Enbridge's Mixed Message

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

With a modest gain of more than 4% on the year, Enbridge's (NYSE: ENB  ) share price is faring far better than beleaguered midstream peer TransCanada. Stronger-than-expected opposition to its key project is creating quite a headwind for the company, however, and investors should take note.

Northern Gateway
At first there was just moderate opposition to Enbridge's proposed Northern Gateway project. The pipeline aims to connect Alberta's oil sands to British Columbia, where the oil would be exported via tanker. Opposition is coming from seemingly everywhere at this point. Environmentalists oppose oil sands development, First Nations communities and other citizens oppose the pipeline traveling over their land, folks in British Columbia are worried about increased tanker traffic in hazardous waters, and the list goes on.

In an attempt to overcome the ever-increasing opposition to its $5.5 billion project, Enbridge has launched a multimillion-dollar advertising campaign. The company's goal is to "help British Columbians understand what the project is about."

Enbridge has set up a website featuring information regarding economic benefits and environmental safeguards. The economic benefits of exporting oil are not difficult to comprehend, but people tend to be more cynical when it comes to energy companies protecting the environment.

Michigan spill
It might be easier to convince people that you are prepared for a pipeline leak if you had some sort of track record to back that claim up. Unfortunately for Enbridge, a recent report from the National Transportation Safety Board does just the opposite.

According to the report, when the Enbridge Line 6B pipeline ruptured on July 25, 2010, operators thought the ensuing shutdown was a false alarm and restarted pumping not once, but twice. Seventeen hours later someone realized that there was indeed a rupture in the line, a rupture that was more than 6 feet at its widest point.

Pipeline systems are complicated, and given the amount of infrastructure criss-crossing North America, the pipes really don't leak that frequently. However, if your employees aren't exercising extreme caution when monitoring pipelines, you cannot expect citizens to be OK with a pipeline in their backyards. For the record, the Michigan spill is still being cleaned up.

Foolish takeaway
It hasn't been all doom and gloom for Enbridge. The reversal of the Seaway pipeline it co-owns with Enterprise Products Partners (NYSE: EPD  ) is great news for the company, but there are too many things that could go wrong with this growth story for me to do anything other than add it to My Watchlist for now.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.

Motley Fool newsletter services have recommended buying shares of Enterprise Products Partners. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1899990, ~/Articles/ArticleHandler.aspx, 10/22/2016 12:11:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
ENB $44.09 Up +0.18 +0.41%
Enbridge CAPS Rating: *****
EPD $26.75 Down -0.32 -1.18%
Enterprise Product… CAPS Rating: *****