BP Executive: No Plans To Sell Alternative-Energy Businesses

14th Jul 2010 21:54

By Naureen S. Malik OF DOW JONES NEWSWIRES NEW YORK (Dow Jones)--BP PLC (BP) has no plans to sell its renewable-energy businesses as the British oil giant seeks to sell billions of dollars of assets in the wake of the Gulf of Mexico oil spill, the head of the company's wind-power unit said Wednesday. As BP has struggled to contain the mile-deep gusher, the alternative-energy division has been fielding calls from banks, utilities and other partners about the company's financial health, said John Graham, president of BP Wind Energy, in an interview with Dow Jones. BP has said it plans to sell $10 billion of assets over the next year, and speculation is growing over which assets will go, with recent media reports of talks between the company and Apache Corp. (APA) over some of BP's Alaska properties, among others. BP executives "have reaffirmed their commitment to the alternative energy business; they told us it's not for sale," Graham said. "We look at every option all the time; if the price is right we will sell." However, "we haven't built it [the renewable-energy business] to sell it. There is no need to sell it." BP's alternative-energy business is dwarfed by the traditional activities of exploring for and producing oil, and refining and selling oil products. The company has committed to invest $8 billion between 2005 and 2015 in alternative energy, whereas BP, in its first-quarter earnings announcement, said it expected total capital expenditures of $20 billion this year alone. The company develops solar-power technology and wind-power projects, and also has hydrogen and biofuel businesses. BP has wind farms in seven states, including California and Texas. The company is also developing projects in California to capture the carbon dioxide emitted by using petroleum coke to produce hydrogen for generating power. BP has spent half of the $8 billion it allocated to renewable-energy development in 2005, of which $1.8 billion went to wind projects. The remaining $4 billion will be spent over the next four years, but it's unclear how that money will be allocated across projects, Graham said. Competition has grown among renewable-energy developers as utilities shy away from signing long-term agreements to purchase power from them, amid uncertainty over the future of U.S. clean-energy and climate-change policy. Development plans in 2012 and beyond will depend on whether Congress extends various incentives and electricity demand rises, Graham said. A federal cash-grant program for wind-project developers will expire at the end of this year, and tax credit for producing renewable power will end in 2012. Amid the competition and uncertainty over policy, "it might be a tough 18 months to 24 months" for the wind-power industry in the U.S., Graham said. Nevertheless: "We still have plenty of opportunities, and expectations that the U.S. will get its energy act together." About two years ago, BP decided to focus its wind-development efforts in the U.S. and sold off three wind farms it had in India. BP is reviewing options to build two wind-power projects totalling 400 megawatts, either by expanding existing wind farms or by going to new locations, possibly in California, Colorado, Indiana or Wyoming. "We are not going offshore," Graham said when asked whether the company was interested in developing wind power along the East Coast. "We have not seen anything that would attract us to go offshore. Too risky." Such risks include the cost of building solid undersea foundations for turbines, unpredictable weather and other issues. -Naureen S. Malik, Dow Jones Newswires; 212-416-4210; [email protected] (END) Dow Jones Newswires July 14, 2010 16:54 ET (20:54 GMT)