Apache deal marks another exit for BP in Canada

Tue Jul 20, 2010 6:35pm EDT
 
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By Scott Haggett and Jeffrey Jones

CALGARY, Alberta (Reuters) - BP Plc is selling its natural gas business in Western Canada to Apache Corp as part of a $7 billion deal to raise funds for hefty Gulf of Mexico oil spill costs, marking an end for what was once the country's dominant gas producer.

Apache, which is expanding its gas business in Canada, will acquire assets in Alberta and British Columbia producing 240 million cubic feet of gas and 6,500 barrels of gas liquids a day for $3.25 billion.

At its height, BP produced more than 1 billion cubic feet a day in Canada.

BP is also handing over its planned Mist Mountain coal bed methane development and the C$1.4 billion ($1.34 billion) Noel project, which is expected to produce up to 130 million cubic feet a day within a decade.

The sale, part of a larger deal with Apache that includes Texas and Egyptian assets, brings to a close BP's Canadian gas business, once the country's largest but winnowed down over the past dozen years into just another mid-sized player.

Most of BP's Canadian assets were acquired with the British oil major's worldwide acquisition of Chicago-based Amoco Corp in 1999. It has since pared holdings such as the Cochin pipeline, the country's main natural gas liquids line. It sold its last interest in the 1,900 mile line in 2007.

The sale of the Canadian gas assets will affect about 520 jobs, roughly half of the unit's total workforce, BP Canada spokeswoman Hejdi Feick said.

"Apache will have the opportunity to acquire those individuals with the assets, but that will be Apache's decision," Feick said.   Continued...