BP plc is putting its once touted U.S. wind energy business on the market to refocus on growing its oil and natural gas operations, the operator said last week.
The London-based major has built one of the largest wind businesses in the United States; last year it installed its 1,000th wind turbine in Texas. The U.S. assets are estimated to be worth $1.5 billion, and BP said it expected to receive “attractive offers” for the properties.
Included in the sale would be stakes in 16 operating wind farms in nine states that have a combined generating capacity of about 2,600 MW. Also for sale is a portfolio of projects in various stages of development, including 2,000 MW of projects that are considered shovel-ready.
BP is considered the 12th largest owner of wind power in the United States, and the seventh-largest investor in new capacity, according to the company. FPL Group is the biggest wind farm owner in the United States through subsidiary NextEra Energy Resources, which has almost 8,000 MW of installed capacity.
The decision to sell the unit was a surprise. Just last month CEO Bob Dudley said BP had invested about $8 billion on alternative energy resources over the past eight years, more than half of that in wind farms (see NGI, March 11). However, he said then that BP had “thrown in the towel on solar. We worked on it for 35 years and it really never made money…” It also has cut carbon capture and storage technology development.
Over the past five years BP has invested more than $55 billion total in U.S. energy projects, which is about $15 billion more than its nearest competitor and more than in any other country. It is the second largest oil and gas producer in the United States.
BP has never sought to be a dominant player in North American wind energy. However, the alternative energy program, launched in 2007, was designed to achieve scale and use existing procurement relationships to reduce costs and bring steady rates of return. Lord John Browne, who served as CEO from 1995 to 2007, had pledged to set the company on a course “Beyond Petroleum.”
The BP Alternative Energy unit handles the low-carbon business and future growth options outside oil and gas. By selling the wind business and ending its solar program, the alternative energy business would be focused only on biofuels, principally sugar cane ethanol in Brazil.
Former CEO Tony Hayward said in 2008 that BP intended to grow the alternative energy business “predominantly for its equity value” (see Daily GPI, Aug. 22, 2008). “Taking stock market valuations for similar companies, we estimate it is already worth between $5 billion and $7 billion. As we go forward we will be looking at how best we can realize that growing value for our shareholders.”
However, a year later BP downsized the unit as part of an across-the-board cost-cutting initiative (see NGI, July 6, 2009). In the aftermath of the Macondo oil well blowout in 2010, BP has set a course to sell $38 billion of its assets to pay for cleanup costs and litigation.
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