Enbridge proposes improvement to controversial Northern Gateway pipeline

Douglas Channel, the proposed termination point for an oil pipeline in the Enbridge Northern Gateway Project, is pictured in an aerial view in Kitimat, B.C. (Darryl Dyck/THE CANADIAN PRESS)

CALGARY -- Enbridge Inc. is proposing to spend up to $500 million to change the design of its Northern Gateway pipeline in a bid to address safety concerns of aboriginal groups and others.

The project, which had a $5.5-billion pricetag before Friday's announcement, has been the focus of intense debate among local communities, environmental groups and politicians.

Enbridge made its announcement on the same day the Alberta government -- a staunch supporter of Northern Gateway -- announced an independent pipeline safety review following three leaks in the province this year.

Critics of Northern Gateway, a paired system of pipelines between the oilsands in northern Alberta and a terminal near Kitimat, B.C., have said they're worried about the potential environmental risks it poses within the B.C. Interior and in coastal waters.

The Calgary-based company (TSX:ENB) said Friday it had listened to the feedback from public hearings and was prepared to address concerns with a combination of improved technology and monitoring.

"We had already planned to build a state-of-the-art project using the most advanced technology, safety measures and procedures in the industry," said Janet Holder, executive vice-president for western access.

"These initiatives announced today make what we believe is a very safe project even safer."

Among other things, Enbridge says its new design would increase the thickness of pipe walls at river crossings. Enbridge says it would also increase the number of inspections it does by at least 50 per cent and staff pumping stations in remote locations around the clock.

"And after years of consultation with stakeholders and after personally attending many of the regulatory hearings for Northern Gateway, it has become clear to me that we have to do everything we can to ensure confidence in the project," Holder told reporters on a conference call.

Holder indicated Enbridge's plans for the marine terminal will remain unchanged.

"We have already raised the bar, I would say, in that our standards for the terminal site and the safety of the tankers off the West Coast of British Columbia far exceeds any standards in Canada and actually exceeds any standards within the world," she said.

In Calgary, meanwhile, Alberta Energy Minister Ken Hughes announced the province would tap an independent third party to work with the Energy Resources Conservation Board in reviewing pipeline integrity, the safety of pipe that crosses waterways and response to spills.

"The scrutiny is at a level we have never seen before. I welcome that scrutiny and I believe our pipeline companies do so as well," Hughes told a news conference.

There have been three pipeline leaks in Alberta this year, including the leak of up to 475,000 litres of oil into the Red Deer River, a major drinking water source in central Alberta.

The company that owns that pipeline, Plains Midstream Canada, was responsible for a bigger spill in Northern Alberta more than a year ago.

Greenpeace released the pictures Friday of a pond adjacent to the Rainbow pipeline leak that was detected April 29, 2011 and spilled 4.5 million litres of oil onto the landscape.

The photos, which Greenpeace says were taken last week, appear to show large globs of oil fouling vegetation and an oily sheen on the water. Deer and wolf tracks were spotted around the bank of the fouled pond.

Samples of oil and water said to be from the site smelled sharply of oil and burned rubber. Greenpeace has yet to test the samples to determine what they contain.

Hughes held meetings with three industry groups -- the Canadian Energy Pipeline Association, the Canadian Association of Petroleum Producers and the Small Explorers and Producers Association of Canada -- before announcing the review.

Environmental groups and others outside of industry did not take part.

"I specifically wanted to meet with the regulator and with the industry -- the people who are closest to the file who actually understand this in most intimate detail," said Hughes.

The scope of the review has not yet been determined. Hughes said it will likely take months, not years, to complete.

Sierra Club Prairie Director Chelsea Flook said it's good the Alberta government has acknowledged the problem, even if it was under "tremendous" pressure.

"Unfortunately it's not yet a review that will provide answers that Albertan communities can trust," she said in a release.

"The ERCB is part of Alberta's pipeline problem and should not be a partner leading the safety review process. Alberta's communities and environment need answers from a completely independent review process."

Brenda Kenny, head of the pipeline association, told reporters incidents such as the ones in Alberta raise important questions.

"And our job is to do two things -- firstly, be safe every day and secondly, ensure the public is confident that we are among the best in the world," she said.

"So this kind of review will bring that to light. I'm very proud of our members' track record overall. I think when you look at the statistics you can see we are very safe but we are continuously improving and anything we can learn from this is fantastic."

David Pryce, vice-president of operations at the Canadian Association of Petroleum Producers, said the review will be important for those inside Alberta and outside.

"Our markets are offshore or south of the border," he said.

"There's a lot of attention to the growth of our industry as a supplier of energy and I think those marketplaces are looking for assurances around the quality of our regulatory expertise."

The calls for the review grew louder earlier this month when the U.S. National Transportation Safety Board lambasted Enbridge for its handling of an oil spill in Michigan two years ago.

A report concluded Enbridge bungled its response when millions of litres of oil began to pour in and around the Kalamazoo River in July 2010, comparing the company's handling of the spill to the "Keystone Kops."

Enbridge has promised to apply the lessons from the Michigan spill to its other projects, including Northern Gateway.

The Michigan spill affected more than 50 kilometres of waterways and wetlands and about 320 people reported symptoms from crude oil exposure.

The cleanup has cost Enbridge about $800 million.