Meghan Schiller of Medill News Service
The head of BP's alternative-energy business on Tuesday said biofuel and wind are the stars of the field as the firm ramps up its presence.
Katrina Landis, CEO of BP's alternative energy business, said at a gathering of the Atlantic Council in Washington that the company is ahead of schedule in its investment plans.
BP's Alternative Energy division began in 2005 with plans to invest $8 billion over a 10-year period. It's ahead of schedule, having already invested a total of $7 billion, with $4 billion in the United States. BP plans to have invested all $8 billion by the end of the year.
BP doesn't break out what the alternative energy division earns or loses for the company that is still recovering from the Gulf of Mexico oil spill. The division is housed within the firm's "other businesses and corporate" unit, which lost $2.5 billion last year before tax and interest, mostly on items unrelated to alternative energy.
"When we entered the sector in 2005, to be honest with you we knew little about it," said Landis.
She explained the company cautiously spent the first three years making small bets and waiting to see where and when the technology matured.
"The reason it's been so fast is that we've found some very, very attractive business opportunities," Landis said.
"Our cellulosic ethanol energy grass feedstock grows 15 to18 feet high and produces 1,000 to 2,000 gallons of fuel per acre," said Landis.
BP grows its "energy cane" at its first commercial plant in a small Florida agricultural town hungry for jobs. Landis says those Floridians are "thrilled with development of this farm, and it's on marginal land so there is no potential impact of the land being used for food crops."
The company notes cellulosic ethanol will compete in the market at $80 per barrel by 2022 and yield 4 to 5 times that of corn.
For wind energy, BP says the production tax credit is to thank for its wind interests in the U.S. There are currently thirteen operating wind farms across seven states and three in construction.
"The $3.5 billion in support from the tax perspective has driven $16 billion in capital investments from the industry," said Landis.
"Over the course of two,three, four years, depending on gas pricing, we will be able to compete with gas without any form of additional subsidization."
One alternative energy without the ability to compete is solar energy, at least based on BP's recent shift in focus.
"We are exiting solar...it has been a very interesting saga," said Landis. "We saw prices fall 40% in a 12-month period and they kept coming down the pricing curve. It was great to be a consumer, but terrible to be a manufacturer with facilities in Western markets."
Thursday, 12 July 2012 15:23