BP opens door to oil sands alliance
Gary Park
BP, often billed as the reluctant oil sands participant, may be undergoing an attitude adjustment. Chief Executive Officer John Browne said the energy giant has earmarked US$3 billion over the next decade to ensure his northern U.S. refineries can handle rising volumes of heavy crude from Canada. But that is only a fraction of the $37 billion will invest in the United States over the same period.
North America’s second largest refiner, BP has been the major holdout from the oil sands and there is no indication yet that the company has no thoughts of entering the upstream sector.
However, words of the refinery upgrades is seen as encouraging news for EnCana and Husky Energy, which are casting around for plants to convert heavy oil into refinery-ready crude and don’t want to take on the burden of that investment.
While BP is seeking Canadian producers to obtain supplies for its U.S. refineries it won’t discuss the details, but EnCana Chief Executive Officer Randy Eresman said earlier this month that his own company is examining various deals after bids were tabled in mid-May.
“We do have the bids, but I can’t really divulge too much at this point,” he told reporters in Calgary. He said the negotiations will be very complicated and will not necessarily result in a deal with a single company.
Eresman noted that EnCana has three oil sands assets — Foster Creek, Christina Lake and Borealis, which are being designed to produce 500,000 barrels per day combined by 2015 at a cost of $12.5 billion — so it could do three separate deals.
Analysts say other refinery owners that could be part of a pact with EnCana include Marathon, Premcor and ConocoPhillips.
Husky, whose plans include the 200,000 bpd Sunrise project, is also weighing downstream options.
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