Energy firms urged to better engage public
Industry enjoying ‘upstream confidence’, but pipeline constraints could choke opportunities, says Enbridge CEO
JESSE SNYDER, FINANCIAL POST 03.06.2017
Al Monaco, president and chief executive officer of Enbridge Inc., speaks during the 2017 IHS CERAWeek conference in Houston, Texas, U.S., on Monday, March 6, 2017. CERAWeek gathers energy industry leaders, experts, government officials and policymakers, leaders from the technology, financial, and industrial communities toprovide new insights and critically-important dialogue on energy markets.
HOUSTON, TX. — Pipeline companies need to get better at communicating with local communities, the chief executive of Canada’s largest midstream company said Monday, as major new infrastructure projects continue to be snarled in regulatory delays.
“Industry needs to up its game,” Enbridge Inc. CEO Al Monaco told a large gathering of oil and gas professionals attending the IHS CERA week in Houston Monday.
“We’re not whining about what’s happening, but we do need to get better when it comes to developing and executing projects.”
Monaco’s comments come after a number of major pipeline projects in Canada were recently approved, including Kinder Morgan Inc.’s Trans Mountain expansion and Enbridge’s Line 3 replacement. TransCanada Corp.’s Keystone XL proposal to the U.S. Gulf Coast was also revived recently after President Donald Trump signed an executive order urging the project forward.
However, public discontent with pipeline expansions continues to plague pipeline expansion plans, with many environmental groups and local residents promising to block the construction of those proposals.
Monaco said that pipeline companies need to improve their consultations with stakeholders of all kinds, including local communities, to better communicate their ideas and hear the criticisms of those who are wary of fossil fuel development.
“It’s this ‘how’ to do things that’s critical moving from, let’s call it consultation, to actually listening and carefully responding to peoples’ concerns,” he said.
There was a tinge of irony to the comments, which were addressed toward an exclusive group of oil and gas industry members. The industry has long been criticized for its insularity and lackluster communication strategy with the public. In recent years, however, pipeline companies have spent much time and capital on public relations efforts.
The Northern Gateway Pipeline, a proposal that would have transported heavy oil from Alberta to the B.C. West Coast, was rejected in late 2016 by Canadian Prime Minister Justin Trudeau.
First Nations along the proposed route of the project said early-stage consultations weren’t adequate to account for their concerns.
Monaco’s comments come amid a general feeling of optimism among the industry members gathered, despite a decidedly miserable and rainy day outside. It is a stark contrast from the gloomy atmosphere of the last few years of the annual event, which is one of the highest-profile energy events in the world.
The Trans-Alaska Pipeline System, which we call TAPS, that crosses three mountain ranges, 34 rivers, and hundreds of small streams, I think there’s a lot of positive energy here such a despairing message,” said Daniel Sullivan, a Republican Senator representing Alaska.
Much of that optimism is tied to the resilience of light, tight oil producers in the U.S., who have proven among the lowest cost operators in the market.
However, opposition to infrastructure expansion remains a concern among U.S.-focused producers, who are eager to ease an ongoing pipeline bottleneck.
“I’m glad to see the focus we’re putting on it,” said Exxon Mobil Corp. CEO Darren Woods.
The company has refocused much of its spending on the Permian Basin in northwest Texas and southeast New Mexico, located just a short distance from where industry members are gathered in Houston.
Monaco said the “dynamics of continental energy transportation are changing” as new supplies of oil and gas are being opened up in Canada and the U.S., mostly due to the use of a combination of horizontal drilling and multi-stage fracking processes over the past 15-odd years.
“There is a building momentum in our industry,” Monaco said.
As a result of lower oil prices, companies are also beginning to trim back operation costs to remain competitive with overseas producers, he said.
“It’s really about upstream confidence.”
However, Monaco warned that a failure to build pipeline projects would handicap producers in North America, which have the opportunity to be among the most competitive oil producers.
“We’re going to miss global export opportunities.”