July 17, 2008

Canadian Pipeline May Snake Its Way to Port Arthur

By David Ball, The Port Arthur News, Texas

Jul. 17--PORT ARTHUR -- A pipeline from Canada may wind its way across the continent and end in Port Arthur.

A proposed $7 billion plan between Alberta, Canada-based TransCanada Corp. and Houston-based ConocoPhillips Co. calls for a 36-inch pipeline to bring tar sands oil from Hardisty, Alberta down a 1,980-mile route to a delivery point near existing terminals in Port Arthur. Plans also call for an additional 50-mile pipeline lateral to the Houston area.

John Comeaux, acting director of public works for the city of Port Arthur, said the pipeline bringing down more crude to the area will help stabilize the economy.

"It's encouraging; jobs will be more secure and Conoco may be around here," Comeaux said. "We try not to deal with the theoretical. It could be five years down the road."

Comeaux said neither TransCanada Corp. nor ConocoPhillips Co. has contacted the city in regard to the pipeline yet.

Unlike the benchmark light, sweet crude, oil extracted from the Alberta oil sands of northern Canada is a dirty, bottom-of-the-barrel substance that is more difficult to refine into gasoline and diesel.

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 years as the South American country shifts its oil from the U.S. to other markets across the world, said Russ Girling, president of TransCanada's pipelines division.

If and when the pipeline comes to Port Arthur, a pipeline committee will review the project, pressure test, ensure the shut-down devices work, review the maintenance and inspect the line.

TransCanada Corp. says it will nearly double the capacity of a pipeline it's building to transport Canadian crude to the Gulf Coast refineries.

When completed, the $12.2 billion project will transport 1.1 million barrels of oil per day. With the addition of incremental pumping facilities, the Keystone Pipeline system could be further expanded form 1.1 million barrels per day to 1.5 million barrels per day.

TransCanada and ConocoPhillips signed an agreement in 2005 to use the Keystone pipeline to deliver crude to ConocoPhillips' Wood River, Ill. and Borger, Texas refineries, which are being expanded. The deal gives ConocoPhillips a 50 percent ownership stake in the pipeline.

The Associated Press contributed to this article.


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