(Adds project details, background on Fort Hills)
July 23 (Reuters) - TransCanada Corp said on Wednesday that the Alberta government had approved construction of its C$800 million ($745 million) Northern Courier pipeline, which will connect the Fort Hills oil sand project to a tank farm in northern Alberta.
Canada's second-largest pipeline company said it expected to start construction on the 90-kilometre (56-mile) oil pipeline in the third quarter and to have it ready for service by 2017.
The project will transport bitumen and diluent between the Fort Hills oil sands project in northern Alberta and Suncor Energy Inc's East Tank Farm near the oil sand hub of Fort McMurray, Alberta.
Suncor and its partners, Teck Resources and Total SA, approved development of Fort Hills late last year. The C$13.5 billion project will produce up to 180,000 barrels per day, with first output expected in late 2017.
TransCanada said it would own, build and operate the Northern Courier pipeline, with the line's capacity fully contracted under long-term agreements. The project is part of the Calgary-based company's long-term capital growth plan.
$1 = 1.0739 Canadian dollars Reporting by Julie Gordon in Vancouver and Sneha Banerjee in Bangalore; Editing by Don Sebastian and Lisa Von Ahn