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Pipeliners Require PR Patchwork After Latest Spill

|Includes:Enbridge Inc. (ENB)

Local television report claims damage to an Enbridge pipeline caused a leak near Sterling, Michigan, about 150km away from Lansing.

SOURCE: - Send in the landmen! A news report coming out of Michigan this morning points to an apparent leak from an Enbridge (NYSE: ENB) (TSX: ENB) pipeline near the community of Sterling, located approximately 150km northeast of Lansing, Michigan. The report says that crews found the leak after discovering oil in the soil, and that cleanup at the site is expected to be swift.

The timing of the incident doesn't help the cause for Enbridge, who is entrenched in a legal battle against mounting opposition from landowners, native groups and independently funded eco groups, both fringe and more established. While proceedings are taking place in multiple courtrooms, Enbridge's Northern Gateway pipeline hangs in the balance as the company attempts to broaden Canada's marketplace for Alberta oil, including transshipment to Asia.

So far, 2012 has put a lot of pressure on the Calgary-based pipeline company both from the public, and from the federal government. More than 4300 individuals are scheduled to air their grievances in court against Enbridge's Northern Gateway plans during the two-year window currently given to deliberate the validity of the project, which should keep the company's hands and lawyers' pocketbooks full. Meanwhile, as it's ensconced in its legal battle, Enbridge is also facing the pressure from the expectations of an impatient Steven Harper, who just returned from China having made bold statements vowing that the pipeline would indeed be built. Now, with a pipeline leak, albeit a small and easily handled one, this doesn't help the cause.

The fact of the matter is that Enbridge is an established company with the business acumen to fight its own battles. With every pipeline comes opposition. Whether it's from landowners who don't want anything in their backyard, or it's pesky swamp land that's impossible to cross, or it's interest groups sticking their noses into other people's business in order to appease their donors, there's always something that can get in the way of pipelines.

But yesterday, a Post Media article pointed out how Enbridge felt that federal departments were asking for too much information and pushing the approval process at an "unrealistically fast" pace, according to a newly released Environment Canada briefing material. It's not that Enbridge wants the timelines to be extended, it's just that the government needs to work with them, not against them if it wants to meet Harper's expectations, but it has raised concern that the government is asking for more technical information and project design details than the company is ready to provide so far.

Meanwhile the costs keep running up. It has been estimated that Enbridge is spending $300 million to prepare its case for regulatory approval alone, so it's fair to see why the company doesn't want to spend millions more on additional work like detailed route plans until the project is officially approved.

What needs to be understood from everyone is that these things take time. Let it play out, without putting arbitrary timelines on at every angle. It's either going too fast, or it's going too slow, but someone is always going to be unhappy with the process. Speediness breeds haphazard practices, and the last thing that Enbridge needs is to have this major project installed sloppily. A leak anywhere along the line of the Northern Gateway will not be tolerated and dealt with as easily as the leak in Michigan today, so let the diligent work that's required be allowed to proceed unfettered, and let's get this show on the road.

G. Joel Chury


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: ENB