A “Keystone Kops” fiasco is the expression used by Debbie Hersman, Chairperson of the US National Transportation Safety Board (NTSB), to describe “Enbridge’s poor handling” of their huge oil spill in Michigan’s Kalamazoo River on July 10, 2010. Indeed, the whole matter would have been a comedy of errors had the spill been something innocuous. It wasn’t. It was more than 3 million litres of “dilbit”, a thick goo from Alberta’s tar sands diluted with solvent to make it fluid enough to move through pipelines.

Enbridge handled the spill like true comedians, a routine they had apparently been perfecting since 2004. In that year, they detected corrosion in the pipe that eventually burst but “took advantage” of lax regulations and failed to do repairs. In 2005, they identified 1.3 metres of cracking in the same area but again neglected repairs — when profit is more important than safety, why repair what isn’t yet broken?
When the pipe did rupture on July 10th, a full 17 hours and 19 minutes lapsed before they shut off the oil. This time delay represented three shifts of employees, none of whom seemed to pay attention to the alarms — unbelievably, they pumped additional oil into the pipeline twice to compensate for the drop in pressure. Even then, it took someone from a natural gas company to advise them they had oil gushing into the Kalamazoo River.

The senior vice president of operations at Enbridge, Leon Zupan, testified to the NTSB, “[W]e had people that were really trying hard to do what they thought was the right thing, but they needed more technical support, they needed more management support, they needed more technical training, and they needed to be clear about what our expectations were in terms of following procedure…. [I]t’s clear to us we could have done more to train and support those people.” Obviously, no one had a clue about what they were doing. Enbridge’s clean-up costs on the Kalamazoo River are currently at more than $800 million.
And this is the company that wants to build the 1,172 km Northern Gateway pipeline from Alberta to BC’s coast, through some of the most remote, wild and difficult terrain on the planet.

Enbridge’s competence in promoting oil pipelines, however, may far exceed their ability to prevent spills. Their warm and reassuring advertisements are peppering the media with images of pristine scenes of wilderness just waiting to be made useful by corporate kindness. “Where energy meets nature” is one comforting theme. For anyone worried about the effect a pipeline might have on nature, Enbridge makes the lavish promise that, “We will plant a tree for every tree we remove.” And for anyone dubious about such lofty intentions, Enbridge is quick to remind the doubtful reader that, “It’s a bold promise,” they boast, “but one that will play an integral role for our company into the future.” And if that doesn’t convert the cynic, be assured that, “It’s commitments like this that will help ensure that future generations continue to enjoy our natural spaces.”

But Robyn Allan, a noted Canadian economist, in her analysis of Enbridge’s Northern Gateway project, has some insights that deserve serious consideration. The environmental damage from inevitable spills is self-evident. The damning report by the NTSB on Michigan’s Kalamazoo River spill highlights Enbridge’s systemic ineptitude and cavalier attitude about safety. And, in an earlier analysis, Allan concluded that the Northern Gateway project will shift Western Canada’s oil pricing structure from the lower West Texas Intermediate to the higher world market Brent structure, adding $2-3 to the cost of each barrel of oil. But Allan recently identified a less obvious example of corporate cunning.

The Northern Gateway project, she contends, is designed as a separate corporate entity to be entirely independent of Enbridge. As such, Enbridge would not be responsible for any environmental damage accruing from a Northern Gateway pipeline spill. Unlike the Kalamazoo spill, in which the wealthy corporate body of Enbridge must assume liability for the damage, the cost of the damage from a Northern Gateway spill would be limited by the assets of only that single legal entity. It has no value beyond itself. If Northern Gateway causes a spill and is shut down because of safety concerns, its value disappears, and its ability to make restitution evaporates like the solvent in the oily goop that would be despoiling BC’s wilderness.

If Allan’s analysis of this corporate structure is correct, then Enbridge is a bit smarter than the “Keystone Kops” and BC has yet another reason to doubt the wisdom of allowing the construction of the Northern Gateway pipeline.