Power, Wealth, and Responsibility –Enbridge

On 13 February 1947, the Imperial Oil Company found crude oil at its Leduc #1 well, about 15 km west of Edmonton. The Leduc well began Alberta’s oil industry. However, finding crude oil was only the first step for it still needed to be transported to refineries to turn it into useable products.

Two years later, Imperial Oil created the Interprovincial Pipe Line Company (IPL). Its first pipeline cost $73 million to construct and, in October 1950, began transporting crude oil from Edmonton to Superior, Wisconsin. Within a year, the company had transported 30.6 million barrels of oil. In 1953, a new pipeline, Line 5, was constructed from Superior to refineries in Sarnia, Ontario, allowing Alberta oil to supply Ontario’s growing manufacturing base. Throughout the 1950s and 1960s, IPL and its American subsidiary, the Lakehead Pipe Line Company, built more pipelines that connected additional American cities including Buffalo, Chicago and Detroit.

The company also expanded in Canada. In 1972, IPL pipelines were transporting an over 1 million barrels of crude oil per day across North America. In June 1976, after an expenditure of $247 million, a pipeline transported Alberta oil to Montréal. In April 1985, IPL pipelines connected the oilfields at Norman Wells, Northwest Territories, to its pipelines in Zama, Alberta, and, through that junction, across Canada and into the United States.

In 1988, IPL changed its name to Interhome Energy Inc. The company expanded in 1994 when it purchased Consumers’ Gas. It was soon transporting natural gas from its sources and distributing it directly to businesses and homes. About this time, the company’s name changed to IPL Energy Inc. The company’s operations expanded internationally with the acquisition of a pipeline in Colombia. By the summer of 1996, its 829 km OCENSA pipeline was transporting crude oil from the Cusiana and Cupiagua fields in central Colombia to its west coast.

Enbridge Created

In 1998, IPL changed its name to Enbridge Inc. The name refers to what the company does by linking the words energy and bridge. Shortly afterward, Enbridge became involved with the exploitation of the Athabasca oil sands in northern Alberta, near Fort McMurray. The difficult process of extracting crude oil from the area by processing it from the rock and soil in which it rests began in 1964. By the 1990s, the oil sands promised to be North America’s largest depository of crude oil. By 1999, Enbridge had built one long-haul pipeline connecting the oil sands to its existing pipelines in Edmonton and Hardisty, Alberta, and, through them, to other parts of Canada and to the United States.

Question of Power - Enbridge

In 1999, Enbridge developed a natural gas distribution network into New Brunswick. Its 2001 purchase of Houston’s Midcoast Energy Resources was followed by a further expansion of its American natural gas distribution network. In 2005, Enbridge acquired Shell Gas Transmission LLC, including ownership interests in 11 natural gas pipelines in 5 offshore Gulf of Mexico pipeline corridors.

Beginning in 2001, Enbridge began to invest in sources of renewable energy. It invested in Saskatchewan’s SunBridge wind power project and by 2012 was involved with 10 wind farms, 4 solar energy operations, 4 waste heat recovery programs, and a geothermal energy project — all representing a $5-billion investment. At the same time, Enbridge altered many of its practices with the goal of becoming more environmentally responsible. It was subsequently listed as one of the world’s most sustainable companies eight years in a row. In 2016, American magazine Newsweek ranked Enbridge the world’s 12th most sustainable corporation.

Controversy

While pipelines play an essential role in the transportation of crude oil and natural gas from their sources to refineries and then to customers, they are controversial because they sometimes break, resulting in leaks onto land and into water. Several Enbridge lines have suffered spills. In 2017, the Great Lakes Region of the National Wildlife Federation (NWF) stated that Enbridge’s aging Line 5 — linking Superior, Wisconsin, and Sarnia, Ontario — had experienced 29 leaks between 1968 and 2015, resulting in the spilling of over 1 million gallons of oil and gas liquids in 64 years. The NWF insisted that the leaks threatened the water supply of more than 40 million people.

In 2005, Enbridge signed a deal with PetroChina stipulating that it would purchase oil from Alberta’s oil sands. A 1,172 km pipeline would bring the crude from northern Alberta to the small, northern British Columbia port of Kitimat. The pipeline’s construction would cost $6.6 billion and be called the Northern Gateway. The project was immediately opposed by environmental groups who worried about spills along the route and in the harbour and along the coast. Several First Nations communities objected to the pipeline crossing their land.

Meanwhile, Enbridge initiated government approval processes to rebuild and expand its aging 1,659 km Line 3 that took crude oil from Hardisty, Alberta, to Superior, Wisconsin. The $7.5-billion project proposed to fix problems, render the pipeline safer and increase its volume to allow the transportation of 760,000 barrels a day. Objections were raised by environmental protection groups and communities through which the pipeline ran, including many Indigenous communities.

