Kinder Morgan Canada has announced a $5.5 billion expansion of its Trans Mountain XL pipeline that aims to connect more Canadian crude to markets along the U.S. West Coast and in Asia.

Thirteen oil producers have already signed on to the plan, and Kinder Morgan has obtained 708,000 barrels per day in 15- to 20-year commitments. The rest of the pipeline's expanded 890,000 bpd potential will be reserved for spot market sales.

According to Ian Anderson, president of Kinder Morgan Canada, oil producers from BP Canada to Cenovus Energy intend to "stand up and support this project." He said the companies on board can "speak to the importance of accessing more markets for Canadian crude for them, and the Alberta and B.C. economies."

The Canadian oil industry is losing about $40 million per day in potential revenues due to the wide price differences between Canadian crude and world oil prices.

Greg Stringham, vice president of markets and oil sands for the Canadian Association of Petroleum Producers, thinks the Trans Mountain expansion may help find better markets for western Canadian products, mitigating the price discount.

"The really good news here is it just shows the additional demand the industry has in general for additional market access," he said, pointing out that the tried-and-true path of the Trans Mountain project will have more streamlined shipping access than the competing Northern Gateway pipeline proposed by Enbridge Inc.

Kinder Morgan plans to bolster the capacity of the line by replacing 30-inch pipe in certain areas with 36-inch steel and adding storage tanks. The bigger diameter means there will be no need to increase pressure on the line, which runs from the outskirts of Edmonton, Alberta, to the Pacific coast along Vancouver, British Columbia, and Washington state. It is set to be operational by 2017, pending hearings, approvals and construction (Dave Cooper, Edmonton Journal, Jan. 10). -- BS