Ineos to acquire BP's Forties pipeline, Kinneil terminal

Ineos has agreed to acquire the 575,000-b/d Forties pipeline system (FPS) and associated pipelines and facilities from BP PLC for as much as $250 million. The purchase price includes a cash payment of $125 million on completion and an earn-out arrangement over 7 years that could total $125 million.

FPS carries liquids production from 85 fields in the central and northern North Sea and several Norwegian fields on behalf of around 40 companies. Built, owned, and operated by BP, FPS was opened in 1975 to transport oil from Forties field, the UK's first major offshore oil field. In 2016, the system's average throughput was 445,000 b/d of oil and 3,500 tonnes/day of raw gas.

FPS primarily comprises a 169-km, 36-in. pipeline connecting the unmanned offshore Forties Unity platform to the onshore terminal at Cruden Bay. From there, a 36-in. onshore pipeline transports the oil 209 km south to the Kinneil facilities, adjacent to the Grangemouth refinery and chemical plant, where it is processed and stabilized before output is sent either for export via the Dalmeny terminal and Hound Point loading jetty or on to Grangemouth.

Upon completion of the deal, which is expected in the third quarter, ownership and operation of FPS, the Kinneil terminal and gas processing plant, the Dalmeny terminal, sites at Aberdeen, the Unity platform, and associated systems will transfer to Ineos as fully operational units.

BP sold its interests in Forties field to Apache Corp. in 2003 and sold the Grangemouth refinery and chemical plants to Ineos in 2005.

"BP is returning to growth in the North Sea as we bring important new projects, including the Quad 204 redevelopment and Clair Ridge, into production and increase new exploration," commented BP group Chief Executive Bob Dudley. "While the Forties pipeline had great significance in BP's history, our business here is now centered [on] our major offshore interests west of Shetland and in the central North Sea."

BP expects the Quad 204 redevelopment west of Shetland to begin production in this year's first half. The Clair Ridge project is expected to begin production next year. Over the next 18 months, BP also plans to participate in as many as five exploration wells in the UK in addition to drilling 50 development wells over the next 3-4 years.