Enbridge should put money where mouth is

Pipeline company should take out liability insurance to cover costs of oil spills.

Editor: Enbridge Inc. is spending a lot of money advertising in the newspapers and on TV in an attempt to persuade people that their planned Northern Gateway pipeline will really be safe.

Enbridge knows that this is the number one concern of the majority of people in B.C. around this project, and their political pals in Victoria and Ottawa will not be able to push this through unless the safety issue disappears.

It is significant that Enbridge Inc. has set up a special company for this project (Northern Gateway Pipelines, Inc. or NGPI).  This sounds reasonable until it is realized that setting up NGPI breaks the liability ties to the principal multi-billion company (with $10 billion Canadian in equity).

If there were a major disaster, at sea or on land, that looked as though it was going to cost billions to fix and clean up, then Enbridge Inc.’s management could just walk away scot-free after declaring NGPI bankrupt.

Commercial law limits the liability of the owners of any company (like NGPI) to its issued capital, which by design is a small fraction of Enbridge’s capitalization.

Four years ago, a group of Enbridge shareholders demanded that their board show how the shareholders could be protected from such possibilities. Well, now we can see how the clever lawyers in Calgary came up with a foolproof protection scheme — it certainly protects Enbridge shareholders.

If Enbridge Inc. is convinced that their project is safe, let them buy a commercial indemnity policy, say for $1 billion (the Exxon Valdez spill cost half that), from the free enterprise insurance industry (not the B.C. government that is drooling over the expected $2 billion in royalties).

If the NGPI plans really are safe, then Enbridge should be able to buy a 30-year policy to pay for any cleanups at a reasonable price.

If they cannot do so, then the independent risk assessment market has voted with its wallet that this is not a safe project.

Let Enbridge Inc. really put its money into safety and not just into smooth-talking advertisements and prove to the people of B.C., in advance, that this project is truly low-risk.  It is significant that the BC Liberals have not yet insisted on this independent proof of safety.

Herb Spencer,

Surrey

Langley Times

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