TransCanada Announces $7B Expansion to Keystone Pipeline Project; Capacity Could Reach 1.5M Barrels per Day
17 July 2008
 |
| The existing Keystone pipeline project and the Keystone XL expansion project. Click to enlarge. |
TransCanada Corporation, on behalf of the Keystone Pipeline partnerships (Keystone) between TransCanada and ConocoPhillips, plans to expand the still-to-be-completed Keystone crude oil pipeline system project (earlier post) to provide additional capacity of 500,000 barrels per day from Western Canada directly to the US Gulf Coast by 2012.
The expansion (“Keystone XL Pipeline Project”) is expected to cost approximately US$7.0 billion. When completed, the expansion will increase the commercial design of the Keystone Pipeline system from 590,000 barrels per day to approximately 1.1 million barrels per day and result in a total capital investment of approximately US$12.2 billion.
The Keystone expansion includes an approximate 3,200-kilometer (1,980-mile), 36-inch crude oil pipeline starting at Hardisty, Alberta and extending south to a delivery point near existing terminals in Port Arthur, Texas and, subject to shipper support, will include an additional approximate 80-kilometer (50-mile) pipeline lateral to the Houston, Texas area. With the addition of incremental pumping facilities, the Keystone Pipeline system could be further expanded from 1.1 million barrels per day to 1.5 million barrels per day.
Plans to expand to the US Gulf Coast follow successful negotiations with several prospective shippers who have agreed, subject to regulatory approvals, to make shipping commitments of approximately 300,000 barrels per day to the US Gulf Coast for an average term of 18 years during a binding open season which closes on 4 September 2008.
Valero Energy Corporation, for one, has agreed to participate as a prospective shipper on the Keystone expansion. In addition to its pipeline shipping commitment, Valero has an option to acquire an equity ownership position in the Keystone partnerships.
As part of its commitments to the pipeline, Valero has secured from several Canadian oil producers meaningful volumes of heavy sour crude oil, which will price competitively with equivalent grades of crude oil on the US Gulf Coast. Once the Keystone pipeline expansion is complete, Valero expects to be one of the largest recipients of heavy sour crude oil from this expansion.
In addition, prospective shippers have also agreed to commit another 35,000 barrels per day to Wood River and Patoka, Illinois during a future open season expected in the third or fourth quarter of 2008. With these commitments Keystone has now secured long-term commitments for approximately 830,000 barrels per day for an average term of 18 years. These commitments represent approximately 75% of the commercial design of the system.
The Keystone expansion will be the first direct pipeline to connect a growing and reliable supply of Canadian crude oil with the largest refining market in North America. The Keystone Pipeline will be constructed and operated as an integrated system with delivery points in the US Midwest and US Gulf Coast.
—Hal Kvisle, TransCanada president and CEO
During the binding open season Keystone will seek additional shipping commitments from interested parties. Once Keystone completes the open season process it will proceed expeditiously with the necessary regulatory applications in Canada and the US for approvals to construct and operate the proposed facilities.
The original Keystone pipeline is due to be in service by the end of 2009. Construction of the Keystone XL facilities is anticipated to commence in 2010 following the receipt of the necessary regulatory approvals, with an in-service target date in the 4Q of 2011. As a result, the majority of the US$7.0 billion in additional capital investment required to expand Keystone to the US Gulf Coast is expected to be made between 2010 and 2012.
Certain parties who have agreed to make volume commitments to the Keystone expansion have an option to acquire up to a combined 15% equity ownership in the Keystone partnerships.
TransCanada is responsible for developing, constructing and operating the Keystone pipeline. It is expected that deliveries to Wood River and Patoka, Illinois will commence in late 2009. Deliveries to Cushing, Oklahoma are expected to commence in late 2010 and deliveries to the US Gulf Coast are expected to begin in 2012.
In 2007, Enbridge Inc. and ExxonMobil Pipeline Company agreed to jointly assess the commercial development of a new pipeline project to transport crude oil from Patoka, Illinois to Beaumont, Texas, and onward to Houston. This pipeline would link Enbridge’s system—which has been expanding to handle the increasing demand for Canadian syncrude from the oil sands—to the refineries on the US Gulf Coast. (Earlier post.)
Spending US$7.0 billion in additional capital investment to continue polluting the world, but at a faster rate .. .
This is a sad decision for all.
US$7.0 billion in additional capital investment in Wind or Solar would be a far better thing.
Posted by: John Taylor | 17 July 2008 at 03:29 AM
John,
A 7B investment in wind and solar would be great, but it would do little to power our current fleet of carrent fleet of cars. At best such an investment would require us to retrofit our cars for CNG(pickens plan). But in the short term we are not going to have fully electric powered cars on market on any significant scale and we still have to support the 200million cars on our road today.
