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Cold Lake Pipeline System expansion planned

Alberta Energy Co. Ltd. (AEC), Calgary, said Monday it's entered an agreement to expand the Cold Lake Pipeline system in northeastern Alberta. It has also entered a partnership which has signed long-term transportation agreements with several large Canadian companies.

AEC, through its subsidiary AEC Pipelines LP, Koch Pipelines Canada LP, and Canadian Natural Resources Ltd. (CNRL) have formed the Cold Lake Pipeline Ltd. Partnership, in which AEC will have a 70% interest and Koch and CNRL each having a 15% interest. Koch Pipelines Canada said it will invest $50 million to acquire its 15% interest. AEC will construct the new pipeline and be operator of the system, it said.

The Cold Lake Pipeline partnership will construct the Hardisty transmission line, a 250-km, 24-in. pipeline that will transport heavy oil from the Cold Lake area to Hardisty, Alta., at a cost of $143 million. The pipeline, which will connect at Hardisty with the Express pipeline system, Koch Hardisty terminal, and other facilities, will have an initial capacity of 200,000 b/d and is expected to be on stream in January 2002.

The Cold Lake System also will be extended north to AEC's steam-assisted gravity drainage heavy oil project at Primrose, Alta.

The current Cold Lake Pipeline System includes a 24-in. bitumen blend and a 12-in. diluent pipeline between Cold Lake and Edmonton. The existing pipeline will be included in the partnership. The combined assets, valued at $330 million, will provide heavy oil shipping capacity of 450,000 b/d initially.

The newly formed partnership has entered into long term shipping contracts with Imperial Oil Ltd., Koch Petroleum Canada LP, Canadian Natural Resources Ltd., and AEC Oil & Gas, a unit of AEC. These companies have committed to shipping 315,000 b/d for an initial term of 10 years, and have dedicated current and future oil reserves to the Cold Lake Pipeline system.

"Expansion of the Cold Lake Pipeline System will provide oil producers in northeast Alberta with efficient, cost-effective pipeline transportation connections to all Canadian and export markets for Alberta oil production," said Hector McFadyen, president of AEC's Midstream Division.

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