BP Collecting Millions In Government Stimulus Funds

The federal government is giving a joint venture involving oil giant BP millions of dollars in stimulus money to build a power plant on farmland near the tiny Kern County town of Tupman, even as the company faces heavy government pressure and a criminal probe into the Gulf of Mexico oil spill.

“If I was the government right now, I would not give BP $300 million to do anything.”

Tom Frantz


BP is benefiting from a $308 million federal grant over several years for the cutting-edge power plant on cotton and alfalfa fields seven miles from the western edge of Bakersfield. More than half of the money, $175 million, is coming from stimulus funds. The rest is coming from another federal program.

The stimulus portion alone ranks as the second biggest award in California to a corporation and among the largest in the country benefiting private interests, according to data reported to the government by stimulus recipients, the California Watch reports.

The U.S. Department of Energy announced the grant last year to Hydrogen Energy California, a joint partnership of BP and the multinational mining firm Rio Tinto, and has paid out $13.6 million so far.

The money continues to flow even as the Obama administration bills BP for the massive costs of the oil spill.

“If you’re trying to get money out of them, why are you giving them money?” said Tom Frantz, a local environmental advocate and part-time almond farmer who opposes the power plant.

“If I was the government right now, I would not give BP $300 million to do anything.”

A power plant involving a BP joint venture would be built near the town of Tupman.

A power plant involving a BP joint venture would be built near the town of Tupman.

The stimulus award highlights the disconnect that occurs when the government gives grants and contracts to companies it has fined or prosecuted.

BP, for example, had been fined hundreds of millions of dollars and pleaded guilty to criminal environmental violations before the Gulf spill and before receiving stimulus money.

The involvement of BP in this stimulus project also poses a sticky political calculus, pitting anger at BP against the desire to create jobs and advance alternative energy.

The White House and some congressional critics of BP also support “clean coal” projects like the one this stimulus money will advance.

Critics of the stimulus bill, Sens. John McCain, R-Ariz., and Tom Coburn, R-Okla., issued a report Tuesday that highlighted the Hydrogen Energy plant as one of 100 stimulus projects that waste taxpayer money, stating “BP may have found itself staring down huge financial losses over the past several months, but executives can take solace knowing that a stimulus windfall will help offset them.”

The grant appears to be the only significant stimulus award for BP. A review of the $219 billion in stimulus funds awarded nationwide did not turn up any other major grants to the company.

A spokeswoman for the power plant partnership distanced the project from BP.

“Most people understand that Hydrogen Energy California LLC, and not BP, is the entity that received a DOE (Department of Energy) grant after a competitive solicitation that was conducted, evaluated and awarded in 2009,” Tiffany Rau wrote in an e-mail.

“DOE reimbursements provide cost sharing in HECA’s (Hydrogen Energy California’s) expenses – no money is flowing to BP.”

Hydrogen Energy California is a 50/50 partnership owned by BP and Rio Tinto and registered to a BP address. The project’s manager, as well as Rau, came to the project from BP.

At a public hearing last fall, when a local landowner asked about potential disasters the plant could cause, Gregory Skannal, who worked at BP before becoming the project’s health, safety, security and environmental manager, addressed the question: “One of our parent companies is BP,” he said. “And in that same vein, we do have resources internal to the company that provide security assessments. And those are the resources that we will be relying on in supporting us and doing those assessments to determine vulnerabilities, security measures and consequences.”

BP declined to comment for this story, but departing CEO Tony Hayward had stated in 2007, when announcing the joint venture, that “projects such as these have the potential to help deliver the carbon emission reductions which companies and countries around the world are now seeking. This will only be possible if companies work together and work alongside governments.”

Read the full story at CaliforniaWatch.org.

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Fears Of Oil Spill Consequences Subside, CDS Spreads Show

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Response To The BP Derivatives Story

So, You Thought BP Was An OIL Company?

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