BP sells stake in Canadian oil sands to push into offshore initiatives

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BP has stop the Canadian oil sands after promoting its sole producing stake within the area to Calgary-based Cenovus Energy in a deal valued at roughly $1bn.

The deal to withdraw from an space lengthy focused by environmental campaigners illustrates the superb line BP is making an attempt to tread as chief government Bernard Looney makes an attempt to stability the corporate’s fossil gasoline investments with a push to scale back emissions.

For its 50 per cent non-operated stake within the Sunrise oil sands undertaking, BP will obtain C$600mn ($466mn US) with as much as an additional C$600mn in funds over the following two years.

But it is going to additionally obtain acreage from Cenovus off the east coast of Canada the place BP is trying to discover and develop oil and gasfields, displaying that new fossil gasoline initiatives stay a part of the corporate’s future even because it pivots in direction of investing extra capital in renewables and quitting its most extremely polluting initiatives.

BP mentioned in an announcement that whereas it “will no longer have interests in oil sands production” in Canada it “will shift its focus to future potential offshore growth”.

BP holds six offshore exploration licences in Newfoundland and Labrador on Canada’s east coast, now together with Cenovus’s 35 per cent place within the undeveloped Bay du Nord undertaking.

“Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio,” mentioned Starlee Sykes, BP senior vice-president, Gulf of Mexico & Canada. “This will position BP Canada for strong future growth.”

The Bay du Nord undertaking consists of a number of oil discoveries within the Flemish Pass Basin 500km north east of St John’s, sitting in deep water of round 1,200 ft.

BP is planning an preliminary exploration properly referred to as Ephesus within the neighbouring Orphan Basin subsequent yr, and was because of open an workplace in St John’s within the second quarter of this yr, in line with an organization e-newsletter. The drilling programme may final till 2026 with the required regulatory approvals, the corporate mentioned.

While BP has deliberate the drilling off japanese Canada for a while, the surge in oil costs following Russia’s invasion of Ukraine has added impetus to many fossil gasoline investments. Brent crude, the worldwide benchmark, is buying and selling close to $120 a barrel — the best degree in a decade.

The Sunrise oil sands undertaking was already operated by Cenovus and produced as much as 60,000 barrels a day of bitumen utilizing an extraction method referred to as steam-assisted gravity drainage.

Canadian corporations have taken a rising share of oil sands investments as western vitality majors have began to show their backs on a area typically related to larger ranges of air pollution than standard oil manufacturing.

But the oil sands output has been rising as oil costs have risen and as new export capability is deliberate, together with a pipeline to Canada’s west coast, making it simpler to get the crude to market.

Large oil sands producers together with Cenovus have pledged to eradicate the carbon emissions from their initiatives by 2050, as Canada strikes to slash its greenhouse fuel air pollution.

BP retains a stake within the Terre de Grace oil sands lease however the undertaking has by no means been developed.

Source: www.ft.com