Kinder to more than double Trans Mountain pipeline

Thu Apr 12, 2012 6:04pm EDT
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By Scott Haggett

CALGARY, Alberta (Reuters) - Kinder Morgan Energy Partners LP KMP.N said on Thursday it would more than double the size of its Trans Mountain oil pipeline with a C$5 billion (US$5 billion) project to add 550,000 barrels per day of capacity to the line that carries oil sands crude to Vancouver and Washington's Puget Sound.

A recent "open season" held to gauge shipper support for an expansion of the line showed that shippers were willing to commit to an expansion even greater than the 550,000 bpd for a 20-year term, the company said.

The revised project is larger than the C$3.8 billion plan to double the size of the 300,000 bpd line that the company initially proposed in February before drawing back to look for additional customers willing to sign binding 20-year contracts to ship oil on the pipeline.

"We knew that as the project's design was evolving it would allow for more commitments," said Ian Anderson, president of Kinder Morgan Canada. "We also knew, or believed, that the market had some players in it ... that might still be interested."

Canadian oil producers have been urging development of a line to let them tap high-paying Asian markets and U.S. West Coast refineries. The majority of Canadian oil exports now flow to the U.S. Midwest, where a glut of crude at the Cushing, Oklahoma, storage hub has depressed prices.

Production from Alberta's oil sands, the world's third largest crude oil reserve, is set to nearly double to 3 million barrels per day by 2020.

The Trans Mountain expansion is one of several pipeline projects in the works as Canadian oil producers look to tap new markets and avoid the discounts they face at Cushing.

Enbridge Inc's (ENB.TO: Quote) Northern Gateway project is also looking to move oil to a Pacific port, while Enbridge's Gulf Access Project and TransCanada Corp's (TRP.TO: Quote) controversial Keystone XL pipeline are looking to push oil sands crude to the refining cluster on the U.S. gulf coast.   Continued...