Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 6 - Evidence, October 4, 2016
OTTAWA, Tuesday, October 4, 2016
The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to study on the development of a strategy to facilitate the transport of crude oil to eastern Canadian refineries and to ports on the East and West coasts of Canada.
Senator Michael L. MacDonald (Deputy Chair) in the chair.
The Deputy Chair: This morning we are continuing the study on the development of a strategy to facilitate the transport of crude oil to eastern Canadian refineries and to ports on the East and West coasts of Canada.
Appearing by video conference from Nisku, Alberta, is Todd Halina, Chief Operating Officer for Chemco. Mr. Halina began his career with Chemco Electrical Contractors Limited in 1996. Upon completion of his electrical apprenticeship in 2001, he joined the procurement department. In 2007, Mr. Halina was promoted to Procurement Manager and joined the ownership group. In his current position, Mr. Halina oversees the construction management group.
Todd Halina, Chief Operating Officer, Chemco Electric: Thank you very much for having me this morning and good morning to everyone.
I've been invited to speak on behalf of our organization, and I appreciate the opportunity. We're an industrial contractor based out of Alberta — I know you've learned a little about us — a second-generation leader here in the province of Alberta within our organization.
My family is the founder of this company, and we have strong beliefs around family values, community participation and involvement of all people — men and women of different races and beliefs.
I would like to speak specifically about what the pipelines mean to the province here in Alberta and how I view it as a business owner, as well as a proud Albertan.
We sit on an energy-rich province that is basically landlocked. As everyone is well aware, without these pipelines or another form of transportation, this product will basically be unused.
There have been a lot of challenges from industry, people maybe not being informed, a lot of opinions on issues with pipelines, possible transportation by rail, and I can understand the challenge of having to deal with all these different perspectives on how to move this product specifically out to the east or west ports.
One strategy that we have been using with our organization to increase communication is getting to know the individuals that we're dealing with. We started on a diversification process here in the last five years looking to different industries. Within that process, one of the first areas that we ran into was First Nations and understanding what we were doing and how it was going to impact them.
Personally, I was involved at the start with trying to strategize working with them. Right away I understood that I needed to understand exactly what their communities were challenged by, what their communities would like to do and not like to do. None of the discussions ever came around a political scenario, more about their community and understanding the challenges that they were faced with.
When the discussions first started, it definitely was challenging because I could tell that there was a lack of trust. Obviously, throughout the years different businesses have moved into areas where First Nation involvement and businesses didn't meet up to the expectation or didn't meet their promises, so it truly was about building a relationship with them prior to any kind of business discussions. So it was right from going to the different communities, reviewing the schools, looking at the children, understanding the challenges that those children are having every day.
Everyone I've met has family, and they are deeply rooted in their family values. It really came to light that they were just trying to understand if we were going to be a positive impact on the ability of their communities to continue to grow and prosper.
Since then, we have gained trust in them and understanding what they are looking for. So now the risks have been removed on the trust scenario. We were able to basically move forward with what we would refer to as a joint venture with them in some scenarios, as well as we have most recently started up a new company that will be majority First Nation owned.
Why I'm speaking about this so much is I view this as one of your largest challenges, in that there are communities where all these projects have an impact. It's understanding what they're truly scared of rather than people just protesting. Generally, I believe it's the minority of these groups that are protesting because they don't understand how a project, whether it be a pipeline, a refinery or any type of construction project, would impact their communities.
Truthfully, I believe that everyone in Canada wants the same. We love the country of Canada. It's a free place to live and people want to prosper. What we need is open communication so that people don't have the understanding that an oil company owner is making a whole bunch of money for transporting crude across the country and it's not benefiting the public.
In the rural communities that a lot of these pipeline projects impact, generally these communities have already gone through several boom-and-bust cycles, especially in the Western provinces, due to oil and gas. A suggestion could be that there be mandatory inclusion of small businesses in those communities as these pipelines move through. There's a huge positive economic impact that these small communities could see, and I truly believe that if they understand the benefits of these programs, then you will have majority support.
I think it's inevitable that the crude has to be moved at some point in time. There are lots of discussions around renewable energy, which is great, and I think it will be part of Canada moving forward as well, but it will be a combination of all these industries that will keep us a successful country, at least from our perspective here in Alberta and within our organization and my family values.
I'm not really sure exactly what type of information you're looking for this morning. Being straight to our values here in Alberta, we have seen great success as a company. We've been in business for over 50 years, and it really has come to family first, being honest, working with people and doing what we say.
