bp sells 50% Sunrise oil sands interest

Kristen Nelson

Petroleum News

bp said June 13 that it has agreed to sell its 50% interest in the Sunrise oil sands in Alberta to Calgary-based Cenovus Energy and as part of the deal is acquiring Cenovus’ interest in the Bay du Nord project in Eastern Canada, adding to its sizeable acreage position offshore Newfoundland and Labrador.

Total consideration includes C$600 million cash, a contingent payment with a maximum aggregate value of C$600 million expiring after two years and Cenovus’ 35% interest in the undeveloped Bay du Nord project offshore Newfoundland and Labrador.

“This is an important step in our plans to create a more focused, resilient and competitive business in Canada,” said Starlee Sykes, bp senior vice president, Gulf of Mexico and Canada. “Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador. Along with bp’s active Canadian marketing and trading business, this will position bp Canada for strong future growth.”

bp said it will no longer have interests in oil sands production in Canada but will shift its focus to future potential offshore growth. It currently has an interest in six exploration licenses in the offshore Eastern Newfoundland Region and the non-operated stake in the Bay du Nord project will expand its offshore Eastern Canada position.

The Bay du Nord project consists of several oil discoveries in the Flemish Pass basin, bp said, in water depths of some 1,200 meters, with recoverable reserves estimated at some 300 million barrels of oil.

The bp Canada Energy Group holds offshore exploration licenses in the Orphan basin where it is planning an initial exploration well in 2023.

The transaction, with an effective date of May 1, is expected to close in 2022, subject to regulatory approvals.

Cenovus said full ownership of Sunrise enhances the company’s core strength in the oil sands. It has operated Sunrise since the beginning of 2021, following the Husky Energy transaction, and is in the early stages of applying its oil sands operating model at this asset.

The company said on its website that it has been operating in the oil sands for more than two decades using steam-assisted gravity drainage, SAGD, and launched the oil sands’ first commercial SAGD project in 2021.

Cenovus has three producing oil sands projects in Alberta - Christina Lake, Foster Creek and Sunrise - along with thermal and heavy oil operations at Lloydminster in Saskatchewan.