Construction Pay Seen Rising as Much as 30% From Keystone

Building the Keystone XL pipeline would temporarily increase construction wages for some workers in three U.S. states by as much as 30 percent, according to a study by Bloomberg Government.

Average construction wages in South Dakota where portions of a separate pipeline were built starting in 2008 rose 10 percent to 30 percent to more than $600 a week, according to the study released today. The same premium may apply for workers in certain Montana, South Dakota and Nebraska counties along the route of the planned XL pipeline connecting Hardisty, Alberta, and Steele City, Nebraska.

The wage boost would subside after the project is finished.

“The project will add thousands of temporary jobs at peak construction,” according to the study by Jason Arvelo and Rob Barnett, analysts at Bloomberg Government. “These jobs may temporarily boost construction wages.”

TransCanada Corp. applied for a U.S. permit to build the project across the international border in 2008. Environmental groups oppose the pipeline they say will increase emissions blamed for global warming and threaten water resources with potential spills. The U.S. State Department, which has jurisdiction over the $5.3 billion project, may make a recommendation to President Barack Obama by September.

Two Years

Estimates for construction and manufacturing employment range from 2,500 to 20,000, depending on assumptions of how much of the project’s budget will be spent in the U.S.

TransCanada will build the pipeline in two years, according to the study.

Permanent jobs to operate the pipeline may be as few as 20, according to the State Department.

Employment at oil refineries along the U.S. Gulf Coast that receive crude through the pipeline is not likely to change with higher imports, according to the BGOV report.

Workers on a section of the pipeline that is under construction from Oklahoma to Texas haven’t captured the premium because prevailing wages in the region were already higher, the study found.

For the U.S. refineries along the Gulf Coast, employment will probably remain unchanged, according to the study.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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