Keystone pipeline to the United States by 35 per cent, citing strong support from Canadian oilsands producers.
The pipeline will be capable of carrying 590,000 barrels per day (bpd) to Cushing, Okla., when subsequent expansion phases come online in 2010, up about 150,000 bpd.
TransCanada said the expansion was driven by the signing of binding contracts for 495,000 bpd of the total available capacity at an average term of 18 years.
"This commitment from shippers clearly confirms the value of Keystone as a cost-competitive way to link growing oilsands supply to U.S. energy markets," said Trans-Canada CEO Hal Kvisle.
"With this support, we expect to move to the next phase of the project, expanding the pipeline to the U.S. Gulf Coast."
A public hearing to construct the Canadian facilities for the pipeline concluded June 21. TransCanada said it has also submitted applications for similar U.S. federal and state approvals.
If it gets the go-ahead, construction of the 2,969-kilometre pipeline is expected to begin in early 2008.
TransCanada spokeswoman Shela Shapiro declined to provide cost numbers for the latest expansion beyond the previous $2.8 billion US estimates for the pipeline and Cushing extension.
"We continue to refine the estimated cost," she said.
Keystone is just the latest in a series of pipeline proposals designed to take up Alberta's growing oilsands output.
Last Thursday, Enbridge Inc. filed commercial terms with the national regulator for the $2-billion Canadian segment of its proposed Alberta Clipper heavy oil pipeline.
Enbridge is also filing with American regulators to the build the $1-billion U.S. portion of the project.
Alberta Clipper will see the construction of 1,600 kilometres of new 91-centimetre diameter pipe from Hardisty, Alberta, to Superior, Wis., where it will trickle down feeder pipes to the Gulf Coast.
Initial capacity of 450,000 bpd will eventually top 800,000 bpd after it comes into service in mid-2010.
On Friday, Enbridge also filed for regulatory approval to build a $300-million extension from Hardisty to Edmonton and expand the capacity of the line to 880,000 bpd to match Alberta Clipper.
The announcements come as Canadian oilsands producers begin to dramatically ramp up output.
Last week, the Canadian Association of Canadian Petroleum Producers (CAPP) said it expects oil production to average 4.6 million to 5.3 million bpd by 2020 due in part to the explosive growth in the oilsands.
Over the same period, total U.S. refinery demand for Alberta oil is projected to increase from about 1.6 million bpd to almost 3.1 million bpd in the same period, or nearly 100 per cent.
Demand for heavy oil is by far the largest of the crude types, necessitating the need for new pipes, the association said in its report.
Greg Stringham, the association's vice-president of markets and fiscal policy agreed the Keystone expansion comes sooner than even he expected but suggested additional capacity will be needed to meet even the base case forecast.
"Even this announcement won't be enough to meet our moderate growth case by 2020," he said. "We may even need more after 2012."
But Gil McGowan, president of the Alberta Federation of Labour, said the province needs more refineries and upgraders -- not new pipes.
He testified as an intervenor against Keystone during the public hearing that closed last month.
His group is concerned there won't be enough bitumen left over to support a domestic processing industry and urged the federal and provincial governments to take steps to encourage value-added processing and jobs at home.
"This (TransCanada's expansion) should be setting off alarm bells with the policy makers in Edmonton," he said.
"We'd rather see half a dozen state-of-the-art upgraders and refineries than five or six new pipelines."
TransCanada shares fell eight cents in Toronto, to close at $36.56.