TransCanada ramps up East Coast pipeline as Keystone stalls

Thu Aug 1, 2013 5:46pm EDT
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By Scott Haggett

CALGARY, Alberta (Reuters) - TransCanada Corp announced plans on Thursday for Canada's largest pipeline, a 2,700-mile, $12 billion line to ship crude from the oil sands of Western Canada to the Atlantic, as its U.S.-bound Keystone XL project stalls in Washington.

Canada's No. 2 pipeline company said "strong market support" convinced it to build the 1.1-million-barrel-per-day Energy East Pipeline, which will bring crude from Alberta to refineries in Eastern Canada and to a new deepwater oil terminal on the Atlantic for export from Canada.

The Energy East line will be nearly a third larger than the 850,000 bpd capacity TransCanada proposed in April.

The line, which still needs regulatory approval, could be in service by late 2017 for deliveries to Quebec and 2018 for New Brunswick, potentially reshaping the Atlantic Basin oil market and opening up new markets for Canadian crude.

Customers have already pledged to use at least 900,000 bpd of the line's capacity, suggesting that producers and refiners will pay for an export route, while regulatory hurdles delay pipelines in Western Canada and to the United States.

"It looks like they got far more interest than they were initially expecting," said analyst Sandy Fielden of consulting firm RBN Energy in Austin, Texas. "It also solves two problems for the company as they have this large natural gas pipeline that has been made largely redundant."

Most of the pipeline will run along an existing TransCanada gas line, with new construction in Alberta and in Quebec and eastern Canada.

But while cross-Canada political support was mostly strong, environmental groups that have resisted projects to pump crude across the Rocky Mountains to Canada's Pacific Coast are already attacking TransCanada's new plan. The government of Quebec, where memories of a crude oil rail crash that killed 47 are still fresh, has yet to say if it will support the project.   Continued...

President and Chief Executive of TransCanada Russ Girling addresses shareholders during the company's annual general meeting in Calgary, Alberta, April 26, 2013. REUTERS/Todd Korol