Tuesday, May 4, 2010

Three U.S. refineries latest to sue to get out of Keystone contracts

CALGARY, Alta. - Three small U.S. oil refineries are suing TransCanada to get out of their contracts to ship oil on the Keystone pipeline. They say that cost overruns on the Keystone pipeline have gone over budget by 145 percent in Canada and 92 percent in the U.S.
Canadian crude producers have already sought to be released from such contracts.
The U.S. refineries are suing TransCanada Corp. in hopes of breaking contracts to ship oil on Keystone, a new pipeline they say has been beset with cost overruns.
The refineries, owned by Sinclair Oil Corp., National Cooperative Refinery Association and Coffeyville Resources Refining & Marketing LLC, together committed to ship 95,000 b/d on the $5-billion line, which would deliver Canadian crude near their locations in the central United States.
Now the refineries want out. In three separate but nearly identical statements of claim, which a TransCanada spokesman has called “without merit,” the refiners argue that Keystone was so expensive to build, it will no longer be a cheaper option than shipping on pipelines run by competitor Enbridge Inc.
The refiners accuse TransCanada of misleading them when they signed shipping contracts in the summer of 2007. TransCanada nearly doubled its construction estimates in October, 2007, from US$2.8-billion to $5.2-billion.
As a result, the three refiners are demanding to be released from their shipping contracts, which together would account for about 12.5 percent of Keystone’s capacity.
If they fail in court, the refiners want US$950-million in damages, plus interest and expenses.

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