Sunday, November 11, 2012

Enbridge, the Storyteller & The Breaking of the Social Contract

Enbridge's Al Monaco - The Storyteller

Just read Nathan Vanderklippe's interview with Al Monaco, CEO of Enbridge Inc., in Saturday's Globe & Mail.

Extracts from the interview:


Al Monaco pauses, for a moment, to apologize.

"Do you mind," he says, "if I spend a minute on this?"

He jumps out of his seat, swings open the doors on a wall-mounted whiteboard and begins to scribble...

There is plenty for Mr. Monaco to talk about. But first, splitting the whiteboard into two columns, he begins to sketch out how he sees the world. It's a personal mission statement - or, if you like, a manifesto, in bullet points.

Monaco outlines his view of the new energy world:

"You've got a few unassailable facts," he says. Canada is highly dependent on exports. Oil makes up 15 per cent of those exports - "so that's one fact." But those exports are all aimed at a place that wants fewer and fewer of them. "What you've got is declining U.S. consumption," he says...
  
"I'm not telling you anything you don't know here," Mr. Monaco says. "But I'm trying to build a story." ...

He turns to the second column, and begins to fill it with words like "consultation." These are his keys to unlocking the first column.

"The business environment is different today," he says. "What stakeholders want is not just the economic value of capital investment. They want you to build and develop energy on a sustainable basis." Because, he says, "it's not just about the money."

He addresses the opposition to the Northern Gateway project:

Which leads to an obvious question: Northern Gateway, in particular, is ripe with opportunities for things to go wrong. Even if it gains regulatory approval, it's certain to be legally challenged and then, in all likelihood, confronted by protesters chaining themselves to equipment.

"So basically, what you're asking is - why bother with the project?" he says. "Let's look at it this way: what if we didn't do the project? We'd be letting down our customers. We'd be letting down the provincial governments. We'd be letting down the federal government. I think we'd actually let down all Canadians."

And he says Enbridge wants to form "partnerships"with stakeholders:

In any case, as Enbridge looks to the future, it intends to start speaking sooner with people along its routes, and Mr. Monaco talks about treating projects like "partnerships" with those whose land Enbridge has long dug up, and occasionally expropriated, to build pipelines. He wants more local workers to carry the company flag: "Our best ambassadors are our employees that live in the communities," he says.

As for Gateway, he doesn't have a ready answer. There may be a Supreme Court battle. There may be protesters. But he intends to press on. "Look," he says, "if it takes longer, it takes longer."

Monaco's key concepts:

These are the key concepts I took away from the Monaco interview: unassailable facts; stakeholders; consultation; and partnership.

But what was missing from this interview were a few other "unassailable facts". Unless Enbridge comes to grips with these unassailable facts, its Northern Gateway project is doomed to failure, as are other attempts to lay pipe westwards.

Chunking the Problem:

A key way to solve any problem is to break it down into several major chunks, and deal with each in turn. And each such major chunk needs to be further chunkized, into smaller chunks, so that they too can be dealt with.

The problem of digging up the tar sands, and moving the heavy oil through pipelines and tankers to thirsty energy markets, can be broken down into the following major chunks:

1.      The oil industry (and fossil fuel industry in general) has broken the social contract with the citizens of America and Canada.

2.     In Canada, the federal government and the provincial governments of Alberta and B.C. have broken the social contract with the citizens of Canada.

3.     The tar sands project must be dealt with in a holistic way: from tar sands in the ground, to its transportation, to the use of tankers to ship it to buyers.

Each one of these chunks has to be dealt with. Each chunk is an "unassailable fact".

The Monaco interview does not show Enbridge dealing with several of these major chunks. 

Unless it does, the Enbridge story will fall on deaf ears.

The breaching of the social contract between the fossil fuel industry and citizens:

The oil industry had its "Katrina moment" with the oil spillage by BP in the Gulf of Mexico, and not yet recovered from that.

BP – seen by Americans as representative of the whole oil industry – breached the social contract with the American citizens through its handling of the spill.

That social contract consisted of a simple agreement: BP and other oil companies could enter lands belonging to America's citizens and drill for and extract oil from those lands, provided that it exercised the utmost good faith in doing so. In legal terms, this is the duty of uberrima fides.

BP showed incredible ineptitude in its actual drilling of the well, and a pattern of obfuscation, disinformation and deceit in its handling of the spill.

For day after relentless day, week after relentless week, month after relentless month, the Gulf spill revealed an oil giant blundering through a self-created problem, covering its tracks, being found out, and then trying another tack to escape responsibility.

But ordinary Americans watched this debacle each day on television, watched BP spokespersons present their story of what was happening, and formed their own conclusions: BP did not act with the utmost good faith in dealing with the property of the American citizens.

This breach of that social contract simply means that each and every oil company now bears the burden to prove beyond any reasonable doubt that it is acting in utmost good faith when it encroaches upon or develops property belonging to the citizens.

