December 6, 2007
New Venture in Canada’s Oil Sands
By REUTERS
The British oil company BP and Husky Energy said yesterday they would form a joint venture linking a BP Ohio refinery with Husky’s Sunrise oil sands project in Alberta in what is the latest in a series of deals integrating Canadian oil production and United States processing.
The British oil major and Husky, a Canadian producer controlled by Hong Kong tycoon Li Ka-shing, plan to spend at least $5.5 billion initially on the venture, which furthers efforts to secure markets for Canada’s huge oil sands resource.
The transaction is similar to an oil sands-refining venture hammered out by EnCana and ConocoPhillips last year and follows various arrangements by Suncor Energy, Marathon Oil and others.
BP was the only oil major without holdings in the oil sands, which are second in size only to Saudi Arabia’s conventional oil reserves.
For BP and its new chief executive, Tony Hayward, the deal is a turnaround from the strategy of the former chief, John Browne, who shunned the oil sands as being too costly.
Husky and BP will have 50 percent each of BP’s 155,000-barrel-a-day refinery in Toledo, the companies said.
The plant will be retooled to process 120,000 barrels a day of extra-heavy bitumen from the Alberta oil sands and total capacity will be increased to 170,000 barrels a day. The work is expected to cost $2.5 billion.
The companies will also share ownership of Sunrise, located near Fort McMurray, Alberta. It is expected to produce 200,000 barrels a day of heavy crude by 2015-2020, starting with a 60,000 barrel-a-day phase in 2012, they said.
