Kinder Morgan to Expand Pipeline from Alberta

oil pipelinePipeline master limited partnership Kinder Morgan Energy Partners LP (NYSE: KMP) announced this afternoon that it will update the scope of its expansion of the Trans Mountain pipeline system that currently moves about 300,000 barrels of crude oil a day from Edmonton, Alberta, to the coast of British Columbia. The existing pipeline is about 715 miles in length and the previous expansion plan called for a capacity increase to 750,000 barrels a day.

In its announcement today, Kinder Morgan said that the recent open season for shippers resulted in long-term contracts for 700,000 barrels a day. Given the demand, the company will now expand the total capacity of the pipeline to 890,000 barrels a day and the total project cost will rise to $5.4 billion.

Producers planning to ship on the expanded Trans Mountain pipeline include a subsidiary of BP plc (NYSE: BP), Canadian Natural Resources Ltd. (NYSE: CNQ), Cenovus Energy Inc. (NYSE: CVE), the Imperial Oil subsidiary of Exxon Mobil Corp. (NYSE: XOM), and subsidiaries of Devon Energy Corp. (NYSE: DVN), Tesoro Corp. (NYSE: TSO), and Total SA (NYSE: TOT), among others.

Kinder Morgan expects to file for regulatory approval late this year and reckons that the expanded pipeline will be operational by 2017.

Because the pipeline essentially follows the route of the existing pipeline and would require additional pumping stations and a twinned line, approvals may be slightly easier to come by than the battles faced by Transcanada Corp. (NYSE: TRP) in its efforts to build the 1,700-mile Keystone XL pipeline from Alberta to the Gulf Coast of the U.S. There is public opposition to the expansion of the Trans Mountain pipeline and a competing pipeline, the Northern Gateway, being proposed for roughly the same purpose by Enbridge Inc. (NYSE: ENB), but at least the U.S. government isn't involved.

Shares (common units) of Kinder Morgan closed up about 1.2% today at $87.30 in a 52-week range of $74.15 to $90.60. Shares are inactive in after-hours trading.

A map of the proposed system is available here.


Filed under: 24/7 Wall St. Wire, Commodities, International Markets, Oil & Gas Tagged: BP, CNQ, CVE, DVN, ENB, KMP, TOT, TRP, TSO, XOM

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