ConocoPhillips takes 50% stake in Keystone

Pipeline & Gas Journal, Feb, 2008

ConocoPhillips Co. has agreed to take a 50% ownership stake in the proposed Keystone oil pipeline planned to transport Canadian crude to U.S. refineries.

ConocoPhillips and TransCanada Corp. made the announcement Jan. 22, about three years after they first signed an agreement to use the Keystone pipeline to deliver crude to ConocoPhillips' Wood River, IL and Borger, TX refineries, which are being expanded. The deal also gave ConocoPhillips the right to up to a 50% ownership stake in the pipeline.

"The Keystone Pipeline will play a significant role in integrating ConocoPhillips' upstream and downstream assets and ensure market access for growing Canadian production," said Jim Mulva, ConocoPhillips' chairman and CEO.

TransCanada plans to start construction this spring on the 2,148-mile, 590,000-bpd pipeline. It will deliver Canadian crude to markets in Patoka, IL and Cushing, OK, crossing North Dakota, South Dakota, Nebraska, Kansas and Missouri.

Hal Kvisle, TransCanada's president and chief executive, said the deal reflects the strategic benefits of two energy companies working together.

"The partnership provides us with a platform for developing future crude oil pipeline opportunities," Kvisle said in a news release.

Earlier this month, TransCanada announced that it received a Final Environmental Impact Statement from the U.S. State Department saying its Keystone would result in limited adverse environmental impacts. The company anticipates a decision in February on a presidential permit authorizing the construction and operation of the facilities at the U.S.-Canada border crossing. The Final Environmental Impact Statement is a requirement for the presidential permit process. The Canadian government already has given regulatory approval for the route through Canada.

In January 2007, ConocoPhillips signed an agreement with EnCana Corp., which specializes in recovery ofoil sands bitumen. That deal gives EnCana a 50% stake in ConocoPhillips' Wood River and Borger refineries in the U.S. in exchange for a 50% stake in EnCana's Foster Creek and Christina Lake oil sands properties in northeast Alberta.