The southern portion of TransCanada's Keystone XL pipeline officially opened on Wednesday, pumping oil from the distribution hub of Cushing, Okla., to refineries on the American Gulf Coast.

Calgary-based TransCanada announced the news on its website Wednesday. At about 10:45 a.m. central time, the Gulf Coast Project began delivering crude oil to the pipeline company's refining customers.

"This is a very important milestone for TransCanada, our shippers and Gulf Coast refiners who have been waiting for a pipeline to supply oil directly from Cushing," TransCanada CEO Russ Girling said.

The 783-kilometre stretch of pipeline in the American South cost $2.3 billion to develop and construct. The 36-inch pipeline that can transport as much as 830,000 barrels of oil per day‚Äč.

More opposition

The shorter leg will begin transporting on average about 300,000 barrels of oil daily and should end the year at an average of about 520,000 barrels, TransCanada's Alex Pourbaix said.

TransCanada was trumpeting the opening of the pipeline as a watershed moment on Wednesday, but the company still faces numerous hurdles getting the rest of the Keystone XL pipeline approved.

The remaining portion of the pipeline is still seeking final approval from the U.S. government. When and if it's completed, it will ship Canadian oil more than 1,800 kilometres from Hardisty, Alta., through six U.S. states to the Gulf of Mexico for refining and export.

Environmentalists have rallied against the project, urging U.S. President Barack Obama to stop its construction. But it's backers say it will be an economic boom for both countries and reduce North America's dependence on foreign oil from more hostile parts of the globe.

Jane Kleeb, of Bold Nebraska, a group that has opposed the Keystone pipeline, said the Gulf Coast segment presented a "huge risk" to people along the route noting problems flagged by the federal pipeline regulator during construction.

"Citizens are watching this pipeline like a hawk," Kleeb vowed.

Oil prices rose

Oil prices were boosted by the opening of the southern leg of the Keystone pipeline.

Benchmark West Texas Intermediate crude for March delivery rose $1.76, or 1.9 per cent, to close at $96.73 US a barrel on the New York Mercantile Exchange. Oil last closed above $96 a barrel on Dec. 31.

Brent crude, used to set prices for international varieties of crude, gained $1.54, or 1.4 per cent, to US$108.27 on the ICE Futures exchange in London. Meanwhile, natural gas futures shot up almost six per cent as temperatures in many parts of the U.S. Northeast dropped well below freezing and strong demand tapped the region's supplies of natural gas.

With files from The Associated Press