TransCanada Corp. has entered a partnership with a Chinese-owned company to build a new $3-billion oilsands pipeline in Northern Alberta, pushing further into a business that has traditionally been dominated by rival pipeline giant Enbridge Inc.
TransCanada and Phoenix Energy Holdings, a unit of state-owned China National Petroleum Corp., would each own half of the Grand Rapids project, which would carry up to 900,000 barrels of crude per day along with 330,000 barrels per day of diluent, which helps thick oilsands bitumen to flow through pipelines.
The pipeline would run about 500 kilometres between an emerging oil-sands area northwest of Fort McMurray, Alta., to the industrial heartland near Edmonton. It's expected to be in service by early 2017.
"As Alberta crude oil production continues to grow, it's critical to have the infrastructure in place to move oil to market from emerging developments west of the Athabasca River," said TransCanada CEO Russ Girling. "This is the first major pipeline project to meet the needs of this fast-growing area."
Crude production in Alberta is expected to grow by three million barrels a day over the next 15 years, nearly all of which will be from the Athabasca oil-sands region, said Paul Miller, TransCanada's senior vice-president of oil pipelines. And of that growth, about half is expected to come from the west side of the Athabasca River, he added.
"We see ourselves as being a significant player in the inter-Alberta transmission business," Miller said.
TransCanada will operate the system. Pheonix has committed to ship crude from its Dover and MacKay River oilsands projects south and diluent from the Edmonton area north to the mine sites.
"Given transportation in the Athabasca region has become a bottleneck, working with TransCanada to build a pipeline in a timely fashion is crucial to implement our strategy," said Pheonix CEO Zhiming Li. "This transportation solution will be important to Phoenix and other potential producers in this area to monetize their huge resources."
In 2009, Athabasca Oil Corp. sold a 60 per cent interest in its MacKay River and Dover oilsands leases to CNPC. Earlier this year, Athabasca exercised its option to sell the rest of MacKay River, making that project the first in the oil-sands to be fully controlled by a Chinese company.
The Dover project is expected to obtain regulatory approval early next year and, once it does, there will be an identical divestiture option.
In August, TransCanada announced it had been selected to build the Northern Courier pipeline - a $660-million project to connect crude from the yet to be developed Fort Hills oilsands mine to the Voyageur upgrader, where the oilsands bitumen will be processed into a type of crude refineries can handle.
