TransCanada President and CEO Russ Girling joined his counterparts from Canada’s five largest pipeline companies on June 5 to discuss the role of leadership in enhancing the industry’s safety record. The CEOs were participating in the National Energy Board’s annual forum on safety in the energy industry.
The following is an abridged version of Girling’s speech to forum delegates about TransCanada’s safety record and his thoughts about how instilling a strong safety culture is key to achieving the industry’s goal of zero pipeline leaks and safety incidents:
I would like to start by thanking National Energy Board Chairman Gaétan Caron and the NEB for your leadership in keeping the Canadian pipeline industry at the leading edge of safety awareness, technology and performance. In large part, because of your efforts and collaboration with the industry, Canadians enjoy one of the lowest incident rates in the world and our Canadian industry is looked to for advice and as an example of best practice.
That said, over the past couple of years public confidence in what we do has been shaken. And rightfully so. Several high profile, horrific events have occurred that have resulted in significant environmental, property and human tragedy. The scenes of these events have been repeatedly played on 24/7 news networks and through social media – like never before – bringing the worst of our industry into mainstream conversations. As a result, public trust has eroded and many are questioning what we do and how we do it – no matter where in the world or what companies are involved – these incidents have impacted the perception of our whole industry.
As an industry and as individual companies we need to work together to understand why these events occur and what we can do collectively to improve performance, minimize the probability of recurrence and regain public confidence in what we do. If we do not regain confidence, we will lose our social license to build and operate – this is not about choice. If we do not maintain the authority to build and operate, simply – we are out of business – and as CEOs there is nothing more fundamental to our businesses than that.
TransCanada is a diversified, leading North American energy infrastructure company with operations across three core businesses: natural gas pipelines, power generation, and oil pipelines. At their core, all three businesses are very similar. Basically, we build and operate massive steel and rotating machinery to transport and process liquid and gaseous hydrocarbons and produce energy from a myriad of fuels. Businesses upon which the public depends to meet their daily needs to heat their homes, cook their food and power their vehicles and the energy our nation needs to keep the lights on and the economy moving. These are important businesses, but businesses that have inherent risk that needs to be managed very carefully. Today, we operate assets valued at close to $50 billion, and we have $25-billion in commercially-secured projects underway and another $20 billion in development.
We are very proud of our 60 year track record of safety and environmental performance. But we are not where we want to be yet, and I am not sure we will ever be satisfied when it comes to safety. However, I believe we are on the right track through the building of a culture and governance that guides decision-making and state-of-the-art asset management systems that ensure rigor and discipline in all of our many processes.
In TransCanada, our safety culture is predicated on the concept that all accidents are preventable and that ZERO incidents is our ultimate goal. The first step towards ensuring we have a safe environment is ensuring we have a workplace where the company’s priorities are clearly articulated and aligned with individual priorities and that everyone makes value-based decisions in a similar manner. Ensuring a safe and continually improving workplace requires all employees, from the Board of Directors to the folks in the field, to share a common view of the importance of safety and clear understanding of how that objective fits relative to the other competing objectives in an organization.
It sounds easy enough – doesn’t the CEO just tell everyone safety is the most important thing and everyone follows? Well, not really – there is a long history of incidents that suggests that snappy slogans and green logos alone don’t work. All of the major incidents over the past few years have involved companies that I believe have clearly articulated the importance of safety and environmental stewardship – so what happened? In my view the priorities were not clear.
In large industrial organizations there are many competing objectives – cost management, profit, performance, deadlines, schedules, contractual commitments and so on. All of these create pressures on individuals to act in a certain way. And in my view, it is these mixed signals that are a major contributor to most industrial accidents. If you study the history of industrial accidents, many come back to time and cost pressure; and as a result, all of these incidents were preventable.The question is: how do we make sure that our workforce and our contractors understand what priority we place on safety and how we expect them to act?
When we say safety is the highest priority, how do we get them to understand what that actually means? In my view, it’s about culture. It’s about walking the talk, from the Board of Directors all the way to the front line. When we say that safety is our first priority – we need to actually act like it is. For example, do we reward individuals for shutting down a job site or operations because they think there is a potential problem? If there really isn’t a problem, that could be very expensive. It could impact revenue, cost and schedule in a very material way. These kinds of decisions and trade-offs are required hundreds of times each day at every level in the organization. And every employee needs to make the decisions the same way. A well-honed safety culture, in my view, is the only way of making sure everyone in the organization makes the decision based on the same fundamental values and beliefs. This means encouraging people to err on the side of caution – and to make sure these people are supported and rewarded for doing so. We can always make up lost dollars but we can’t ever repair the damage and devastation of a catastrophic event.
At TransCanada, I’m very comfortable we are on this path. For example, last week, we had a call from a local landowner close to the Keystone Pipeline that he observed a sheen on some water along the pipeline. The operating staff quickly determined the safest course was to shut down 600,000 barrels per day of crude oil delivery. Obviously this is very expensive to us, our shippers and the marketplace. It was not an easy decision.
As things turned out, the sheen was actually a sewage discharge from a local farmer – a septic back-up – the sheen had nothing to do with our pipe. I can’t touch every decision in our company and in fact I didn’t even know this had occurred. But I can tell you that when I read about this on my Reuters Newswire it was very gratifying. I was gratified to see our public outreach campaigns have worked – the landowner recognized a potential issue and knew who to call. And I am comforted that our employees felt empowered to make such a decision. To me, that is safety culture and we will celebrate and reward that type of decision-making.
Culture alone can’t solely be relied on – in complex operations such as ours, we need state-of-the-art systems, processes and technology to manage the integrity of our assets. Our systems define how people are to carry out their responsibilities. They are a set of interrelated and interacting processes and procedures used to implement our policies and achieve our objectives. They govern the way we plan and do our work, measure our results and continually improve: We call it the Plan – Do – Review quality management cycle. Once we identify a risk, we develop plans to reduce and, if possible, eliminate the potential for an incident. And in the unlikely event of an incident, these programs work to mitigate the consequences. These systems, combined with our safety culture, give me confidence that we can meet the public’s expectations.
Thank you again to the NEB for providing a forum for the exchange of ideas and enhancing awareness about safety in our industry. I look forward to continuing this discussion as we move forward.
For more information about pipeline safety at TransCanada, see a recent video of our pipeline control centre.
Learn more about the National Energy Board’s Safety Forum 2013.