June 9, 2008 / 5:17 PM / 11 years ago

BP bids big for Canadian Arctic drilling rights

CALGARY, Alberta, June 9 (Reuters) - BP Plc (BP.L) said on Monday it has no immediate plans to drill properties in Canada’s Beaufort Sea that it was awarded last week after bidding C$1.2 billion ($1.17 billion) for three offshore parcels in the petroleum-rich Arctic region.

BP, already one of the largest landholders in the Arctic through its acquisition of Amoco Canada Petroleum Co in 1998, was the biggest bidder for exploration parcels in Canada’s Arctic in a lease sale conducted by the Canadian government.

Results for the latest round of petroleum exploration properties in Canada’s Arctic were released late on Friday. Along with BP, winning bids for other parcels in the Beaufort and the Mackenzie Delta came from ConocoPhillips (COP.N) and MGM Energy Corp MGX.TO.

However, these other bids were much smaller, with the sale raising a total of C$1.21 billion, including BP’s offer.

“We see it as an area of promise and see it as an opportunity to add to BP’s existing resource base in the Beaufort Sea,” said Hejdi Feick, a spokeswoman for BP’s Canadian unit. “We already have 15 significant discovery licenses in the Beaufort.”

Feick said BP will develop an exploration plan for its newly acquired holdings but there was little rush to exploit the properties. Drilling a well on the lands within five years secures the acreage for an additional four years.

The Beaufort Sea is one of the most promising areas for big oil and gas discoveries in Canada but has been largely bypassed because the region doesn’t have pipeline access to southern markets.

Previous exploration in the region and the Arctic Islands — backed by lucrative government grants in the 1970s and 80s — discovered 25 trillion cubic feet of gas 1.7 billion barrels of oil, but only a tiny fraction was ever produced.

However, a consortium led by Imperial Oil Ltd (IMO.TO) is backing a C$16.2 billion plan to build a natural gas pipeline from the Mackenzie Delta north of the Arctic circle to Alberta, raising new interest in the region.

Imperial and its majority owner Exxon Mobil Corp (XOM.N) bid nearly C$600 million for a Beaufort block last year. And in 2005, Devon Energy Corp (DVN.N) drilled the first well in the Beaufort in 17 years, but was disappointed to strike a big oil field instead of the natural gas it had hoped to find.

Devon has no plans to drill again in the Beaufort, but the company teamed up with MGM Energy to pay C$5.5 million for an exploration parcel in the Tulita region of the Northwest Territories southeast of Norman Wells, the Canadian government said on Friday. ($1=$1.02 Canadian) (Reporting by Scott Haggett; Editing by Bernadette Baum)

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