Unions could be winners in Trans Mountain shuffle of pipeline contractors
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 licences 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, said labour representatives.
Finance department spokesman Pierre-Olivier Herbert said the expanded union representation was part of an internal decision by Kinder Morgan, saying the federal government 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 said before the federal government 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 firms that will build the pipeline. It modifies an earlier list from September 2017.
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 cut back in the new list, halving its share of a 150-kilometre stretch of pipeline from Blue River, B.C. to Darfield.
Midwest Pipelines 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.