Just days after being slammed by the U.S. regulator governing pipelines, Enbridge Inc. has been granted permission to restart an oil line that leaked in July.
Enbridge expects oil will once again begin flowing through Line 14 on Tuesday. The Pipeline and Hazardous Materials Safety Administration (PHMSA), which sharply criticized Enbridge last week, said on Monday that the Calgary-based company had met the conditions necessary to restart the line in Wisconsin, although the regulator pledged to closely monitor the company's safety plan.
The pipeline, which is part of the 3,000-kilometre Lakehead system, leaked 1,200 barrels of oil last month.
Despite the decision, Enbridge remains under pressure from the U.S. Department of Transportation, which oversees PHMSA. With Enbridge and its competitors lobbying to build major oil sands pipelines, the company desperately needs to prove it can operate safely in order to win public trust.
Chad Friess, an analyst with UBS Securities, said the short time between the regulator's rebuke and the granting of permission to restart Line 14 is "clearly a positive indication for [Enbridge's] business and relationship with the regulator."
Even though Enbridge can now restart the 318,000-barrel-per-day line, it will not be able to do so at full pressure.
Further, it must monitor the pipeline on foot and from the air, the regulator said. Enbridge and PHMSA worked through the weekend to review the restart and safety plans Enbridge submitted late last week.
"Communities across the country deserve to know that the pipelines running underneath their homes, streets and businesses are safe. That is why we are requiring Enbridge to commit to such a thorough safety plan," U.S. Transportation Secretary Ray LaHood said in a statement.
"I have met with Enbridge leadership and told them they must ensure the safety of their Lakehead system. ... I will be holding weekly meetings with my team to ensure Enbridge is complying with our safety requirements."
Lorraine Little, an Enbridge spokeswoman in the U.S., said in a statement: "The safety of people who live and work along our pipelines, as well as the protection of the environment, are our top priority."
Enbridge will continue to work with PHMSA to ensure Line 14 is safely restarted, she said.
The company had to submit a safety plan for all of the Lakehead system to be approved by the regulator. Further, PHMSA last week said Enbridge must have a third party to "oversee the creation, execution and implementation" of the steps identified in the plan and submit progress reports to Enbridge and PHMSA. The U.S. regulator said Enbridge "must commit to address any deficiencies or risks identified in the third-party's assessment, including repair and replacement of high-risk infrastructure."
Enbridge says it is already making safety improvements.
PHMSA last week questioned Enbridge's "integrity management program" and said it has long-standing concerns about the company's "pattern of failures."
The pipeline was built in 1998, making it a relatively new piece of oil and gas infrastructure in North America. PHMSA said Enbridge knew the pipeline had defects when it was built. The line leaked in 2007 as well.
Enbridge had a major leak in Michigan's waterways in 2010, which prompted the U.S. National Transportation Safety Board to compare the company to the "Keystone Kops" as it criticized Enbridge's response. The board was also harsh on PHMSA's handling of the company.
Enbridge wants to build an oil sands pipeline to a port on Canada's west coast. The so-called Northern Gateway project has drawn the ire of environmentalists, some First Nations groups along the proposed route, and some local citizens and politicians. While the federal Conservative government is a staunch supporter, Heritage Minister James Moore, who comes from British Columbia, said Enbridge's proposal will fail unless it does a better job of engaging the public and explaining its spills in the U.S.
Kinder Morgan Inc. already delivers oil to the west coast, and wants to expand that network. Further, TransCanada Corp. wants to build a pipeline, dubbed Keystone XL, to Texas's Gulf Coast.