BP's new deal with Devon Energy to bring its dormant Kirby oilsands project to life, will help BP fill up its Whiting refinery and result in oil sands production of more than 200 thousand barrels per day by 2020, says UBS analyst Jon Rigby.
Last week, BP acquired Devon Energy's international assets in Brazil,
Azerbaijan and the deepwater Gulf of Mexico for $7-billion, but Devon also agreed to acquire a 50% stake in BP’s dormant Kirby oilsands acreage in Athabasca for $500 million, with Devon becoming the operator.
BP and Devon have also agreed to enter into a longterm off-take agreement for heavy oil production from the Kirby development as well as a portion of the production from some of Devon's other oil sands assets. Kirby lies near Devon's existing Jackfish development.
"BP’s ongoing upgrade at its Whiting refinery (due for completion in 2012) will significantly increase the refinery’s capacity to process the heavy crude from these projects and BP’s strategic aim is to achieve a balanced portfolio of upstream and downstream interests covering the Canadian oil sands (but not mining) and the two northern refineries Whiting and Toledo," Mr. Rigby said in a note clients.
He said there are likely to be further deals by BP to fill up the Whiting refinery.