Posted by: chris | 17 July 2008 at 04:33 AM
If only we didn't have those cars on the road today - If only... But we do.
We will always need idealists, but we no longer have the luxury of doing nothing while saying IF ONLY;
If only we had increased CAFE “Detroit” would be making economical cars now (or be bankrupt and gone, who knows?).
If only we had invested more heavily in solar cells and wind we would not need to drill in the ANWAR badlands. (Solar and wind power are comming and will not come much faster if we dump all our money there)
If only we bussed and cycled and walked we would not have spent trillions on imported oil while also consuming our own.
If only we had not litigated nuclear power out of business we would not be facing offshore drilling.
If only Detroit had not given auto workers everything they wanted to avoid strikes US auto prices would be in line.
If only we grew our own food and shopped at the local market and used only candles and did not spend so much on material goods and technology such as Ipods and big screen TVs and super weapons and MRIs and AIDS research.
All of us have idealism, we morn the loss of archeology when they dig for a freeway ramp (or maybe that was a hospital or school foundation). We morn the 0.001% of the world beaches fouled by oil spills (we also morn the 0.01% fouled by leakage from oil deposits left untapped).
Fortunately we have a democracy that will not see our nation bankrupt by idealists. As times get tough less priority is given to Harp Seal Pups and Spectacled Owls and more to the businesses and families in financial ruin.
If only we didn’t have to wait until big business was in trouble before “anyone cared”, if only.
My concern is the naturally sluggish responses of the free market and the ineffective government responses to long term and strategic problems.
Over the next 10 years we need every possible energy solution. Not just conservation but CTL, not just solar but drilling, not just wind but nuclear. Positive steps now will reduce the problem NOW; oil prices are based on current demand AND ANTICIPATED DEMAND.
Maybe not as much as we'd like, but what is the alternative – None - do EVERYTHING we can.
Posted by: ToppaTom | 17 July 2008 at 05:51 AM
ToppaTom, I couldn't have said it better.
Posted by: shigley | 17 July 2008 at 06:12 AM
ToppaTom
+1 Well said and I concur.
Posted by: Joseph | 17 July 2008 at 07:27 AM
Very well said ToppaTom !!
Posted by: Beester | 17 July 2008 at 07:45 AM
The 600+ million world gas guzzlers have to be fed for another 15 to 20 years.
Using Canadian oil instead of ...... may be a good USA decision, for the next 20+ years.
More north-south pipelines will be built to transport the expected increase to 5 mbd by 2020.
Posted by: HarveyD | 17 July 2008 at 08:18 AM
Toppatom: careful lest the pendulum swings too far the other way. Without some push back for the environment we'll turn the earth into a wasteland. CTL? (shudder) Dirty and wasteful.
Posted by: OldNeil | 17 July 2008 at 09:24 AM
"An idealist is a person who helps other people to be prosperous." -- Henry Ford
or how about this one:
"If I'd asked people what they wanted, they would have asked for a better horse." -- Henry Ford (apocryphal; these and others can be seen at http://en.wikiquote.org/wiki/Henry_Ford).
Ask the baby-boomers and they will want to swim in an ocean of oil for the remainder of their lives. Ask the oil companies, and they will be happy to fill said ocean.
But these aren't right questions, are they?
"History is bunk."
We don't want to re-live useless tradition.
We want a future. Invest in it, and it shall be.
We built those 600 million cars -- they did not build us. Just who is in charge around here, anyways?
Posted by: mdf | 17 July 2008 at 09:59 AM
The present economy of the US and all industrialized nations is only possible with cheap energy. At least with coal to liquids less of the money spent on the fuel leaves the county and the workers pay taxes in the US. The tar sands of Alberta are large enough for sufficient energy for the necessary US uses when combined with US production. At current prices many old US oil fields and wells could be put back into production with simple pumps and many others could use enhanced recovery methods. There might even be a few where liquid or supercritical CO2 could be circulated to dissolve some of the remaining oil and still be profitable at half present prices. Oil pipelines are always welcome to us who have not bought into the anti-CO2 cult and still must breath out CO2 every day, and there is far less a danger of very large crude oil spills. The massive pipes built to take Texas oil to New England states during WWII are still in service sixty-five years later.
Today, any one with a great deal of money can buy an electric car (TH!NK, XBOX, TESLA) and then can buy enough land and solar cells to charge extra batteries during the day so that the energy can be transfered to the car when it gets home. Then that person can commision AC propulsion to build one of their high power density trailers to generate electricity at high efficiency from gasoline for long trips. It is, of course cheaper, in the long run, to buy a working old used car (clunker) and pay $5 a gallon for gasoline. Does anyone remember that Gasoline was less than $1.00 in some places after the beginning of the attack on Afganistan. ..hg..
