TransCanada Keystone XL Pipeline Approved by Canada

By Jordan Burke

March 11 (Bloomberg) -- TransCanada Corp., owner of Canada’s largest pipeline system, received approval to expand the Canadian portion of its Keystone pipeline to bring crude from Alberta’s oil sands to refineries in the U.S. Gulf Coast.

Canada’s National Energy Board announced the approval with 22 conditions in a statement today. The 1,980-mile (3,185- kilometer) Keystone XL project extends the Calgary-based company’s existing Keystone pipeline, which runs through Canada to the central U.S. and will begin operating this year.

“Keystone will be the first pipeline to directly connect a growing and reliable supply of Canadian crude oil to the largest refining market in North America,” TransCanada Chief Executive Officer Hal Kvisle said in a statement.

TransCanada became the sole owner of Keystone in August, buying ConocoPhillips’s 20.1 percent stake for about $550 million. The company cited increasing oil-sands production in its decision to buy out its partner. ConocoPhillips had owned as much as 50 percent of the line.

The 327-mile Canadian portion of the Keystone XL pipeline will run from Hardisty, Alberta, to the U.S. border at Monchy, Saskatchewan, and cost about C$1.7 billion ($1.66 billion). From there the line will cut across Montana, South Dakota and Nebraska before joining the existing Keystone pipeline. The XL expansion will also extend the pipeline from Cushing, Oklahoma, to Houston and Port Arthur, Texas.

Canadian Conditions

The National Energy Board’s conditions include options on landowner rights and environmental protection. TransCanada must also report to the board on the pipeline’s expected greenhouse- gas emissions and how to reduce them. A voicemail message left for TransCanada’s media department seeking comment on the approval wasn’t immediately returned.

The Keystone XL pipeline will have a 36-inch diameter and carry up to 500,000 barrels per day, according to TransCanada.

A portion of the Keystone pipeline is scheduled to start operating in mid-2010, Kvisle said during a Feb. 23 conference call with investors. The Keystone XL expansion is targeted to start operating in 2012, according to TransCanada’s Web site.

The entire Keystone system is expected to cost about $12 billion, the company has said.

TransCanada owns 37,000 miles of pipelines and has interests in another 5,000 miles. TransCanada fell 3 cents, to C$36.11 at 5 p.m. on the Toronto Stock Exchange.

--Editors: Tina Davis, Dan Stets.