VANCOUVER - As Enbridge (TSX:ENB) attempts to sell its controversial Northern Gateway pipeline project, the National Energy Board is examining the broader issue of pipeline safety and pointing to Enbridge's devastating spill along Michigan's Kalamazoo River two years ago as an example of why the industry needs to change.
The National Energy Board released a discussion paper Thursday in advance of a forum on pipeline safety, planned for next June, citing several incidents including the 2010 Kalamazoo spill to argue the industry must to put a renewed focus on environmental safety.
The paper comes as a joint review panel, representing both the energy board and the Canadian Environmental Assessment Authority, examines the potential risks associated with the Northern Gateway pipeline between Alberta's oil sands and the British Columbia coast.
The National Energy Board announced an action plan last year designed to ensure pipelines are safe for workers and the environment. Part of that plan includes next year's forum in Calgary, which will invite the industry to examine safety issues in oil and gas management and brainstorm ways to address them.
The board posted a brief paper to its website that notes the BP oil spill in the Gulf of Mexico in April 2010, which killed 11 workers and caused the worst offshore spill in American history, dramatically changed the public debate over the industry and its safety record.
The BP disaster was followed by several "notable pipeline incidents," the paper says, including a Pacific Gas pipeline explosion in California in 2010, a spill in Alberta in 2011 along a Plains Midstream Canada pipeline and the Enbridge spill in Michigan.
A U.S. safety board report likened Enbridge's response to the Michigan spill to the bumbling "Keystone Kops" for failing to detect the leak and then responding poorly.
"These events and others demonstrate the need for the energy sector to put renewed focus on safety and environmental protection," says the six-page paper.
The National Energy Board paper says three areas must be addressed by the industry: corporate leadership, effective management, and the lack of tools to assess risk and measure safety performance.
The paper cites two previous studies, a National Energy Board review of Arctic drilling that was released last year and a report issued this past June by the Organization for Economic Co-operation and Development.
While both were released before the scathing report into the Kalamazoo spill, and neither mention Enbridge by name, the papers raised concerns about safety problems throughout the industry, which is expected to be a dominant factor in the debate for the Northern Gateway proposal.
The earlier reports looked at accidents within the industry and concluded safety policies and procedures were often not implemented, safety performance was not adequately measured and companies lacked a "safety culture."
The newly released paper then poses a number of questions for companies to consider in advance of the forum, many focusing on how the industry and its regulators can improve the safety of oil and gas developments and how best to ensure the industry is held accountable when things go wrong.
Roger McKnight, an energy analyst with Oshawa-based En-Pro International Inc., said a critical examination of pipeline safety during the Northern Gateway review will increase scrutiny on Enbridge, though he questioned the wisdom of holding a forum on the topic after the review panel has finished its work.
"I think they got the cart before the horse — maybe they should have had this forum before this whole (Northern Gateway) thing started going," McKnight said in an interview.
McKnight acknowledged there have been some high-profile incidents within the industry, but he also noted there are thousands of kilometres of pipelines across North America.
The issue of pipeline safety, and specifically Enbridge's safety record, is central to the debate over the Northern Gateway project.
Environmentalists, First Nations and the political opposition in B.C. have long pointed to potential environmental risks of a spill, either along the pipeline route or from a tanker off the B.C. coast, as a reason to reject the Northern Gateway plan.
B.C.'s Liberal government eventually raised the same concerns, with Premier Christy Clark issuing a list of demands that must be met before she would be prepared to offer her support.
Clark's demands include assurances that Enbridge has sufficient plans to prevent and respond to a spill and that First Nations are properly involved.
Her most controversial demand is that B.C. receive a "fair share" of the economic benefits from the pipeline — a request that Alberta's premier, Alison Redford, has steadfastly rejected.