Enbridge gears up spill PR campaign

Enbridge chief executive officer Pat Daniel is personally spearheading the company's efforts to restore its reputation among residents affected by its Michigan oil spill and, as importantly for the company, among regulators who have so much sway over its operations.

Mr. Daniel has been meeting with residents in the Battle Creek area to assure them the Calgary-based company will compensate them for all their costs and damages, and has hosted daily news conferences on the cleanup operation.

His effort - along with the mobilization of a small army of workers - appears to be paying some dividends. At the beginning of the week, Michigan Governor Jennifer Granholm criticized Enbridge's early response to the leak as "anemic." By Friday, she was praising the aggressive efforts of Enbridge and the U.S. Environmental Protection Agency (EPA).

"I think they've done a pretty good job from a public relations point of view," said David Waymire, a partner in Martin Waymire Advocacy Communications, which works with energy companies in the state.

"They've been pretty open with people; they've had the CEO involved early on - following classic crisis management advice - and they've stepped up and said they'd cover all the costs."

After Enbridge confirmed the leak late Monday morning, Mr. Daniel immediately boarded a plane, arriving Monday afternoon to supervise the response. The company enlisted Hill & Knowlton to provide communications advice. Among other things, the company established a website to inform local residents and the media about its efforts to contain the oil spill, and offer assistance to people affected.

"It's about communications, communications, communications," said D'Arcy Levesque, Enbridge's vice-president of public affairs. "People have been impacted and are upset, and we need to provide factual information about what we are doing to respond."

Enbridge also faces hefty cleanup costs, which have yet to be tallied. One analyst suggested the cost could reach $40-million (U.S.) - a relative minor hiccup for a company that made a profit of $1.56-billion in 2009.

Still, industry observers suggest the high-profile spill could contribute to a tighter and more costly regulatory system, which was already brewing under the Democratic administration of President Barack Obama. EPA administrator Lisa Jackson was in Michigan on Friday and toured the affected area with Ms. Granholm.

"In itself, the Enbridge spill is not likely to cause any regulatory response," said William Walsh, a Washington-based partner with Pepper Hamilton LLP law firm. "But it will give additional impetus to those in the administration who argue for a more stringent approach."

Mr. Waymire, the PR consultant, said the oil leak may also affect the debate raging in the state about opening up northern Michigan, with its pristine trout streams, to aggressive shale gas development, which has been criticized for polluting water in other states.

In the Friday news conference, Mr. Daniel said his company will work with the industry and federal regulators to introduce new technology that would better detect flaws in pipelines in order to reduce the risk of breaks.

The CEO conceded the spill has tarnished the reputation of Enbridge which, thanks to its investments in renewable energy, has been judged a leading North American corporation in terms of its environmental performance.

"Certainly it tarnishes the image and we will do everything we can to rebrighten that image in the minds of the local residents and the agencies involved, and ensure that we are upheld to the very highest standards - the standards we have always upheld in this company," Mr. Daniel said.

"I think we've already started restoring faith … in terms of showing how responsive we have been to this incident and that we are going to stick with this to make sure we make it right to the local residents."

But he rejected claims that Enbridge had been warned about corrosion in the section of pipe that broke. In January, the federal agency that supervises pipeline safety sent Enbridge a warning letter, saying there was corrosion in the Line 6B and that the company had likely violated federal regulations.

But Enbridge CEO said that warning covered a different section of the pipeline, and that Enbridge had addressed it. The company was still working on Friday to excavate the broken section from the swampy ground in order to determine the cause of the leak.

In the meantime, the entire pipeline - which carries 2.6 million barrels of day of heavy Alberta crude to Great Lakes refineries - was shut down.

Enbridge representatives have knocked on people's doors in neighbourhoods along the river front, said Marshall resident Beau Jencks, who lives a few blocks from the water. While Mr. Jencks was happy to see them on the ground talking to locals, the company hasn't been able to or has avoided answering specific questions, he said.

"Their intentions may be in the right place, but they need to work more on definitive answers to questions being asked," he said. "I tell you, from this day forward, my neighbours and I will be watching," Mr. Jencks said.

Enbridge brought in a shipment of water into the Marshall area after the local health department warned some 100 families residents not to use their well water for drinking or cooking.

Cleanup efforts pick up as the week progressed and Enbridge had 560 employees and contractors working on the cleanup by Friday. But Battle Creek state representative Kate Segal said there needs to be more boom sites to direct and absorb the oil, and more workers to clean up the oil.

Ms. Segal said Enbridge has a history of violations prior to the Kalamazoo River spill, though Mr. Daniel said regulators routinely issue warnings to pipeline companies about potential problem areas, and that Enbridge's record is in keeping with the industry averages.

"We can no longer have a slap on the wrist for minor spills," Ms. Segal said. "They need to be addressed and seriously addressed," she said. "It was something that you wished you had watched closer. You think living here in Michigan we don't have the problems of the Gulf, but those little spills and what they do to our community are devastating."