PetroChina Subsidiary Partners with TransCanada on Pipeline
China is cementing its Canadian energy ambitions with a commitment to a new $3-billion pipeline that would carry oil sands crude south.
Phoenix Energy Holdings Ltd., the Canadian subsidiary of PetroChina Co. Ltd., is partnering with TransCanada Corp. to build a 900,000 barrel-a-day project, called the Grand Rapids Pipeline System, 500 kilometres from northwest of Fort McMurray to Fort Saskatchewan, near Edmonton.
The pipeline is the latest move by Chinese companies into the Canadian oil sector, and shows the maturing work of those firms in Canada, which are moving past acquisitions into building oil production. PetroChina has been joined in a multibillion-dollar oil sands acquisition spree by China Petroleum & Chemical Corp. and CNOOC Ltd., which has struck a $15.1-billion (U.S.) deal to acquire Nexen Inc. and is awaiting government approval for the deal.
Though a route for the pipeline has yet to be selected, it’s expected it will carry oil from the MacKay River and Dover projects that PetroChina has largely secured from Athabasca Oil Corp.
“It’s a pretty big commitment by PetroChina – shows that they’re here to stay in the oil sands,” said Chad Friess, an analyst with UBS.
The 50-50 partnership gives PetroChina the opportunity to secure a pipeline to an area of the oil sands where there is little current production, while TransCanada operates the project.