TransCanada Corp. (TRP) said Wednesday it has been selected to build a 660 million Canadian dollar (US$659 million) pipeline for an oil-sands project under development by Suncor Energy Inc. (SU) and Total SA (TOT).
The announcement comes just a week after Suncor warned it's reviewing the potential profitability of the Fort Hills mine and Voyageur upgrader projects that the new TransCanada pipeline would serve, and that it may decide not to proceed with development.
The TransCanada pipeline would transport bitumen, a kind of heavy oil produced from Alberta's oil sands, and diluent, a light hydrocarbon used to thin it, about 55 miles between the Fort Hills mine and the Voyageur upgrader. An upgrader is a type of refinery that converts bitumen into synthetic light oil.
Last week, Suncor Chief Executive Steve Williams said that because more light oil is being developed from shale basins in the U.S. and Canada, Suncor is reviewing its plans to proceed with Fort Hills and Voyageur.
"In principle there is the opportunity not to progress" the projects, Mr. Williams said. "We're reviewing the scope and we're looking at the profitability of those projects as we speak."
The Fort Hills mine is a joint venture between Suncor, French energy company Total and Teck Resources Ltd. (TCK) that would produce 160,000 barrels of bitumen a day. The Voyageur upgrader is a 50-50 joint venture between Suncor and Total that would produce 200,000 barrels a day of light oil.
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