UK supermajor BP has made its first foray into offshore wind through a $1.1 billion deal that will see it partner with Norwegian giant Equinor in the US.
BP confirmed on Thursday it will pay Equinor $1.1 billion for interests in four assets in two existing offshore wind leases off New York and Massachusetts, with the deal expected to close early next year.
This includes a 50% interest in Equinor’s Empire Wind and Beacon Wind assets, with the Norwegian company to remain operator of both projects during the development, construction and operations phases, while it is anticipated the wind farms will be equally staffed after a period of time.
The Empire Wind lease area covers 80,000 acres off Long Island, New York and will be developed in two phases. The first phase will see the installation of between 60 and 80 turbines, with each turbine expected to have an installed capacity of 10-15 megawatts.
BP noted the the lease area had a potential total generation capacity of 2 gigawatts.
First power from Empire Wind is expected in the mid-2020s, while the planned second phase of development is preparing for upcoming solicitations.
Meanwhile, Beacon Wind covers a total area of 128,000 acres off the New England coast and, when fully developed, is anticipated to have a total generating capacity of 2.4GW, however the joint venture still needs to obtain the necessary permits for the project.
The deal will also see the two traditional oil giants form a strategic partnership to jointly pursue other potential offshore wind opportunities in the US, in both bottom-fixed and floating offshore wind.
“This partnership provides an extraordinary opportunity for our two companies to work together in pursuit of our shared ambition—creating better, lower carbon energy for the world,” BP executive vice president for gas and low carbon energy, Dev Sanyal, said.
“It will leverage BP’s trading expertise and onshore wind experience with Equinor’s sector-leading track record in offshore wind to deliver value for our shareholders. We look forward to working with Equinor and together exploring further opportunities in the fast-growing US wind market.”
Equinor chief executive Eldar Saetre added: "Our partnership underlines both companies’ strong commitment to accelerate the energy transition and combining our strengths will enable us to grow a profitable offshore wind business together in the US.”
BP chief executive Bernard Looney labeled the deal “an important early step” in the company’s new strategy, which will see it pivot towards becoming an integrated energy company.
“Offshore wind is growing at around 20% a year globally and is recognised as being a core part of meeting the world’s need to limit emissions,” Looney said.
“Equinor is a recognised sector leader and this partnership builds on a long history between our two companies. It will play a vital role in allowing us to deliver our aim of rapidly scaling up our renewable energy capacity, and in doing so help deliver the energy the world wants and needs.”
Oil giants shift to green
BP first unveiled its plan to transform into an integrated energy company last month, marking a shift from its 110-year history as a traditional oil and gas player.
The new strategy will see it increase its annual low carbon investment to about $5 billion per annum, while it has also set the ambitious goal of increasing its renewable generating capacity from 2.5 GW last year to about 50 GW by 2030.
Equinor, meanwhile, has set a target to grow its renewables capacity to between 4 GW and 6 GW by 2026 and 12 GW to 16 GW by 2035.
The Norwegian company is looking to meet its targets by focusing on core offshore areas in the North Sea, the US and the Baltic Sea.