North Amerca’s Changing Energy Landscape – An Interview with Enbridge Inc.’s Al Monaco

Al Monaco, the Chief Executive Officer of Calgary-based Enbridge Inc., has become the face behind the proposed Northern Gateway pipeline, one of the most ambitious – and controversial – energy projects on the continent.

Ottawa gave the go-ahead in June to build the 1,200-kilometre pipeline and tanker terminal even as First Nations and environmental groups vowed to stop the project, which, if completed, will carry crude oil from Alberta’s oil sands to Kitimat, B.C. on the northern coast of British Columbia. Opponents have expressed concern that if oil were to spill from the pipeline or from the tankers that will travel through coastal channels, it will harm the environment.

Al Monaco, Chief Executive Officer of Enbridge Inc.

Al Monaco, Chief Executive Officer of Enbridge Inc.

But the legal opposition – and media attention – hasn’t fazed Monaco, who said he was eager to talk about the project. Part of his role, he said, is to promote and explain to Canadians the benefits of the pipeline.

“This is so important, it’s got to happen,” Monaco said in an interview at Enbridge’s downtown Calgary headquarters. Tall and wiry, Monaco, 54, exudes a restless energy. At one point during the interview he jumped to his feet to sketch his thoughts on a whiteboard mounted on a wall.

The wide-ranging interview touched on other topics, including the implications of new natural gas finds on pricing and markets, but the conversation opened with the proposed $6.5-billion Northern Gateway pipeline and what it means to Canadians.

Monaco believes the existing infrastructure isn’t big enough to transport growing volumes, and other regions lack pipelines altogether.

Monaco believes the existing infrastructure isn’t big enough to transport growing volumes, and other regions lack pipelines altogether.

“We really think that this is a good project,” he said. “We think it’s important for our customers and for the rest of Canada.

A federal review panel approved the project last December, subject to Enbridge satisfying 209 safety and environmental conditions. By July, five groups, including the Gitga’at First Nation, had launched legal suits challenging the federal government’s approval of the project.

“The need to build Northern Gateway is part of a larger energy story, Monaco said. North America’s energy landscape is undergoing dramatic changes.”

Monaco said he understands the concerns, but emphasized that safety is a company priority. “There’s a ton of money going into leak detection systems, integrity systems, the tools to inspect the inside of pipes,” he said. “You need technology. We apply the latest.”

Monaco argues that a pressing need in Canada is to bring Western Canada’s crude oil and natural gas to coastal ports via pipelines.

Monaco argues that a pressing need in Canada is to bring Western Canada’s crude oil and natural gas to coastal ports via pipelines.

The need to build Northern Gateway is part of a larger energy story, Monaco said. North America’s energy landscape is undergoing dramatic changes. New hydraulic technology has unlocked vast reserves of natural gas, lowering the price of the commodity for over 6.5 million Canadian customers, but also flattening U.S. demand for Canadian natural gas. On the crude oil side, the supply is forecast to rise by seven million barrels per day by 2025. At the same time, global demand for energy is forecast to rise 35 to 50 per cent over the next three decades, driven mainly by population growth and urbanization principally in Asian markets.

Meanwhile, the existing infrastructure isn’t big enough to transport growing volumes, and other regions lack pipelines altogether.

Combined, these factors will re-draw the pipeline grid of North America and underscore the need for new infrastructure.

“That’s a big number to supply,” Monaco said. “It’s the sheer magnitude of growth through development.

“How are we going to meet that (demand)? If you look at the supply of energy, we are going to need all (forms of energy).”

The most pressing need in Canada is to bring Western Canada’s crude oil and natural gas to coastal ports via pipelines.

“The focus used to be on moving volumes inland from coastal markets, now the focus is on how do we get that inland production . . . because when you get to the coastal markets you can start to receive global pricing.

Monaco described pipeline construction as a “nation-building,” exercise similar to the railway construction that opened Western Canada in the late 19th Century

Monaco described pipeline construction as a “nation-building,” exercise similar to the railway construction that opened Western Canada in the late 19th Century

“Ultimately in the bigger picture, in the long term, you’ve got to have connectivity to global markets.”

Monaco described pipeline construction as a “nation-building,” exercise similar to the railway construction that opened Western Canada in the late 19th Century and the development of the St. Lawrence Seaway in the mid-20th Century. Those projects faced opposition in their time too.

Monaco said the opposition to Northern Gateway from First Nations, the British Columbia government and environmental groups, has been instructive for Enbridge, providing lessons for ongoing dealings with stakeholders affected by energy infrastructure projects.

Monaco said project proponents must recognize the changed nature and methods of opposition groups. In the past, pipelines mainly dealt with landowners and those directly affected by the proposed project, Monaco said.

“The way we used to approach development like this, we used to focus on ‘What is the economic benefit to you?”

“This is a huge opportunity if we can demonstrate that it can be done in an environmentally safe way.”

Today, the public is more sophisticated about safety issues and threats to the environment.

“I think now you have to focus on safety and environmental protection first. Put the map aside with the pipeline on it and talk to people about why they can be comfortable with you as a company.”

In hindsight, Monaco said Enbridge officials should have spent more time with First Nations and those who live near the proposed pipeline, building trust and explaining the company’s safety procedures. “Because if you’re not successful in that regard, then they’re not going to listen to you.”

At the same time, Monaco said it’s harder to engage opponents. There is a corps of opposition that is opposed to fossil fuel extraction, he said, and isn’t interested in debate.

“They’re interested in stopping it. Or they’re opposed to fossil fuels in general. I think unless we want to get off fossil fuels entirely, the reality is we need to move energy.”

Looking to the future, Monaco foresees more opportunity for natural gas, especially for power generation. “From our perspective, it really comes down to the abundance of it. Abundance essentially means lower costs or more stable costs for gas.

“I think that problem is being solved now because the reserves are going to last us hundreds of years in Canada. I think that’s good for Canadian manufacturing and other industrial uses.”