S AT U RDAY , APR I L 11, 2020 | T HE GLO BE AND MAIL G
Enbridge: Monaco in constant contact with customers, staff from Calgary home
FROM B1
In early March, the company activated emergency
control centres in Edmonton and Houston. Its staff
was separated from existing facilities at pipeline
hubs in Alberta and Texas, to ensure oil and gas
would continue to flow even if some employees got
sick or were quarantined. Enbridge also rearranged
the furniture at its call centres to ensure employees
could take customer calls with a hockey stick’s
worth of space between them. “We’ve faced hurri-
canes in the Gulf and floods in Calgary,” Mr. Mona-
co says. “We’re well-versed in contingency plan-
ning.”
As for Mr. Monaco, like most of us, he suddenly
found himself house-bound – a non-essential em-
ployee. In a time of crisis, he’s confined at home in
Calgary, running one of North America’s largest en-
ergy companies off his laptop in a modest home
office. When asked about the last time he spent
more than a consecutive week or two in one place
in his eight years as CEO, he pauses and then says:
“I honestly can’t recall.”
Mr. Monaco admits he thrives on a jam-packed
daily schedule – he’s described in every media pro-
file as having “restless energy.” That helps explain
how he managed to earn an MBA at the University
of Calgary while working full time at Home Oil Co.
and raising three sons with his wife, Laurie (all
three kids are out of the house now, meaning it’s
just the two of them on lockdown).
Being cooped up at home right now is extra hard
for Mr. Monaco as the industry landscape shifts.
Last week, rival TC Energy Corp. moved ahead
with its Keystone XL pipeline, snagging a US$1.1-
billion investment from the Alberta government.
As he told a virtual Scotiabank conference after the
deal was announced, Mr. Monaco always assumed
Keystone would be built, and he was pleased to see
it move forward – customers pump more than
enough oil and gas to fill new pipelines from both
TC and Enbridge.
But Enbridge’s Canadian clients are reeling,
thanks to the month-long price war between Saudi
Arabia and Russia, which effectively cut world
crude prices in half and slashed Canadian prices
from US$40 a barrel to just $4 (although there were
signs late in the week that the two countries had
declared a ceasefire). As a result, Mr. Monaco said
recently he expects Canadian producers to slash
output by up to 25 per cent this year.
Enbridge is largely insulated from swings in
commodity prices, since it sets prices for transport-
ing oil and gas in long-term contracts. But an oil
price war or prolonged recession that drives down
either supply or demand for energy – or both –
could translate into lower volumes across the com-
pany’s 192,000 kilometres of pipelines. That uncer-
tainty, along with the broader COVID-19 market
meltdown, explain a 21-per-cent decline in its stock
price since the beginning of the year.
So, from his home office – decorated with a pho-
to of the boat that brought his parents to Canada
from Italy in the 1950s – Mr. Monaco is using this
forced downtime to burnish Enbridge’s credentials.
He’s on the phone most mornings by six, checking
in with employees, customers, regulators and in-
vestors. Dressed in a favourite black sweater, rather
than the CEO’s more traditional blue suit, he
makes frequent appearances at virtual investor
conferences. His pitch: Enbridge’s strong balance
sheet and deep ties to the world’s largest energy
companies differentiate it from rivals.
Enbridge’s boss is also looking ahead to a time
when the company can shift from crisis manage-
ment back to growth strategies. Part of that plan-
ning is focused on winning the social licence it
needs to build new pipelines when a large segment
of the population has turned against fossil fuels.
In 2016, a federal court blocked its planned
Northern Gateway pipeline, ruling the federal gov-
ernment had failed to adequately consult with In-
digenous groups. The CEO says Enbridge has al-
ways prioritized good relations with Indigenous
communities, and he has made a point of staying
in regular contact with First Nations leaders
throughout the pandemic.
He’s also launched a charm offensive, putting in
calls to U.S. regulators and government officials
who will determine the fate of planned pipelines in
Minnesota and Michigan. In a series of recent vir-
tual conferences, Mr. Monaco said Enbridge is mak-
ing headway on projects in both states thanks to a
combination of lobbying and litigation.
Closer to home, the born-and-bred Calgarian has
been quick to praise politicians for stepping up in a
crisis that’s expected to leave one in four Albertans
unemployed. “The provincial and federal govern-
ments are taking decisive action,” he says. A long-
time advocate of using Canada’s energy resources
to help fund the transition to an economy that’s
less reliant on fossil fuels, Mr. Monaco says he’s
encouraged that both Alberta and federal leaders
“recognize we have to protect the energy industry.”
Mr. Monaco is an accountant by training. His
first corporate job was tracking inventories as an
analyst at Home Oil. After the company was ac-
quired and its management team let go, he joined
a predecessor to Enbridge in 1995 and was named
CEO seven years later. The accounting background
bubbles up in the way Mr. Monaco answers ques-
tions, occasionally numbering his conversation
points.
