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To: lexi2004 who wrote (175943)	7/17/2008 12:12:57 AM
From: ACAN	Read Replies (2) \| Respond to of 208838

lexi; TransCanada to proceed with $7-billion pipeline link to Texas PAUL HAAVARDSRUD From Thursday's Globe and Mail July 16, 2008 at 8:12 PM EDT CALGARY — TransCanada Corp. is taking the lead in a high-stakes competition to ship Canadian oil to the U.S. Gulf Coast by pushing ahead with a $7-billion (U.S.) pipeline expansion only days after a rival proposal was put on hold. The company said Wednesday that it has signed contracts with oil sands producers to move 300,000 barrels a day on its proposed half-million barrel-a-day line from the U.S. Midwest to Texas. TransCanada and partner ConocoPhillips Co. are already spending $5.2-billion on the Keystone pipeline system, which will take 590,000 barrels a day from Alberta to the U.S. Midwest by 2009, and the expansion will extend the line from Nebraska to refineries near Houston and Port Arthur, Tex. “We have come up with a proposal that offers producers the cheapest way to get to the Gulf Coast,” said chief executive officer Hal Kvisle. Rival Enbridge Inc. said last week that it would push back plans for its Texas Access pipeline to the Gulf Coast, citing slower-than-expected output growth in the oil sands. Enbridge is now proposing a more modest, interim $350-million (Canadian) line known as Trailbreaker to take 230,000 barrels a day from Montreal to the eastern seaboard by 2010. From there, the oil would be loaded on tankers and shipped south. Enbridge and its partner ExxonMobil Corp. would then look to build their $2.6-billion Texas Access line from southern Illinois to the Houston area by 2014, the company said. Building a pipe to Gulf Coast refineries, which account for nearly half of U.S. refining capacity, is critical for Canadian producers looking to find a home for oil sands production that is forecast to triple by the end of next decade. For now, only one major new pipeline is likely to succeed, because in the next few years there won't be enough extra production coming from the oil sands to support two such projects. Given the shipper commitments inked for Keystone, Enbridge appears to be in an uphill fight. “Could other projects go ahead?” mused Steven Paget, an analyst at FirstEnergy Capital. “Sure they could if they receive shipper support, but right now it looks like Keystone has won the next big oil sands pipeline contract.” TransCanada still needs to secure additional shipper commitments during an open season, which runs until Sept. 4, so the outcome of the competing Gulf Coast lines is still in doubt, said Enbridge vice-president Steve Wuori. “It's a long step from today to [Keystone] becoming a reality,” Mr. Wuori said. “I think the approach that we're taking makes better sense for the industry.” The Keystone pipeline would give TransCanada the inside edge on shipping Canadian oil to the Gulf Coast for years to come. “Given the ease of expanding [Keystone] and the cost competitiveness of those expansions anybody proposing a new line to the Gulf Coast will have to compete with [us],” Mr. Kvisle said. Building an oil line would further shift TransCanada away from its traditional natural gas shipping business. Over the last five years, with production volumes out of Western Canada expected to decline, the company has been aggressive in moving away from its gas operations and into new areas such as power generation. Special to The Globe and Mail