TransCanada Corp. is joining with Northwest Natural Gas Company on a proposal to build a natural gas pipeline in Oregon that could cost the companies up to $700 million US.

The project continues the rapid expansion of infrastructure by major Canadian energy companies to transport Canadian oil and natural gas to energy-hungry American consumers as production from the northern Alberta oilsands is slated to rise sharply over the next decade.

The two companies announced Monday they'll form a new venture, Palomar Gas Transmission LLC, to design, construct and own the Palomar pipeline to serve residential and industrial customers in the state. A separate line could also be built to link up with a proposed new liquefied natural gas plant also proposed for the Pacific Northwest region.

The main pipeline would extend approximately 354 kilometres from northwestern Oregon to north-central Oregon and would serve growing markets in Oregon, the Pacific Northwest and the western U.S., the companies said in a release.

If approved, the new transmission line is scheduled to begin service in late 2011. The two lines would have a price tag of between $600 million US to $700 million US if both are built.

In June, Calgary-based oil shipper Enbridge Inc. and U.S. giant ExxonMobil Pipelines Co. said they were looking to build a pipeline to ship Canadian oilsands crude from Illinois to Texas.

Recently, TransCanada announced plans to expand its proposed Keystone pipeline from Illinois to Cushing, Okla., and increase Keystone's transportation capacity to 590,000 barrels a day. Other Canadian companies also have plans to build more oil and gas pipelines in Canada to transport energy to Canadian and U.S. markets.

TransCanada, based in Calgary, has a network of more than 58,739 kilometres of pipeline that taps into virtually all major gas supply basins in North America. The company also is a major storer of natural gas and a growing independent electricity generator.