BP to sell Carson refinery to Tesoro; Sunray and Hemphill gas processing facilities to Eagle Rock
BP continues to implement its $38 billion divestment plan of non strategic assets by the end of 2013 in signing two spin off agreements with Tesoro Corporation (Tesoro) and Eagle Rock Energy (Eagle Rock) partners.
These agreements cover:
– Downstream assets with California refinery and retails
– Midstream assets with Texas central processing facilities (CPFs) and associated gathering system.
All the related upstream assets are excluded from these transactions.
Tesoro to acquire southwest Carson refinery while BP upgrade three northern refineries
BP and Tesoro agreement covers downstream activities including the:
– Carson refinery close by Los Angeles in California, USA
– Pipeline and crude oil tank farm terminal
– 800 ARCO retailers in the southwest of USA
– BP’s working interest (51%) in the associated 400 MW co-generation
– Wilmington coke calcining units
The Carson refinery has a capacity of 266,000 b/d
In buying the Carson refinery, Tesoro is planning to spend $225 million capital expenditure for revamping and performance enhancement in order to save up to $250 million per year on running costs.
The transaction between BP and Tesoro has been established on the base of $2.5 billion
After selling the Carson refinery, BP will still own and operate three refineries in USA:
– Whiting in Indiana
– Cherry point in Washington
– Toledo in Ohio
Located in the north, these remaining refineries can benefit from better sourcing market with heavy crude oil as feedstock at lower market price than reference light crude such as WTI.
In addition the historical position of these refineries give BP better market access.
To accept heavy crude oil as feedstock and meet the new international standards regarding the low sulfur diesel and gasoline content to meet the ppm emissions requirements, BP is spending billions of capital expenditure upgrading these Whiting ($3 billion), Cherry Point and Toledo refineries.
BP sells midstream assets to Eagle Rock but keeps Panhandle production wells
For BP, the Sunray and Hemphill Gas Central Processing Facilities (CPFs) and associated gathering system were part of its natural gas production in the Panhandle area in Texas.
The Sunray and Hemphill Central processing facilities (CPFs) are located in Texas.
Together the Sunray and Hemphill (CPFs) have a capacity of 220 million cf/d of natural gas.
The gas gathering network sold together with the Central Processing Facilities, covers 2,500 miles.
The transaction between BP and Eagle Rock including both Central Processing Facilities and the gathering network is based on $227.5 million to be closed at year end.
In parallel to this agreement with Eagle Rock, BP will keep operating the 1900 wells producing natural gas from the Texas Panhadle field in the Anadarko basin.
BP with North America Gas (NAG) is the seventh biggest natural gas producer in the USA producing 1,800 mm cf/d of natural gas.
Despite the actual and foreseeable low gas prices in North America, BP intends to continue to play a leading role in exploration and production of conventional unconventional natural gas.
In including the Carson refinery sold to Teroso and the Sunray and Hemphill central processing facilities left to Eagle Rock, the BP’s divestments program stands at $26.5 billion.
BP made this plan in 2010, but does not mean that BP would have the intention to leave the US market.
Since 2007, BP managed to spend $52 billion of capital expenditure in USA, so that BP remains heavily a net investor in the USA, mainly in unconventional oil and gas.
