By September 15, 2016 3 Comments Read More →

Oil/gas industry’s Dakota Access pipeline strategy is risky and likely to fail

Dakota Access

Industry’s decision to not engage with local Sioux tribe has galvanized Native American protestors from across nation. Photo: Facebook.

Alliance of Native Americans and environmental groups could spell big trouble for industry, a la Keystone XL fiasco

Energy Transfer Partners and the American Petroleum Institute have just made a huge strategic mistake with their handling of the Dakota Access pipeline protests.

Dakota Access

Atwood Journalism Chair Mark Trahant. Photo: University of North Dakota.

When the protests were just starting, there was opportunity for the pipeline company and the Standing Rock Sioux Tribe to resolve the issue cordially, according to Mark Trahant, a University of North Dakota communications professor.

“Early on it was a situation where I think it could’ve been resolved in terms of rethinking the actual route of the pipeline. But then it became bigger than that,” he said in an interview.

“The whole issue became about climate change as well as the actual incident [bulldozing a burial site during the Labor Day weekend] with the community.”

That right there.

Indigenous concerns about territory, culture, and the local environment being combined with climate change and the anti-fossil fuel ideology of environmental groups.

The union of those two sets of ideas is a powerful political force.

Just ask Enbridge.

The Calgary-based company’s 525,000 b/d Northern Gateway project from Alberta to the West Coast is considered dead in the water, primarily because eco-activists teamed up with British Columbia First Nations to apply enormous legal, moral, and political clout to the fight against it. Native leaders have complained publicly that Enbridge did only the bare minimum to engage with them and address concerns about the pipeline’s impact on their traditional territory.

Canadian government approval was thrown out by the Federal Court of Appeals a few  months ago. Northern Gateway has become such a toxic project that Prime Minister Justin Trudeau refuses to support it. A path to approval and construction is hard to imagine.

Or TransCanada, whose Keystone XL pipeline was rejected by President Barack Obama last fall after eco-activist opponents organized a massive campaign and made it a symbol of the fight against climate change. Local landowners and native activists were an important part of that campaign.

This is the potential fate faced by Dakota Access.

There are now reportedly 200 Native American tribes and scores of eco-activists at the protest camp supporting the Standing Rock Sioux, over 4,000 people altogether.

350.org – the environmental organization started by Bill McKibben, who spearheaded the anti-Keystone XL – calls the Dakota Access protest “the most high profile environmental fight in the country.”

The response from industry? Bad, bad, bad.

Bulldozing a tribal burial ground was just plain stupid. Sicking guard dogs on protestors was almost as bad.

Energy Transfer management’s handling of the crisis has been abysmal, according to Jen Vardeman, associate professor of communications at the University of Houston, who specializes in crisis communications.

“I came across the internal memo that CEO Kelcy Warren issued to employees and it definitely voices some interesting sympathy and compassion and respect for the tribes,” she said in an interview.

“At the same time, there’s definitely some defensiveness I think that’s coming across because he is trying to definitely suggest that they have done everything above board…but I think that especially the oil and gas industry, they really have to go above and beyond the basic requirements.”

Vardeman says Warren seems to be behind the times when it comes to corporate communications, which now emphasizes engaging with communities in which the company is operating. Especially when big projects have a significant impact on a local community.

When Warren says in the memo that “our corporate mindset has long been to keep our head down and do our work. It has not been my preference to engage in a media/PR battle,” Vardeman sees an insular corporate culture that just wants to play by the rules and not reach out.

“Historically, these kinds of defensive communications strategies don’t fare well with public opinion,” she said.

API CEO Jack Gerard is no better.

He’s upset that President Obama halted construction of the Dakota Access on federal lands shortly after a judge ruled against the Standing Rock Sioux and granted permission for Energy Partners to resume building.

“Moving forward, it’s critical that the rule of law is followed as the need for new energy infrastructure grows,” Gerard said.

No, that’s not what’s critical.

What’s critical is the two sides engaging before this growing standoff turns into a full-fledged public relations nightmare for Energy Transfer, the pipeline industry, and the larger oil and gas sector.

“I don’t think anyone’s going to go away,” says Trahant. “Even if the tribes lose in court, they’re going to hold that ground.

“Then it becomes a case of real massive disobedience and how much they’re willing to do that. But I think it’s going to be pretty extraordinary.”

Is Energy Transfer willing to roll the dice during a national election campaign, when a prolonged fight will almost surely become a political football?

What happens if Democrat Hillary Clinton is elected president? After being a moderate Keystone XL supporter during her term as Secretary of State, she has moved far to the left on climate change and pipeline issues.

Does industry want a newly elected President Clinton coming to power next January having partly fought her campaign on Dakota Access, with promises to supportive environmental groups she’d likely be happy to keep?

Industry is walking a razor’s edge with Dakota Access. Sadly, it doesn’t have to.

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Posted in: Markham on Energy