How deep red Nebraska (may have) killed the Keystone Pipeline

One of things I teach my students is that it is very important to know what you don’t know when operating in a foreign country. If you have a native-level understanding, great! Play the political game. But if you don’t, then it’s best to be completely hands-off (e.g., letting local partners do the work) or stay away.

The worst thing is to think you understand something you don’t.

This is a problem that Canadians often suffer.

Our case on the Keystone pipeline highlights this problem: TransCanada was prepared for national resistance to the pipeline, but never expected a problem with deep-red Nebraska. But they got one! Oh, boy, did they get one.

Our HBS case goes through that all in depth, but Karl Sigwarth, a former student, just sent me a great story in McLean’s that tells it all far more readably. (Cases, remember, are meant to be slightly cryptic!)

My favorite part:

Back in his office tower in Calgary, Alex Pourbaix, the affable, rosy-cheeked head of pipelines for TransCanada, still marvels at how a western Canadian oil company came to be so hated by ranchers in Nebraska.

“TransCanada didn’t just dream up the route out of thin air,” he insists. But Nebraska landowners could never understand why the company didn’t simply follow the route of the first Keystone project, along the far eastern edge of the state, out of the Sand Hills and away from the aquifer. The new path struck them as so illogical that some believed only secret ulterior motives could explain it. “What we’re really afraid of is that once the tar sands run out, they are going to be piping into the aquifer to get the water so that they can export the water to other areas of the country or overseas,” speculated one Nebraska farmer, Art Tanderup.

Pourbaix was amazed by the mistrust. “I don’t even know what to say to that.”

Now, heavy opposition to anything coming anywhere near the Ogalalla was super-predictable, as anyone who has ever read The Amazing Spider-Man knows:

You just don’t mess with anything iconic enough to make it into a comic book.

That’s serious advice, by the way. It was utterly ridiculous for TransCanada to be taken by surprise at the Nebraskan opposition. They could have avoided the whole damn thing by starting with the route they eventually chose. (The green line below, instead of the yellow.) That would have also gotten the route approved at the federal level before the opposition had a chance to mobilize.

But they were just too arrogant, failing to realize that their southern neighbor was in fact an entirely different country. No American would ever do that!

Comments

[Randy McDonald]

OK, am sharing this.

[John Huang]

TransCanada doesn't even do a particularly good job of understanding Canadians. They faced very similar opposition to a greenfield-situated natural gas generation plant in Ontario that was eventually cancelled due to environmental and political concerns. In that specific case, they avoided financial losses due to signed government contracts, but they displayed great incompetency in dealing with the public on such issues.

[Noel Maurer]

I did not know that! There's room for a wider case on TransCanada, written from secondary sources. Sadly, I don't think they'd approve a case on their terrible political risk management ...