ConocoPhillips exits Keystone pipeline

It took ConocoPhillips less than 18 months to decide it had better places to spend money than by holding a stake in TransCanada’s planned $12 billion Keystone pipeline from the Alberta oil sands to Illinois, Oklahoma and possibly the Gulf Coast.

The big U.S. independent entered 2008 by taking a 50 percent stake in the project, which is scheduled for completion of its first phase in 2012, and bailed out of its remaining 20 percent interest on June 16 for $550 million.

TransCanada will also assume $200 million of short-term debt and increase its commitment by another $1.7 billion.

A ConocoPhillips spokesman said his company decided it would be a “good time to exit” Keystone, recover its investment and redirect the money elsewhere.

TransCanada Chief Executive Officer Hal Kvisle said in a statement that taking over exclusive ownership of the project represents a “unique opportunity (for his company) to play a vital role in transporting a growing supply of Canadian crude oil to the largest refining markets in the United States for decades to come.”

Keystone has shipping commitments of 910,000 barrels per day for the opening segments to Wood River and Patoka, Ill., with the prospect of expanding capacity to 1.1 million-1.5 million bpd. It is one of three pipeline proposals to deliver crude from the Alberta oil sands to the U.S.

When ConocoPhillips joined the Keystone project, Chief Executive Officer Jim Mulva said the system would play a “significant role” in integrating his company’s upstream and downstream assets and ensure market access for growing Canadian production, while Kvisle welcomed the benefits of having two companies establish a “platform for developing future crude oil pipeline opportunities.”

It seems now that ConocoPhillips wants to draw the line at its joint venture with EnCana, by sharing its refinery outlet with EnCana’s production.

—Gary Park