I look at a lot of these projects as being just another business venture, obviously on a very large scale. It comes back to once something is proposed, it's following a set agenda, keeping the project on schedule, keeping people interested and knowing that there will be an outcome.
From the public's perspective, if I step away from the business avenue, I look at most things in my life similar to my business life, and that is a schedule-driven program. So if you have a plan that's within the next five years and you want to have a pipeline across Canada, how are you going to get there and what are the steps you're going to take, and then communicate that schedule back to the public.
That will create confidence within the public that, yes, we are on track, we know what we're doing and we're sticking to the plan. It's when the public sees projects sliding on schedule — at least from my perspective — so if we are planning for 5 years and the project is sliding to a 10-year project. Why? Generally, schedule slip is going to increase the cost of things. So cost certainty is very important.
On the project level, we have experienced some projects with extreme cost increase, and that's for multiple reasons. Generally, there are three main reasons that we see, on the construction side, of why projects are overrun.
First, it starts with engineering. Traditionally, prior to construction start, engineering is not what we'd classify as complete. So what happens is constructors mobilize too early in a project prior to engineering being completed. When that happens, we start to be inefficient, and by being inefficient it starts to cost more money and our schedules slip. So the end-user sees this as being a cost overrun without a lot of cost certainty, and then we lose the trust, whether it's the public, the project owner or our construction team, for that matter.
That's really what I have this morning. I'd be open to any questions. If there's anything specific you would like to talk about, I'd be more than happy to answer any questions.
The Deputy Chair: Thank you very much for your presentation. We'll turn to questions from the senators.
Senator Unger: Thank you, Mr. Halina, for appearing before our committee, which, as you know, is studying pipelines and, more specifically, Energy East.
You recognize that each Aboriginal community is unique, and you stated that, and you build separate relationships with them. There are three things that you talked about. The second was striving to fill your commitments to your Aboriginal community partners, and the third is encouraging training and apprenticeship for Aboriginal youth, which focuses on the employment of those who complete these training programs.
Would you take a couple of minutes specifically to develop each of these points for us, to give us further insight into how Chemco Electric has been successful in forming these relationships?
Mr. Halina: Sure. The first item is the different communities. I have dealt with two different First Nation bands or communities. One is in Saskatchewan and one in northern British Columbia. They are very different. It starts with history, where the bands originated from and what their values were and how they participated in the past.
A lot of my initial discussions with First Nations groups are about their ancestral history and what things they are very, very proud of. For example, in northern British Columbia, they were very proud of their farming heritage and their hunting and trapping, and understanding that gave me a context of how to communicate with them.
My family has a large rural background in farming and ranching. That discussion lends itself to having a positive communication with them about something they truly are interested in. The discussions weren't around Site C dam and the negativity of Site C dam. It was more about being a farming and ranching community. This is land we pasture our cows on. We have people that are great ancestors buried in these plots, and there's a potential that Site C dam could impact this, but not once did they come forward to me with any negativity around Site C. It was specifically about them communicating to me about some of their concerns or fears.
The First Nation in Saskatchewan was a more roaming-type First Nation. They travelled the prairies. They were very proud of some of the battles from hundreds of years ago that they had had with other First Nations in the area. They went into depth about how proud they were about their senior leadership and their ability to look outside the box, not be traditional as far as saying no to things, but be more progressive. They were proud of that. They were a leading example in First Nations on community training. That specific First Nation has what they refer to as an Iron Buffalo Training Centre. They were very focused on their internal community and understanding that they needed to train and educate their local members so they could get out. They promoted members to leave their First Nation reserve and become doctors and lawyers. So there was one First Nation who really wants to stick at home and do farming, ranching, hunting and fishing, and then another one was very progressive. They want their members to get out and get trained and become doctors, lawyers and possibly come back and assist others within their community.
So if I was to discuss with the two groups' chiefs, it's two totally different discussions. That has to be recognized. Every one of these groups is different, and they have different values. Yes, there are some cases where by geographical region the bands would be similar in nature, but they are all different, and that's something to needs to be recognized.
What was the second comment?
Senator Unger: You encouraged training and apprenticeship for Aboriginal youth, and then a focus on employment. Would you speak about that?
Mr. Halina: Specifically with First Nations, unfortunately there's not a lot of great lead by example. A lot of the next generation, the younger generation, may not know their moms and dads, or mom and dad may not be around. Grandma or grandpa is still there. We have been a large supporter of bringing them to light, giving them opportunity.
