A media report informs that, as expected, Orsted is marketing the suspended Ocean Wind 1 and 2 leases. BOEM should deny any request to assign these leases. Here’s why:
- As discussed in a previous post, those leases should have been terminated when Orsted announced that they would “cease development of the Ocean Wind 1 and Ocean Wind 2 projects.”
- Absent termination, these inactive leases would have expired were it not for BOEM’s approval of a 2 year suspension of operations.
- For the first time in the history of the US OCS program, the lease suspensions were approved without any work commitment on the part of the operator.
- Per the approval letter (attached), the suspensions were granted so Orsted could get “full enjoyment” of the leases by waiting for economic conditions to improve.
- The approval relieves Orsted from complying with any deadlines in their approved Construction and Operations Plan.
- Under the approved suspensions, Orsted’s only obligations are to reply to requests for information and participate in meetings or consultations as requested. Note that for suspensions of operations on oil and gas leases, the operator must provide “a reasonable schedule of work leading to the commencement or restoration of the suspended activity.”
- Subsequent to BOEM’s approval of the lease suspensions, the New Jersey Board of Public Utilities correctly vacated all of its Orders that approved the Ocean Wind One and Ocean Wind Two offshore wind projects.
Suspensions of Operations are for the purpose of providing additional time, where necessary, for diligent operators to meet development milestones and initiate energy production. They are not for the purpose of waiting for improved economic conditions or providing time to sell your leases.
Any request by Orsted to assign these leases should be denied. If BOEM wants to reissue the leases, they may do so at a future sale in accordance with their regulations at 30 CFR Part 285.
Bud's Offshore Energy (BOE) 