BP enters Canadian Oil Sands

06 December 2007

BP has announced that it is moving into the Canadian oil sands by acquiring a half-share in the Sunrise field in Alberta operated by Husky Energy. At the same time Husky will acquire a half share in BP's Toledo oil refinery in Ohio, US, between them forming an integrated North American oil sands business. Two independent 50/50 joint ventures will be formed from the equally valued assets to own and develop the businesses. The Sunrise oil sands field is expected to be sanctioned in 2008 with first production of bitumen in 2012, building to 200,000bpd by the end of the next decade with a 40 year production plateau. Sunrise, located in the Athabasca oil sands in NE Alberta will be developed using steam assisted gravity drainage, a tested technology which heats the bitumen within the reservoir allowing it to flow to the surface. The bitumen will be piped to Hardisty, Alberta, from where it will be transported via existing pipeline networks for refining. Sunrise will be operated by Husky as a Canadian oil sands partnership, based in Calgary. Toledo Refinery's crude distillation capacity is currently 155,000bpd of which 60,000bpd capacity is currently heavy oil. The refinery is located in one of the largest energy consumption regions of the US and, subject to necessary approvals and permits, will be expanded to process approximately 170,000bpd of heavy oil and bitumen by 2015. It will be operated by BP as a US refining LLC. Full regulatory approval of the proposed deal and final commercial agreements are expected to be completed in 1Q 2008, with a partnership effective date of 1 January 2008.

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