First of all, they don't know what opportunities present themselves. They don't understand what's available to them. The trades are a great opportunity for First Nation employment. Generally most trades you can start with a Grade 10 education, and traditionally that seems to be where First Nations communities start to really see a high increase of children dropping out of school. So we have to re-engage them and offer them the apprenticeship programs. An individual in Canada can make a very substantial living working as a tradesperson, whether they want to be a welder, an electrician, a pipefitter, a carpenter or do mechanical instrumentation. These are all very good, solid jobs in the Country of Canada, the Province of Alberta or Saskatchewan or British Columbia. These trades are all recognized across the country.
So talking to a First Nations group, you can say that you can get a job in Alberta, and if things slow down in Alberta, you can get a job in Saskatchewan or you can get a job in Manitoba. So it really opens the door to this youth.
There is nothing saying that they can't be multi-trade disciplined. We have lots of tradespeople that have multi-trades. On projects, all these trades are required. So whether it's pipelining, facility builds or maintenance, these are all good, solid jobs that this country will need for generations.
When we talk about a pipeline project, there are two points specifically, and this is where we get a lot of buy-in from individuals. One is building the project, and the second would be maintaining it. So our organization, as an example, wouldn't exist if we did not have maintenance work. That's something that is rarely talked about. So if we were to build a pipeline through several areas, there will be long-term jobs there for communities. It's not building a pipeline and then the pipeline company leaves and there's no work. There will be work there for generations. The work will be there basically for as long as the pipeline is in service.
These First Nations aren't going anywhere. They're going to be there for that same duration. We have to engage these First Nation individuals and this younger generation, although it truly has nothing to do with age. Apprenticeship can start when you're 50 years old. It has a huge impact for us.
Senator Eggleton: Mr. Halina, thank you very much for your presentation. I congratulate you for what you've described here as reaching out to First Nations people and the way that you do it.
You talk about building relationships, building trust, addressing their values. You talked about your company's own values, your family values, and you have a lot to be proud of in terms of how you're doing that. It sounds like a very genuine kind of engagement with the First Nations population.
I don't know details about what other companies do in the oil patch, but we certainly get the impression that there are a lot of confrontations involving indigenous people and some companies in the oil patch. Why isn't more of it being done the way you do it?
Mr. Halina: I guess there are a couple of different ways to look at that, and this may be just my opinion.
I've been very fortunate and brought up with very strong family values that taught me that everyone has the right to work and equality.
I think a lot of the oil companies haven't done what they said they were going to do, and I don't think that they have been held accountable.
We have a lot of great relationships with — we'll just call them the large pipeline owners of Canada. I'm seeing a major change right now with them specifically saying, "Yes, we need to do this and we need contractors like you to help us do it.'' They're struggling as well with how to communicate with the First Nations groups.
I can specifically speak on behalf of our organization. We are very open-minded about this, and we went into it without being opinionated on whether First Nations people were right or wrong in the choices that they were making and how they were voicing those opinions.
Traditionally, I think there are still a lot of pipeline owners, or people working for pipeline owners, that have maybe had a bad experience working with First Nations. They, in essence, have thrown their hands up and said, "We don't know how to deal with this,'' rather than trying to move forward and saying, "We're not listening. We need to understand what they're looking for so we can work with them.''
There was a bad reputation out there among First Nations groups possibly looking for handouts from oil companies. That's not the case. That may have been the case in some scenarios, but when you talk about community, those handouts weren't going to the community. They may have been going to someone in a senior role or something, but I personally haven't experienced that. Those discussions have never come up with us, and we have never presented anything like that along those lines.
That's not what we're communicating. We're communicating that we want to bring value to your community, employ your people, engage with your groups and be invited to your community functions. Those are truly the relationships we have been able to build, but we have been very open and accommodating, just even in terms of time frames. They may call for a meeting today at 10 and they'll show up at 2, and that's just something we have to understand and manage. I'm okay with that. Our organization is okay with that. The expectation is that everyone here needs to be open, understanding, and accepting of different individuals, their values, and, really, what they're looking for.
Senator Eggleton: You keep doing what you're doing, and I hope it rubs off on some of the other companies.
The Deputy Chair: Any other questions from senators?
Senator Unger: Mr. Halina, I understand that your company is based on values and that you are working for Aboriginal youth. Can you tell me how many trainees who start, say, studying for any trade — plumber, electrician or maintenance — typically complete their training, and do you then employ many of these people?
Mr. Halina: Yes. Traditionally, we set KPIs, or key performance indicators, for ourselves, so we hold ourselves accountable, meaning that we would say of our mandatory apprenticeship programs, we would have a percentage based on region for First Nations content. There is an apprenticeship program called Trade Winds to Success specifically designed to try to engage First Nations youth, or First Nations in general.
