Email Print

BP's 4th quarter profits slump "a clear warning to investors"

Risky investment in tar sands and continued failure of alternative energy division threatens future profitability of oil major
3 Feb 2009

BP's announcement of record profits masks major flaws in the company's long term investment strategy, according to analysts at Greenpeace and PLATFORM.

Strong growth recorded in the first half of 2008 was undermined by a collapse in profits during the final quarter, indicating a vulnerability to oil price fluctuations which will continue while BP remains wedded to an “oil at any cost” strategy.

Analysts from both groups criticised the company for its investment decisions which they claim have failed to take a new political, environmental and regulatory climate into account.

In March 2008 BP finalised its $5.8bn investment in the Sunrise tar sands project in Alberta, Canada. Since then the future of the tar sands industry has been thrown into question as oil prices fell below the breakeven point of most tar sands projects, and a new era of clean energy legislation has been proposed by the Obama administration.

Reacting to the news, Greenpeace chief climate advisor Charlie Kronick said:

"These results prove that BP's investment decisions are going in the wrong direction. The Canadian tar sands project is a clear threat to investors, while the alternative energy division has been left to wither on the vine despite the urgency of climate change."

Whilst James Marriott, Partner of PLATFORM said:

"The company is wedded to a 20th century business model which is simply not flexible enough to cope with the twin challenges of global climate change and increasingly remote oil reserves. Shareholder returns are bound to fall as the political, environmental and regulatory climate changes dramatically over the next few years."

Last week the head of the Sunrise field, Catherine Hughes, resigned her post amid rumours of a delay in the project, and BP's annual results confirm that production has been put back until 2013. Since October 2008, dozens of tar sands projects have been put on hold, including three major projects proposed by BP’s main rival Shell.

Rumours of the Sunrise project being scrapped remain unconfirmed, but as a high cost SAGD (1) investment it appears unlikely that it will go ahead as originally planned. BP spent $250 million on the project during the 2008 financial year, and is committed to a total spend of over $2.5 billion over 4-5 years.

CEO Tony Hayward told investors at Davos that "The price needed today to stimulate investment into that [oil sand] resource is of the order of $60 to $80 a barrel." Oil currently languishes at $40 per barrel and this price remains highly volatile.

The results also reveal the disastrous performance of BP’s Alternative Energy division, which lost $633m over the past year. Greenpeace points out that despite axing staff and pulling investment from the division, BP has continued to spend heavily on a worldwide advertising campaign which gives the false impression that alternative energy represents a core part of the company’s business. (2)

In fact, the company diverted 93% of its 2008 capital expenditure towards oil and gas extraction, compared with just 1.3% on solar energy, 2.6% on wind and a similar amount on biofuels (3). The head of BP’s alternative energy decision recently admitted that “limits on capital spending in the existing portfolio” had been imposed on clean energy projects. (4)

For more information please contact the Greenpeace press office on 0207 865 8255

Or PLATFORM on 0207 403 3738

Footnotes

(1) SAGD is Steam Assisted Gravity Drainage, a highly energy intensive and therefore expensive method of extracting bitumen from the deeper deposits in Alberta’s tar sands belt. It involves injecting steam into the reservoir to heat the bitumen so it can be pumped to the surface.

(2) One of BP's more notable adverts claims the company works with "the earth, the sun and everything in between." Another states that "the best way out of the energy mix is an energy fix." See "BP wins coveted emerald paintbrush award" for more details.

(3)http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/IC_bp_strategy_presentation_2008_slides.pdf

(4) http://www.guardian.co.uk/business/2009/jan/20/bp-oil-green-energy

ENDS

Email Print

Breaking news: Greenpeace – on the Rainbow Warrior, and on our way to Kingsnorth

Rainbow Warrior on route to Kingsnorth

The Rainbow Warrior on route to Kingsnorth coal fired power station in Kent. © Kristian Buus / Greenpeace.

See all Rainbow Warrior tour updates or get them by email.


It’s quite a sight: under a wintry sun, a flotilla of Greenpeace boats is heading down the Medway, straight towards Kingsnorth power station. The Rainbow Warrior is leading the peaceful armada and, from up here on the bridge, I can see our rigid inflatable boats abreast of us and streaming out behind in a V formation.

A couple of minutes ago, John, our executive director, phoned E.on and told them that our peaceful flotilla will be arriving at midday. Here's the mp3 or click to play:

Our amphibious incursion has a serious and peaceful purpose. The boats are carrying dozens of campaigners who plan to board Kingsnorth’s 700-metre coal jetty and then walk through the existing coal plant site to the site where E.on wants to build the UK’s first new coal plant in 30 years.

