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National Post (Canada): BP’S $1B GAS COMEBACK

B.C. project will set new environment standards

Claudia Cattaneo, Financial Post 
Published: Friday, January 25, 2008

CALGARY – A month after its dramatic re-entry into the oilsands, BPPLC is charting a big comeback into Canadian natural gas with a $1-billion project in Northeastern British Columbia that uses new environmentally friendly methods.

In addition, Randy McLeod, president and chief executive of BPCanadaEnergy Co., said the British oil super-major has started evaluating oilsands leases it owns in Alberta’s Kirby area that could support a 60,000 to 70,000 barrels a day in-situ project.

The Kirby project, in the southern part of the Athabasca oilsands, would build on the US$11.7-billion joint venture BP struck with Husky Energy Inc. in December that gave BP half-ownership of Husky’s Sunrise thermal project, and Husky half of BP’s Toledo refinery.

BP’s renewed interest in Canada comes after a decade of keeping activity here on low boil, causing many to wonder whether a complete exit was likely, as it pursued projects in other areas such as Russia. BP joins other multinationals, including Royal Dutch Shell PLC, ConocoPhillips and Total SA, that are charging ahead in Canada.

In an interview, Mr. McLeod said the Noel unconventional natural-gas project, 60 kilo-metres south of Dawson Creek, is the company’s first in unconventional natural gas in Canada, where it let its volumes slide to 400 million cubic feet, from a high of 1 billion cubic feet about a decade ago.

“You will see some industry firsts there,” said Mr. McLeod, a Canadian. “We will raise the bar and reduce the environmental footprint as much as we can.”

The company is using technology — developed at a cost of $100-million in the United States, where it is a major tight-gas producer — that unlocks tight reservoirs while reducing carbon emissions by 80% relative to a conventional development. The footprint on the environment is one-third smaller.

The method is already in use in its Wamsutter project in Wyoming and BP plans to duplicate it in coalbed methane, another area in which it wants to expand in Canada.

It involves reducing well density by extending the reach of horizontal wells, producing more from those wells, using zero-emission well sites powered by wind turbines and solar panels, using electricity instead of gas to power compressors, and collecting seismic data by using satellites rather than cut lines and big vibrating machines.

While the technologies will increase costs by 20%, BP will still make money, Mr. McLeod said.

The Noel tight-gas resource development, straddling lands accumulated over several years, is expected to receive final internal sanction in mid-2008 and is scheduled to ramp up activity in the third quarter, he said.

It has the potential to add at least 125 million cubic feet a day, up from 10 million to 20 million now coming from a dozen test wells. The $1-billion in spending would be distributed over nine to 10 years.

On the oilsands front, BP has assembled a team to evaluate its options for Kirby, the only deposits it held on to after selling its heavy-oil business to Canadian Natural Resources Ltd. in 1999.

“We obviously held on to them for a reason,” Mr. Mc-Leod said. “Options range from BP operating [a project] or looking for a partner.”

Mr. McLeod said the push to rebuild the Canadian unit unfolded over the past three years. BP Canada evolved from Dome Petroleum Ltd., once a Canadian giant, which was acquired by Amoco Corp., which then merged with BP.

“The hydrocarbons have always been there, and we have always been attracted to the Canadian basin. As much as people thought we had intentions of leaving Canada, we never did,” he said. “In the last three years, with the right people inside Canada and the right support in Houston and London, and shared technologies out of Houston, we have been able to develop a plan that we have been able to articulate and execute.” and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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