Posted by: Henry Gibson | 17 July 2008 at 10:16 AM
In 20 years there will most likely be 900+ million PHEV gas sippers instead of the 600+ million gas guzzlers.
Such is the World with 10 Billion people on it.
Posted by: Joseph | 17 July 2008 at 10:33 AM
Forget China. Canada - the New World Empire!
Posted by: mowztung | 17 July 2008 at 11:09 AM
Mr. Gibson, I'm sorry to say that if you believe the USA can drill itself into oil independence, then you are living in a fantasy world.
Variously, from your missive:
Just a friendly reminder: Alberta is not in the USA.
The various FT based technologies essentially convert one form of energy into another form, with an unavoidable conversion loss, as well as some economic ones too. For example, it is plain stupid for Alberta to be converting large amounts of natural gas into synthetic crude oil. Why not just burn the gas directly, or better, put it to more useful tasks like fertilizer production?
Kick-starting US production? HA HA HA! I'd be surprised if there was more than a few months of consumption in the lower 48. Maybe a decade or two, tops, for the rest of it. Even if you could get every last drop, at an unlimited rate, for zero cost. Not only that, but your currently untapped reserves are completely insignificant in the grand scheme of things. 20 million barrels a day adds up. Quite quickly!
Let's just lay the cards on the table, Mr. Gibson: short of trillions of barrels awaiting discovery, when it comes to oil the USA is right (*#$@'d.
Full stop.
Your only 'salvation' in this department will be at the hands of others. People who would be happy to help ... if it wasn't for the fact that the USA has been acting like a jerk for the last N decades. Your only real friends left are Canada, and ... hm, help me here. UK? Israel? But they don't have any oil either.
You'd do a hell of a lot better to use the remaining dregs of oil to bootstrap yourselves out of 20th century energy dependence. Reduce your consumption to the point your remaining oil reserves are truly significant -- depletion times on the order of centuries.
In short: invent the future, instead of reliving the past.
Posted by: | 17 July 2008 at 04:33 PM
Oops. That rant was from me.
Posted by: mdf | 17 July 2008 at 04:39 PM
Sorry bfd:
"Ask the baby-boomers and they will want to swim in an ocean of oil..."
I could'a sworn that Algore was a boomer. This kind of confusion arises when you blame groups, instead of those responsible.
Posted by: Sulleny | 17 July 2008 at 04:49 PM
Sulleny: This kind of confusion arises when you blame groups, instead of those responsible.
The only confusion is in your head.
Posted by: mdf | 17 July 2008 at 06:56 PM
There is no oil left in US, so let’s prohibit drilling.
Something is strange in this logic.
Posted by: A | 17 July 2008 at 10:55 PM
mdf:
A lot of what you're saying may be true. Fossil fuel will not last for long at the current consumption rate.
However, that is not such bad news. There are many other sources of abundant much cleaner energy.
The world has to wean itself off oil and coal because those sources will effectively run out in about half a century.
A new oil and coal free economy will rise to the challenge. Tomorrow's leading countries belong to those who will implement the transition soonest. Being a few step ahead has many advantages.
USA has all what is required to accellerate the transition, but are the people and politicians ready for it?
Progressive but massive electrification of transportation vehicles and HVAC is a neccessary first step.
Progressive but massive introduction of clean alternative electrical energy sources (wind, solar, geothermal, nuclear etc) has to be carried out at the same time.
Major improvement of the existing power grid.
Major direction change in a large economy is not easy but it can be done with the proper leadership. Free market forces are not suffissant. Somebody has to push the market (and people?) in the right direction. That's part of the job for our politicians and (other)leaders.
Posted by: HarveyD | 18 July 2008 at 08:18 AM
If you believe windmills and solar cells can provide all the Energy that you want, you are dreaming in the fantasy world of the lefty true believers, and GAIA religious fanatical converts. You religion is not new. The Druids among others were animists, and Nature Worshippers. Lefties have their Marxist dogmas and never let reality intrude.
Both solar and wind have great limits, expressed in a simple function called C-O-$-T. Our forefathers in the early days of electricity ,had valid reasons to abandon "free wind" and windmills when they started contructing the electrical grid in the late 19th century. Today's EE have had to be reminded of the flaws.
Plus both have enormous warts and pollution drawbacks that simpletons whoo propose them, have simply not recognized.
Solar reduces the Albedo, drastically. It creates massive amounts of "Thermal Pollution". Don't know what that is? Then go research it and then you might be able to talk intelligently. While you are at it research Lysenkoism, too.
Wind is simply too variable to allow a great portion of any power grid to be composed of it. It creates oscillations in the grid that can't be damped out except with massive amounts of stable, constant generation. Like 80% of the grid or more.
