TransCanada plans to expand is Keystone oil pipeline system and provide additional capacity of 500,000 barrels a day from Western Canada to the US Gulf Coast in 2012.
The expansion is expected to cost $7 billion (4.76 million) and will increase the commercial design of the Keystone Pipeline system to 1.1 million b/d from 590,000 b/d and result in a total capital investment of $12.2 billion. Keystone Pipeline is a partnership between TransCanada and ConocoPhillips.
Several prospective shippers have committed, subject to regulatory approvals, to shipping 300,000 b/d to the Gulf Coast for an average term of 18 years during a binding open season that began on 16 July.
TransCanada will accept bids for firm transportation capacity until September 4. Prospective shippers agreed to commit another 35,000 b/d to Wood River and Patoka, Illinois., in a future open season in Q3 or 4 this year. As a result, Keystone has secured long-term commitments for 830,000 b/d with an average term of 18 years. That represents 75% of the system's commercial design
'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,' Hal Kvisle, TransCanada president and CEO, says. 'The Keystone Pipeline will be constructed and operated as an integrated system with delivery points in the US Midwest and Gulf Coast.'
The expansion includes a 1,980-mile long, 36-in. diameter pipeline starting at Hardisty, Alberta, and extending south to a delivery point near existing terminals in Port Arthur, Texas. Subject to shipper support, Keystone will add a 50-mile pipeline lateral to the Houston area. With addition of incremental pumping facilities, the pipeline system could be further expanded to 1.5 million b/d from 1.1 million b/d.
Construction will commence in 2010 following necessary regulatory approvals. Certain parties who agreed to make volume commitments to the expansion have an option to acquire up to a combined 15% equity ownership in the Keystone partnerships.
TransCanada is responsible for developing, constructing and operating the Keystone pipeline. Deliveries to Wood River and Patoka, Illiois, are expected in late 2009. Deliveries to Cushing, Oklahoma, should begin in late 2010, and deliveries to the Gulf Coast are anticipated 2012.