VANCOUVER - The National Energy Board says it will increase safety audits on Enbridge (TSX:ENB) in the coming months based on a damning report into the company's conduct before and after a spill from one of the Calgary-based company's pipelines in Michigan.
Board chairman Gaetan Caron issued a public letter on the board's website noting that the federal regulatory body has reviewed the U.S. National Transportation Safety Board's report into the massive spill into Michigan's Kalamazoo River in 2010.
In the letter, Caron said the board will thoroughly review the U.S. agency's report, but in the meantime, the board has been reviewing Enbridge's management practices.
"In the next weeks and months, we will be conducting safety audits to review and confirm that improvements, particularly to their control room practices in Edmonton, are satisfactory," Caron wrote.
In a letter to company CEO Patrick Daniel dated July 26, the board advised that it plans to inspect the company's Edmonton control room on Aug. 8 and 9 and discuss implementation of onshore pipeline regulations.
The complete U.S. transportation board report will be available in several weeks, it noted, and findings may prompt additional follow-up compliance activities.
The investigation into the Michigan spill has focused unwanted attention on Enbridge as it champions a 1,177-kilometre pipeline that would deliver crude from Alberta's oilsands to tankers in Kitimat, B.C., for shipment to Asia.
In recent years, the National Energy Board has conducted approximately 25 compliance checks per year on every aspect of Enbridge's management system and imposed two precautionary pressure restrictions on Enbridge pipelines, both of which remain in effect.
In June 2011, the board issued a restriction on Enbridge's Norman Wells to Zama pipeline, noting that the company initially reported that approximately four barrels of oil were released in a pipeline leak near Wrigley, N.W.T., on May 20 of that year, but ultimately revised that to up to 1,500 barrels.
The order also admonished Enbridge for its communication with the local community over that spill.
But nothing issued so far by the federal regulatory agency has come close to the scathing preliminary report by the U.S. transportation safety board, which likened Enbridge's response to the Kalamazoo spill to "Keystone Kops," saying the company missed opportunities to prevent the 2010 spill and then bungled the response.
Three million litres of crude leaked into the river.
Another spill last week from the company's Line 14 pipeline running through Grand Marsh, Wis., dumped roughly 1,200 barrels of oil into a field that is part of the pipeline right-of-way.
In recent years the company and its subsidiaries have been fined tens of thousands of dollars by the U.S. Environmental Protection Agency.
B.C. Environment Minister Terry Lake announced Thursday the provincial government will take the opportunity as an intervenor to ask some tough questions of the company when federal environmental review hearings resume this fall.
Lake said the government wants to know more about the increased safety measures Enbridge recently announced it would take to prevent a spill, and more details about how much liability Enbridge and its partners will take on in the event of an oil spill.
Last month, the province announced it could only support the pipeline project if it met five criteria, including a greater portion of the economic benefits and assurances that the "best" responses will be available for potential spills on land and at sea.
"We know that you can't reduce the risk to zero. What we're saying is that we think you can develop resources in British Columbia in a sustainable way," Lake told reporters in Vancouver.
"We need evidence to show that you can reduce the risk to an acceptable level. That is entirely separate from the fair share of fiscal benefits, because there is no price that is worth taking a risk with the environment, whether it's on the coast or the land."
Lake said it's up to Enbridge to convince British Columbians that they have acceptable safety measures in place.
The province is looking at other jurisdictions around the world, including Norway and Alaska, to see what kind of measures and regulatory processes are in place to prevent spills, or failing that, to ensure companies pay for the clean-up.
Ultimately, critics say the greatest risk from the project lies offshore in the oil-laden super-tankers that will be traversing the Pacific, and that is federal jurisdiction. And the Conservative government has made no secret of its support for the project.
Lake said he's met with the federal environment and fisheries ministers to outline provincial concerns.
"We're at the early stages of this, so I suspect that those discussions will take place," he told reporters. "They just have to take place. These are conditions that we've laid down as mandatory for us to consider this, so those things will have to occur."
Enbridge chief executive Patrick Daniel is confident the company can meet all of the safety demands by the B.C. government.
"We feel absolutely confident that we can do that," Daniel said during a conference call Thursday to discuss the company's latest quarterly results.
Environmental review hearings are set to resume this fall, and final arguments in the process are scheduled for March and April next year.