DOI Announces Proposal for Second GOM Offshore Wind Auction
This article was first published on Rigzone here
In a statement posted on its website this week, the U.S. Department of the Interior (DOI) announced a proposal for a second offshore wind energy auction in the Gulf of Mexico.
The proposed lease sale includes four areas offshore Louisiana and Texas, totaling 410,060 acres, which have the potential to power 1.2 million homes, the DOI said in the statement, which outlined that the move is “another step by the Biden-Harris administration to support the growing momentum across America for a clean energy economy”.
“The announcement is part of the administration’s commitment to expand offshore wind opportunities, building on investments made by the president’s Investing in America agenda to develop a clean energy economy, create good-paying jobs for American workers, and make our communities more resilient,” the DOI noted in the statement.
The DOI highlighted in the statement that the Bureau of Ocean Energy Management (BOEM) is seeking feedback on various aspects of the proposed lease areas, including size, orientation, and location of the four lease areas and which areas, if any, should be prioritized for inclusion or exclusion from this lease sale.
DOI pointed out that BOEM is also seeking comment on potential lease revisions to include the production of hydrogen or other energy products using wind turbine generators on the lease. The organization also noted in the statement that BOEM is considering lease stipulations “to ensure that communities, particularly those which are historically underserved, are considered and engaged early and often throughout the offshore wind energy development process”. Proposed bidding credits include funding for fisheries compensatory mitigation and workforce development, the DOI revealed.
BOEM is proposing to conduct simultaneous auctions for each of the four lease areas using multiple factor bidding, according to the DOI, which said BOEM will use new auction software for enhanced efficiency, with minor adjustments to auction rules used in previous offshore wind lease auctions.
The proposed sale notice was published in the Federal Register on March 21 and initiated a 60-day public comment period ending on May 20, the DOI outlined in the statement. If BOEM decides to proceed with the auction, the next step would be publication of a final sale notice, the DOI noted.
“[This] announcement is another step forward in the Biden-Harris administration’s pursuit of building a clean energy future and permitting 30 gigawatts of offshore wind energy capacity by 2030,” Secretary Deb Haaland said in the statement.
“We are taking action to jumpstart America’s offshore wind industry and using American innovation to deliver reliable, affordable power to homes and businesses, while also addressing the climate crisis,” Haaland added.
BOEM Director Elizabeth Klein said in the statement, “BOEM is proud to play a leading role in the administration’s clean energy efforts”.
“We look forward to receiving feedback from tribes, other government agencies, ocean users, local communities, and others to minimize any impacts to natural and cultural resources, reduce potential conflicts with ocean uses, and maintain a healthy marine ecosystem,” Klein added.
In the statement, the DOI highlighted that, since the start of the Biden-Harris administration, it has approved the nation's first six commercial scale offshore wind projects, held four offshore wind lease auctions, initiated environmental review of 12 offshore wind projects, and advanced the process to access and establish additional Wind Energy Areas in Oregon, Gulf of Maine and the Central Atlantic.
In a statement sent to Rigzone, National Ocean Industries Association (NOIA) President Erik Milito said, “consistent lease sales, including for oil and gas and wind energy, are essential for maintaining a steady flow of energy production”.
“Periods of inactivity in lease sales only serve to heighten uncertainty and risk pushing investment dollars overseas. Sustaining regular lease sales ensures energy continuity, fosters economic growth, and keeps the United States competitive in the global energy market,” he added.
“The need for regular, and increased, oil and gas and wind lease opportunities has never been greater. In our forward-thinking industry, securing new leases is vital for exploring and developing resources crucial to our nation,” he continued.
Rigzone has asked the DOI and BOEM for comment on NOIA’s statement. While BOEM declined to comment, the DOI has not yet responded to Rigzone at the time of writing.
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In a statement posted on its site in December last year, the DOI announced it had published the final 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program “with the fewest oil and gas lease sales in history”.
“The IRA (Inflation Reduction Act) prohibits the Bureau of Ocean Energy Management from issuing a lease for offshore wind development unless the agency has offered at least 60 million acres for oil and gas leasing on the OCS (Outer Continental Shelf) in the previous year,” the DOI added in that statement.
“The program schedules three oil and gas lease sales in the Gulf of Mexico Program Area in 2025, 2027 and 2029. These three lease sales are the minimum number that will enable the Interior Department’s offshore wind energy program to continue issuing leases in a way that will ensure continued progress towards the administration’s goal of 30 gigawatts of offshore wind by 2030,” it continued.
First Ever GOM Offshore Wind Auction
In a statement posted on its site back in August 2023, the DOI announced that it had held the first-ever offshore wind energy auction for the Gulf of Mexico region, “resulting in one lease area receiving a high bid of $5.6 million”.
“RWE Offshore US Gulf, LLC was the winner of the Lake Charles Lease Area, which has the potential to generate approximately 1.24 gigawatts of offshore wind energy capacity and power nearly 435,400 homes with clean, renewable energy,” the DOI said in that statement.
The DOI highlighted in the statement that the BOEM’s lease sale offered two areas offshore Galveston, Texas - one comprising 102,480 acres and the other 96,786 acres - and a third, 102,480-acre area offshore Lake Charles, Louisiana. The two Galveston lease areas offered did not receive bids, the DOI pointed out.
In the statement, the DOI revealed that RWE Offshore US Gulf LLC earned two “bidding credits”. These comprised a “credit equal to 20 percent of the cash bid to bidders who commit to supporting workforce training programs and developing a domestic supply chain for the offshore wind energy industry” and a “credit equal to 10 percent of the cash bid to bidders for establishing and contributing to a fisheries compensatory mitigation fund or contributing to an existing fund to mitigate potential negative impacts to commercial and for-hire recreational fisheries caused by offshore wind energy development in the Gulf of Mexico”.
These bidding credits will result in over $860,000 in investments for workforce training and a domestic supply chain, and another more than $430,000 for fisheries compensatory mitigation, the DOI noted in the statement.
The DOI also highlighted that BOEM included two lease stipulations, “one that encourages project labor agreements and construction efficiency and the other that contributes toward establishing a domestic supply chain”.
“In addition, the lessee is required to engage with tribes, ocean users and local communities that may be affected by lease activities. The engagement activities must be routinely reported to BOEM,” the DOI said in that statement.
“The purpose of such engagement is to promote offshore wind energy development in a way that coexists with other ocean uses, addresses potential impacts and benefits, and protects the ocean environment, while also facilitating our nation’s energy future for generations to come,” it added.
“The Biden-Harris administration is making once in a generation investments in America’s infrastructure and our clean energy future as we take steps to bring offshore wind energy to additional areas around the country,” Haaland noted in that statement.
“I am proud of the hard work being done by the Bureau of Ocean Energy Management and across the Interior Department to deliver on our promises to advance a clean energy economy that will lower energy costs for families and create good-paying jobs as we help tackle the climate crisis,” Haaland added.
In that statement, Klein said, “today’s lease sale represents an important milestone for the Gulf of Mexico region, and for our nation, to transition to a clean energy future”.
“The Lake Charles Lease Area will have the potential to generate enough electricity to power about 435,400 homes and create hundreds of jobs,” Klein added.
To contact the author, email andreas.exarheas@rigzone.com
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