TransCanada's Keystone Pipeline starts crude oil deliveries to US Midwest

Source: TransCanada

TransCanada Corporation (NYSE:TRP) announced that line fill of the first phase of the US$12 billion Keystone Pipeline has been completed and commercial deliveries of crude oil to U.S. Midwest markets at Wood River and Patoka, Illinois will commence on June 30, 2010. 

"Looking forward, Keystone will play an important role in linking a secure and growing supply of Canadian crude oil with the largest refining markets in the United States, significantly improving North American energy security," said Hal Kvisle, TransCanada president and CEO.
 
"The pipeline will also continue to have a significant impact on the North American economy through the thousands of manufacturing and construction jobs it is creating and the millions of dollars in tax revenues that will be paid annually to state and local authorities," added Mr. Kvisle. "Recently, an independent economic study found that the Keystone Gulf Coast expansion alone would inject more than US$20 billion into the U.S. economy and create 119,000 person-years of employment." 

Keystone Crude Pipeline Construction

In Canada, the first phase of Keystone involved the conversion of approximately 864 kilometers (537 miles) of existing natural gas pipeline in Saskatchewan and Manitoba to crude oil pipeline service. It also included approximately 373 kilometers (232 miles) of new 30-inch diameter pipeline, 16 pump stations and the Keystone Hardisty Terminal.

The U.S. portion of the Keystone Pipeline included 1,744 kilometers (1,084 miles) of new, 30-inch diameter pipeline in North Dakota, South Dakota, Nebraska, Kansas, Missouri and Illinois. It also involved construction of 23 pump stations and delivery facilities at Wood River and Patoka, Illinois.

TransCanada has commenced construction of the second phase of Keystone. It includes a 480 kilometer (298 mile) extension from Steele City, Nebraska to Cushing, Oklahoma and 11 new pump stations which will increase the capacity of the pipeline from 435,000 barrels per day to 591,000 barrels per day. The second phase of Keystone is expected to be in-service in the first quarter of 2011. 

Keystone Expansion

In July 2008, TransCanada announced plans to expand the Keystone crude oil pipeline system and provide additional capacity of 500,000 barrels per day from Western Canada directly to the U.S. Gulf Coast. An innovative and cost-competitive solution to a growing North American demand for energy, TransCanada received approval in March 2010 from both the National Energy Board in Canada and the South Dakota Public Utility Commission for the proposed Gulf Coast Expansion project. TransCanada expects to commence construction of the Gulf Coast expansion in the first quarter of 2011, pending the receipt of all regulatory approvals. 

The Keystone Gulf Coast Expansion project is a 2,673 kilometre (1,661 mile), 36-inch crude oil pipeline that would begin at Hardisty, Alberta and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska. It would incorporate the portion of the Keystone Pipeline that is currently under construction through Kansas to Cushing, Oklahoma. The pipeline will then continue on through Oklahoma and Texas to a delivery point near existing terminals on the Gulf Coast, to serve the Port Arthur, Texas marketplace. When completed, the expansion project will increase the commercial capacity of the Keystone Pipeline system to approximately 1.1 million barrels per day. 

The US$12 billion Keystone Pipeline system is 83 percent subscribed with long-term, binding contracts that include commitments of 910,000 barrels per day for an average term of approximately 18 years.



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