The 500km long Grand Rapids Pipeline system will transport crude oil and diluent from northwest of Fort McMurray to the Edmonton/Heartland region in Alberta.
Grand Rapids pipeline will have a capacity to transport 900,000 barrels per day (bpd) of crude oil and 330,000bpd of diluent.
Under a long term agreement, Transcanada will operate the system and Phoenix will ship crude oil and diluents on it.
TransCanada president and chief executive officer Russ Girling said the pipeline will meet the growing needs of oil.
"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," Girling added.
Phoenix Energy president and chief executive officer Zhiming Li said, "This transportation solution will be important to Phoenix and other potential producers in this area to monetize their huge resources."
Transcanada and Phoenix will each own 50% in the pipeline project which is expected to begin services by early 2017, subject to certain regulatory clearances.
