TransCanada plans U.S. Bakken pipeline link

Thu Jan 20, 2011 5:17pm EST
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - TransCanada Corp plans to build a $140 million link to its proposed Keystone XL oil pipeline from the Bakken oil region in the northern United States, a project that would send more crude to a huge Oklahoma storage hub, the company said on Thursday.

TransCanada, whose $7 billion XL pipeline to the U.S. Gulf Coast from Alberta is awaiting U.S. State Department approval, said shippers from the fast-developing Bakken oil region have committed to capacity of 65,000 barrels a day on the planned link.

That is less than the 100,000 bpd the company had on offer, but pushes the project above its economic hurdle, TransCanada Chief Executive Russ Girling said.

"There was substantially more interest in the proposal and as that production comes on, I would expect we would move closer to that 100,000 barrels a day," Girling said in an interview.

The line would provide access from Baker, Montana, to Cushing, Oklahoma, the delivery point for New York Mercantile Exchange West Texas Intermediate oil futures, and on to the U.S. Gulf Coast.

The Bakken geological formation, straddling North Dakota, Montana and Saskatchewan, is the target of brisk investment as companies employ the horizontal drilling and multistage rock fracturing technology developed for shale gas.

Output from the U.S. portion of the region is expected to climb as much as 300,000 bpd by 2015, nearly doubling current overall North Dakota oil output. Pipeline capacity has lagged production increases.

The line would start up in the first quarter of 2013, but it is dependent on Keystone XL being approved, TransCanada said.   Continued...