The expansion will accommodate for increased production from the Tucker oil sands project near Cold Lake, Alberta.
Construction of the 50-mile pipeline will begin in September for a total cost of $100 million. The first phase is expected to be operational by the second quarter of next year, while the second phase is slated to be finished by the end of 2007.
"The expansion of Husky's mainline system between Lloydminster and Hardisty is a key component to transport Husky's crude products to a growing energy market," said Chief Executive John Lau in a news release. "Our pipeline infrastructure will play an increasingly important role as Husky seeks midstream and downstream solutions for developing our oil sands and heavy oil assets in this region."