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TransCanada to start Keystone South oil deliveries to Texas refining belt

12.04.2013  | 

TransCanada expects to begin delivering oil January 3 to Texas on the southern portion of its Keystone pipeline, allowing more crude to leave a key delivery hub in Oklahoma.

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By DAN MURTAUGH

CALGARY (Bloomberg) -- TransCanada expects to begin delivering oil January 3 to Texas on the southern portion of its Keystone pipeline, allowing more crude to leave a key delivery hub in Oklahoma.

TransCanada’s Gulf Coast pipeline can carry 700,000 bpd of crude to Port Arthur, Texas, from Cushing, Oklahoma. The Calgary-based company disclosed its plan to start service on January 3 in a filing with the United States Federal Energy Regulatory Commission. 

That adds to the capacity of the Seaway pipeline owned by Enterprise Products Partners and Enbridge, which now carries 400,000 bpd to Houston from Cushing. The operators have said they expect Seaway’s capacity to reach 850,000 in the first half of 2014.

“It’s bullish for WTI because we’re going to be pulling more barrels out of Cushing,” said Carl Larry, president of Oil Outlooks & Opinions in Houston. “Once they start taking out, say 500,000 bpd, along with Seaway expanding, it’s going to pull crude out of Cushing a bit faster than it’s going in.”

Bottleneck Moving

“This pipeline startup enables refineries to move significant amount of crude from the Mid-continent to the Gulf Coast,” said Andy Lipow, president of Lipow Oil Associates in Houston. “That reinforces that the logistical bottleneck is moving from Cushing to Gulf Coast.”

Building the 700,000 bpd Gulf Coast line will cost $2.3 billion, TransCanada has said. It began construction in August 2012. After the line’s initial capacity is reached, it will be able to expand to 830,000 bpd, according to the company.

The pipeline was originally part of TransCanada’s Keystone XL project, which entered its sixth year of United States review last month. President Barack Obama initially rejected the conduit in January 2012, citing concerns with its path through ecologically sensitive lands in Nebraska.

TransCanada reapplied with a new Nebraska route last year and split the project in two, proceeding with the Gulf Coast project, the southern portion of the network that doesn’t require federal permission.

The $5.4 billion northern section can start no sooner than two years after it gets a United States presidential permit, which is expected early next year, CEO Russ Girling said November 19.



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