TransCanada plots next big oil line to Gulf Coast

CALGARY, Alberta, Feb 21 (Reuters) - TransCanada Corp (TRP.TO: Quote, Profile, Research, Stock Buzz) is plotting a bigger pipeline beyond its Keystone project to ship Canadian crude to the U.S. Gulf Coast and is considering a direct "bullet" route to the huge refining hub, its chief executive said on Thursday.

The other option to send growing volumes of oil sands crude to more distant refineries is to take a page from Keystone's design and reconfigure more of its underused natural gas pipelines for part of the route, TransCanada CEO Hal Kvisle said.

"But if the demand for transportation materializes more quickly we would look at building a direct line," Kvisle told investors at a conference in Whistler, British Columbia.

"Either way, the discussions are well advanced and this is one of the future projects that we will be bring forward here in the months ahead," he said in his Webcast speech.

The $5.2 billion Keystone pipeline is set to start construction in the next few months. Half-owned by ConocoPhillips (COP.N: Quote, Profile, Research, Stock Buzz), it is designed to ship 590,000 barrels of oil a day to refineries in southern Illinois and to the supply hub of Cushing, Oklahoma.

The 3,456 km (2,148 mile) pipeline is slated to be in service in 2009 or 2010. Much of the Canadian portion of Keystone will consist of natural gas pipeline on TransCanada's national system converted for oil shipping.

The U.S. Gulf Coast, with demand for about seven million barrels of crude a day, is the next logical market for Canadian crude production, which could increase by one million to two million barrels a day over the next decade, Kvisle said. (Reporting by Jeffrey Jones; Editing by Renato Andrade)