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James MacPherson, Associated Press, Published January 21 2011

TransCanada secures contracts to ship oil

BISMARCK – TransCanada Corp. said Thursday that it has secured enough contracts to ship 65,000 barrels of oil daily from Montana and North Dakota on its proposed oil pipeline from Canada to the Gulf of Mexico.

The Calgary-based company said it signed five-year contracts with producers tapping the rich Bakken Formation in North Dakota and Montana to transport crude on the proposed 1,980-mile-long Keystone XL pipeline, which is designed to move crude from Alberta’s oil sands to refineries in Oklahoma and Texas.

The five-mile-long Bakken Marketlink pipeline would meet with the Keystone XL pipeline in Baker, Mont., said Paul Miller, TransCanada’s senior vice president of oil pipelines. The $140 million project would rely on so-called feeder pipelines proposed by other companies to move North Dakota and Montana crude to the facility in Baker, he said.

“There are numerous proposals out there for feeder pipelines to the Baker hub,” he said.

Miller said oil from North Dakota and Montana would be segregated from Canadian crude and then sent to storage facilities in Cushing, Okla., which typically store about 10 percent of the nation’s oil.

TransCanada had faced political pressure to let U.S. oil companies tap into the Keystone XL pipeline that would cross Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas. The project would pass through or near oil fields along the Montana-North Dakota border.

Oil companies and officials from North Dakota and Montana had complained that development of the states’ oil patches had been hampered by a lack of refineries, pipelines and rail facilities.

Montana Gov. Brian Schweitzer had threatened to hold up Keystone XL’s 280-mile route through his state if it did not agree to an “on ramp.” Sen. John Hoeven, R-N.D, also has pushed for U.S. access to the pipeline.

Schweitzer said Thursday that the Bakken Marketlink would encourage more drilling in Montana and North Dakota by increasing potential profit margins for companies.

Hoeven said the project “means significantly more transport capacity for North Dakota producers in the Williston Basin, and reduced reliance on foreign oil imports.”

The Bakken Marketlink is slated to come online in early 2013, Miller said.

The Keystone XL pipeline needs a permit from the State Department because it would cross the U.S.-Canada border in carrying Canadian oil to the U.S. Gulf Coast. Environmental groups have pushed the State Department to reject TransCanada’s application.They say the pipeline would speed the expansion of oil sands extraction to a rate that could exacerbate global warming.

Miller said the company expects to get approval for the Keystone XL by mid-year.