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The Global Implications of A&D Activity in North and South America

Contributor: Oil & Gas IQ
Posted: 05/31/2010
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The United States' high level of dependence on oil means that, despite an increased interest in renewable resources, companies in the region will be looking for new acquisitions for years to come.

This includes expanding into different regions, as well as exploring previously untapped and unconventional resources.

Prior to the oil spill in March, BP announced a transaction with Devon Energy, which it said would "significantly enhance its position in core strategic areas." A $7 billion (£4.86 billion) deal saw the oil giant acquire a number of sites worldwide, including some in Brazil and the Gulf of Mexico.

The then-CEO of BP Tony Hayward said at the time: "This strategic opportunity fits well with BP's operating strengths and key interests around the world, offering us significant additional long-term growth potential with an emphasis on high-margin oil."



BP Operations in Brazil

The acquisition of the 10 exploration sites in Brazil includes locations in the Campos basin, which BP said offers "a major portfolio of deepwater exploration."

Offshore reserves in the Campos and Camamu-Almada basins, which make up eight of the 10 sites, are located in water depth of around 330 to 9,100 feet. Further sites acquired by the company are located in the Parnaiba basin.

Brazilian state oil company Petrobas recently announced the discovery of two new oil reserves in the Campos basin, which are believed to contain around 105 million barrels. The basin is thought to hold 55 separate oil reserves, with around 30 percent of these having matured.

Andy Inglis, BP's chief executive of exploration and production, said: "Through our entry into Brazil, BP will add a major position in another attractive deepwater basin."

Acquisitions in Canada

Devon Energy originally announced its intention to divest its international and Gulf of Mexico oil and gas assets in 2009 to focus on onshore production, which includes Kirby oil sands interests in Alberta, Canada.

BP and Devon Energy have now entered into a partnership to develop these reserves. The heavy oil will be extracted using steam-assisted gravity drainage and will help complement the company's investment in its refinery for crude oil in Whiting, Indiana.

Inglis said: "We expect this transaction will accelerate the development of the Kirby assets and, through the associated crude off-take agreement, provide a secure source of Canadian heavy oil for our advantaged Whiting refinery."

At the time of the deal, Raymond James oil sands analyst Justin Bouchard told the Calgary Herald that the reserves could offer Devon Energy the potential to produce 300,000 to 400,000 barrels per day.

Kierland Resources has also found itself in possession of oil and gas reserves in Canada, following the acquisition ofQMAC Ventures, Inc.

The company's reserves in Saskatchewan now include 600 million cubic feet per day of natural gas and 32,000 gross acres of undeveloped land.

Richard J Boswell, president and chief executive officer, said: "There are currently 34 producing wells plus an additional 14 standing wells waiting on completion and tie-in. Kierland expects to spend $500,000 to increase production from the QMAC properties in Saskatchewan."

Reuters reports that Canadian Natural, the country's largest independent oil and gas firm, is also looking to invest in British Columbia and Alberta, purchasing as much as C$1 billion (£652 million) of reserves while prices are low.

Shell Looks to Shed Assets

In early May, Shell announced that it was in discussions with third parties to release a number of its liquefied petroleum gas (LPG) businesses, some of which have already been the subject of divestitures.

Shell's Indian LPG was sold in April and now it is looking to lose a number of other assets, including its LPG business in Argentina.

Mark Williams, Shell's downstream director, said: "This review is consistent with our strategy to concentrate Shell's global downstream footprint.

"We will continue with our programme of asset sales which includes planned exits from 15 percent of our worldwide refining capacity and 35 percent of our current retail markets."

Contributor: Oil & Gas IQ