TransCanada to trim capacity of Keystone XL line (Globe and Mail)

TransCanada to trim capacity of Keystone XL line

Pipeline firm bows to U.S. public, political pressure, withdraws request to operate line at higher pressure

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Calgary — ReutersPublished on Thursday, Aug. 05, 2010 5:09PM EDTLast updated on Thursday, Aug. 05, 2010 5:33PM EDT

TransCanada Corp. (TRP-T36.69-0.12-0.33%) said on Thursday it has withdrawn a request to allow its planned Keystone XL oil pipeline to operate at higher pressures than usual because of public concerns, a move that would reduce the line’s capacity.

TransCanada said it will still be able to handle all 375,000 barrels per day of oil it has contracted to deliver on the line, but spot capacity is likely to be reduced by the change.

“It cuts throughput slightly but we are still able to meet all of our contracts,” said James Millar, a spokesman for the company. He added that TransCanada is still trying to determine the exact size of the capacity cut.

The $7-billion (U.S.) Keystone XL was expected to ship as much as 510,000 barrels of crude from Canada’s oil sands to refiners along the Gulf of Mexico, replacing declining shipments from Mexico and Venezuela.

However the line has faced stiff opposition from some U.S. environmental groups and legislators, who consider oil sands crude to be more environmentally damaging than conventional oil and have pressed the State Department to refuse to allow the line’s construction.

TransCanada expects to begin building the line early next year, but withdrew a request lodged with an agency of the U.S. Department of Transportation to operate under higher than normal pressure because the steel could handle the higher volume.

The company said it dropped the plan because of concerns raised by the public and others.

“After listening to concerns from the public and various political leaders we made the decision to withdraw the application,” Mr. Millar said.

Pipeline safety has also been an issue in the United States in recent days after an Enbridge Inc. (ENB-T51.760.360.70%) line carrying Canadian crude through Michigan burst last week, spilling 19,500 barrels of oil into a river system.