TransCanada and ConocoPhillips plan pipeline expansion for $7 billion

17 July 2008

TransCanada Corporation, which owns Canada's largest pipeline network, in association with ConocoPhillips is planning a $7-billion pipeline expansion that will add capacity to transport crude oil from western Canada to the US Gulf Coast refiners.

According to a statement by TransCanada, the Keystone pipeline, which was originally intended to transport around 590,000 barrels per day, would be expanded by around another 500,000 barrels per day, with the expansion program likely to start by 2012. When complete, it would transport around 1.1 million barrels of oil per day.

In a statement, TransCanada CEO Hal Kyisle said, "The Keystone expansion will be the first direct pipeline to connect a growing and reliable supply of Canadian crude oil with the largest refining market in North America." He said that the Keystone pipeline would be constructed and operated as an integrated system, with delivery points in the US Midwest and US Gulf Coast.

The company says it already has contracts in place with customers for 300,000 barrels a day, and the remaining capacity would be open for bids for a binding open season starting Wednesday and lasting until 4 September.

Houston, Texas-based ConocoPhillips is the third largest oil company in the US, and along with TransCanada will spend around $5.2 billion on the Keystone pipeline to transport 590,000 barrels per day by 2009 across the continental US to the Midwest refineries.

The first phase of the Keystone pipeline will move around 530,000 barrels a day of Alberta sands crude to the US Midwest by 2009, is now under construction, and will eventually extend from Illinois west to Nebraska, merging the two phases to head south. The capacity addition would facilitate the processing of output from the Alberta oil- sands by Gulf Coast refiners, who account of around half of the US refining capacity. The second phase would follow by around 2012.