TransCanada pipeline expansion may cost C$7 bln

CALGARY, Alberta, July 9 (Reuters) - TransCanada Corp (TRP.TO) expects the next phase of its Keystone oil pipeline to the southern United States from Alberta will cost C$7 billion ($6.9 billion) as the company tries to attract anchor shippers, an executive said on Wednesday.

The Keystone expansion would run 3,200 km (1,980 miles) to refineries in Port Arthur and Houston, Texas, from Hardisty Alberta, moving 700,000 barrels a day.

It adds to TransCanada's C$5.2 billion Keystone project, which will transport 590,000 barrels a day to southern Illinois and the oil hub of Cushing, Oklahoma, from Alberta, starting late next year.

The company, best known for its Canadian gas pipeline networks, has started construction on the initial Keystone project, a 50-50 partnership with ConocoPhillips (COP.N).

TransCanada Vice-President Steve Becker said the expansion, one of several proposals to ship growing volumes of crude from Alberta's vast oil sands to Texas, is needed to make up for falling volumes of Mexican heavy oil and uncertainty surrounding supplies from Venezuela.

The target in-service date for the next phase is late 2011, Becker said at an oil sands conference.

($1=$1.01 Canadian) (Reporting by Jeffrey Jones; editing by Rob Wilson)