16-07-08 TransCanada Corporation, on behalf of the Keystone Pipeline partnerships between TransCanada and ConocoPhillips, has announced plans to expand the Keystone crude oil pipeline system and provide additional capacity of 500,000 bpd from Western Canada to the US Gulf Coast in 2012.
The expansion is expected to cost approximately $ 7.0 bn. When completed, the expansion will increase the commercial design of the Keystone Pipeline system from 590,000 bpd to approximately 1.1 mm bpd and result in a total capital investment of approximately $ 12.2 bn.

Plans to expand to the US Gulf Coast follow successful negotiations with several prospective shippers who have agreed, subject to regulatory approvals, to make shipping commitments of approximately 300,000 bpd to the US Gulf Coast for an average term of 18 years during a binding open season. In addition, prospective shippers have also agreed to commit another 35,000 bpd to Wood River and Patoka, Illinois during a future open season expected in the thirdor fourth quarter of 2008.
With these commitments Keystone has now secured long-term commitments for approximately 830,000 bpd for an average term of 18 years. These commitments represent approximately 75 % of the commercial design of the system.

"The Keystone expansion will be the first direct pipeline to connect a growing and reliable supply of Canadian crude oil with the largest refining market in North America," said Hal Kvisle, TransCanada President and CEO. "The Keystone Pipeline will be constructed and operated as an integrated system with delivery points in the US Midwest and US Gulf Coast."
The Keystone expansion includes an approximate 3,200-km (1,980-mile), 36-inch crude oil pipeline starting at Hardisty, Alberta and extending south to a delivery point near existing terminals in Port Arthur, Texas and, subject to shipper support, will include an additional approximate 80-km (50-mile) pipeline lateral to the Houston, Texas area. With the addition of incremental pumping facilities, the Keystone Pipeline system could be further expanded from 1.1 mm bpd to 1.5 mm bpd.

During the binding open season Keystone will seek additional shipping commitments from interested parties. Once Keystone completes the open season process it will proceed expeditiously with the necessary regulatory applications in Canada and the US for approvals to construct and operate the proposed facilities.
Construction of the facilities is anticipated to commence in 2010 following the receipt of the necessary regulatory approvals. As a result, the majority of the $ 7.0 bn in additional capital investment required to expand Keystone to the US Gulf Coast is expected to be made between 2010 and 2012. Certain parties who have agreed to make volume commitments to the Keystone expansion have an option to acquire up to a combined 15 % equity ownership in the Keystone partnerships.

TransCanada is responsible for developing, constructing and operating the Keystone pipeline and has initiated outreach activities with key stakeholders including local communities and landowners along the expansion route.
It is expected that deliveries to Wood River and Patoka, Illinois will commence in late 2009. Deliveries to Cushing, Oklahoma are expected to commence in late 2010 and deliveries to the US Gulf Coast are expected to begin in 2012.