CALGARY, Alberta (Reuters) - Kinder Morgan Energy Partners LP KMP.N said on Thursday it would more than double the size of its Trans Mountain oil pipeline with a C$5 billion (US$5.02 billion) project to add 550,000 barrels per day of new capacity to the line that carries oil sands crude to Vancouver and Washington’s Puget Sound.
The company said that at a recent “open season” held to gauge shipper support for an expansion of the line, shippers were willing to commit as much as 660,000 bpd to the expansion for a 20 year term.
“This strong commercial support shows the market’s enthusiasm for expanding market access for Canadian crude by expanding an existing system,” Ian Anderson, president of Kinder Morgan Canada, said in a statement.
The project is larger than the C$3.8 billion plan to double the size of the 300,000 bpd line that the company initially proposed in February.
Canadian oil producers have been urging development of a line to let them tap high-paying Asian markets and U.S. West Coast refineries. The majority of Canada’s oil exports now flow to the U.S. Midwest, where a glut of crude at the Cushing, Oklahoma, storage hub has depressed prices.
Production from Alberta’s oil sands, the world’s third largest crude oil reserve, is set to nearly double to 3 million barrels per day by 2020.
Trans Mountain, which takes oil to the port of Vancouver and refineries in British Columbia and Washington state, is the only pipeline carrying Alberta oil sands crude to the Pacific. Space on the line has been rationed for months as customers look to ship more oil than it can handle.
But the project, which could be completed in 2017, is facing a rival proposal from Enbridge Inc (ENB.TO), which is seeking approval for its 525,000 bpd Northern Gateway pipeline to take oil sands crude to a deepwater port at Kitimat, on British Columbia’s northern coast.
Kinder Morgan said it planned to file for regulatory approval of the project in 2104 and construction could begin in 2016.
Trans Mountain runs 1,150 kilometers (713 miles) from Edmonton, Alberta, to Vancouver.
($1 = $0.99 Canadian)
Reporting by Scott Haggett