September 2012, Vol. 239 No. 9

Features

TransCanada Selected To Develop Northern Courier Pipeline System

TransCanada Corporation was selected by the Fort Hills Energy Limited Partnership to design, build, own and operate the proposed Northern Courier Pipeline project. The project, with an estimated capital cost of $660 million, is a 90-km pipeline system that will transport bitumen and diluent between the Fort Hills mine site and the Voyageur Upgrader located north of Fort McMurray, Alberta.

Northern Courier Pipeline is fully subscribed under long-term contract to service the Fort Hills Mine, which is jointly owned by Suncor Energy Inc., Total E&P Canada Ltd. and Teck Resources Limited and is operated by Suncor Energy Operating Inc. Northern Courier is conditional on and subject to the Fort Hills project receiving sanction by its co-owners and obtaining regulatory approval. TransCanada expects to file its initial regulatory application in late 2012, and at that time a more detailed schedule will be provided.

“We appreciate the confidence placed in us to build, own and operate the Northern Courier Pipeline,” said Russ Girling, TransCanada’s president and CEO. “We look forward to providing additional solutions to meet the transportation needs of growing crude oil production in Alberta.”

The Northern Courier Pipeline will complement TransCanada’s extensive operating experience in Alberta. TransCanada currently operates 24,200 km of natural gas pipelines across Alberta and 3,500 km of crude oil pipelines through the operation of the Keystone Pipeline. This project will be operated by Northern Courier Pipeline GP Ltd., a wholly owned subsidiary of TransCanada.

The final pipeline route will be determined with Aboriginal and stakeholder input, as well as consideration for environmental, archaeological and cultural values, land use compatibility, safety, constructability and economics.

Southern Leg Of Keystone XL Gets Permits
Meanwhile, on July 27 TransCanada received the final of three key permits needed from the U.S. Army Corps of Engineers in order to advance the 485-mile (780-km) Gulf Coast Project. With the permit from the Fort Worth, TX Army Corps district added to previously received permits from the Galveston, TX and the Tulsa, OK districts, TransCanada said it is now in a position to start construction of the 36-inch oil pipeline shortly. It is expected to be placed in service in mid to late 2013.

Gulf Coast is expected to have an initial capacity of up to 700,000 bpd with an ultimate capacity of 830,000 bpd. Included in the US$2.3 billion cost is $300 million for the 47-mile (76-km) Houston Lateral pipeline that will transport crude oil to Houston refineries. As of June 30, 2012, approximately $900 million has been invested in the project.

“Receiving this final, key Army Corps permit for the Gulf Coast Project is very positive news. TransCanada is now poised to put approximately 4,000 Americans to work constructing the pipeline that will be built in three distinct ‘spreads’ or sections,” said Girling, adding that “the Gulf Coast Project will contribute millions in property taxes to counties in Oklahoma and Texas, money that can be used to build roads, schools and hospitals.”

The pipeline will transport growing supplies of U.S. crude oil to meet refinery demand in Texas. Gulf Coast refineries will be able to access lower-cost domestic production and avoid paying a premium to foreign oil producers, reducing cost and the United States’ dependence on foreign crude oil.

Girling said building a safe and reliable pipeline remains TransCanada’s top priority.

“TransCanada has an industry-leading safety record and that is something we take great pride in,” he added. “People expect their energy to be delivered safely and reliably – on this point there can be no compromise. As an industry, we need to have the best and most modern policies, procedures and equipment in place to prevent and respond to incidents.”

TransCanada has state-of-the-art leak detection systems, elevated safety features and specialized staff training in place to ensure our crude oil pipeline system is safe. These features include:
* Around-the-clock monitoring of pipeline operations by highly trained staff who are empowered to shut down the pipeline at the first sign of a problem;
* A greater number of data sensors and emergency shut-off valves than in older pipeline systems;
* Information updates every five seconds on pipeline operating conditions from more than 36,000 electronic sensors that transmit data via satellite (16,000 sensors in the current operational Keystone pipeline, 6,800 for the Gulf Coast Project, 13,500 for Keystone XL);
* The ability to shut down the pipeline and isolate affected sections within minutes using hundreds of remote-controlled shut-off valves; and
* Requiring all possible problems to be investigated immediately by pipeline controllers and field staff. The pipeline cannot be re-started until it is confirmed safe to do so.

The company has voluntarily agreed to 57 additional safety procedures that will be incorporated into the construction of our crude oil pipelines, including a higher number of remotely controlled shutoff valves, increased pipeline inspections and burying the pipe deeper in the ground. TransCanada will use horizontal directional drilling to drill under major rivers a minimum of 25 feet, enabling it to bury the pipe deeper on both sides of the river bank, offering protection from floods or high river levels. The pipe will be made of thicker steel as it crosses rivers, will operate at a lower pressure and be further protected by advanced non-abrasive coatings.

The company’s existing 2,154-mile (3,467-km) Keystone pipeline from Alberta to Cushing, OK and Wood River/Patoka, IL has safely delivered more than 280 million barrels of Canadian crude oil to U.S. markets since July 1, 2010.

The U.S. Department of State is reviewing TransCanada’s application for a Presidential Permit to proceed with the 1,179-mile (1,897-km) Keystone XL pipeline from Hardisty, Alberta to Steele City, NE and is expected to make a decision in the first quarter of 2013. TransCanada is continuing to work with the Nebraska Department of Environmental Quality to finalize a route that avoids the environmentally sensitive Sandhills area of Nebraska.

“The Gulf Coast Project and the entire Keystone system will further help the U.S. achieve true energy security,” concluded Girling. “The U.S. Energy Information Administration has forecast the United States will continue to import more than 7 million barrels of oil each day into 2035. I continue to believe Americans would prefer to consume their crude oil from domestic producers and from Canada rather than higher-priced oil from countries that do not share American values.”

The over three-year environmental review completed last summer for the Keystone XL Pipeline was the most comprehensive process ever for a cross-border pipeline. Subject to regulatory approvals, TransCanada expects the Keystone XL Pipeline to be in service in late 2014 or early 2015. The approximate cost of the 36-inch, 830,000 bpd is $5.3 billion. As of June 30, 2012, US$1.5 billion has been invested in the project.

In a related development, TransCanada announced that it had secured binding long-term commitments exceeding 500,000 bpd for the Keystone Hardisty Terminal (Hardisty Terminal). As a result of strong commercial support for the project, the company will expand the proposed 2 million barrel project to a 2.6 million-barrel terminal.

The Hardisty Terminal will provide new crude oil batch accumulation tankage and pipeline infrastructure for Western Canadian producers and access to the Keystone Pipeline System. Subject to regulatory approvals, the Hardisty Terminal is expected to be operational in late 2014 and cost $275 million.