CALGARY – BP PLC is selling its Canadian natural gas liquids business for nearly US$1.7 billion but remains a major player in the Canadian oilpatch with interests in oilsands and significant other exploration businesses.
The buyer of the liquids business is Plains Midstream Canada, a subsidiary of Plains All American Pipeline, a U.S. company based in Texas.
The purchase price is US$1.67 billion, the British-owned energy giant said early Thursday.
The acquisition by Plains is subject to regulatory approval and is expected to close by next spring.
The business being sold is involved in extracting, processing and wholesaling natural gas liquids across Canada and in the midwestern United States.
It owns or has rights to 4,000 kilometres of pipeline systems and storage capacity of 21 million barrels.
“BP’s Canadian NGL business is an asset-rich platform that significantly expands our (liquefied petroleum gas) asset footprint, providing a supply-based complement to our existing demand-focused business and making Plains one of the largest LPG service providers in North America,” said Greg Armstrong, chairman and CEO of Plains All American.
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“We expect to be able to generate meaningful operating and commercial synergies by more fully connecting, integrating and utilizing these assets together with our existing North American LPG assets and our Canadian crude oil assets and activities.”
The liquids business is attractive to many energy companies because natural gas liquids – like propane, butane and ethane – tend to track oil prices more closely than natural gas prices, which have been anything but robust lately.
In a separate development Thursday, Plains also announced four recent acquisitions the company said are worth about US$620 million.
The deals include oil pipelines in Texas, a trucking operation in Canada, an oil storage business in Virginia and and a pipeline in New Mexico.
BP said Thursday that about 450 employees would be moving to the new owner.
The oil company currently aims to dispose of US$45 billion in assets, mainly to meet the costs arising from the oil well blowout in the Gulf of Mexico last year that led to massive losses and potential lawsuit liabilities.
BP Canada, based in Calgary, has exploration, oilsands and other businesses in Alberta and the Northwest Territories, while its marketing and trading businesses operate in Canada and the United States.
BP Canada has stakes in three oilsands projects in northern Alberta that can be developed using steam-assisted gravity drainage, or SAGD, technology.
Under steam assisted, or SAGD, technology, oilsands companies pipe steam underground to melt thick tar-like oilsands deposits.
The oil is then collected through a second pipeline and pumped to the surface.
Those BP oilsands assets include:
– A joint venture with Husky Energy (TSX:HSE) to develop the Sunrise oilsands lease in the northeastern Athabasca region of Alberta.
– A partnership with Devon Energy to develop the Pike oilsands lease’
– A venture with Value Creation Inc. to develop the Terre de Grace oilsands lease in the northwestern Athabasca region.
“Canada remains an important part of our portfolio of growth opportunities to meet North America’s energy needs,” Bob Dudley, BP Group’s chief executive, said in a release.
BP Canada also has offshore exploration licences in the Beaufort Sea and the Mackenzie Delta, either alone or with partners/
Plains Midstream Canada is a wholly owned unit of Plains All American (NYSE:PAA), which has a network of owns a network of more than 25,000 kilometres of liquids pipelines, storage and related businesses.
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