had some high-profile pipeline spills. These have made the company look uncaring and incompetent, but the project was doomed long before the spills.

Likely more damaging have been the actions of the Harper government to downsize and weaken almost everything environmental, including moving spill-response capacity to Montreal. Nobody believes that the environmental review process will be fair, thorough and competent.

It is one thing to be wary of Enbridge’s assurances of pipeline safety if federal environmental standards are high and trusted, but entirely another if there is no longer any faith in anything Ottawa does concerning environmental matters. Even today, Enbridge executives should be in Ottawa loudly protesting the downgrading of environmental response capacity in northern B.C.

The company never considered the project in a B.C. context, never tried to foresee the problems it would face, did not seek out broad, experienced advice or find possible allies in governments and get them committed to resolving the land claims and environmental issues up front. In other words, the company never perceived the linkages necessary for success.

The Enbridge project is now a dead man walking. Enbridge continues to push the permitting process against provincial government opposition and the prospect of a decade of lawsuits.
However, if the Harper government was to approve the project, it would likely cost the Conservatives 10 to 15 seats in 2015, so cabinet approval will be withheld. If the Harper government planned to approve the project, there would be evidence of a serious acceleration on native land claims negotiations. There is not; in fact, quite the reverse.

The Enbridge experience will be studied in business schools for decades to come, or at least until B.C. land claims are settled. Businesspeople, frustrated with this situation, ought to be demanding that governments get serious with land-claim negotiations. But business is silent, and governments insincere, and that is why Enbridge failed.
Tex Enemark, former president of the Mining Association of B.C. and a former B.C. deputy ­minister, is a Vancouver-based public-policy consultant who does political risk assessments and strategic planning.

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