Oil Sands Truth: Shut Down the Tar Sands

Enbridge CEO Interview: Gateway, China, Canada and more

Enbridge CEO on what's wrong with Canada's DNA

June 11, 2007

CALGARY -- Patrick Daniel has the classic CV of an energy CEO - prairie upbringing, strong engineering education, and a varied career amid the cycles of the oil patch. Now 60 and head of pipeline giant Enbridge Inc., he is a critical link in the supply chain between Canada's oil producers and major North American markets. Mr. Daniel talks about this role, and the challenges in pushing Canadian thinking beyond this continent.

Do you come from a business background? No, my father worked for the Red Deer recreation department and my mother was a school teacher but gave that up when the five children came along.

Are you a family of high achievers? My older brother is a Stanford PhD and a professor at University of Alberta; another brother was a senior vice-president at EnCana and is now consulting. My next brother is a professor at Red Deer College and runs his own consulting company. My sister is an MBA in the headhunting business and left that to raise a family.

So how did your parents pull that off? They just emphasized education all the way. We didn't have a lot of money. If we wanted a university education, we had to do well enough in school to get scholarships and bursaries. My parents couldn't afford to give me a dollar to go to school.

Does that drive extend to your two children? My older son is in surgery residency at the Mayo Clinic and my younger son has a master's degree in mechanical engineering and is in the fuel cell development business in Connecticut.

He's very involved in the energy industry of the future. We joke a lot about me being involved with this dirty old crude oil and him with fuel cells. But I remind him how he gets to work every day.

Are you concerned we are losing many of our major Canadian companies?

It is a concern, but I wouldn't want any roadblocks put in the way of some foreign companies coming in here and acquiring Canadian companies. I just wish Canadian companies would get more aggressive and present themselves on the world scene as acquirers and leaders.

Is this reticence part of our makeup?

I think it is a little bit in our DNA that we are conservative and undersell ourselves. I suppose it is partly because we are a resource-based economy, and developing resources has provided a very good income. We haven't had to create a product that sells worldwide in order to earn our stripes.

Are you personally more outward looking?

A little bit, but not dramatically. I think I have enough of that Canadian DNA that I tend to be fairly conservative.

You have expressed frustration over the slow progress in attracting partners to your Gateway project that would carry crude to the West Coast for shipment to China.

We think it is very much in oil producers' interests to broaden out their markets and hence improve their netback pricing. I think everyone agrees with us in principle, but there are big financial commitments required to put a pipeline like that in place. Those commitments right now outweigh the strategic opportunity.

Are oil producers too North American-oriented?

That's part of it. We continue to do business with the people we know, primarily refiners in the U.S.

There is undoubtedly concern that the prime customers of Gateway would be Chinese, and we're not used to the Chinese way of doing things. Also, because they still have a state-controlled economy, there is a certain amount of nervousness. All of those factors have caused us to delay the project. We're now looking at 2012 to 2014.

Are the Chinese giving up on us as a major energy source?

They may be giving up on their ability to come in and buy reserves in Canada.

That's another thing I've found out through this process. The Chinese, in my view, could come in and buy production in Edmonton or wherever - in a long-term contract with very attractive pricing. But they like to own the reserves in the ground. They want to move their own molecules home, rather than buying them and moving them.

I'm not sure whether it is cultural or strategic, but I think the Chinese tend to be asset owners and managers. They really don't want to do a financial transaction - they want to actually own the assets.

They must also be noticing the negative signals from Ottawa against Chinese state investment.

Yes, there have been informal signals, and I think that is a little bit of a misguided potential policy in Canada.

From here, I can see the tower of PetroCan, which was a state-owned Canadian oil and gas company. From here I can see the hole in the ground for the EnCana tower, which was a provincially state-owned entity. Both of these companies have done very well.

In the case of China, there are moves afoot to take these state-owned enterprises and roll them out in publicly traded arms. We may be just a few years past that in Canada. But I don't think we ever wanted anyone in the world saying Petro-Canada can't invest or Alberta Energy Co. [EnCana's predecessor] can't invest.

Why do you call Enbridge an 'aggressive, conservative company?'

We're all over every opportunity that's out there. We rarely ever let anything sneak by us. But we're very disciplined and conservative in making sure we throw out the bad projects and only keep the good.


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