Right now we're as high as 30 per cent in some scenarios, and that's where we're trying to be. We have also had areas where we haven't been able to make our targets because there hasn't been the interest from individuals in those regions.
So what I have to take back from that is: If there is not enough interest, what am I doing that I'm not communicating this opportunity properly? It reflects back on us. It's not a reflection on the area that suggests the people don't want to work. It's about how I can communicate that this is positive for these people and they should take this as a positive consideration to becoming a tradesperson.
In the trades program, as long as there is consistent employment, generally the individuals will finish their training. We'll speak about the Alberta program, which is a four-year cycle for most trades. They would work about 1,800 hours and then qualify for two months of school training. During that time at school, traditionally, most people would go on unemployment to assist with the costs of going to school. If you're a First Nations person, those schools would be located in major areas, like Edmonton, Calgary, Red Deer, and some of the other larger cities here in Alberta.
Because they have to come into those major areas, there are additional costs for those individuals and it's very expensive to go to school. Something that the Alberta apprenticeship program is considering is the use of online learning, so the students could do it from home, in their area of residence, for four days a week and do technical training one day a week. If they were within driving distance, they would be able to drive to and from that major area. Ideas like that will continue to support people in finishing the training.
Once they have their apprenticeship, it is most likely the best avenue for them to make a good living. Most of these trades are going to pay between $75,000 and $125,000 a year, which is a good wage structure for any individual and it is something they can look forward to.
What we need to ensure is that there will be jobs for them, so it comes back to how we keep projects moving and make sure we don't have too many projects at once, whether they are pipeline projects or any type. We need to try to mitigate that to make sure we don't need 20,000 electricians for three years and then we only need five the following three years. It's running consistent projects that will keep these people employed in those trades.
[Translation]
Senator Boisvenu: First of all, Mr. Halina, I would like to join my colleague Senator Eggleton in congratulating you on your company's very commendable efforts to integrate Aboriginal youth into the workforce. This is how we can improve the socioeconomic status of Aboriginal communities which, in many cases in Canada, is truly alarming.
A few days ago, the Liberal government announced the approval of a very important project in western Canada, the PETRONAS project. It is reportedly the largest industrial project in Canada in the past decade and will have natural gas and shale gas operations in British Columbia. Despite all of that, we know that Aboriginal communities have turned to the UN in protest of the environmental impacts of this economic project.
What is your company's position on this project? Do you foresee impacts for you? Could the Aboriginal communities' opposition to the project potentially damage the ties your company has developed with them?
[English]
Mr. Halina: That's a very good question. I will take my best stab at that. Based on the relationships that we're developing with these First Nations of trust and doing what we say, I do believe that we will be able to continue to develop our organization, working with First Nations. There are going to be things that come about where they are going to be in complete disagreement, for multiple reasons. In those situations, I traditionally have taken a step back and just said, "Okay, let's see; I need to understand where their concerns are.'' Then, if invited, with them, I would have the discussions about how I would view that and how I can see that impacting.
With the environment, I think it's fair to say that we all love our country and don't want to see the environment damaged in any way, so it's the risk mitigation. How much risk is the country, the First Nation and the pipeline owner willing to take? There are lots of technologies that could have a huge benefit to pipeline leaks, as an example.
We've had projects where we installed fibre optic lines to increase the ability for leak detection drastically. This is new technology, but it potentially could really reduce impacts. It would reduce minutes to milliseconds in valve closures.
Obviously, technology adds cost to projects, but something along that line is something about which, when we spoke to First Nations about pipelines and explained about some possible technologies, the discussion starts to become very positive. They all understand that projects need to happen. They're not saying they can't happen. They just want them to happen safely and so that it is not going to impact them within their traditional lands.
So I do think it's a work-in-progress. It's very ongoing, but I do strongly believe that, with relationship building, there can be positive outcomes.
There are some projects that are going to be planned that most likely shouldn't happen because the risk is going to be too high, and no one is willing to take that risk on. I'm just not sure what they are. Hopefully, I answered your question.
The Deputy Chair: Thank you, Mr. Halina for your presentation today. It was very informative. I think everyone appreciates the efforts that your company makes in this regard. We apologize for the technical difficulties on the front end, but thank you for your patience.
With that, we'll sign off. I want to let honourable senators know that our next meeting will be tomorrow evening, Wednesday, October 5, at 6:45. We will hold the meeting in room 257 of the East Block, where we will consider the remainder of the recommendations for the draft report and will also go over and approve our budget.
The meeting is adjourned.
(The committee adjourned.)