In partnership with Business in Vancouver, JWN looks at the potential business impacts of the proposed Trans Mountain pipeline expansion project.
Winnipeg, Manitoba is a long way from coastal British Columbia.
In 2006, when native Winnipeggers Iggy Domagalski and Mike Miller moved from there to Vancouver and Calgary and started buying companies involved in the sale and distribution of industrial products like valves, motors and instruments, they probably had no idea their future business prospects would be strongly linked, ten years later, to plans for the $6.8 billion expansion of the Trans Mountain Pipeline.
Meanwhile, along with president Dan Peet, the partners have transformed what is now Tundra Process Solutions Ltd. from disparate businesses with seven small sales outlets, mostly within Western Canada, to a company that has 14 offices worldwide. This includes Calgary, Vancouver, Edmonton, Fort St. John, Bogota, Colombia, Cairo, Egypt, Texas, Louisiana, Denver and North Dakota.
Along the way the businessmen, both having finance backgrounds, have turned Tundra into a manufacturer as well as sales and distribution outlet that now has 140 employees and generates about $140 million a year in revenue.
“We have the broadest range of industrial products of any company in Western Canada,” says Domagalski, the company’s chief executive officer.
That product range and its extensive geographical footprint have helped Tundra cope with one of the most significant business downturns experienced in Alberta for decades, he says. For instance, while the Alberta offices took a significant hit as a result of the oil price collapse, he says the Vancouver office, with 40 employees, continued to do well.
And now Calgary-based Domagalski says he’s seeing “glimmers of optimism” in the Alberta market, where his company is very reliant on the health of the oil and gas industry.
“Capital spending won’t return to 2013 levels anytime soon,” he says, but after a painful adjustment, companies are starting to invest again.
The scenario could be changed by large new capital projects like the Trans Mountain expansion, which would transport oilsands products from near Edmonton to Canada’s West Coast.
Recent moves out of Ottawa to address issues raised by critics of the pipeline proposal, including a $1.1 billion commitment for oil spill response off the West Coast, are viewed as a sign the project will soon be approved by the Liberal government of Justin Trudeau.
That would be good news for Tundra, which manufactures products aimed specifically at the pipeline and broader midstream sector.
From its shops in Western Canada, Tundra now designs and builds components including electrical houses (E-Houses), which will be in great demand if the 1,150-kilometre Trans Mountain expansion goes ahead.
“Kinder Morgan Canada has been a client for 13 years,” says Domagalski. “We supply variable frequency drives, motors and E-Houses to them.”
If and when Kinder Morgan Canada’s expanded pipeline is approved, Tundra would be in the running to compete for the E-House contract, and that would create at least 100 new jobs, mostly for skilled tradespeople like electricians. In addition, it would create 10 ongoing maintenance positions.
While Kinder Morgan Canada president Ian Anderson has said construction could start in September 2017, with the project in-service in late 2019 (the company needs to comply with the 157 conditions set out by the National Energy Board), work on key components would likely start earlier.
Domagalski says Trans Mountain would need 50 E-Houses, which are located at pumping stations and terminals along pipeline routes. The units, about 15 feet by 60 feet in size, are used to house vital equipment that controls the flow of the pipeline.
“These are sophisticated units that help to control the speed of oil in the pipeline, and also of the temperatures in these buildings at the pumping stations,” says Domagalski. “In the summertime, in particular, there is a huge issue with overheating, especially in areas like Kamloops.”
E-Houses are linked to the pipeline electrically via large pumps, which are driven by large Toshiba motors, which are in turn controlled by Toshiba variable frequency drive units. The variable frequency drive units are located within the E-Houses.
Tundra employs engineers and technologists who help design the systems
While some components, such as the variable frequency drives, come from suppliers “we add engineering and project management value to them,” says Domagalski.
While Tundra has an ongoing stream of business from operating oil, gas and petrochemical facilities, like many suppliers new capital investment in the industry is vital for the company to grow its business in Western Canada.
“If we can access tidewater [with Alberta crude] there will be a huge trickle down impact, which will create thousands of jobs,” he says, adding that accessing new markets for Canadian oil is crucial as the single U.S. market is saturated and discounted.
While he can appreciate the positions of environmentalists and others opposed to Trans Mountain, Domagalski believes the impacts from the project will be property managed. He also believes it’s time to get on with building new pipelines.
“I believe in the economic well being of our country,” says Domagalski. “We need jobs.”