Exxon Tries to Put the Worst Behind it With $20 Billion Writedown
By Jennifer Hiller HOUSTON, Nov 30 (Reuters) – Exxon Mobil Corp on Monday said it would write down the value of natural gas properties by $17 billion to $20 billion,...
NEW YORK (Dow Jones) — Cape Wind LLC, developer of the first fully permitted offshore wind farm in North America, was told by the Department of Energy this week that its application for federal funding is ‘on hold,’ according to statement Thursday from the developer’s spokesman.
Since its inception a decade ago, the project has been met with fierce resistance from commercial fishermen and environmentalists because it is located in the Nantucket Sound off Cape Cod, Mass., a unique area for wildlife, and because some believe other renewable energy sources would be cheaper for local residents.
“The Department of Energy has notified Cape Wind that our application is not one that can be completely processed by the program’s Sept. 30 deadline,” the spokesman said in a statement, adding that it would continue to pursue financing from the DOE because grants under the program would “substantially reduce costs to Massachusetts electricity consumers.”
In the meantime, Cape Wind intends to secure project financing in the capital markets. The company plans to use a mix of debt and equity to fund the approximately $2 billion project. A search is under way for an equity partner who would buy into the project, and the debt could come in the form of a bond, or commercial bank loans, export credit agency funding, or a combination of these. Barclays Capital is the lead financial adviser on the project.
“Cape Wind intends to secure project financing expeditiously so that the United States does not fall even further behind Europe and China, where governments have established offshore wind development as an important national priority worthy of support,” the spokesman added.
Proponents say the benefits of offshore wind are that it has fewer obstructions than onshore wind, making the resource more consistent through day and night, and it is generated close to where it will be consumed, eliminating transmission issues.
Critics say the promise of the technology is offset by its ugliness, obstruction to prime fishing grounds and added costs. Cape Wind faces 11 lawsuits from the Alliance to Protect Nantucket Sound, commercial fishermen, a native American tribe and others. The Alliance has also appealed the project’s Clean Air Act permit.
“Nantucket Sound is a national treasure that is unparalleled historically,” said Audra Parker, chief executive of the Alliance, who said the contract Cape Wind has with the buyer for 50% of its power, National Grid PLC (NGG, NG.LN), represents a $1.2 billion premium over market rates.
-By Katy Burne, Dow Jones Newswires
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