(Adds details on Keystone XL project in final paragraphs;
By Scott Haggett and Nia Williams
CALGARY, Alberta Dec 17 TransCanada Corp
expects its new 700,000-barrel-per-day Gulf Coast oil
pipeline to begin service on Jan. 22, Chief Executive Russ
Girling said in an interview on Tuesday.
The company is currently filling the Cushing, Oklahoma, to
Port Arthur, Texas, pipeline with the 3 million barrels of crude
oil needed before it can be placed into normal operation.
Initial testing showed no issues with the line and shippers
were told of the planned in-service date on Monday.
"We need to make sure that we continue to test things as we
load the pipeline with oil," Girling said. "Based on our current
estimates, January 22 is what we've told our shippers for
The Gulf Coast line is the southern leg of TransCanada's
controversial Keystone XL project, which, more than five years
after the initial filing, is still awaiting a final decision
from the Obama Administration.
The start-up of the Gulf Coast project will give Canada's
oil sands producers their first large-scale access to the
refining hub on Texas' Gulf Coast. It could also help alleviate
steep discounts on Canadian crude, which dropped to more than
$40 per barrel below the West Texas Intermediate benchmark last
Girling said much of the oil on the line will come from
shippers on the company's existing 590,000 bpd Keystone
pipeline, which takes crude from Hardisty in central Alberta to
"We are now actually connected all the way to the Gulf
Coast," Girling said. "The shippers (on the Keystone line) have
the ability to not deliver at Cushing, they can deliver right
through to the Gulf Coast. So we actually have ... a contiguous
system that has the ability, once Gulf Coast is up and running,
to deliver 600,000 barrels per day to the coast."
Girling said oil headed to Cushing and to Wood River,
Illinois, Keystone's two existing delivery points, can be
diverted to Texas refineries if prices warrant.
"Right now the gulf coast is priced higher than
mid-continent barrels," he said. "So right now all of our
shippers on the base system will want to take their barrels in
The Gulf Coast line will also take oil from shippers at
Cushing who signed up for space on the line prior to
construction. Girling said those customers will retain the right
to ship on the project after the northern leg of the Keystone XL
project is complete.
The Gulf Coast line will also take some Cushing crude from
shippers who have not signed binding contracts for capacity on
the line, however that group will lose its access to the line
when the northern leg of the project is complete, Girling said.
The Keystone XL pipeline requires a presidential permit
before construction begins because it crosses the Canada-U.S.
border, unlike the Gulf Coast project. The U.S. State Department
is completing an environmental impact statement on the project,
which will be followed by a comment period prior to the
President's final decision.
Should Obama approve the project in 2014, the line could be
built within two years, though costs are expected to be well
above TransCanada's last $5.4 billion estimate.
"It's materially more expensive," Girling said. "But until
we actually get the permit, we have not put out a new estimate
publicly. But it's certainly something we discuss with our
shippers on a continuous basis because they foot part of the
bill. At the end of the day, this will cost more because of all
TransCanada shares were up 15 Canadian cents to C$46.87 in
midafternoon trading on the Toronto Stock Exchange.
(Editing by Gerald E. McCormick, Phil Berlowitz and Bob