On July 20, 2023, the Department of the Interior announced the first ever offshore wind energy lease sale in the Gulf of Mexico, with the Bureau of Ocean Energy Management (BOEM) scheduled to hold an auction on August 29, 2023. The area has the potential to generate about 3.7GW and power nearly 1.3 million homes.
The last several years have seen discussions about developing offshore wind farms in the Gulf. After an environmental analysis in May found that wind farms would not adversely affect the U.S. Outer Continental Shelf in any significant way, the next steps got under way to make offshore wind farms in the area a reality.
Keep reading to learn more about this development and about the potential for offshore wind in the Gulf of Mexico going forward.
What Will the Gulf of Mexico Auction Include?
The Final Sale Notice (FSN) was released the day after the announcement of the auction and it details the area that will be auctioned off:
- 102,480-acre area off the shore of Lake Charles, Louisiana
- 102,480-acre area off the shore of Galveston, Texas
- 96,786-acre area off the shore of Galveston, Texas
A full map detailing these areas is on the BOEM website.
The FSN also includes information detailing which qualified companies can participate in the auction, as well as lease provisions, conditions, auction details, and more. Some details to note include:
- Bidding credits will be granted to those who commit to supporting training programs for their workforce and those who establish and contribute to a fisheries compensatory mitigation fund to moderate negative impacts to fisheries caused by development.
- Reporting requirements dictate that the lessees need to produce a semi-annual report of their activities.
- Lessees must maintain regular engagement with Tribes that have cultural and/or historical ties to the Lease Areas, as well as local communities, fishing industries and stakeholders; research and educational institutions; government organizations; public interest organizations; and other entities.
- Lessees must design and conduct biological surveys to support plans that could interact with protected species.
In addition, the FSN contains information on other requirements and stipulations, such as those related to archaeological surveys, foreign interests, research site access, Project Labor Agreements (PLAs), the domestic supply chain, Marine Mammal Protection Act Authorization, transmission planning, potential future restrictions, and more.
The full FSN can be seen here.
Who is Eligible to Bid?
The FSN also details the list of eligible bidders, which include:
- 547 Energy
- Avangrid Renewables
- Coastal Offshore Renewable Energy
- energyRe Offshore Wind Holdings
- Equinor Wind US
- Gulf Coast Offshore Wind
- Gulf Wind Offshore
- Hanwha Offshore North America
- Hanwha Qcells
- Hecate Energy
- Invenergy GOM Offshore Wind
- RWE Offshore US Gulf
- Shell New Energies US
- TotalEnergies Renewables
- US Mainstream Renewable Power
What Potential Does the Gulf of Mexico Hold for Offshore Wind Farms?
United States offshore wind capacity goals include producing 40 gigawatts (GW) in Atlantic Ocean farms by 2040, and a separate Biden administration target to produce 30 GW in offshore wind by 2030. The Inflation Reduction Act of 2022 supports these goals by appropriating $100 million to the Department of Energy for interregional and offshore wind transmission planning, modeling, and analysis. Introducing offshore wind farms to the Gulf of Mexico moves these goals closer to reality.
By 2033, these projects could create more than $12 billion in capital investments toward meeting the 30 GW target.
Not only can Gulf of Mexico projects help the United States reach its energy goals but there’s plenty of added potential, too, with estimates of:
- 301,746 developable acres.
- 12,835,152 megawatt hours per year in power production.
- 1,282,050 homes powered.
In addition, the Gulf of Mexico work environment offers a wealth of benefits to those looking to develop the area for offshore wind, including:
- Shallow waters that can reduce project costs when compared to other projects in the Atlantic Ocean.
- Closer proximity to supply chains.
- Existing components and foundations from the offshore oil and gas industry, making it easy for offshore wind projects and organizations to establish themselves quickly.
- Lower labor costs compared to other locations.
However, it is also important to note that Gulf of Mexico investors and developers will face the weather risks that come with the area. Consideration of hurricanes is a must before development even begins, but lessons can be taken from the offshore oil and gas industry thanks to their history of operating in the area. It is recommended that offshore wind projects:
- Research and develop standards for turbines to withstand hurricanes.
- Conduct site-specific studies and risk assessments.
- Consider load mitigation, foundation proportions, and other construction factors.
The development of offshore wind in the Gulf of Mexico promises an exciting future. The industry is set to benefit from investing in the area if proper measures can be taken to offset the unique risks that come with this location.
For companies interested in investing in offshore wind in the Gulf of Mexico, planning will be critical. Interested organizations need to give proper thought to documentation for the end-of-August auction as well as prepare for future documentation requirements following the auction. Shea Writing & Technical Solutions is here to help, thanks to our extensive experience in the offshore wind industry. Learn more about our services here.
GOM Lease Sale UPDATE:
The U.S. Bureau of Ocean Energy Management (BOEM) held its long-anticipated offshore wind lease sale for the federal Outer Continental Shelf (OCS) in the Gulf of Mexico (GOM) on Tuesday, August 29, 2023. Three GOM leases were offered for sale, with one located offshore Lake Charles, Louisiana, covering 102,480 acres (OCS-G 37334), and two located offshore Galveston, Texas, covering 102,480 acres (OCS-G 37335) and 96,786 acres (OCS-G 37336). 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. Click here to read the full press release from the U.S. Department of the Interior.