* Deal gives TransCanada full control of Keystone pipeline
* Selling C$1.6 bln of stock at C$31.50 a share (Adds details. In U.S. dollars unless noted)
CALGARY, Alberta, June 16 (Reuters) - TransCanada Corp (TRP.TO) is buying ConocoPhillips’ (COP.N) remaining stake in the Keystone pipeline for $550 million, giving it full control over the new Canada-to-United States oil pipeline, it said on Tuesday.
TransCanada, known for its extensive North American natural gas pipeline network, said it will also assume $200 million in short-term debt. The total price reflects ConocoPhillips’ contribution to the project to date and will be funded partly by a C$1.6 billion share issue, TransCanada said.
The company said the acquisition will mean spending $1.7 billion more on the pipeline through 2012.
The $5.2 billion Keystone line is designed to carry 435,000 barrels of crude a day to refineries in southern Illinois from Alberta, a distance of 3,456 km (2,148 miles).
A subsequent expansion will boost capacity to 590,000 barrels a day and extend the line to the key oil storage hub of Cushing, Oklahoma.
The first phase is expected to be commissioned late this year and be in service in early 2010. The Cushing segment is due to be commissioned late next year.
The deal, slated to be closed in the third quarter, follows TransCanada’s acquisition of 20.1 percent of Keystone from ConocoPhillips last year.
It also follows a key step last week in TransCanada’s quest to build an Alaska natural gas pipeline, when Exxon Mobil Corp (XOM.N) agreed to join the effort.
Meanwhile, TransCanada is seeking approval for a further $7 billion expansion of Keystone, which would lift the system’s capacity to 1.1 million barrels a day and extend it to the U.S. Gulf Coast by 2012.
TransCanada said a syndicate of underwriters, led by RBC Dominion Securities, BMO Capital Markets and TD Securities Inc, agreed to buy 50.8 million of its shares at C$31.50 each. They have the option to buy another 7.6 million to cover overallotments.
TransCanada shares closed down 58 Canadian cents at C$33.06 on the Toronto Stock Exchange on Tuesday. It announced the acquisition and share offering after the market closed.
$1=$1.13 Canadian Reporting by Jeffrey Jones; editing by Peter Galloway