Aecon JV awarded CA$526M TransCanada pipeline contract
- Canadian infrastructure contractor Aecon Group announced Tuesday that TransCanada Corp. has awarded SA Energy Group — a 50/50 joint venture between Aecon and Robert B. Sommerville Co. Ltd. — a CA$526 million (roughly $409 million) contract to build two segments of the Coastal GasLink Pipeline in British Columbia.
- SA Energy will construct more than 76 miles for spread three of the project and then almost 46 miles for spread four. Both sections are located northeast of Prince George, British Columbia. The project is supported by LNG Canada, which is a joint venture between Shell, PETRONAS, PetroChina, Mitsubishi Corp. and KOGAS.
- The current schedule will see preconstruction work begin in mid-2019, construction in July 2020, substantial completion by November 2021 and final completion by the end of 2022. “Our strong relationships with local unions and workforces," said Mark Scherer, executive vice president of Aecon Industrial, "proven success working with Indigenous groups and outstanding safety performance makes SA Energy Group a partner-of-choice for executing pipeline construction projects in Western Canada."
This marks the latest pipeline project for SA Energy, which previously did business under the Somerville Aecon joint-venture banner. Between 2012 and 2017, the joint venture built more than 620 miles of large-diameter pipeline from Ontario to British Columbia. Recent awards under the new partnership include a $282 million contract from Enbridge for construction of almost 120 miles of pipeline — split into two segments — in Manitoba, Canada. Both shares are part of Enbridge's largest project ever, the multi-billion dollar Line 3 Replacement, which runs between Canada and the U.S. At the time of the announcement in July, this and other projects, according to company executives, pushed Aecon's backlog to record levels.
According to a study of 365 oil and gas mega-projects by professional services firm Ernst & Young, approximately 71% of the investment was spent through joint ventures like SA Energy. Like companies in the general construction industry, the reasons for forming a joint venture typically can be boiled down to a few reasons, including the desire to spread the risk, to share the financial burden, to take advantage of proprietary methods or technology of one partner, to establish a significant presence in a particular market and to meet regulatory requirements that domestic companies take part in a project.
And for contractors hoping to participate in energy pipeline projects, it would certainly help to have a company that is experienced in navigating the environmental regulation process. Even those who are in favor of pipeline projects running through or near where they do business or live tend to be apprehensive about potential leaks or spills, so the pressure is on contractors to make sure they've met every regulation and taken every precaution to protect the areas surrounding pipeline installation.
Failure to do so can come with a hefty price tag. In August, the Federal Energy Regulatory Commission halted construction on the West Virginia-to-Virginia Mountain Valley Pipeline due to environmental lawsuits targeting the project's permits. The agency allowed construction to resume later in the month, but Mountain Valley said the stoppage resulted in an additional $500 million in costs.
Follow Kim Slowey on Twitter