Has BP Decided to Kick Clean Energy to the Curb?
While oil and gas operations can clearly be costly endeavors — the 2010 Gulf of Mexico oil spill has cost BP (NYSE:BP) an upwards of $40 billion — in general, those projects offer far better returns than clean energy. In light, of the massive expenditures that the company has had to make to pay off its bill, BP has turned to oil and gas projects increasingly often. Just on Wednesday, the British oil producer announced that had put its United States wind farm operation, one of the largest in the country, up for sale, continuing the retreat that many of the world’s largest energy companies have made from their renewable energy investments.
BP has already sold or allocated for sale approximately $38 billion worth of assets — partly to pay for the penalties and clean-up costs associated with the spill and partly to redraw itself as a leaner company focused on high-margin oil production and exploration.
Reports seen by Reuters indicated that the deal could raise as much as $1.5 billion for the company. However, BP has not yet put a value on the wind farm. In a statement obtained by the publication, the company said it expected “attractive offers” for the assets, which include interests in 16 wind farms in nine states with a total generating capacity of about 2,600 megawatts of renewable power and a portfolio of projects in varying stages of completion…
More than ten years ago, several big oil companies — BP and Shell (NYSE:RDSA)(NYSE:RDSB) among them — began making large investments in renewable energy projects. But in the intervening years, government subsidies have come to be less assured and prices for solar, wind, and other clean energy sources have not been enticing. As a result, the re-emergence of healthy prices for oil and opportunities to develop large gas fields have drawn their attention away from renewable energy, noted Reuters.
When John Browne was the company’s chief executive, he stylized its initials to represent “Beyond Petroleum,” but that way of thinking is now less influential.
While BP still has a substantial interest in Brazilian biofuels, its investments in renewable energy have only amounted to about $1 billion annually since 2005, and according to Reuters, it has no particular investment plans for the sector scheduled in the near future. For comparison, the company’s total capital spending budget comes to more than $20 billion annually.
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