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Monday, July 21, 2008 1:01:50 PM
July 17, 2008...SIOUX FALLS, S.D.
Two major energy companies will spend $7 billion to nearly double the amount of crude oil flowing through a pipeline from Canada's tar sands to the U.S. Gulf Coast, highlighting intense demand for crude that was once too expensive to pull from the ground and process.
Alberta-based TransCanada Corp. and Houston-based ConocoPhillips Co. said yesterday that they will add 500,000 barrels of daily capacity to the 1,980-mile Keystone Pipeline, which connects Hardisty, Alberta, with a delivery point near terminals in Port Arthur, Texas.
Demand for oil has driven the price for a barrel up 80 percent in the past year and up about 40 percent since the first of the year.
Unlike the benchmark light, sweet crude, oil extracted from the tar sands of northern Alberta, previously an afterthought in the crude market, is difficult to refine into gasoline and diesel.
U.S. refiners have been converting plants to handle the thicker Canadian crude as supplies for lighter crude continue to tighten, much to the consternation of environmental groups.
Alberta has vast reserves of oil sands. Industry officials estimate that the region could yield as much as 175 billion barrels of oil, which would make Canada second to Saudi Arabia in crude oil reserves.
In western Canada, oil sands production has grown fourfold since 1990 and exceeded 1.2 million barrels a day last year, according to the Canadian Association of Petroleum Producers. That could grow to 3 million barrels a day by 2015. Current global output of oil is about 85 million barrels a day.
Gulf Coast refiners have traditionally processed crude oil from Mexico and Venezuela. But output from the Mexican Cantarell oil field is in decline, and many Venezuelan contracts will change over the next couple of years as the South American country shifts its oil exports from the United States to other markets around the world, said Russ Girling, president of TransCanada's pipelines division.
TransCanada said construction has begun in Manitoba and North Dakota.
The company hopes to begin delivering crude from tar sands through its 36-inch pipeline to refineries in Wood River and Patoka, Ill., by late 2009 and to Cushing, Okla., by late 2010.
The project, the total cost of which has risen to $12.2 billion, is expected to move 1.1 million barrels of oil a day eventually.
Copyright © 2008, The Baltimore Sun
Two major energy companies will spend $7 billion to nearly double the amount of crude oil flowing through a pipeline from Canada's tar sands to the U.S. Gulf Coast, highlighting intense demand for crude that was once too expensive to pull from the ground and process.
Alberta-based TransCanada Corp. and Houston-based ConocoPhillips Co. said yesterday that they will add 500,000 barrels of daily capacity to the 1,980-mile Keystone Pipeline, which connects Hardisty, Alberta, with a delivery point near terminals in Port Arthur, Texas.
Demand for oil has driven the price for a barrel up 80 percent in the past year and up about 40 percent since the first of the year.
Unlike the benchmark light, sweet crude, oil extracted from the tar sands of northern Alberta, previously an afterthought in the crude market, is difficult to refine into gasoline and diesel.
U.S. refiners have been converting plants to handle the thicker Canadian crude as supplies for lighter crude continue to tighten, much to the consternation of environmental groups.
Alberta has vast reserves of oil sands. Industry officials estimate that the region could yield as much as 175 billion barrels of oil, which would make Canada second to Saudi Arabia in crude oil reserves.
In western Canada, oil sands production has grown fourfold since 1990 and exceeded 1.2 million barrels a day last year, according to the Canadian Association of Petroleum Producers. That could grow to 3 million barrels a day by 2015. Current global output of oil is about 85 million barrels a day.
Gulf Coast refiners have traditionally processed crude oil from Mexico and Venezuela. But output from the Mexican Cantarell oil field is in decline, and many Venezuelan contracts will change over the next couple of years as the South American country shifts its oil exports from the United States to other markets around the world, said Russ Girling, president of TransCanada's pipelines division.
TransCanada said construction has begun in Manitoba and North Dakota.
The company hopes to begin delivering crude from tar sands through its 36-inch pipeline to refineries in Wood River and Patoka, Ill., by late 2009 and to Cushing, Okla., by late 2010.
The project, the total cost of which has risen to $12.2 billion, is expected to move 1.1 million barrels of oil a day eventually.
Copyright © 2008, The Baltimore Sun
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