Regina – TransCanada looked at the way it does business and realized it wants to diversify its supplier base.
That was the message from Andrea Korney, senior manager, supplier diversity and stakeholder relations with TransCanada. She spoke to the Saskatchewan Oil and Gas Supply Chain Forum in Regina on Oct. 4
This is of particular consideration as the long-delayed Keystone XL pipeline project is now planned to start construction in the second half of 2019.
“We are re-engaging in this project,” she said. “We have all the major permits that we need, across Canada and the U.S.
The project will have 38 pump stations. Eight of those pump stations are in Canada, three of which are in southwest Saskatchewan at Fox Valley, Piapot and Grassy Creek.
The 36-inch pipeline will run from Hardisty, Alta., connecting to the original Keystone pipeline at Steele City, Nebraska. It’s almost 2,000 kilometres of new pipeline, of which 529 kilometres are in Canada, and of that, a large portion is in Saskatchewan.
She noted there was some long political history involved, saying “We’ve been trying to build this pipeline for over 10 years.”
In January 2017, newly-elected President Donald Trump invited TransCanada to resubmit its application. (The project’s Presidential Permit application had been denied by previous President Barack Obama.) A few months later, he granted the Presidential Permit. She noted it was a big move for TransCanada. The recent approval by the Nebraska Public Services Commission in November 2017 led to the company re-engaging.
“We are in the process, right now, of construction preparation activities. This is engaging with our prime contractors, understanding what suppliers exist locally across where this project will go ahead. We’re also looking to secure some of the land permits and agreements that we to go; environmental surveys, of course, as well.”
“The anticipated construction for this project is for 2019 and 2020, with an in-service date of 2021. And of those of you who speculate this might have something to do with U.S. elections, you’re probably not wrong. Our intention is to really get this project going, but it is also very important to TransCanada. This is something we really believe in. Its been in our books for a very long time.”
She noted there are still some regulatory challenges in the U.S. they are keeping a close eye on. “But we’re continuing to proceed as if we’re going to have construction in that 2019-2020 time frame.”
The pipe refurbishment program started this past July. (See related story Page A???)
Korney spoke of engaging with a broad range of qualified suppliers. “Qualified suppliers lead to safe projects, lead to reduced opposition, lead to protection of the environment, lead to protection of people. So we really love to engage with the top primes and the top subcontractors with inclusive qualification programs and performance management programs.
“The original Keystone line really brought to our attention that we really need to focus on diversification of our supply base,” she said. “What can happen in supply chains is you can get very long-standing relationships with your prime contractors and they tend to know how to bid your projects, you know how to receive their projects. If we don’t continue to add diversification in our supply base, we could not be getting the best commercial value. We might not be seeing the most innovative practices and processes. So we really want to continue to make sure we work to diversify that supply base, work with our primes to ensure they’re following the principles TransCanada really values, making sure work stays locally around your communities.”
She noted Bloomberg recently recognized TransCanada on a sustainability index for Indigenous relations, public affairs, community relations and their supplier diversity program. A lot of that came from these efforts seeking diversity in their supply chain.
“Our contracting strategy is to ensure we are including diverse, local, Indigenous suppliers within our overall supply chain, whether, we, with a unionize workforce or non-union. We do that in many ways. Through our major projects, what we do is we look at the scope of the projects. We look at the areas the projects are happening. And we try to align those things with the local goals of some of the associations, ministries, chambers of commerce, any of the unions that happen to be present in the places we’re working.”
Korney noted the use of local hotels and restaurants, as well as educational opportunities.
In operations, she said they have a very intensive pipe integrity program, spending hundreds of millions of dollars each year on things like integrity digs.
Regarding contracts, she said, “All types of contracts can be used in our contracting strategy. We are a category management shop at TransCanada, so we do have categories of spend, however, that doesn’t limit the opportunity to do things that make sense on a scope by scope basis, and using different forms of contracts and how we do that.”
TransCanada works with Indigenous communities in several ways. This includes traditional knowledge studies, opportunities in the supply chain, and educational opportunities.
“We’ve been doing Indigenous relations at TransCanada for a significant number of years. We’ve extended our diversity program to include other diverse groups across Canada, and into the U.S. as well.”
That also includes Mexico.
Becoming a vendor
The online vendor registration portal is where to start. “A lot of suppliers see this as a big black hole. It isn’t,” Korney said. “This is the first step in identifying yourself to us. If you are a local supplier and you do have a local contact that you’re working with TransCanada, don’t be afraid to ask questions.”
Korney explained that when prime contactors are asked to include and Indigenous participation plan or a diverse and local participation plan in a bid package, “The message I want to get out to you is we really want you to be as robust and thorough as you possibly can.”
“And while I understand that traditionally TransCanada’s response is you must have the best commercial value or come in at the lowest price, we will not be able to work with you if you do not identify what those options are.”
“It might take longer and cost a little bit more money. Just tell us that, and let us make the choice. Oftentimes we do have extra budget that we can kick in, or, in regards to the Indigenous relations effort, we have people that will help negotiate those subcontracts that you receive, and help get them into the price and it helps you be more competitive,” Korney said.
“The most important message I need to give to you is communicate with us.”
On vendor qualification, she said, “We do a general qualification that looks at your safety, your quality, your technical and your financial ability to do the work. Ours is risk-based, so high-risked all the way down to low-risk, requiring different things.
“Those of you who worked with TransCanada in the past may think TransCanada’s impossible to get qualified by, and we may have been, at times. But we’ve been doing a lot of work to make this easier for our suppliers and to help you get through the process.
“Qualification will not be a barrier to you getting work. We will just work with you and help you get those expectations on track to bring you in. So if you do have problems, and again, don’t be afraid to ask. Our goal is to have a very diverse workforce and a large supplier pool to draw from. It benefits us to help you with your qualification.”
She noted there’s a lot of opportunity for local supply on the operations side, and a lot of it is low risk, too. These low risk opportunities are good for younger businesses.
Talking about the supplier development strategy, she explained big projects often go to big companies, but they are looking for opportunities to include smaller companies.
“Oftentimes, when you have a company as large as TransCanada, the scope of work is very big. And they typically go to firms that can bid on a several-million-dollar scope. What we’re trying to do, with our carve-outs, is even if it’s pipe construction, if you only have the capacity or experience to do a smaller spread, or smaller diameter pipeline build, that’s okay. It doesn’t mean we don’t want to include you on the bid, and it doesn’t mean we won’t consider you. We might award smaller sections of work based on capacity. As resources get tighter and tighter, we tend to get more creative in this space,” Korney said.
That could involve joint ventures or partnerships. “We will never tell you you must joint venture, however, we will tell you if we believe there’s an opportunity for you to joint venture with another company to bid on a larger scope of work. We can make introductions for you. Hopefully, you have a happy marriage. As soon as we make the introduction, that’s where our part stops.”
She noted a big expectation is the Indigenous and local participation components on an ongoing basis.
“Indigenous and local participation is in every bid,” she concluded. And the company tracks these items, too.