* Western Canada gas assets sell for $3.25 billion
* BP’s 2nd exit from Canadian gas business
* Oil sands, Arctic acreage, NGLs not part of deal
* Affects 520 jobs at BP (In U.S. dollars unless noted)
By Scott Haggett and Jeffrey Jones
CALGARY, Alberta, July 20 (Reuters) - BP Plc (BP.L) is selling its natural gas business in Western Canada to Apache Corp (APA.N) as part of a $7 billion deal to raise funds for hefty Gulf of Mexico oil spill costs, marking an end for what was once the country’s dominant gas producer.
Apache, which is expanding its gas business in Canada, will acquire assets in Alberta and British Columbia producing 240 million cubic feet of gas and 6,500 barrels of gas liquids a day for $3.25 billion.
At its height, BP produced more than 1 billion cubic feet a day in Canada.
BP is also handing over its planned Mist Mountain coal bed methane development and the C$1.4 billion ($1.34 billion) Noel project, which is expected to produce up to 130 million cubic feet a day within a decade.
The sale, part of a larger deal with Apache that includes Texas and Egyptian assets, brings to a close BP’s Canadian gas business, once the country’s largest but winnowed down over the past dozen years into just another mid-sized player.
Most of BP’s Canadian assets were acquired with the British oil major’s worldwide acquisition of Chicago-based Amoco Corp in 1999. It has since pared holdings such as the Cochin pipeline, the country’s main natural gas liquids line. It sold its last interest in the 1,900 mile (3,000 km) line in 2007.
The sale of the Canadian gas assets will affect about 520 jobs, roughly half of the unit’s total workforce, BP Canada spokeswoman Hejdi Feick said.
“Apache will have the opportunity to acquire those individuals with the assets, but that will be Apache’s decision,” Feick said.
BP’s Canadian unit had 2,100 employees at the time of the Amoco takeover.
The company has pulled up stakes in Canada before. In 1992 it spun off its holdings in a public offering, creating Talisman Energy Inc TLM.TO, now Canada’s No. 4 independent energy company, with a market value of $16 billion.
BP’s remaining Canadian assets include oil sands, an area the company shied away from under former Chief Executive John Browne. In recent years it has struck three deals to build a presence in northern Alberta’s oil sands, the largest crude reserves outside the Middle East.
It signed an agreement with Husky Energy Inc (HSE.TO) in 2008 to take a 50 percent interest in the Sunrise oil sands development in exchange for a half stake in BP’s Toledo, Ohio, refinery.
This year, it sold a half interest in its Kirby oil sands property to Devon Energy Corp (DVN.N), which will operate the project, and agreed with privately held Value Creation Inc to join and operate the Terre de Grace oil sands block.
The unit also has exploration acreage in Canada’s Beaufort Sea in the Far North, a gas liquids extraction business and a sales and trading arm.
With the acquisition, Apache will further expand its Canadian gas business. Along with conventional assets, the U.S. independent is a partner with Encana Corp (ECA.TO) in developing property in the gas-rich Horn River shale region of northern British Columbia and has a controlling interest in a planned natural gas liquefaction plant on the province’s northern Pacific Coast.
$1=$1.04 Canadian Editing by Rob Wilson