EnCana, ConocoPhillips in $15B US oilsands joint venture
EnCana Corp. is joining with ConocoPhillips of the United States to form an oilsands extraction and refining venture.
The two big energy companies said they have formed a 50/50 joint venture that will include EnCana's Foster Creek and Christina Lake heavy oil projects in northeastern Alberta plus ConocoPhillips's Wood River refinery in Roxana, Ill., and the Borger refinery in Borger, Texas.
Each company will contribute $7.5 billion USto the venture over the next 10 years.
The two companies said they plan to boost oilsands extraction in the Alberta projects from the current 50,000 barrels per day to 400,000 barrels per day by 2015. EnCana will remain responsible for managing the "upstream" part of the joint venture.
The "downstream", or refining, portion of the venture will be expanded to process 550,000 barrels of heavy oil per day from the current 60,000 barrels. EnCana and ConocoPhillips will jointly own the refining operations, but ConocoPhillips will keep an 85 per cent economic interest in the Borger refinery next year and a 65 per cent stake in 2008.
"These partnerships provide greater certainty of execution for our oilsands projects by reducing cost and price risk and increasing confidence in our ability to achieve economic returns," said said Randy Eresman, EnCana's president and chief executive officer.
"They also give EnCana immediate participation in the North American refining industry and provide options for future upgrader development," he said.
Jim Mulva, chairman andchief executive officerof ConocoPhillips, said the move will give it a stable source of oil supplies that can be refined into gasoline, diesel and other petroleum products for U.S. consumers, plus a significant market for Canada's oilsands.
Shares of EnCana rose $1.75 on the TSX to close at $51.70.
With files from the Canadian Press