Oct. 30 (Bloomberg) -- TransCanada Corp. and a unit of PetroChina Co. Ltd. agreed to develop a C$3 billion ($3 billion) oil pipeline to ship crude from oil-sands projects in northern Alberta.
TransCanada and Phoenix Energy Holdings Ltd. will each own 50 percent of the proposed Grand Rapids Pipeline, which will ship oil 500 kilometers (310 miles) from the Fort McMurray oil-sands production area to Edmonton, according to a statement yesterday.
The stake would be the largest taken by a Chinese company in a Canadian pipeline, according to data compiled by Bloomberg. PetroChina expects to produce 400,000 barrels a day from its Dover and MacKay River oil-sands developments near Fort McMurray, according to a website for the projects.
“Transportation in the Athabasca region has become a bottleneck,” Zhiming Li, the chief executive officer of Phoenix, said in the statement. “This transportation solution will be important to Phoenix and other potential producers in the area to monetize their huge resources.”
The plan includes a 900,000 barrel-a-day crude pipeline, and a 330,000 barrel-a-day pipeline for diluent, fluids mixed with tar-like bitumen so it can flow through pipelines. The project is expected to be in service by 2017.
“This is the first major pipeline project to meet the needs of this fast-growing area,” TransCanada Chief Executive Officer Russ Girling said in the statement.
TransCanada, based in Calgary, will operate the system and Phoenix has agreed to ship crude on it. Phoenix is a unit of publicly traded PetroChina, controlled by Chinese state-owned China National Petroleum Corp., according to filings. CNPC owns a controlling interest in PetroChina.
In March, PetroChina bought the interest it didn’t own in MacKay River through its joint venture with Athabasca Oil Corp. Dover Operating Corp., owned by Athabasca Oil and PetroChina, runs the projects.
Margaret Jia, a spokeswoman for CNPC companies in Canada, didn’t return telephone calls seeking comment.
TransCanada rose 1 percent to C$44.83 at the close in Toronto in yesterday.
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