Anchorage Daily News

SIOUX FALLS, S.D. -- Oil company Conoco Phillips has taken a 50 percent ownership stake in a proposed oil pipeline that would deliver Canadian crude to U.S. refineries.

Houston-based Conoco and TransCanada Corp. of Alberta made the announcement Tuesday.

In 2005, the companies signed an agreement to use the Keystone pipeline to deliver crude to Conoco's Wood River, Ill., and Borger, Texas, refineries, which are being expanded. The deal also gave Conoco the right to up to a 50 percent ownership of the pipeline.

"The Keystone pipeline will play a significant role in integrating Conoco Phillips' upstream and downstream assets and ensure market access for growing Canadian production," Jim Mulva, Conoco chairman and chief executive, said in a release.

TransCanada plans to start construction this spring on the 590,000-barrel-a-day pipeline, a 2,148-mile route. Its goal is to deliver Canadian crude to markets in Patoka, Ill., and Cushing, Okla., 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.

Earlier this month, TransCanada announced that it received a final environmental impact statement from the U.S. State Department saying its planned Keystone pipeline project would result in limited adverse environmental impacts.

The company has said it 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.

Last month, the South Dakota Public Utilities Commission wrapped up testimony on TransCanada's construction permit application, but the commissioners have not yet issued a decision.

In South Dakota, the 220 miles of pipeline would run through Marshall, Day, Clark, Beadle, Kingsbury, Miner, Hanson, McCook, Hutchinson and Yankton counties.

In January 2007, Conoco signed an agreement with EnCana Corp., a Calgary-based company specializing in recovery of oil sands bitumen -- the thick, gooey crude that's found in that part of the world.

The deal gives EnCana a 50 percent stake in Conoco's Wood River and Borger refineries in the U.S. in exchange for a 50 percent stake in EnCana's Foster Creek and Christina Lake oil sands properties in northeast Alberta.

TransCanada is the lead candidate to get Alaska Gov. Sarah Palin's blessing to pursue a gas pipeline from the North Slope.

It was deemed the most compliant out of five applications filed under the state's Alaska Gasline Inducement Act, or AGIA.

Conoco also submitted an application that was outside the state's requirements, and Palin rejected it for consideration.

But Conoco still wants its offering formally reviewed, even as it's deemed an "alternative" proposal outside the AGIA parameters.

Conoco will get its first hearing today in the state's Senate Resource Committee.

The Alaska Legislature expects to receive the administration's recommendation within months.

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