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BP Exploration makes record setting bid

Brodie Thomas
Northern News Services
Published Monday, June 9, 2008

BEAUFORT DELTA - Four different companies bid an unprecedented 1.26 billion dollars in total for the right to explore for oil and gas on five parcels of land on the Beaufort Sea floor.

The winning bids were announced by Indian Affairs and Northern Development on Friday. It was the largest bid on oil and gas rights in Canadian history, signaling a new era in oil and gas exploration for the North.

The majority of the bids came from BP Exploration, a previously unknown player in Beaufort Delta oil and gas exploration. The company bid $1.18 billion for the rights to explore just one of the five parcels of land.

The bid represents how much the company plans to spend exploring for oil and gas on its parcel in the Beaufort Sea. They will pay a work deposit of $295 million to the federal government.

The winning bids on the rights to four other parcels were also announced. The bids ranged from $1.1 million to $15 million. BP Exploration snatched up two of those parcels as well.

Tuktoyaktuk mayor Merven Gruben said the bid from BP Exploration "came out of left field" but was welcome news for his town.

"That was different. I was expecting Chevron or Shell or something," said Gruben.

BP also snagged two other parcels in the Delta, each around 200,000 hectares in size: Parcel BSMD-3 for $15 million, and Parcel BSMD-5 for 1.1 million.

When asked why BP's bid for Parcel 1 was so much higher than all the rest, Gruben had his own theory.

"I think everybody is bidding on that one place because somebody knows something there. I was telling everybody there's a billion dollars out there. I just didn't expect it from BP. Not in the Beaufort," he said.

Gruben thinks the exploration will mean a windfall for Tuktoyaktuk. "We're opening our door for anything that is going to be happening. We got the Imperial Oil bid for over half a billion last year, so we knew this was going to be big. My phone was just ringing off the hook after the announcement," said Gruben.

South of Tuktoyaktuk, Inuvik's Mayor Derek Lindsay was also hopeful that the exploration will bring more development to Inuvik.

"The spin off effects will be tremendous. The economic development alone will be a terrific advantage for Inuvik. It's a great thing. Mayor Gruben and I had the same thoughts. It will be a great benefit to the Inuvialuit and the region. That kind of activity is a pleasure to see. Activity has been slow and hopefully this will open things up," said Lindsay.

BP's billion dollar parcel is roughly 200 kilometres offshore from Tuktoyaktuk.

ConocoPhillips Canada Resources Corporation won the rights to Parcel BSMD-4, a parcel of land just under 200,000 hectares for $2.5 million.

MGM Energy, CocnocoPhillips Canada Resources Corporation, and Phillips Petroleum Canada shared a $1.7 million bid on parcel BSDM-2. Parcel 2 is a much smaller area, at about 41,000 hectares. It is about 50 km west of Tuktoyaktuk.