The Northern Gateway and Line 3 proposals led to fiery public hearings and long, complex submissions to the Canadian government’s National Energy Board, the body responsible for issuing the necessary licences to proceed. Enbridge admitted, with respect to both projects, that there is always “residual risk” but promised to take all necessary precautions to mitigate them. It pledged, for example, to use tethered tugboats to pull big oil tankers out of the Kitimat harbour and through the Douglas Channel, to employ new radar and other navigation aids, and to enforce strict rules about the quality of ships that would be allowed to transport the oil.

In July 2010, Enbridge’s pipeline in Marshall Township, Michigan, ruptured, dumping 20,000 barrels of oil in the Kalamazoo River watershed. The US National Transportation Safety Board investigated the spill and accused Enbridge of lax safety standards, made worse by the fact that the company’s monitoring stations had been between shifts when the rupture happened so that no one was watching the line. Enbridge promised to make changes, but the damage was done to the environment, to people of the area and to the company’s reputation.

In November 2016, the Canadian government announced that it would not approve the Northern Gateway project. Prime Minister Justin Trudeau said that he was approving a proposal put forth by Enbridge’s competitor, Kinder Morgan Energy Partners, to build a pipeline from Alberta to a bigger and more southern British Columbia port. Trudeau said of Enbridge’s Northern Gateway: “It has become clear that this project is not in the best interest of the local affected communities, including Indigenous peoples.” Trudeau also announced that the government approved Enbridge’s Line 3 rebuild.

Continued Growth 

In September 2016, Enbridge had purchased Spectra Energy Corporation of Houston, Texas, for $37 billion. The move increased Enbridge’s value to $166 billion and made it North America’s largest energy infrastructure company. Enbridge was restructured with its natural gas pipeline business run from Houston, its liquid pipeline business from Edmonton and its headquarters remaining in Calgary. The move also meant that Enbridge laid off about 1,000 employees. The layoffs, potential for tax savings, and capacity for more growth in Canada and the United States increased Enbridge’s stock price and dividends for investors.

In November 2017, Enbridge filed an application with the Ontario Energy Board to amalgamate with Union Gas. Enbridge stated that the merger of the two natural gas distribution companies would allow a more efficient distribution to customers. Critics said it would create a monopoly that would allow Enbridge too much power to control distribution and prices.

The questions surrounding the amalgamation were the same as had been asked for years regarding balancing a return on shareholder investment, consumer rights, the power of government to regulate, and environmental responsibility.

This column is my latest entry in the Canadian Encyclopedia which is a great source of information on all things Canadian.

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Redemption Earned and Denied

Every novel, play, movie, and TV episode is the same. From Gilgamesh to Game of Thrones they all have three parts. The first act introduces the protagonist and the major conflict he needs to address. The second finds him torn down by difficulties he either creates himself or has visited upon him. The protagonist digs deep into his psyche, revisits what truly matters, recommits to that in which he once believed, and reinvents himself. If the work is done sincerely and well, the third act finds him stronger than ever, at one with his true self, and with redemption earned. The cowboy rides into the sunset, lovers gaze into each other’s eyes, and the mother and child hug as the last page is turned, the curtain falls, or the screen fades to black.

American novelist F. Scott Fitzgerald wrote in The Last Tycoon, “There are no second acts in American lives.” He was suggesting that Americans want to avoid the hard work of existential angst and introspection. Instead, they seek short cuts from the first to third acts. Fitzgerald observed, “The tragedy of these men was that nothing in their lives had really bitten deep at all.” They want rewards without cost, rights without responsibilities, and redemption without reflection.

Sadly, too many examples afford credence to Fitzgerald’s observation. Consider Richard Nixon. He used dirty tricks to win the presidency in 1968 and again 1972. He then illegally spied upon and attacked enemies whom he considered anyone who disagreed with him or his worldview. He treated questions as disloyalty, senior staff as attack dogs, the constitution as an annoyance, and those he was there to serve as saps. Watergate was unique only because he got caught.

After resigning in disgrace, he tried to ignite his third act by writing a number of books but it didn’t work. In interviews and his memoirs, he admitted mistakes and regret for having let Americans down but insisted that Watergate was simply a low rent burglary that should never have destroyed a presidency. He could never admit that it was never really about the break in. Rather, the scandal centred upon the clumsy attempts to cover up and manage mistakes, his reckless disrespect for political culture and proper process, and his flaunting of the spirit as much as the letter of the law.

Americans instinctively recognized that Nixon was attempting to pull a Fitzgerald and skip from acts one to three. They had none of it. They have still not forgiven him. For Richard Nixon, there has been no redemption.

Redemption has no shortcuts. This is a tough truth. We have all done something for which we feel regret and perhaps shame. To move forward there is simply no option save entering the dark and difficult second act and then demonstrating, not just talking about, fundamental change. In January 2011, Dr. Alex Lickerman wrote in Psychology Today, “We must fully recognize that we’ve done wrong; fully accept responsibility for having done it; determine never to do it again; apologize to those we’ve done it to (if appropriate); and resolve to aim at improving ourselves in the general direction of good.”

