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Some 15,000 pieces of pipe for TransCanada Corp.’s Keystone XL pipeline lie in a field in North Dakota on April 23, 2013.Nathan VanderKlippe/The Globe and Mail

TransCanada Corp. is filling its Gulf Coast pipeline to deliver crude from Cushing, Okla., to Texas, but it will be feeding a market already absorbing a growing abundance of domestic oil.

The Calgary-based company began supplying some 3 million barrels of crude into the pipeline as part of its initial startup.

Within a few weeks, the Gulf Coast line – essentially the southern leg of the Keystone XL pipeline – will deliver 700,000 barrels per day of crude from Cushing to Texas and help ease a backup of crude at the Oklahoma terminal where the price of the benchmark West Texas Intermediate is set.

TransCanada said Monday that it began to fill the pipeline on Saturday, and will take the next few weeks to ensure its safety as it increases the rate of flow.

"The Gulf Coast project is an important part of modernizing America's energy infrastructure and providing U.S. refineries with the crude oil they need to create gasoline and other products we rely on," a company spokesman said in a statement.

Analysts have blamed a lack of pipeline access from Cushing to the U.S. Gulf Coast for a wide differential between WTI – which serves as a benchmark for Canadian crude – and international crude sources such as North Sea Brent.

WTI serves as a benchmark for Canadian crude that is exported to the United States.

"They're going to drain the swamp at Cushing, which should relieve some of the pressure there," said Jim Williams, president at WTRG Economics Ltd.

But the U.S. Gulf Coast market has changed dramatically since TransCanada first began planning the Keystone XL project more than eight years ago. Growing supplies of domestic light oil have backed out imports of similar quality and undermined investments made by refiners to process more heavy crude from Canada, Mexico, Venezuela and Saudi Arabia.

Mr. Williams said the new TransCanada pipeline will add to a robust supply of light crude on the U.S. Gulf Coast, which has resulted from the boom in production in West Texas. While TransCanada's Gulf Coast line should provide some lift for West Texas Intermediate prices by reducing inventories at Cushing, the impact will be modest due to the growing supply of light oil on the Gulf Coast.

On Monday, Brent traded at about $110 (U.S.) per barrel, while WTI sold for $97.30 (U.S.) a barrel in New York. The differential between WTI and Brent has narrowed somewhat as traders anticipated the start-up of TransCanada's Gulf Coast project in January.

U.S. President Barack Obama endorsed the construction of the southern leg of the Keystone XL plan, though TransCanada did not need the same type of presidential permit that is required for the long-delayed, cross-border portion of the pipeline further north. However, the U.S. State department is still reviewing whether to approve the international project, which is staunchly opposed by American environmental groups who argue it will spur additional greenhouse gas emissions from the oil sands.

If approved, Keystone XL would deliver some 800,000 barrels per day of crude from Canada to the Gulf Coast, in addition to as much as 300,000 barrels per day of oil from North Dakota's Bakken field.

Martin King, energy commodities analyst at Calgary-based FirstEnergy Capital Corp., said he expects the improvement in the price spread between Canadian heavy oil and benchmark crude to be gradual as the Gulf Coast project starts up because Canadian producers still face market problems elsewhere.

"It certainly will help, but I think part of the bottleneck is still in the Midwest and if the crude can't get down to Cushing, then getting more of the Canadian heavy to the Gulf is still going to be a bit of a challenge," Mr. King said. "It's doing better in the Midwest than it was a year ago, and certainly better than it was a month ago but I think they still have to jump through some more hoops."

Western Canada Select heavy crude blend for December delivery sold on Monday for $28 a barrel (U.S.) under U.S. benchmark West Texas Intermediate, according to oil broker Net Energy Inc. That compares to a discount last month that topped $40 a barrel at times.

One of the next key developments aimed at reducing the discount is the opening of Enbridge Inc.'s Flanagan South pipeline that will add 600,000 barrels a day of capacity between the Chicago area and Cushing starting around the middle of 2014.

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