TransCanada to start Keystone line construction in 2008

By OGJ editors
HOUSTON, Nov. 1 -- TransCanada Corp. is preparing to begin construction in spring 2008 on the 1,845-mile US portion of its Keystone oil pipeline project, which will transport oil from Canada to the US Midwest.

Keystone will total 3,456-km, including additions to existing Canadian pipelines and mainline flow reversals. It is expected to start up in late 2009 with the capacity to deliver 435,000 b/d of crude oil from Hardisty, Alta., to the US at Wood River and Patoka, Ill.

The company has entered into contracts or conditionally awarded about $3 billion for major materials and pipeline construction contractors and is continuing to secure land access agreements.

TransCanada intends to apply to Canada's National Energy Board in November for additional pumping facilities to expand Keystone's capacity to 590,000 b/d and extend the line to Cushing, Okla., starting in 2010.

Based on the increased size and scope of the project and the executed material and service construction contracts, the Keystone project cost is now estimated at $5.2 billion.

Plans to expand Keystone were announced earlier this year following the successful completion of an open season that secured an additional 155,000 b/d of firm contracts for oil delivery from Hardisty to Cushing (OGJ, July 16, 2007, p. 10).

The project has secured firm long-term contracts totaling 495,000 b/d for an average of 18 years. And producers and refiners continue to express interest in contracting for additional volumes. In response, Keystone intends to hold another binding open season by yearend.

Keystone received NEB approval this year for two major applications to construct and operate the Canadian portion of the project. Applications for US regulatory approvals at federal and state levels are proceeding.

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