We can’t say we’re sorry if we don’t really mean it and it won’t matter anyway if we can’t or won’t change. We can’t fool others and, in the end, we can’t fool ourselves. After all, if a faulty steering wheel put us in the ditch, then saying sorry without fixing the wheel will have us off the road again in no time. We become childhood’s refugees, blaming colleagues, bosses, staff, parents, spouses, the stars, an interfering or absent God, and anything and anyone but ourselves. Our families, organizations, or companies, unfortunately and unfairly, pay the highest price for our obstinacy. In such circumstances we deserve to be removed from the driver’s seat through dismissal, divorce, social exile, or, in Nixon’s case, resignation.

For what it’s worth, I think Fitzgerald was wrong. I sincerely believe that most of us are willing and capable of undertaking a second act journey. Right now there are many among us struggling to rescue relationships, marriages, leadership positions, and ultimately themselves. Celebrate them. But watch warily. Those willing to do the work with humility and sincerity, and who are of sufficiently sound moral rectitude, will find old enablers and habits gone but ultimately see second act efforts rewarded with forgiveness earned and redemption deserved.

May we live and work with these people. May we be these people.

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Loyalty Tarnished, Tested, and True

Abraham Lincoln knew there would be a war and wanted America’s best officer to lead his army. He wanted Robert E. Lee. Lee was offered the post but demurred. He packed up his family, left his beloved Arlington, on a Virginia hillside overlooking Washington D.C., and rode south to offer himself to the newly formed Confederate States of America. He had decided that although he despised slavery, the issue that spurred the founding of the Confederacy in the first place, and that he had sworn an oath to the United States, his loyalty lay more with his state than his country. Lee’s decision should give us pause.

Loyalty is perhaps an old fashioned and certainly a tarnished concept. Consider that Liverpool soccer player Mario Balotelli was just awarded a six-figure Loyalty Bonus to remain with his team for the rest of the season. It is interesting because he is being paid £80,000 a week and is in the middle of his contract. Loyalty Bonuses are becoming increasingly common in professional sport.

Customer loyalty is big business. Ten years ago, a ground-breaking study done by Earl Sasser, of the Harvard Business School, determined that acquiring new customers cost a great deal but is worth the effort and expense if followed by strategies to keep them. Sasser concluded that if only 5% of new customers stay customers – remain loyal – then net profits can increase from 25% to an astounding 95%. His conclusions led to waves of ploys to win customer loyalty. They became more intense with the growth of e-commerce. His conclusions were proven valid when company after company reported the value of swallowing early losses for the long-term profits of loyal online customers.

Schools know Sasser. I graduated from McMaster University a long time ago and they have been sending me magazines, letters, push-page newsletters, and emails ever since. In a moment of generosity, or soft surrender, I once sent them a $100 cheque to help with a library renovation project – a piddling amount, but no matter. They upped their game and sent me mountains of appeals and even phone calls from earnest young folks who always start by encouraging me to reminisce and end with a request for money. They’ve spent way more than I gave them!

All colleges, universities, and private schools are part of the Sasser game. They all have Sasser loyalty departments flimsily disguised as alumni affairs, constituent relations, parent councils, trustee boards, or whatever other euphemisms they contrive. Good on them.

Loyalty

(Photo: http://www.linkedin.com)

My grandfather was loyal to the steel plant in which he worked for 42 years and it was loyal to him. Those days of reciprocal loyalty appear to be over. In just about any workplace, be it an office, factory, or school, Robert E. Lee’s conundrum of divided loyalty is played out every day. What happens when a decision tests a CEO’s loyalty to the Board to which she reports, those she employs, customers she serves, and shareholder’s dividends? Can she muster the ethical fortitude to take a stand on where her loyalty should rest? What happens to middle managers when a CEO’s decisions violate established policies or threaten an organization’s values, culture, and customer loyalty? Will their loyalty rest with the leader or company? Will they summon the courage to fight for right or demonstrate character and walk away?

According to the Journal of Psychology, loyalty among today’s workers no longer depends on the old motivators of money, office, or title. Workers will walk, wilt, or revolt if loyalty is not shown through the trust of genuine autonomy, professional development they design or find, and an environment in which their voices are actually heard and sincerely respected without fear of reprisal or pandering.

An organization that fails to understand and live loyalty will flounder. Loyalty dies because one-way loyalty cannot live. People will only be loyal to someone whose loyalty to them is always demonstrated and never questioned. If loyalty is sacrificed for a quick buck, quick fix, or even the best of intentions it becomes a burned bridge that is tough to rebuild, especially by those found holding the matches.

Perhaps loyalty is old fashioned. It is certainly tarnished and it is tested every day. Maybe things have become so bad that loyalty is now a commodity that can be bought, wheedled, or ignored. I hope not. Maybe we would be well served to pause and consider where our loyalties truly lay. The exercise might reveal that loyalty is not so hard or old fashioned after all.

My loyalty rests with leaders who earn it, ideas that stand scrutiny, friends who offer compassion, companies that provide value, and institutions that live their stated values. The loyalty I feel most deeply is to loved ones who gently but constantly remind me that, in the end, they are all that truly matters.

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