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Blowout Sale: BP Plans to Divest US Wind Properties
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April 03, 2013

Blowout Sale: BP Plans to Divest US Wind Properties

By Cheryl Kaften
TMCnet Contributor

British Petroleum (BP), which under former chief executive John Browne set its course "Beyond Petroleum,” is now “back pedaling” away from that strategy. According to multiple industry sources, the company has abandoned its alternative energy initiatives and will sell its U.S. wind operations, valued at about $1.5 billion.

The London-based oil and gas company has been crushed under the weight of a commitment to restore the economy and environment of America’s Gulf Coast, following the Deepwater Horizon oil rig spill in April 2010. BP already has spent about $24 billion on cleanup efforts and compensation—and may well owe another $17 million if a U.S. district court finds that its actions were grossly negligent under the terms of the Clean Water Act on the day of the explosion.

BP plans to dispose of interests in 16 operating wind farms in nine states (see map) with a total capacity of about 2,600 megawatts, Mark Salt, a London-based spokesman for BP, confirmed in an e-mailed statement to Bloomberg (News - Alert). The company also will sell projects in various stages of development, including 2,000 megawatts of wind poised to start construction, he said.

With uncertainty over the fate of the U.S. wind production tax credit—due to sunset again at year-end 2013—it is not the only company that has hedged its bets on the future of the U.S wind industry.

A profitable sale would reposition BP as a smaller, more sinewy company with greater shareholder value. To date, in an effort to divest the company of loss-leading operations, CEO Bob Dudley has sold $38 billion in oil fields, pipelines and refineries—and has “thrown in the towel on solar” after trying to make money at it for 35 years, according to the Financial Times (News - Alert). BP also has cancelled plans to build a $300 million advanced cellulosic ethanol plant in Florida, saying it could earn better results elsewhere—and has ditched an investment in a carbon-capture project in Scotland.

Industry analysts say the sale of wind properties may lure Asian investors looking to establish U.S. traction. Any sale of the wind assets will be the subject to “attractive offers” being received, Salt said.

BP had been the remaining large oil company with wind operations; Dutch Shell blew out of the market in 2009. BP has invested more than $55 billion in U.S. energy development the last five years, according to the company.

Edited by Rachel Ramsey

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