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CALGARY, Alberta, Oct 10 (Reuters) - Canadian regulators have approved TransCanada Corp's 900,000-barrel-per-day Grand Rapids pipeline to carry diluted bitumen from Fort MacKay in the oil sands of northern Alberta to the marketing and transportation hub of Edmonton, Alberta.
Following a public hearing in the summer, the Alberta Energy Regulator ruled the pipeline can go ahead subject to 26 conditions relating to routing and environmental monitoring.
As well as shipping crude to Edmonton, Grand Rapids will transport 330,000 bpd of diluent from the Edmonton area to the Fort MacKay terminal.
Oil sands producers must blend about 30 percent diluent into each barrel of crude, otherwise the oil sands bitumen is too viscous to flow through pipelines.
TransCanada is also the backer of the controversial Keystone XL pipeline. Bitterly opposed by environmentalists and many landowners along its route, the proposed pipeline would carry oil sands crude to U.S. Gulf Coast refiners. The project has waited six years for the Obama administration to issue a permit allowing construction to proceed.
Brion Energy, a wholly owned subsidiary of PetroChina , will be the anchor shipper on the Grand Rapids pipeline with committed production from its Dover and MacKay projects expected to eventually reach 520,000 bpd.
TransCanada said it was confident the remaining capacity on Grand Rapids will be taken up by nearby oil sands projects that are in development or producing and do not have existing pipeline contracts.
There are 15 producers owning 22 oil sands projects within 50 kilometers of the pipeline.
"Grand Rapids is a long-term project and the pipeline is sized to efficiently accommodate growing oil sands production over the long term," a TransCanada spokesman said.
The project will consist of two 460-kilometer (288-mile) main lines, two 4-kilometer lateral pipelines, three pump stations and two tank terminals with approximately 1 million barrels of storage.
Construction is expected to start in the autumn of 2014 with the pipeline becoming operational in stages, with initial crude transported by mid-2016. The pipeline system should be completed in 2017. (Editing by Peter Galloway)