Royal Dutch Shell plc (ADR) (RDS-A), BP plc (ADR) (BP): Who’s Going ‘Back to Petroleum’?

Is BP going “Back to Petroleum”?
BP, which adopted the slogan “Beyond Petroleum” to reflect its determination to expand beyond its core oil and gas business, also seems to have given up on alternative energy projects in recent years. The company’s CEO, Bob Dudley, recently stated that BP has scrapped its solar ambitions after three decades of disappointing results.

The company also appears to have give up on developing carbon capture and storage technology, after calling it quits on a $500 million plant in Scotland back in 2007. It also ditched plans to build a cellulosic biofuel plant in Florida, a facility that would have converted biological materials, such as wood, grasses, and plants, into ethanol.

The bottom line
Though BP maintains that these decisions don’t reflect a departure from its push into alternative energies, the company’s recent moves tell a different story. In fact, BP’s last remaining relic from its prior push into alternative energy is its biofuels production business in Brazil. To me, it certainly appears that BP is returning to what it knows best — drilling oil and gas wells.

Over the next decade, the company plans to direct as much as 75%-80% of its capital budget toward its upstream business, specifically in Angola, Azerbaijan, the North Sea, and the U.S. Gulf of Mexico — its four core growth areas. Since BP expects these four regions to generate approximately half  of its operating income by 2020, investors would do well to carefully monitor the company’s successes or failures in these projects.

The article Is BP Changing Its Mind About Renewable Energy? originally appeared on Fool.com is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron.

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