Husky Energy Inc. and British Petroleum giant BP Plc. are joining forces in a landmark deal move that will give BP access to Canada's oil sands while bringing Husky the additional refining capacity it has been seeking.

The two companies said Wednesday that they have struck a deal to create an integrated North American oil sands business through two 50/50 joint ventures, one for upstream resources, the other for downstream.
Husky will contribute its Sunrise oil sands asset in northeast Alberta's Athabasca region, while BP will contribute its refinery in Toledo, Ohio. The companies will invest a total of about $5.5-billion (U.S.) in the two assets over the next seven years.
“This transaction completes Husky's Sunrise oil sands total integration with respect to upstream and downstream solutions,” Husky chief executive officer John Lau said in a news release. “Husky will have an immediate benefit in terms of earnings and cash flows from the refining operations
[and] the partnership solidifies Husky's position in the U.S. refining market.”
“BP's move into oil sands with Husky is an opportunity to build a strategic, material position and the huge potential of Sunrise is the ideal entry point for BP into Canadian oil sands,” said BP group CEO Tony Hayward.
Husky's shares climbed to $40.15 on the Toronto Stock Exchange following the news, up $1 or 2.55 percent.
Among other things, the deal calls for an investment of about $3-billion to bring what will be named the Sunrise Oil Sands Partnership into production in 2012, at an initial rate of 60,000 barrels a day, rising to about 200,000 in the 2015 to 2020 period, the companies said.
The 42,000-acre Sunrise property contains an estimate 9 billion barrels of “discovered resources,” while probable and possible reserves total 1 billion and 2.2 billion barrels, respectively.
BP's Toledo refinery, meanwhile, can distil up to 155,000 barrels of crude a day and is currently processing about 135,000, including 60,000 barrels of heavy sour crude, the companies said.
The joint venture plan calls for an investment of about $2.5-billion by 2015 to boost bitumen processing capacity at Toledo to 120,000 barrels a day and raising total daily refining capacity to 170,000 barrels.
The deal also gives Husky first call on up to 50 percent of the refinery's capacity in order to process Husky's share of the bitumen produced at Sunshine.
(Source: ReportonBusiness.com)