When BP announced in early August that they were transitioning to an integrated energy company, the news was met with cautious approval by some environmental agencies. BP have today followed up with details of their first excursion into the nascent US offshore wind industry by taking a $1.1bn stake in two projects being developed by Equinor, the Norwegian oil company.
BP’s divestment policy began in earnest in June when they sold their global petrochemicals business to Ineos for $5 billion. In August, they pledged to increase their low-carbon investments eight-fold by 2025 and ten-fold by 2030 and to reduce their fossil fuel output by 40% over the next 10 years and to aim at net-zero carbon by 2050.
Now, they have acquired a 50% interest in two wind farms developments:
Beacon Wind is located 20 miles south of Nantucket. The lease was acquired in 2019, covers 128,000 acres and has a potential capacity of more than 2.4GW.
Empire Wind is located 15-30 miles southeast of Long Island, New York, covers 80,000 acres and is in the early stage of development. It has a potential capacity of 2GW. Both projects will each potentially power a million households.
In the longer term, much interest will reside in the deal marking the beginning of a partnership between BP and Equinor. The offshore wind industry is growing at around 20% a year globally and with BP committed to a low-carbon future, it is telling that their choice of partner is Equinor. Together, they will consider joint opportunities in the US for both fixed and floating offshore wind.
The two companies have some commonality: Equinor started life as Statoil in 1972 before changing their name in 2018 and re-branding themselves as a broad energy rather than pure oil and gas company. They are still 67%-owned by the Norwegian state and are currently building the world’s largest floating wind farm 87miles off the Norwegian coast in the North Sea.
Both organisations were eager to stress the collaborative nature of the deal. Bernard Looney, BP’s chief executive, said “the partnership will play a vital role in allowing us to deliver our aim of scaling up our renewable energy capacity”.
Looney’s counterpart in Equinor, Eldar Sætre, described the partnership as “combining our strengths [to] enable us to grow a profitable offshore wind business together in the US”.
The deal is expected to close in early 2021.