This is the standard of care that Enbridge has to display with its planning for, explanation of, and execution of the Northern Gateway project. Business as usual does not meet this higher standard, and will not repair the broken social contract. It is not at all clear from the Monaco interview that he understands this.

The breaching of the social  contract between the three governments and Canadian citizens:

These three levels of government are the stewards of the public propery that rightfully belongs to the citizens of Canada. As stewards, their responsibility is to act with the utmost good faith, as part of the social contract between the governments and the governed.

All three levels have failed this test with regard to the development of the tar sands.

The social contract between Canadians and their governments covers not only the exercise of utmost good faith in the stewardship of public lands, but also the taking of necessary steps to combat global warming by addressing the issue of the greenhouse gas emissions from the tar sands.

The Harper government has failed to address the emissions posed by developing the tar sands in any meaningful way, due to its small-state ideological mindset. Instead, it has focused on trying to achieve "efficiency" in the planning and approval process of tar sands and pipeline projects, as the highest good.

The two provincial  governments have failed because they have reduced the  discussion mostly to a dog in a manger fight over the the sharing of the royalties bone.

All three governments have failed to address the need to reduce total greenhouse gas emissions through the upgrading within Canada of the heavy oil from the tar sands.

The holistic treatment of the tar sands oil:

The three governments have failed to deal with all the aspects of the development of and transportation of the tar sands heavy oil. They have dealt with parts only, but failed to deal with it as a seamless project. This has allowed the participants in parts of the overall project to wash their hands of responsibility for parts they are not party to.

For example, developing tar sands and moving them by tanker from the B.C. coast clearly is part of the overall project; however, pipeline companies are on record as saying that they are not responsible for the problems posed by a tanker spilling heavy oil into the sea and damaging wildlife, the coast and livelihoods.

Any competent government would have insisted on such a holistic treatment of the tar sand oil, as part of its duty of stewardship on behalf of its citizens. And as part of this, such a competent government would have laid down clear principles governing each and every part of the holistic project, aimed at protecting the citizens first and foremost. This has not been done.

The inevitable reaction is now seen.

There is a threat by some First Nations to barricade pipeline routes even if the current government system of regulatory approval is complied with.

There is a threat by the provincial NDP to terminate the current agreement with the federal government to allow one approval process to take place for pipelines crossing B.C., and to take back that approval so that the province can make sure that its concerns about the whole project are addressed.

And there is the threat by the mayor of Vancouver, Gregor Robertson, to use the permitting powers of a municipality to insist that any oil project within the city's boundaries carry sufficient insurance to cover the costs of a catastrophic oil spill that damages miles of pristine coastline and harms local livelihoods.

These are things that happen when social contracts with citizens are breached.

Some further hints for Enbridge:

Enbridge will need to widen its definition of the stakeholders in the Northern Gateway project to include those who would be affected by any spillage of oil from a tanker off the coast of B.C. Such a risk is an integral part of the holistic tar sands development, and dealing with that risk is part of the burden of all parties involved in the tar sands, not just the tanker companies.

Enbridge will also need to widen its definition of the "partnership" Monaco talks about to much more than the "limited partnership" concept currently favoured by most oil companies. For example, a "full partnership" extends far beyond an oil company simply providing for jobs for the First Nations during the construction and operation of a new pipeline.

Enbridge will also need to deal with what steps need to  be taken to reduce the greenhouse gas emissions of the oil from the tar sands, both during the extraction process and during the use of the oil by the ultimate buyers.

One way for Enbridge to do this is to reconsider who gets what from the pipeline. It can insist on its current plans, in which case Enbridge will most likely earn 100% of nothing.

Or it can decide to take 80% of something, and gift the remaining 20% - split equally – to the First Nations, for their use, and to reduce greenhouse gas emissions and build alternatives to the use of fossil fuel energy (green energy).

The choice is Enbridge's.

3 comments :

  1. You've got it. Fabulous.
    The idea that a public resource is privatized for it's stakeholders is one of the most insidious and destructive forces. Corporations work for their stakeholders and fail if they do not make decisions for the benefit of those stakeholders. But oceans and air and water and forests are not for corporations' stakeholders. They are for the common good - we all hold a stake in their protection. But Enbridge doesn't include the public as a stakeholder; it's a private company. And there lies the destructive force that must be opposed. If we privatize oil, we privatize water and then we're lost.
    Thanks again!

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  2. What nonsense falls from the lips of these vultures.. and to think that our so called 'government' parrot squawk birds drool-excrete the same sanctimonious economic dreary theory. Why not cut to the chase and admit the theory and oily in situ lack of ethics are based on their stock options and related portfolios.. and dreams of multiple board of directorships.

    Brilliant analysis and essay .. should be required reading, front page of mainstream media and in schools, legislature.. keep up the incredible work !

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