August 4, 2008

TransCanada announces plan to expand Keystone pipeline capacity

Richard Gilbert

staff writer

A Calgary-based company is expanding its plans to build a pipeline to transport oil from Alberta to the U.S. Gulf Coast, while construction of the project ramps up in both countries.

The Keystone pipeline expansion involves the construction of a 3,200-kilometre, 36-inch crude oil pipeline from Hardisty, Alberta to a delivery point near existing terminals in Port Arthur, Texas.

TransCanada Corporation announced recently that its plan for the pipeline system is being expanded to provide additional capacity of 500,000 barrels per day by 2012.

“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,” said Hal Kvisle, TransCanada president and CEO.

“The Keystone Pipeline will be constructed and operated as an integrated system with delivery points in the U.S. Midwest and U.S. Gulf Coast.”

When completed, the expansion will increase the commercial design of the Keystone Pipeline system from 590,000 barrels per day to about 1.1 million barrels per day and result in a total capital investment of about US$12.2 billion. The expansion is expected to cost about US$7 billion.

Construction of the Keystone terminal and initiating station began at Hardisty, Alberta on May 9.

Site preparations for pipeline construction in North and South Dakota started shortly after.

“By mid-summer of this year we expect to have up to 2,500 contractors working for us on Keystone in both Canada and the United States,” said Dean Cowling, project director.

Oil is expected to reach Cushing, Oklahoma, by late 2010 and deliveries to the U.S. Gulf Coast are expected to begin in 2012.

TransCanada announced earlier this year that the U.S. Department of State issued a Presidential Permit to TransCanada Keystone Pipeline authorizing the construction, maintenance and operation of facilities at the U.S. and Canada border to transport crude oil between the two countries.

Keystone received National Energy Board approval last year for two major regulatory applications to construct and operate the Canadian portion of the project.

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