What has Enbridge learned from the coronavi-
rus crisis? “Two key learnings. First, it reinforced
the need for a robust IT team to support the whole
organization and the importance of cybersecurity,”
he says. “Second, COVID-19 reinforced the need to
ensure our critical infrastructure can stay up and
running.”
What are his priorities? “There are four things,”
he replies, then rhymes them off: protecting and
supporting Enbridge’s 12,000 employees and mil-
lions of customers; setting goals for the next 60, 90
and 120 days to recognize the shifting landscape;
ensuring the company has the financial strength to
fund essential projects; and finally, getting a long-
delayed pipeline built to link Alberta oil sands to
eastern refineries.
In fact, Enbridge has a list of 14 major projects,
along with maintenance work, to keep it busy, and
by mid-March, with North American businesses go-
ing dark, the company’s engineers and financiers
ENBRIDGE’S NORTH AMERICAN ENERGY INFRASTRUCTURE
CANADA
ELbridge moves 25% U N I T E D S TAT E S
of North America’s
crude oil aLd 20%
of Latural gas
MEXICO
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: ENBRIDGE
R EPORT ON BUSINESS | B7
Enbridge CEO Al Monaco,
seen on Wednesday,
usually runs Canada’s
largest utility in full
executive attire, but
these days a sweater
is the right workwear.
COURTESY OF FAMILY
began reviewing that list, with a total tally of $11-
billion over three years. Big-ticket items include
$2.9-billion to complete the final U.S. section of the
Line 3 pipeline, which runs from Alberta to Minne-
sota, and rebuilding part of a second pipeline, Line
5, in Michigan. Enbridge also plans to spend $1.8-
billion on an offshore wind farm in France.
Some of this work might be “deferred and de-
layed” due to the pandemic, Mr. Monaco says. But
$5-billion in funding for new projects is already
locked down, and the CEO is confident he can raise
an additional $6-billion from lenders. Enbridge has
relationships with about 50 banks – the executives
of which are on the other end of some of Mr. Mona-
co’s early-morning calls. Collectively, they’ve
pledged to lend the utility up to $12-billion, if need-
ed.
Sitting at home, talking about Enbridge’s finan-
cial muscle and growth plans, Mr. Monaco comes
about as close as any energy CEO ever can to talk-
ing trash about rivals.
Take the railroads. When Alberta oil companies
pumped more crude than pipelines could handle
last year, the railways saw an opportunity to grab
customers by shipping oil in tanker cars. Mr. Mona-
co expects to win back that market share this year
and next, as oil production falls and Enbridge
brings on additional capacity. The economics of oil
by rail, he says, just don’t make sense, since pipe-
lines can get oil to refineries on the Gulf coast for
about $8 a barrel, while the train trip costs roughly
$20.
Where some companies are coy about revealing
clients, Mr. Monaco wants everyone to know the
utility has long-term contracts with Canada’s large-
st, deepest-pocketed players – Imperial Oil Ltd. and
Suncor Energy Inc., top the list – providing a source
of dependable future cash. During a Merrill Lynch
virtual conference last week, he talked up the mas-
sive reserves among Enbridge’s clients, adding:
“This is a bit of a contrast to the shale situation.”
He didn’t go full Rodney Dangerfield on the al-
ready beat-up U.S. shale oil sector. (Whiting Pet-
roleum Corp., once the largest oil producer in
North Dakota’s Bakken region, filed for bankruptcy
last week, and more failures are expected.) But En-
bridge’s boss wants investors to understand its oil
sands clients will be sending crude down the com-
pany’s pipelines for decades to come, while shale
plays are now measuring their lifespan in months.
To date, Mr. Monaco’s defining moment as CEO
has been the $37-billion Spectra acquisition. The
deal added a growing natural gas business to En-
bridge’s portfolio and helped the utility maintain
its track record for hiking dividends, with average
increases of 11 per cent annually over the past 15
years.
Could the coronavirus crisis open up the oppor-
tunity for another major deal?
Mr. Monaco says the pipeline sector “is bound to
experience some dislocation, some distress,”
which means the barrier to another takeover is
simple: Quality utilities such as Spectra are unlike-
ly to run into trouble and almost always command
a premium price. But hunkered down at home,
marshalling Enbridge’s resources in preparation for
future growth, Mr. Monaco says his teams are track-
ing potential targets.
“We’re always looking.”
KEY
Liquids PiMeliLe
Liquids PiMeliLe
(MroMosed)
Natural Gas
TraLsmissioL PiMeliLe
Natural Gas GatheriLg
PiMeliLe
Natural Gas Liquids
PiMeliLe