By CHIP CUMMINS and JUDY McKINNON
TransCanada Corp., taking another a step to help alleviate a
glut of Canadian crude in landlocked Alberta, said Tuesday it
will seek commitments from shippers interested in capacity on a
pipeline-conversion project to send Western Canadian oil
to eastern Canadian refining markets.
TransCanada has been mulling the plan publicly for months,
amid a growing glut of oil in Western Canada that has depressed
prices there. The plan involves converting part of an existing
gas pipeline, TransCanada's Mainline network, for crude-oil
service, and building about 870 miles of new pipeline.
Depending on shippers' interest, the project could have a capacity of
some 850,000 bpd. TransCanada said that Canadian crude could
displace some 600,000 bbl of foreign oil that Canadian
refiners currently import along the east coast.
TransCanada said the line, subject to regulatory approval,
could be up and running by 2017. TransCanada said it would
commence an "open season" later this month, during which
shippers could express binding interest for capacity on the
The project, called the Energy East
Pipeline, would transport crude oil from Alberta and other
points in western Canada for delivery in Quebec and New
The open season is the latest move by Canadian pipeline
companies, oil producers and North American refiners to try to
circumvent a growing bottleneck of oil that's depressed prices
of western Canadian crude.
Amid growing Canadian production, particularly of heavy bitumen
from the country's vast oil-sands developments, shippers have
struggled to move all the new oil to refining markets in the US.
More recently, a surge in US production has competed with
Canadian crude for pipeline space, exacerbating the bottleneck.
Earlier this year, the price for Canadian crude fell sharply
compared to US and international benchmark oil because of the
difficulty producers had in getting their product to
More recently, that discount has eased somewhat. But
Canadian government officials, industry executives and analysts
say they expect price volatility as long as capacity on
pipelines out of Alberta remains tight. In addition to about a
half dozen proposals for new or expanded pipelines, producers
and refiners have started to move large volumes of Canadian
crude on railroads.
Separately, TransCanada is awaiting final US approval for
its proposed Keystone XL oil pipeline, which would carry heavy
crude from Alberta through the US to Gulf Coast
Dow Jones Newswires