Read more »
Tags:
Email Print

"Four million strong, we say no to dirty coal, yes to clean energy"

The Rainbow Warrior in front of Kent Flats Wind Farm

The Rainbow Warrior in front of Kent Flats wind farm © Will Rose / Greenpeace.

See all Rainbow Warrior tour updates or get them by email.


Just a quick one to let you know that we've just left Southend pier and are heading towards Chatham, to pick up the leaders of the UK's most important development, faith and environment groups - including the Women's Institute, Oxfam, Tearfund and RSPB - representing four million people.

From Chatham, we'll be sailing towards Kingsnorth, where the directors will sign a declaration saying: "Four million strong, we say no to dirty coal power stations, and yes to a clean green renewable energy future". The declaration will then be taken to Kingsnorth by one of our inflatable boats and delivered by hand to E.on staff.

Read more »
Tags:
Email Print

The (Not Very) Weekly Geek: Wave power

EfficienCity - wave power

A screengrab from our virtual, climate-friendly town, EfficienCity

With the UK government apparently bending over backwards to stop renewable energy development at the moment, it's refreshing to hear some good news from elsewhere in Europe; the world's first commercial wave power farm has gone live in Portugal.

Read more »
Tags:
Email Print

UK sabotages European renewables deal - again

Solar panels

Just under a year ago, we revealed that Gordon Brown was planning to scupper the vital, and binding, European climate change deal to generate 20 per cent of energy from renewable sources by 2020.

A brouhaha ensued; EU leaders were so furious at the UK's underhanded shenanigans that a red-faced Brown had to explicitly re-commit to the target soon afterwards.

Well, leaked documents (pdf) show it's happened again. This time, the man weilding the wrecking ball is John Hutton, the Business Secretary with an inordinate fondness for coal and nuclear power.

Read more »
Tags:
Email Print

Are energy utilities "doing an IBM" by ignoring solar opportunity?

A new report claims solar PV will dominate global energy industry – and, like IBM's infamous early failure to exploit the emerging PC market, energy utilities look set to miss out.

Original Article Link
Email Print

Al Gore and the new American Dream

More good news on the renewables front today: Al Gore has challenged the US to produce 100 per cent of its power from renewable sources in 10 years.

Gore has pitched his plan as the solution to not only climate change but also to high oil prices and energy insecurity - and as a way to keep the US economy healthy and to ensure national security.

A few of my favourite bits (the full text is here):

Read more »
Tags:
Email Print

The Weekly Geek: micro-hydro power

Micro-hydro power

It's Weekly Geek time, and this week we're looking at micro-hydro power: a truly reliable, highly efficient, and extremely clean (it has no direct carbon emissions) way of generating electricity.

It needs no fuel but offers a constant supply of electricity which often increases in winter, along with demand. It has a long life cycle (typically 25 years or more). It can have low implementation and maintenance costs. And, unlike some large scale hydroelectric power schemes, it has minimal environmental and visual impacts.

Read more »
Tags:
Email Print

Welcome to The Weekly Geek: decentralised energy

This CHP plant in Denmark is 95 per cent efficient

This combined heat and power plant in Denmark is up to 95 per cent efficient

To celebrate our launch of EfficienCity, we're starting a new, weekly column for all the closet energy geeks out there. Every week, we'll take an in-depth look at one of the technologies we feature in EfficienCity - tidal power, wave power, wind energy, combined heat and power, micro-hydro power, anaerobic digestion, biomass and the rest. We'll also be looking at issues like baseload and the regulatory context for decentralised energy.

So remember to check back each Wednesday and, if you have any suggestions for energy solutions to climate change you'd like to see us cover, just post a comment at the bottom of this page and we'll try to slot it in.

Read more »
Tags:
Email Print

Germany steps closer to the 100% renewables dream

New coal, new nuclear - the government here seems to be doing everything in its power to avoid facing up to the reality that our energy system is archaic, our energy policy is a disaster, and the new large-scale, centralised coal and nuclear power plants they want won't stop climate change or ensure energy security.

But at least we can glean hope from a more forward thinking European neighbour. Scientists have proved that Germany - which is already way ahead of us on renewables (14 per cent in 2007) - can power itself entirely by renewable energy sources. Completely. 100 per cent.

Read more »
Tags: