Texas is the nation’s oil capital. Texas is the nation’s biggest producer of wind energy. Could a blending of those two roles be in the offing, thanks to the credit crunch and tax credits?
Without addressing the Texas angle specifically, the Wall Street Journal’s Russell Gold posed a broader question in a recent post on the newspaper’s Environmental Capital blog: “Could Big Oil end up financing tomorrow’s wind farms?”
The possibility arises, he wrote, because oil companies are part of a “shrinking group” with “a reliable stream of taxable income to offset with tax credits” available for wind projects.
Gold examined the possibility that oil money might replace now-harder-to-find capital from other investment sources because of news about BP, the U.K.-based energy giant. Britain’s Guardian reported a shift in BP’s strategy for future renewable projects on Nov. 7:
“BP has dropped all plans to build wind farms and other renewable schemes in Britain and is instead concentrating the bulk of its $8bn (£5bn) renewables spending programme on the U.S., where government incentives for clean energy projects can provide a convenient tax shelter for oil and gas revenues.”
The Journal’s Gold, in the Nov. 11 blog post, reported no sign that three major U.S. oil companies were similarly inclined:
“ConocoPhillips says it is focusing on its oil and gas portfolio. A Chevron Corp. spokesman said the California company had evaluated it in the past, but ‘we are not currently pursuing tax credits for wind projects.’ Exxon Mobil Corp. declined comment.”
(Shell, not mentioned in the Journal blog post, last summer pulled out of a huge offshore wind farm planned in Britain, reported the British Web publication BusinessGreen.com, because “rising costs had been a factor in the ‘strategic decision’ to focus on U.S. wind energy projects that boast stronger economies of scale and find it easier to obtain planning permission.”)
A New York Times profile of Exxon, published Nov. 17, did offer a look at the mammoth Texas-based oil company’s approach to renewables. The story was headlined “Green is for sissies” in the paper edition and, less provocatively, “At Exxon, making the case for oil” on the Times’ Web site.
While Exxon has departed from its longstanding skepticism about manmade global warming and “acknowledged that climate change is a risk to the world,” it is still “dismissing most green alternatives and sticking with hydrocarbons,” Times reporter Jad Mouawad wrote.
He continued: “Although the company’s tone has changed, its strategy has not. Despite growing pressures on oil companies to invest in alternative energy, Exxon’s long-term view remains unapologetically tied to fossil fuels.”
(Exxon’s oil-based product line includes lubricants formulated and marketed for wind turbines.)
A BP spokesman told BusinessGreen.com that the decision to shift its wind strategy was prompted by the potential for higher returns in onshore wind farms in the U.S.: “There is more opportunity for scale in the U.S. where there is a lot of empty land, a lot of wind, and a commercial and planning environment that makes projects viable.”
Even before word that BP would concentrate its renewable investments in the U.S., that company was increasing its wind-power activities in Texas and other American states.
BP Wind Energy announced on Oct. 20 that the first phase of its Sherbino Wind Farm, located in Pecos County in West Texas, was in full commercial operation. BP’s Silver Star I Wind Farm, 80 miles southwest of the Dallas-Fort Worth area, became commercially operational on Sept. 24, the company said.
Meanwhile, on Nov. 18, the Graham Leader newspaper in Young County, west of Dallas-Fort Worth, reported that a BP wind project proposed for that county had taken “a major step toward reality” when county commissioners approved a tax abatement plan.
BP also brought wind projects into operation this year in California and Colorado and has projects in Kansas and Indiana under construction, according to the company.
Still, a columnist for the Guardian recently criticized such ventures as “small fry” because BP continues to place “the great bulk of its investment” in oil.
– Bill Dawson