TransCanada plans another oil pipeline to Gulf Coast

At its annual meeting in Calgary, Alberta, Hal Kvisle, president and CEO of TransCanada, said Keystone Phase II, a 36-inch pipe, would go from Alberta to Nebraska and then turn south to Port Arthur, Texas.

Kvisle showed shareholders a map with the pipeline entering the U.S. in northeast Montana and running diagonally to northwestern South Dakota and leaving the central part of the state at the southern border with Nebraska.

"This would not just be a modest expansion of Keystone," he said. "It would, in fact, be a larger project than the original Keystone that we're building over the next two summers."

He said good progress has been made in negotiations with Alberta producers and Gulf Coast refiners on the new pipeline.

"By connecting to the Gulf Coast, our Keystone expansion project would narrow the price differential that currently exists between Alberta wellhead prices and the Gulf Coast refining market," Kvisle said. "A narrower price differential would bring enormous economic benefits to Alberta, raising the price of all crude oils here in Alberta, and bringing benefits to both the Alberta economy and specifically Alberta producers of crude oil."

TransCanada officials have not yet contacted the South Dakota Public Utilities Commission about the proposed second pipeline, PUC Chairman Gary Hanson said Tuesday. The PUC earlier approved a construction permit for the TransCanada pipeline that will cross the eastern part of South Dakota, and the company would have to seek the same approval before it can build Keystone Phase II in the state, Hanson said.

"We're certainly interested in knowing what they're going to be proposing," Hanson said.

The PUC approved a construction permit in March for the portion of Keystone's original $5.2 billion pipeline that will run through the eastern part of the state. That pipeline also will run through eastern North Dakota.

The company, based in Calgary, Alberta, hopes to begin building the 2,148-mile pipeline this spring, pending approval of a federal permit. It is designed to deliver 590,000 barrels of crude oil daily from Alberta, Canada, to refineries in Oklahoma and Illinois.

TransCanada is stockpiling pipe at many locations along the route, Kvisle told shareholders at the April 25 meeting.

"We'll have that Keystone pipeline system up and running by the end of 2009. That will establish TransCanada as a major player in the oil pipeline business," he said.