UPDATE 1-TransCanada says Keystone leg to start on time; oil futures gain

Wed Oct 2, 2013 2:50pm EDT
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By Nia Williams and Matthew Robinson

CALGARY, Alberta Oct 2 (Reuters) - The southern portion of TransCanada Corp's Keystone XL oil pipeline is 95 percent complete and the company is focused on the line starting by the end of 2013, a TransCanada spokesman said on Wednesday.

Rumors the line could be delayed into 2014 have dogged the North American crude market in recent weeks. TransCanada's comments that the line would start on schedule helped narrow international Brent crude's premium to U.S. oil futures by nearly 70 cents to around $5.20 in afternoon trade.

Initial capacity on the Gulf Coast pipeline, which will ship crude from the Cushing, Oklahoma, delivery point of the U.S. oil futures contract, to Nederland, Texas, will be 700,000 barrels per day, expandable up to 830,000 bpd, TransCanada spokesman Shawn Howard said.

He declined to discuss volume commitments on the line from customers, but added it was "overwhelmingly subscribed".

The market has been focused on the start up of the pipeline to provide another conduit to the Gulf Coast refining center for inventories of crude that swelled to record levels earlier this year at Cushing on surging production from Canada, North Dakota and Texas.

"Once construction is done there's commissioning work that has to take place and continued testing. That will take some time. The end of the year is what we are focused on," Howard said, in response to questions about when shipping would start.

In an April filing with the U.S. Federal Energy Regulatory Commission, TransCanada said early leased capacity on the pipeline would be "approximately 400,000 bpd."   Continued...