bp to take Full Ownership of Beacon Wind US Offshore Projects
The move will also transfer interest in Empire Wind to Equinor.
bp and Equinor announced an agreement to restructure the ownership of their joint US offshore wind projects which, following completion, will result in bp taking ownership of Equinor’s 50% stake in the Beacon Wind 1 and 2 projects and Equinor taking ownership of bp’s 50% stake in the Empire Wind 1 and 2 projects. In addition, bp agrees to take ownership of Equinor’s 50% interest in the Astoria Gateway for Renewable Energy (AGRE) site and, subject to certain future conditions, Equinor agrees to take ownership of bp’s 50% interest in the South Brooklyn Marine Terminal (SBMT).
Previously, bp and Equinor each held a 50% stake in the Beacon and Empire offshore wind projects. Under the new agreement, the companies will work independently to develop their wholly owned projects. The pair have also agreed with the New York State Energy Research and Development Authority (NYSERDA) to terminate the Offshore Wind Renewable Energy Certificate (OREC) Purchase and Sale Agreement for the Beacon Wind 1 project. The agreement aims to help each company optimize their development strategies, strengthen their positions in the US offshore wind market and continue supporting the energy transition.
“Over the past few years, we have built a highly experienced offshore wind team with deep capabilities and a sizeable global project portfolio with scale positions in the most attractive basins,” said Anja Isabel Dotzenrath, bp executive vice president, gas & low carbon energy. “We remain disciplined with an uncompromised focus on value creation across our entire offshore wind portfolio as we continue to pursue growth opportunities that underpin our company’s transformation.”
Beacon Wind 1 and 2 comprise a combined area of 128,000 acres in federal waters between Cape Cod, Massachusetts, and Long Island, New York. The combined potential generative capacity of the projects is in excess of approximately 2.5 gigawatts which has the potential to deliver renewable energy to over 2 million consumers in the northeastern US.
“Beacon Wind 1 and 2 have immense potential to create American jobs, benefit local communities, deliver low carbon energy and support the energy transition,” added Joshua Weinstein, bp’s president of offshore wind Americas. “bp has a proven track record of delivering complex engineering projects offshore, and we’ll continue bringing that expertise to bear as we advance the development, engage with communities and bring these projects closer to commercial operations."
The proposed transaction is expected to be on a cash neutral basis subject to customary working capital adjustments. Following assessment of fair value of bp’s assets, bp expects to recognize a pre-tax impairment charge of around $0.6 billion relating to bp’s US offshore wind assets in the fourth quarter 2023. bp remains committed to US offshore wind and will continue to seek opportunities to build on its global portfolio.Subject to regulatory approvals, the transaction is currently anticipated to close around mid-2024.
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This is happening because both companies have different plans for "value". BP's is to sell any equity from the project. The new structure also allows both companies to renegotiate rates with New York.