The plan to extend a major pipeline network from Cushing, Okla., to the Gulf of Mexico won't be the "silver bullet" that will wipe out the oil supply glut in the central U.S., Marathon Petroleum Corp. (MPC) Chief Executive Gary Heminger said Tuesday.

If the expansion takes place, TransCanada Corp.'s (TRP) 1,700-mile Keystone pipeline would carry heavy crude oil from Alberta to the refining corridor on the U.S. Gulf Coast. Currently, Canadian crude is piling up at Keystone's terminus in Cushing, Okla., alongside new production from growing fields in the Texas and North Dakota--a situation that is depressing the price of oil in the region compared with most of the world's other crudes.

Benchmark crude on the New York Mercantile Exchange, which is priced at Cushing, currently trades at a discount of as much as $19 a barrel to crude on the Gulf Coast and Europe.

That discount has allowed refiners operating in the central U.S. to profit handsomely off cheaper crude because it gives them bigger margins.

Meanwhile, the U.S. Gulf Coast, which contains the largest concentration of refineries in the country, relies on more expensive water-borne crude from the deepwater Gulf of Mexico or abroad. Proponents of the Keystone expansion say the line would eliminate the glut and level the field for refiners on the coast and those in the U.S. interior.

But Heminger said that the Keystone expansion--called Keystone XL--will bring mostly heavy Canadian crude to the Gulf Coast, where refineries have been modified to handle the harder-to-process oil. Lighter crudes produced in increasing volumes in the U.S. will continue piling up in Cushing, providing access to cheap fuel to a handful of nearby refiners that haven't undergone extensive upgrades to process heavy crude.

"I don't believe Keystone XL is the silver bullet that's going to relieve the pressure," Heminger said during an interview with Dow Jones Newswires in New York. "What is stuck in Cushing is Bakken [crude], which is very light crude."

Marathon Petroleum operates six refineries in the central U.S., which have benefited from the West Texas Intermediate discount.

Keystone XL is still awaiting a go-ahead from the State Department, which last week said it would release an environmental review of the pipeline in August. That would put it on track to decide whether to approve the controversial project by the end of the year.

Environmentalists oppose the project because they say Canadian oil-sands crude is especially corrosive, therefore having a higher likelihood of eating through a pipeline wall than other types of oil. TransCanada says the pipeline project is safe.

Heminger said the U.S. should be welcoming more crude oil from Canada. The growth of Canadian imports coincides with Marathon's plan to upgrade its refinery in Detroit to process heavier Canadian crude, a $2.2 billion project expected to be completed in 2012.

"The U.S. needs a comprehensive energy policy and this needs to be a piece of that pie," he said.

Uncertainty over the project's completion date has prompted other companies to announce pipelines to bring crude from Cushing to the Gulf. In April, Enterprise Products Partners LP (EPD) and Energy Transfer Partners LP (ETP) said they would build a 400,000-barrel-a-day oil pipeline from Cushing to Houston.

Marathon Petroleum, the second-largest U.S. oil independent refiner, effectively split from Marathon Oil Corp. (MRO) on July 1. The latter company now focuses on exploration and production.

Heminger also said that it's too soon to judge whether the recent decision by the International Energy Agency to release 60 million barrels of oil and products from strategic reserves was successful in reducing oil prices because most of the oil hasn't hit the market yet. Ultimately, however, the release is likely to have a "minor impact" on prices, he said.

Marathon Petroleum purchased 2 million barrels of oil from the U.S.'s auction of 30 million barrels of reserve crude, according to the Department of Energy.