TransCanada Plans Early 2011 Start of Keystone Pipeline Cushing Extension

TransCanada Corp., Canada’s biggest pipeline operator, expects the Cushing Extension of the Keystone system to be in service in the first quarter next year, a company executive said.

“We are about 80 percent complete on the pipeline and about 75 percent complete on facilities,” Ken Murchie, a director of pipeline development, said today at the Platts Pipeline Development and Expansion conference in Houston. “We are looking at having construction completed this year.”

The Cushing Extension, the second phase of the $12 billion Keystone pipeline project, extends a 36-inch pipeline from Steele City, Nebraska, to Cushing, Oklahoma, and will increase capacity to 591,000 barrels a day, he said.

TransCanada’s Keystone pipeline, which runs more than 3,800 miles (6,200 kilometers), will move crude oil from western Canada to the U.S. Midwest and Gulf Coast.

The pipeline is being built in stages. The first phase, from Hardisty, Alberta, to Wood River and Patoka, Illinois, started service in mid-2010 with a throughput capacity of 435,000 barrels a day.

The U.S. Gulf Coast expansion, the third phase of the project and known as Keystone XL, will be operational by early 2013 if regulatory approvals are completed, Murchie said. The XL extension will extend from Cushing to Nederland, Texas, linking refineries on the U.S. Gulf Coast to Canada’s oil sands.

More Scrutiny

U.S. politicians and environment groups have increased attention to the project in the wake of the BP Plc well blowout in the Gulf of Mexico and a leak in a pipeline operated by Canadian rival Enbridge Inc. in Michigan.

“We weren’t that surprised by additional scrutiny after these events,” Murchie said. The additional 90 days that’s been added to the review of applications by the U.S. State Department has not altered TransCanada’s plans to start construction on the Gulf Coast expansion in 2011, he said.

The Calgary-based company withdrew an application on Aug. 5 to run the Keystone XL pipeline at higher-than-normal pressure. The lower pressure will reduce Keystone’s capacity to 700,000 barrels daily from 900,000, Robert Jones, vice president of the pipeline project, said in an interview in August.

TransCanada became the sole owner of the Keystone pipeline system in June after buying ConocoPhillips’s interest in the project.

To contact the reporter on this story: Leela Landress in Houston at llandress@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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