When it comes to the oil and gas business, it's rare that I would make a comparison between a pipeline operator and an integrated major, yet here we are. I spent the better part of this summer covering Enbridge (NYS: ENB) and its difficulties in the media regarding a major 2010 pipeline spill. The company is suffering from a banged-up reputation, and facing incredible opposition to a key project. If we look at the history of ExxonMobil (NYS: XOM) , however, we see that there is potential opportunity for Enbridge to raise the bar for all pipeline companies.

Exxon's lesson
In March of 1989, the Exxon Valdez spilled oil all over Prince William Sound, in southern Alaska. At that point, it was the largest oil spill in U.S. waters; the cause of the spill and Exxon's immediate reaction to it more or less decimated the company's reputation. The best-run company in the industry was now the most-hated.

The following year, Exxon had a deadly refinery explosion, and yet another spill outside of New York City. Unable to escape public scrutiny, the company was reeling. Rather than continue on its downward spiral, Exxon developed its Operations Integrity Management System, or OIMS. The approach entailed thorough internal evaluations across the company and prioritized safety, health, and the environment. Today, the company's safety culture is the gold standard in the industry.


Enbridge
Over the past two years, Enbridge has walked a similar path. In July of 2010, an Enbridge pipeline in Michigan suffered a catastrophic leak. The oil that leaked into the Kalamazoo River was diluted bitumen, fresh from Canada's oil sands.

When the National Transportation Safety Board finally published its review of the incident this summer, it cited gross negligence, weak oversight, and a general lack of preparedness as the reasons behind the magnitude of the spill. As was the case with Exxon, Enbridge was criticized for the cause of the spill, as well as the company's public reaction. Shortly after the report was released, the company had another pipeline leak in Wisconsin, increasing the number of punches it was already taking on the front page.

Uphill battle
Enbridge now faces an extremely challenging climate for future projects, but it also faces an opportunity to change its internal operations and set the bar higher for pipeline operators. Exxon proved it could be done, but whether Enbridge finds the same success remains to be seen.

Follow the company's progress on Fool.com: Click here to add Enbridge to My Watchlist.

The article What Can Enbridge Learn From Exxon? originally appeared on Fool.com.

Fool contributor Aimee Duffy holds no position in any company mentioned. Click here to see her holdings and a short bio. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy. The Motley Fool owns shares of ExxonMobil. 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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Income Investing

Grow your nest-egg.

View Course »

Introduction to Economic Indicators

Measure the performance of the economy.

View Course »

Add a Comment

*0 / 3000 Character Maximum