BP said Thursday that it has agreed to sell its Canadian natural gas liquids (NGL) business to Plains Midstream Canada ULC (Plains Midstream), a wholly-owned subsidiary of Plains All American Pipeline, L.P. (NYSE:PAA). Plains Midstream will pay BP a total of US$1.67 billion in cash, subject to customary adjustments, for the business.
BP’s Canadian NGLs business owns, operates and has contractual rights to assets involved in the extraction, gathering, fractionation, storage, distribution and wholesale marketing of NGLs across Canada and in the Midwest United States. Assets include NGL extraction plants; pipeline gathering systems; fractionation plants; and storage and specification product distribution facilities.
In total, the business owns or has rights to approximately 4,000 kilometres of pipeline systems; 21 million barrels of storage capacity; 232,000 barrels per day of fractionation capacity; and NGLs produced from 8.3 billion cubic feet per day of gas processing capacity.
Bob Dudley, BP Group Chief Executive, said: “Canada remains an important part of our portfolio of growth opportunities to meet North America’s energy needs.”
The business employs approximately 450 people who will transfer to Plains Midstream upon completion of the deal.
“I want to thank our NGL employees for their dedication,” said Anne Drinkwater, president of BP Canada. “They have continued to remain vigilant about maintaining safe and reliable operations.”
Completion of the transaction is subject to closing conditions including the receipt of all necessary governmental and regulatory approvals. The transaction is expected to be completed by the end of the first half of 2012.
Credit Suisse acted as the sole financial advisor to BP for this transaction.