TransCanada Corp. has entered a partnership to build a new $3-billion oil sands pipeline in Northern Alberta, pushing further into a business that has traditionally been dominated by rival pipeline giant Enbridge Inc.

TransCanada and Phoenix Energy Holdings Ltd. would each own half of the Grand Rapids project, which would carry up to 900,000 barrels of crude per day along with 330,000 barrels per day of diluent, which helps thick oil sands bitumen to flow through pipelines.

The pipeline would run about 500 kilometres between an emerging oil sands area northwest of Fort McMurray, Alta., to the industrial heartland near Edmonton. It’s expected to be in service by early 2017.

“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,” said TransCanada chief executive officer Russ Girling in a release.

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

TransCanada will operate the system and Phoenix has committed to ship both crude from its Dover and MacKay River oil sands projects and diluent through it.

“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,”said Pheonix CEO Zhiming Li.

“This transportation solution will be important to Phoenix and other potential producers in this area to monetize their huge resources.”

In August, TransCanada announced it had been selected to build the Northern Courier pipeline – a $660-million project to connect crude from the yet-to-be-developed Fort Hills oil sands mine to the Voyageur upgrader, where the oil sands bitumen will be processed into a type of crude refineries can handle.

The Fort Hills partners are Suncor Energy Inc., Teck Resources Ltd. and Total SA. Suncor and Total, which work together on a variety of oil sands assets, are reviewing their joint projects in an effort to drive down costs.

Desjardins Securities analyst Pierre Lacroix said the partnership will bring both financial and strategic benefits to TransCanada.

“In addition to its substantial size, the project builds on (TransCanada’s) recent efforts to expand in the intra-Alberta crude oil transportation market, which has typically been dominated by other large energy infrastructure players,” he wrote in a note to clients.

Enbridge is the biggest shipper of crude in the oil sands region and has undertaken a number of expansion projects in recent years to its vast network.

Calgary-based TransCanada operates one of North America’s largest networks of energy pipelines.

Lately, it’s become best-known for its controversial Keystone XL project, which would expand the company’s capacity to carry Alberta crude to U.S. markets.

Construction is under way on the southern leg of the pipeline between a major storage hub in Oklahoma to refineries along the U.S. Gulf Coast.

A decision on the northern portion, delayed because of environmental concerns in Nebraska, is expected early in the new year.

Environmentalists are concerned a spill from the pipeline could cause ecological harm in the American heartland and increase U.S. reliance on oil sands crude, which they deem dirtier than other varieties.

TransCanada and proponents, meanwhile, say Keystone XL will help supplant oil imports from hostile regimes with crude from a friendly northern neighbour and provide a much-needed economic boost throughout the country.