* Wins 20-year commitments for 510,000 bpd
* Pipeline capacity would climb to 750,000 bpd
* Faces criticism from Vancouver city council
By Jeffrey Jones
CALGARY, Alberta, May 23 Kinder Morgan Energy
Partners has reduced the size of a planned expansion of
its pipeline to the Pacific Coast after fewer shippers than
expected signed 20-year contracts that would allow surging
Canadian oil supplies to be shipped to Asia, the company said on
Kinder Morgan now plans a $4.1 billion expansion of its
Trans Mountain pipeline to the Vancouver area from Alberta,
increasing capacity to 750,000 barrels a day from 300,000. That
is down from last month's estimate of 850,000.
It had expected enough contracts to support a $5 billion
project with crude production from the Alberta oil sands
forecast to more than double over the next decade. But a few
potential shippers it thought would sign onto the lengthy
obligations had failed to obtain their boards' approvals by the
deadline, prompting the reduction, Kinder Morgan said.
The Trans Mountain expansion is the second
multibillion-dollar proposal aimed at opening up lucrative new
markets in Asia for Canadian oil producers, now captive to U.S.
customers amid a glut that has led to bargain-basement price
The first, Enbridge Inc's $5.5 billion Northern
Gateway pipeline to Kitimat, British Columbia, from Alberta, is
the subject of public hearings that began in January.
Both projects face opposition from environmental groups and
some native communities in British Columbia. Vancouver city
council has also come out against the Kinder expansion, which
would increase tanker traffic in the city's harbor.
Ottawa has signaled strong support for new pipelines to the
West Coast, and is making changes to regulatory reviews aimed at
speeding up approvals.
Kinder Morgan said one benefit of its proposal is that it
would be able to add a second pipeline along the existing one
for much of the 1,150 km (715 mile) route.
"We're basing our project on the commitments we've received.
The market will determine what projects are being supported, and
we're confident that we've got a good approach and we're going
to focus on making sure that we can bring this to fruition,"
Kinder Morgan spokesman Andrew Galarnyk said.
Under current plans, the company would file regulatory
applications by the end of 2013 for a target in-service date of
Despite staunch opposition to the project from Vancouver
Mayor Gregor Robertson, Kinder Morgan remains in talks with city
officials in hopes of winning favor, Galarnyk said.
"We're obviously working through some of the concerns and
we'll be engaging with all of the interested stakeholders. We're
developing our consultation and engagement program, and that's
set to roll out later this summer," he said.
City officials were not immediately available for comment.
The current Trans Mountain system is routinely overbooked as
shippers seek to get oil supplies to British Columbia and
Washington state refineries, as well as to tankers.
On Wednesday, Kinder Morgan said shippers would be able to
move just 32 percent of their hoped-for volumes in June as
companies clamored for space.