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Archive for the ‘Offshore Wind’ Category

Right whale – Atlantic
Rice’s whale – Gulf of Mexico

Both species are endangered, but the operating restrictions differ significantly:

North Atlantic wind leases: right whale restrictions GoM Lease sale 261: Rice’s whale restrictions
No leasing prohibitions or turbine-free areas have been established despite concerns raised by NOAA (see attached letter)All of the expanded Rice’s whale area is excluded from leasing (i.e. the entire area between the 100 and 400 m isobaths across the GoM)
seasonal 10 kt max speed for vessels > 65′year round 10 kt max for all vessels
vessel separation distance of 500 m for any sighted right whale or unidentified large marine mammalseparation distance of 500 m for any sighted Rice’s whale; if unsure, must assume whale is Rice’s
no visibility restrictions for vessel operationsvessels must avoid transit between dusk and dawn and other times of low visibility
no automatic identification system (AIS) requirementsvessels > 65′ must have AIS functioning at all times
no documentation requirementsmust maintain records to document compliance

Note (below) the proximity of existing and planned wind leases to moderate to high density RIght whale areas compared to the more speculative expanded Rice’s whale area in the central and western GoM that is predicted based on passive acoustic recordings.

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In the wake of the disappointing Gulf of Mexico wind sale and Orsted’s recent financial announcement, Equinor and bp have requested a massive increase in the price of electricity to be generated at Empire Wind 1, Empire Wind 2, and Beacon Wind (see map above).

According to the New York State Energy Research and Development Authority, this would result in an average 54% price hike across their portfolio. The strike prices would rise from $118.38 to $159.64/MWh for Empire Wind 1, from $107.50 to $177.84/MWh for Empire Wind 2, and from $118.00 to $190.82/MWh for Beacon Wind.

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Yesterday was not a good day for US offshore wind. Not only was the Gulf of Mexico wind lease sale disappointing, but Orsted announced US impairments of $2.3 billion causing their share price to fall to the lowest level in more than 4 years.

Unsurprisingly, Orsted management assumes no responsibility for the company’s poor performance, blaming supply chain problems, high interest rates and “a lack of new tax credits.” Outsiders might suggest that there were other factors such as irrational exuberance in the acquisition of wind leases at inflated prices, and unrealistic expectations regarding a complementary power source that is dependent on government mandates and subsidies.

“The situation in U.S. offshore wind is severe,” Chief Executive Mads Nipper told reporters on a conference call.

Reuters

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Only 1 of the 3 tracts was sold, and the amount bid was a modest $5.6 million. Given the extensive lease sale planning and promotion, this would seem to be a rather embarrassing outcome.

RWE Offshore US Gulf LLC won the Lake Charles tract. Neither of the 2 Galveston tracts received bids. RWE’s headquarters are located in Essen, Germany.

By comparison, the 5 California offshore wind leases, each of which is smaller and in far deeper water than the GoM tracts, received bids of $130 to 173 million. These leases were sold in December 2022. Smaller Atlantic wind tracts have also received much higher bids. State mandates and subsidies no doubt contributed to the inflated bidding in the Atlantic and Pacific.

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See the Block Island Wind Farm’s reef environment in the BOEM video below.

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BOEM’s Final Sale Notice for the upcoming Gulf of Mexico wind auction identifies 3 lease areas (see map below). Wind operations in these areas should not significantly conflict with other GoM activities, including oil and gas operations.

Those who followed Exxon’s recent lease acquisitions may be amused by the map below from BOEM’s siting analysis document. The 94 Exxon leases acquired at Oil and Gas Lease Sale 257 (yellow blocks) are misidentified as “Carbon Capture Lease Blocks.” As has been discussed at length on this blog (most recently here), Sales 257 and 259 were oil and gas lease sales. Although Exxon’s intentions are now well known, they may not conduct carbon sequestration operations on these leases unless they are competitively reissued or converted. (Is BOEM’s siting document implying that conversion of the Exxon leases is a fait accompli?) The regulations for such conversions, and for CCS operational activities, have yet to be promulgated. A draft of these regulations is expected later this year, and the comments should be spirited and diverse.

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Pioneering subsea engineer, Jean Louis Daeschler, is also an acclaimed artist. He recently shared two paintings that are very much on-topic for this blog. The paintings depict a wind turbine installation with support from a jackup vessel, and a drilling operation with jackup rig. The paintings give a sense of the commonality of these mutually supportive industries.

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The Jones Act, protectionism at its finest, was enacted 113 years ago, and stipulates that vessels which transport merchandise or people between two US points must be US built, flagged, owned, and crewed. Congress tightened the screws further by ordaining that offshore energy facilities, including wind farms, are US points. That precludes the transportation of wind turbine components from US ports to offshore wind farms.

The Jones Act has thus provided an opportunity for the Port of Argentia, a former US Navy base in southeast Newfoundland, and the port is set to become a key node in the offshore wind supply chain. Monopiles constructed in Europe will be stored in Argentia, until they are delivered to US wind farms in the North Atlantic. Kudos to the folks at the Port of Argentia for taking advantage of this opportunity.

Dutch company Boskalis will be transporting the monopiles, which are expected to land in the Port of Argentia in a few weeks. (Boskalis)

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Last week I had the privilege of attending a retirement party for Jim Bennett. Jim spent most of his 43 year Federal career in the OCS program focusing on environmental reviews and offshore wind. Most recently he served as Chief of the Offshore Renewable Energy Program. Congratulations to Jim on a long and very successful career!

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Rick was one of the first Americans on Utah Beach during the D-Day invasion, helped to protect the endangered American Bald Eagle, and was an offshore energy (green hydrogen) pioneer. More about Rick.

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