BP takes stake in planned oil sands project

CALGARY, Alberta (Reuters) - BP Plc (BP.L), will take a majority stake in a Canadian oil sands property owned by closely held Value Creation Inc, marking the British oil major's second oil sands deal in a week as it looks to build a presence in the crude-rich region.

Value Creation said BP agreed to develop and operate the 185,000-acre Terre de Grace block in northern Alberta. Terms were not disclosed but Columba Yeung, Value Creation's chief executive, said the final price will depend on the results of drilling undertaken by the partners to determine the size of the property's reserves.

"We agreed to have a vigorous program to define (the reserves) before the final value is established," he said. "Along the way they will be contributing capital, however the final amount is depending on the outcome (of the drilling) ... But it will be a very significant capital investment."

BP, which sold a half interest in its Kirby oil sands property to Devon Energy Inc (DVN.N) last week, also holds a half share in a oil sands and refining venture with Husky Energy Inc (HSE.TO) that is in the early stages of construction.

The British company is a late arrival to the oil sands, where most of its large rivals have already acquired significant stakes.

The northern Alberta oil sands region has the largest crude reserves outside the Middle East and one of the few places in the world where investor-owned oil companies are still allowed to freely invest to develop significant oil resources.

"They are catching up to the other majors," said Fadel Gheit, an analyst with Oppenheimer & Co. "It represents the smallest of their operations and they have to grow it fast. They also have to gain knowledge and experience in (the oil sands)."

BP spokesman Daren Beaudo confirmed the company had entered into the venture, but referred questions on the value and details of the project to Value Creation.

The Terre de Grace property is expected to be developed with in-situ thermal technology, which pumps steam into the ground to liquefy deposits of the tar-like bitumen so it can flow to the surface.

Value Creation's BA Energy subsidiary, which has regulatory approvals to develop a 260,000 barrel per day upgrader to convert oil sands bitumen into refinery-ready synthetic crude, was placed under protection from creditors in late 2008 when it was unable to pay its bills.

Yeung said Value Creation would ask an Alberta court to this week to approve a plan of arrangement to bring the unit out of court protection. (Editing by Rob Wilson)