Wednesday, February 9, 2011

TransCanada begins delivering tarsands crude to Cushing hub

CALGARY, Alta. - TransCanada Corp. started making commercial oil deliveries to the Cushing, Okla., storage hub on Feb. 8 from a newly completed extension of its Keystone pipeline system.

Paul Miller, TransCanada's senior vice-president, oil pipelines, said Keystone's Cushing Extension is complete and the line has entered commercial service, pushing more oil into the hub, where record amounts of the commodity are already depressing prices.

"We completed linefill and we're delivering barrels into Cushing," Miller said.

Record levels of oil at the storage hub, the delivery point for West Texas Intermediate (WTI) oil futures traded on the New York Mercantile Exchange, are blamed for widening the premium that Brent crude oil futures receive compared to the U.S. benchmark.

The Cushing extension is part of the second phase of TransCanada's Keystone system, running 298 miles from Steele City, Neb., to Cushing. The additional leg pushes the capacity of the system to 591,000 b/d of oil from the 435,000 b/d carried by the first phase, which runs from Alberta to Wood River and Patoka, Ill.

Miller said the system was carrying less than its full capacity as service on the new line ramps up.

"On the entire line we're flowing probably about 450,000 b/d," he said.

Miller said he expects that the additional Canadian oil into Cushing would displace shipments to the hub from Gulf of Mexico producers.

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