BP assessing New York wind projects after $540 mln writedown, CEO says - Reuters
BP assessing New York wind projects after $540 mln writedown, CEO says | Reuters
BP assessing New York wind projects after $540 mln writedown, CEO says
The logo of British multinational oil and gas company BP is displayed at their booth during the LNG 2023 energy trade show in Vancouver, British Columbia, Canada, July 12, 2023. REUTERS/Chris Helgren/File Photo Acquire Licensing Rights
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LONDON, Oct 31 (Reuters) - BP remains committed to its offshore wind growth plans after the energy company booked a $540 million impairment on two U.S. projects, CEO Murray Auchincloss told Reuters on Tuesday.
BP and its partner Equinor (EQNR.OL) are assessing their next steps after the state of New York rejected the companies' request to revise upwards power supply contracts for the giant projects, Auchincloss said.
The pretax impairment on the projects was due to "inflationary pressures and permitting delays," BP said.
Norway's Equinor booked a $300 million impairment on the projects last week.
"New York put out a 10-point plan, which would help move these projects forward... We'll be looking at that with our partner Equinor and deciding what we do moving forward," he said, after BP reported third-quarter earnings of $3.3 billion.
"We remain committed to offshore wind, in particular here in the UK and in Germany," Auchincloss added.
BP paid Equinor $1.1 billion in 2020 for a 50% stake in the venture to develop the Empire and Beacon offshore wind projects, which have a combined capacity of 3.3 gigawatts, capable of powering 2 million homes.
Reporting by Ron Bousso; editing by Jason Neely and Louise Heavens
Our Standards: The Thomson Reuters Trust Principles.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.