Calgary-based TransCanada and Phoenix Energy Holdings Ltd. are forming a partnership to build a $3-billion pipeline project in northern Alberta to serve an area of emerging oilsands production.
Each of the companies would own half of the Grand Rapids project, which they expect will carry crude oil and diluent for oilsands producers northwest of Fort McMurray, Alta., starting in early 2017.
"As Alberta crude oil production continues to grow, it's critical to have the infrastructure in place to move oil to market from emerging developments west of the Athabasca River," says Russ Girling, TransCanada's president and chief executive officer.
"This is the first major pipeline project to meet the needs of this fast-growing area."
TransCanada operates one of North America's largest networks of energy pipelines.
Its best-known development is the controversial Keystone XL project, which would expand the company's capacity to carry Alberta crude to refineries in the U.S. Gulf Coast region.
The Keystone XL project has been stalled by concerns about the environmental impact of building the pipeline, as well as the increased risk that could occur in the event of a major spill.
The pipeline industry, including TransCanada, argues that their networks are vital to link the United States with a stable source of energy and that technological advances have reduced the risk.
In Canada, there's the additional incentive to open up new markets and improve prices for oil and gas produced in Western Canada.
Zhiming Li, Phoenix's president and chief executive officer, said the company is committed to developing its Dover and MacKay River oilsands assets.
"Given that transportation in the Athabasca region has become a bottleneck, working with TransCanada to build a pipeline system in a timely fashion is crucial to implement our development strategy," Li said.
"This transportation solution will be important to Phoenix and other potential producers in this area to monetize their huge resource."
The Grand Rapids project would stretch 500 kilometres to an area northwest of Fort McMurray, one of Canada's oilsands centres.