Experience is a rude reminder of reality. Experience with the 2000 windmill net in Britain, and others in the the Netherlands, and also Denmark have made EEs recall their funadamental training. They have ALL suffered blackouts (as has T Boone Picken's windmill grid), and could only be stabilized with attachments to the stable constant grids of Germany, France and Sweden. And for Pickens to make you pay for his stability interconnect.
But who provide the stable grid when El dopo has mandated that all the grid is to be instaneously variable, except for some aging nuclear?
Of course we could have used hydro, but El dopo has mandated that these be torn down too. They have been written out of the world of approved "renewables".
Apparently in the El dopo world, it no longer rains; and rain no longer flows into rivers; and piles up in reservoirs, to be able to generate electricity. That never happens twice, or "renew"-ably.
Thank heavens we never elected this fool to anything important.
Posted by: stas peterson | 18 July 2008 at 09:20 AM
stas peterson: If you believe windmills and solar cells can provide all the Energy that you want, you are dreaming in the fantasy world [...]
However did you get the impression I believe such things?
A: There is no oil left in US, so let’s prohibit drilling. Something is strange in this logic.
Indeed. However, the logic is really like this: "There isn't enough oil left in the USA for it to even pretend it will ever be 'independent' of foreign sources. (You are so lucky your biggest foreign source -- Canada -- still loves you.) So let's develop some new energy ideas, instead of wasting too much time and resources in a dead-end fantasy."
Note that most of the rest of the world has the same problem. Imagine this: if you solve it, you can sell them the solution!
HarveyD: There are many other sources of abundant much cleaner energy.
Precisely. Eventually someone will twig onto the huge opportunity that is presenting itself.
Posted by: mdf | 18 July 2008 at 01:52 PM
If the Canadians keep this up, it will soon be $1.40 U.S. per Canadian dollar instead of the other way around like it used to be. We are about at par now.
We can not drill our way to energy independence. Most of the oil reserves are owned by other countries and they control them. We have less than 5 percent of the world oil reserves, we use 20 percent of all the world's oil produced every day and we have only 5 percent of the world's population.
Even if we went all out and drilled everywhere in the U.S. and Alaska we might increase our oil production from 5 million barrels per day to 10 million barrels per day of the 20 million barrels we use every day. Rather than import 70 percent of the oil we use it would be 50 percent and it would run out in 20 years.
Posted by: sjc | 18 July 2008 at 08:16 PM
Funny thing: everybody and his ankle know that there is no oil, except for oil companies who are ready to invest hundreds of billions of their private money into drilling.
Funny thing: everybody and his ankle know that nuclear is more expensive than solar and wind, except for utility companies who are ready to invest hundreds of billions of their private money into construction of new nuclear power plants.
Funny thing: everybody and his ankle know that coal-to-liquid is not economical, except for private companies who are ready to invest hundreds of billions of their private money into CTL plants.
May be it would be vise to allow professionals to do their job? On their own penny?
Posted by: Andrey Levin | 18 July 2008 at 11:57 PM
No one is stopping the private sector from using their own money on these things. The "everybody knows" comments are a bit off the mark. I do not think everyone believes that nuclear is more expensive than solar. I do not, so that disproves the statement. Logic is a wonderful thing, it either is or it is not.
Posted by: sjc | 19 July 2008 at 01:30 PM
The world (and USA) will soon have to accept that energy sources will progressively shift away from fossil fuels, within the next 3 to 5 decades.
Future energy mix will include biofuels for selected applications but the bulk will come from free sustainable cleaner sources such as Hydro, Sun, Wind, Geothermal, Waves and from many new up-to-date nuclear power plants.
Vehicles (and HVAC) are going to be mostly electrified.
The new Beijing Jinghua Coach 60-seat electric city bus is just one of the many working examples of what is coming.
Sales of e-motor bykes, 3 and 4-wheel BEVs, e-bus, e-taxis, e-delivery trucks etc will progress very rapidly from 2010 onwards.
Concurrently, PHEVs will also be successful and the prefered choice for many for up to 10+ years but they too will be replaced by EVs when batteries performance improves and become more afffordable.
Posted by: HarveyD | 21 July 2008 at 09:53 AM
Ne vous demandez plus POURQUOI on a un ete aussi EXECRABLE!!!
Les sables bitumineux d'Alberta POLLUENT TELLEMENT
que ca change toutes les temperatures!!
Et dans l'ouest,
ils ne comprennent RIEN, ne Voient Rien et n'Entendent Rien!
Il n'y a que l'argent qui les assouvit....
On est entrain.. de la faire Notre Apocalypse!
Posted by: Pierre | 25 July 2008 at 05:51 AM