UNIONS WINNERS IN PIPELINE SHUFFLE,

OTTAWA • If and when construction begins on the Trans Mountain pipeline expansion, one of the biggest winners could be organized labour, thanks to a decision to increase the amount of work given to unionized companies revealed just before the federal government took possession of the project.

Though the government announced in May it would pay $4.5 billion to buy the pipeline and licenses for the expansion, the deal didn’t close until Aug. 31.

On Aug. 22, Kinder Morgan, then still the owner, released an updated list of contractors hired to work on the project. Two firms — Midwest Pipelines Inc. and Ledcor Group of Companies — had their share of the project reduced in favour of a unionized consortium, SA Energy Group.

“Obviously, it’s good news for the companies and for our association,” said Wayne Hodgins, the executive director-designate of the Pipeline Contractors Association of Canada, of which SA Energy Group is a part.

Ledcor and Midwest Pipelines declined to comment on the changes. Ledcor said in a written statement it “looks forward to working with our business partners” on Trans Mountain.

The decision appears to have marked a departure for Kinder Morgan, which for years resisted lobbying by organized labour in B.C. and Alberta to expand union representation among pipeline contractors, labour representatives told the National Post.

Finance department spokesman Pierre-Olivier Herbert said the expanded union representation was part of an internal decision by Kinder Morgan, saying Ottawa was well removed while the deal was being finalized. “We’re not making those types of decisions,” he said.

Kinder Morgan, for its part, said its updated selections were based solely on project-specific factors like safety, labour and materials costs, and the specific capabilities of contractors.

“The goal is to ensure that we deliver the project in the best possible way,” Kinder Morgan spokeswoman Ali Hounsell told the Post before Ottawa took possession of the pipeline.

SA Energy Group is a partnership between a subsidiary of construction giant Aecon Group Inc. and Robert B. Somerville Co. Ltd., a King City, Ont.-based firm.

The updated August list effectively lays out the companies that will build the Trans Mountain pipeline. It modifies an earlier list of companies, released in September 2017, that were awarded the early-stage “consultancy” work.

Construction will be divided between seven sections, or “spreads,” of the pipeline.

On the initial 2017 contractor list, SA Energy Group had won a single spread, comprising a 60-kilometre stretch near the B.C. coast.

The updated list shows that share expanded to three spreads.

Ledcor, which had won three spreads in 2017, had one trimmed back in the updated list, halving its share of a 150-kilometre stretch of pipeline from Blue River, B.C. to Darfield.

Midwest Pipelines, meanwhile, had won consultancy contracts in 2017 for the first and second spreads, leading roughly 300 kilometres from Edmonton to around Hinton, Alta. The updated list gives the company only the second spread, and awarded the Edmonton-area portion of the project to SA Energy.

One person with knowledge of the discussions, but who spoke on the condition of anonymity given the commercial sensitivity, said executives at Ledcor and Midwest Pipelines were notified of the scaling down just weeks after the government’s May announcement it would purchase the pipeline.

Ottawa now oversees the existing Trans Mountain pipeline through a Crown corporation that has retained several Kinder Morgan executives, including former president Ian Anderson.

The latest delay in the effort to expand the pipeline’s capacity to transport oil from Alberta to the B.C. coast came earlier this month, when the Federal Court of Appeal overturned cabinet’s 2016 approval of the project, requiring the national energy regulator to repeat a portion of its consultations before the government can proceed.

The decision halted construction on the expansion, potentially setting back the estimated timeline for completion.

According to public filings submitted by Kinder Morgan in August, the pipeline was already expected to come online as late as December 2021, a year later than expected, with the expansion potentially costing $1.9 billion more than the initial estimate of $7.4 billion.

The firms building Trans Mountain have not officially announced the construction contracts, or disclosed their values, due to uncertainty around when the project might move ahead.

Terry Parker, executive director of the Building Trades of Alberta, said his group has for years been lobbying for an increased share of the Trans Mountain expansion.

“Our provincial offices have been talking to Trans Mountain continuously, and our national office has been relentless that this work goes to union trades people across Canada,” he said.

Both Kinder Morgan and industry observers said it’s common for some shuffling to take place on a preferred contractor list before project construction gets underway.

“Until there’s a contract signed, nothing’s in the bag,” said Robert Blakely, officer at Canada’s Building Trades Unions.