TransCanada Begins Permitting for $2.1 Billion Keystone Crude Oil Pipeline Project

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Researched by Industrial Info Resources (Sugar Land, Texas). TransCanada Corporation (NYSE:TRP) (Calgary, Alberta) has filed permitting applications for the Canadian and U.S. portions of its proposed Keystone Pipeline project. The Keystone Pipeline will be capable of transporting 435,000 barrels per day (BBL/d) of crude oil and will originate near Hardisty, Alberta, and will extend approximately 1,830 miles and terminate near the crude oil storage and pipeline hub near Patoka, Illinois.

The proposed pipeline system will involve a combination of new pipeline construction and the conversion of an existing natural gas pipeline to crude oil service in Canada. The entire project carries an estimated capital cost of approximately $2.1 billion and is viewed as a competitive way to link the growing oil sands supply to refineries in the Midwest. The Keystone Pipeline proposal would also be able to interconnect with other existing crude oil pipelines that could supply refinery markets in Cushing, Oklahoma; Wood River, Illinois and the Gulf Coast.

The Canadian portion of the pipeline proposal will involve the construction of 230 miles of new 30” diameter pipeline and the conversion of approximately 530 miles of existing pipeline owned by TransCanada from natural gas to crude oil transmission. The Canadian portion will also involve the construction of six new pump stations and the partial conversion of nine existing compressor stations to supply pumping services. Each pump station will utilize two or three 4,000 horsepower electric-drive motor pump packages. Construction activities will span across the provinces of Alberta, Saskatchewan and Manitoba.

The U.S. portion of the Keystone Pipeline proposal will involve the construction of approximately 1,070 miles of new pipeline. The new pipeline will have a diameter of 30” with the exception of a 55-mile portion that will connect Wood River and Patoka, Illinois. To support the pipeline, approximately fifteen new pump stations will be constructed. The size of the new pump stations will be approximately the same as the Canadian pump stations. The estimated operating pressure of the new pipeline sections in both Canada and the U.S. will be 1,440 pounds per square inch (psi). Construction in the U.S. will be spread across the states of North Dakota, South Dakota, Nebraska, Kansas, Missouri and Illinois.

TransCanada filed its Section 74 transfer application with the NEB on June 6, 2006, and expects to begin public hearings on the Canadian portion of the Keystone Pipeline project on October 23, 2006, with the NEB. In the U.S., the applications for a Presidential Permit and an Environmental Impact Statement have been filed. All things considered, TransCanada expects to begin construction on its Keystone Pipeline project some time in either late 2007 or early 2008, with a completion and in-service date targeted for some time in 2009.

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