(EnergyAsia, October 31 2012, Wednesday) — Amid the intensifying debate over the role of Chinese state-owned companies in Canada’s oil and gas sector, a  PetroChina subsidary has concluded an equal joint venture deal with TransCanada  Corp to build a C$3 billion oil pipeline in Alberta province.

Phoenix Energy Holdings Ltd, the Canadian subsidiary of PetroChina Co Ltd, and TransCanada will build the 500-km Grand Rapids pipeline to deliver up to 900,000 b/d of oil sands from northwest of Fort McMurray to Fort Saskatchewan, near Edmonton starting 2017.

TransCanada will operate the system through which Phoenix has entered a long-term commitment to ship crude oil and diluent liquids.

The project will be constructed, owned and operated by the Grand Rapids Pipeline Limited Partnership, which is jointly owned by Phoenix and a wholly-owned subsidiary of  TransCanada.

This is the first oil pipeline project that has Chinese ownership, underlining the country’s growing interest to become a long-term player in Canada’s oil and gas sector.

Another state-owned company, CNOOC, is awaiting the Canadian government’s approval for its proposed C$15.1 billion takeover of Calgary-based Nexen Inc. The deal has run into major political headwinds as most Canadians are fearful of Chinese state companies having a bigger role in their country’s economy.

Russ Girling, TransCanada’s president and CEO, said:

“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. This is the first major pipeline project to meet the needs of this fast-growing area.

“With over 60 years’ experience in Alberta and North America, TransCanada is a leader in providing safe, efficient and reliable operation of energy infrastructure. We are pleased Phoenix is joining us on the Grand Rapids Pipeline project to transport this growing, long-term supply of Canadian crude oil in a manner that respects the communities and environment where the pipeline will operate.”

Zhiming Li, Phoenix’s president and CEO, said:

“Phoenix is committed to developing its Dover and MacKay River oil sands assets through multiple phases. 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. This transportation solution will be important to Phoenix and other potential producers in this area to monetise their huge resources.”

According to TransCanada, the pipeline’s route and design will be determined with Aboriginal and stakeholder input as well as consideration for environmental, archaeological and cultural values, land use compatibility, safety, constructability and economics.

TransCanada, which expects to apply for regulatory approval next year, said the project will expand its liquids transportation capabilities and complement extensive operating experience in Alberta. TransCanada recently announced the Northern Courier Pipeline project, a 90-km pipeline system to transport bitumen and diluent between the Fort Hills mine site and the Voyageur Upgrader located north of Fort McMurray.