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The first of several proposed new pipelines to carry crude oil from Alberta to the U.S. will begin construction this spring after receiving a key U.S. approval this month.

A partnership of TransCanada Corp., Calgary, Alberta, and ConocoPhillips, Houston, is building a $5.2-billion, 2,148-mile pipeline from Hardisty, Alberta, to Wood River and Patoka, Ill., and to Cushing, Okla. The line has re-ceived approval from the Canadian government and in mid-March received its presidential permit to cross the U.S.-Canada border. It must still receive approval from several of the states in the pipeline’s path. Those approvals aren’t guaranteed; landowners in the Dakotas have protested plans to install the pipeline near the water table.

Confident of its prospects, TransCanada awarded about $3 billion in contracts for materials and pipeline construction in October. When the line to Illinois is complete in late 2009, it will have a capacity of 435,000 barrels per day. When the extension to Cushing is finished in late 2010, it will have a capacity of 590,000 bbl per day.

Keystone is just one of several lines that are being built to transport Alberta oil-sands production to U.S. and Canadian markets. The Canadian Energy Pipeline Association says there is at least $20 billion in pipeline projects on the drawing board.

“There’s a realization that markets are necessary to develop this crude. Markets need to be found,” says Steven Paget, an analyst for First Energy Capital Corp., Calgary.

The TransCanada-ConocoPhillips partnership, Enbridge Inc. and Kinder Morgan Canada, all of Calgary, are in the midst of pipeline expansion projects. Those companies, in addition to Calgary-based Altex Energy Ltd., are racing to be the first to build a pipeline from Alberta to the Texas coast.

The cost of such a pipeline through the middle of the U.S. would exceed $5 billion, says Greg Hill, Kinder Morgan Canada’s director of major pipeline projects. But the economics still are positive, says Paget. Canadian heavy-oil costs about $11 per barrel less than Mexican heavy crude being processed by Texas refineries. The cost to ship the Canadian oil is $4 to $6 per barrel, leaving producers with a profit, he says.

Canadian companies also are expanding pipelines or building new ones to ease capacity constraints. Late last month Enbridge received Canadian approval for its $2-billion, 1,000-mile Alberta Clipper line from Hardisty to Superior, Wis. Kinder Morgan is in the middle of a $443-million expansion to increase capacity from 260,000 bbl per day to 300,000 bbl per day over the Rocky Mountains from Hinton, Alberta, to Jackman, British Columbia. The company also plans to increase its total capacity from 300,000 bbl per day to 1.1 million bbl per day, according to Hill.

The 24- to 36-in. pipelines being built for the heavy crude are no different from the pipelines built to move regular crude or natural gas, Paget says. In fact a portion of the Keystone line is natural-gas line being converted to carry crude.

The pipelines will be installed using open-cut trenching with conventional boring for roads and directional drilling for wetlands and rivers, says Bob Osborn, pipeline division vice president of Michels Corp., Brownsville, Wis., which is constructing 273 miles of the Keystone pipeline in North Dakota and South Dakota. During the two-year project, Michels will employ about 300 workers a year, he says.

Other Keystone contractors include Ledcor Pipeline Ltd., Edmonton, Alberta; Louisbourg Pipelines Inc., Mississauga, Ontario; U.S. Pipeline Inc., Houston; Henkels & McCoy Inc., Blue Bell, Pa.; and Mid West Constructors, a consortium of Dallas-based HC Price Co., Meeker, Colo.-based Gregory & Cook Inc. and Tulsa-based Sheehan Pipe Line Construction Co.