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Providing coverage of Alaska and northern Canada's oil and gas industry
October 2006

Vol. 11, No. 40 Week of October 01, 2006

BP refinery to process more heavy crude

BP edged closer to a significant deal with an Alberta oil sands player by announcing it will spend $3 billion upgrading its Indiana refinery to handle more heavy crude from Canada.

It lent weight to speculation that when EnCana announces its long-term oil sands strategy it will form a partnership with a major refining company in the U.S. by swapping oil sands production for a stake in a Midwest refinery.

The BP plant will be reconfigured to process 260,000 barrels per day of additional Canadian heavy crude, boosting runs from the Alberta oil sands to about 400,000 bpd, or 80-90 percent of the Whiting plant’s capacity.

Pending regulatory approval, construction is scheduled to start in 2007 and be completed in 2011. BP refining Vice President Mike Hoffman said the investment will “modernize the refinery with equipment of significant size and scale and competitively reposition it as a top-tier refinery well into the future.” He also said BP (one of the few majors with no presence in the oil sands) is completing agreements with producers of heavy oil and pipeline access.

Although BP is seen as a strong contender to do a deal with EnCana, Marathon has 657,000 bpd of capacity in the Midwest and has also let it be known that it is interested in completing a swap with an oil sands producer.

—Gary Park






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