Wednesday, 25 September, 2024 / Edition 26

Greetings from China!

After more than four years, my better half and I are back in our home of Nanchang. The last time we were here was just before Covid-19 hit the world. I am certainly glad that the pandemic is over, but I so wish the world would have recovered better...

And speaking of making things better, we are looking for feedback on Well Read and would love to know more about you and what you are looking to learn in this weekly newsletter. Take this survey to give your input.

Now, let’s move to two pieces of energy news from the past week.

Shangyou Nie

Editor, Well Read

BP Sells U.S. Onshore Wind Business 

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BP recently announced that it will start the selling process for its onshore wind business, BP Wind Energy, in the USA. The wind arm of the European major is estimated to be worth around $2 billion. BP will focus on solar energy instead via its subsidiary Lighthouse BP.

What BP will sell:

• The divestment program will consist of 10 assets in Indiana, Kansas, South Dakota, Colorado, Pennsylvania, Idaho, and Hawaii. Nine are operated by BP.

• The total net generating capacity will be 1.3 GW out of 1.7 GW total.

• The 10 wind assets are connected to existing grids for different off-takers and are run from a Houston remote operating center.

• BP’s experienced wind energy workforce is expected to transfer to the new owner, so job loss should be minimal.

Switching to solar:

• BP entered the onshore U.S. wind business in the mid-1990s.

• In November 2023, BP announced plans to take full ownership of Lighthouse, buying out the remaining 50.3-percent stake that it did not own at the time. The deal is expected to close by year’s end.

• William Lin, BP’s new EVP for gas and low carbon energy, explained that the onshore wind business is “not aligned with our plans for growth in Lightsource BP.”

Offshore wind:

• The latest decision in onshore wind follows a $1.1 billion write-off for BP’s offshore business in 2023, resulting from its struggle with project delays and cost escalation.

• In January, BP and Equinor agreed to swap some offshore wind assets on the Atlantic coast.

• BP also took full control of Beacon Wind United States’ offshore projects in Massachusetts and New York, while Equinor took 100 percent of Empire Wind in New York.

BP continues to gain investor confidence:

• The latest divestment decision in onshore wind reflects continued re-orientation by BP’s CEO Murray Auchincloss back to oil and gas, according to the Houston Chronicle. Auchincloss took BP’s helm in January.

• According to the Financial Times, BP’s recent moves still have not won confidence from the financial market.

• BP’s shares are down by 7.7 percent YTD and 15 percent in the past year. Its market cap stands at $87 billion as of 19 September, trailing its European peers.

What to watch:

• According to the WSJ, BP is separately selling an undisclosed share in the Trans Adriatic Pipeline in Europe to Apollo Global Management for $1 billion.

• Will Auchincloss finally drop BP’s previously announced commitment to reduce its oil and gas output by 2 million barrels per day by 2030, a 25 percent decline from its 2019 levels?

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Chevron Receives Key EPA Approval for CCS Project Along Texas Coast

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At the Gastech Exhibition & Conference last week in Houston, Chevron VP, CCUS Chris Powers told Upstream that the company had received the greenlight from the EPA for its Bayou Bend CCS project in offshore Texas. “That’s one of the first big milestones from the EPA,” Powers said.

Key points:

• Two months ago, Chevron submitted a permit application to the EPA for an offshore Class VI well to inject CO2 underground.

• According to Powers, the EPA has now updated the application to the “administratively complete” status.

• The Bayou Bend CCS project will be the third major CCS project for Chevron globally: It is the operator for the Gorgon CCS project in Australia and a non-operating partner with operator Shell in the Quest CCS project in Canada.

About the Bayou Bend CCS project:

• The Bayou Bend CCS project is located in Southeast Texas, in onshore and offshore areas. The onshore piece is for storage and is currently undergoing testing.

• The project is the first big CCS project on the Texas Gulf coast and has two parts: Bayou Bend East in a 42,000-acre area and Bayou Bend West in a 100,000-acre area.

• The project’s original operator was Talos Energy, which was said to have very good 3D seismic data coverage for the area.

• Talos and partner Carbonvert beat 11 other bidders in 2021 to win the project.

• The project has the capacity to store 225–275 million tonnes of CO2, helping Chevron to achieve its goal of sequestering 100 million tonnes of CO2 before 2032.

• Chevron bought 50 percent of Talos’ equity in 2022 and took over the operatorship. Chevron agreed to carry some of the capital cost for Talos (25 percent) and Carbonvert (25 percent).

• Equinor bought 25 percent of Talos’ remaining equity in August 2023. No financial details for the transaction were released.

• TotalEnergies bought the other 25 percent of Talos’ remaining equity in March 2024, as part of its $148-million acquisition of Talos Low Carbon Solutions.

What to watch: Will the Biden Administration accelerate approvals for energy project permit applications as the presidential election draws closer?

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✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.