US conditionally approves Arctic offshore oil exploration

The U.S. Bureau of Ocean Energy Management has conditionally approved an oil and gas company's plan to drill four exploration wells into the federal submerged lands of the Beaufort Sea in the U.S. Arctic.

On July 12, 2017, BOEM announced that it had conditionally approved a Beaufort Sea exploration plan (EP) it received from Eni US Operating Co. Inc.  The company is a subsidiary of Italian multinational oil and gas company Eni S.p.A.

Under federal law, BOEM regulates exploration and production activities on the Outer Continental Shelf.  It requires a developer to file and receive approval of an Exploration Plan or EP before most activities can begin.  An EP describes all exploration activities planned by the operator for a specific lease or leases, including the timing of these activities, information concerning drilling processes, the surface location of each planned well, and actions to be taken to meet important safety and environmental standards and to protect access to subsistence resources, but it does not allow actual production of oil -- for that, an operator is required to obtain BOEM approval of a Development and Production Plan (DPP).

Eni US had applied to BOEM for approval of a plan to drill four exploration wells from its existing Spy Island Drillsite, located in Alaska state waters.  The Nikaitchuq North Project's wells would run down from Spy Island, then extend below the ocean floor to federal leases on the Outer Continental Shelf.  Eni proposed exploratory drilling activities commencing in December 2017, and continuing into 2019.

BOEM deemed Eni US's exploration plan application to be submitted in June 2017, triggering a 30-day review period including a site-specific Environmental Assessment of the proposed exploration activities pursuant to the National Environmental Policy Act.  That NEPA process concluded with a Finding of No Significant Impact (FONSI), and on July 12 BOEM issued its conditional approval of the Exploration Plan.  Conditions include a requirement that Eni procure all other appropriate permits from state and federal agencies, as well as certain mitigation measures.

In a statement announcing the conditional approval, BOEM's acting director, Walter Cruickshank, described Eni's exploration plan as "a solid, well-considered plan,” and noted the existence of "vast oil and gas resources under the Beaufort Sea.”

Rhode Island offshore transmission line

Federal regulators have granted a right-of-way in federal waters for an electric transmission line connecting to the proposed Block Island offshore wind farm off Rhode Island.  The Bureau of Ocean Energy Management describes the grant as the first right-of-way grant offered in federal waters for renewable energy transmission.

Proposed by Deepwater Wind, the Block Island Wind Farm is a 30-megawatt offshore wind farm to be located approximately three miles southeast of Block Island.  Located entirely in Rhode Island state waters, the 5-turbine project is expected to generate over 125,000 megawatt hours annually.  The project received its final required permit in September 2014, and in 2010 secured a 20-year power purchase agreement with Narragansett Electric Co.

Block Island is about 13 miles off the mainland coast, and is not connected to the mainland by a power cable or road.  While the island's population does consume some electricity, most of the wind farm's power will be exported to the mainland electric grid via a newly built 21-mile submarine cable.  Because the proposed Block Island Transmission System is bi-directional, it would also transmit power from the existing onshore transmission grid on the mainland to Block Island, stabilizing supplies of electricity available to islanders.

The Block Island Transmission System is proposed to make landfall in Narragansett, Rhode Island.  Rhode Island's territorial waters extend 3 miles seaward from shore.  To reach the mainland, the submerged transmission line must cross about 8 nautical miles of federal waters.

The Bureau of Ocean Energy Management regulates the use of federally controlled Outer Continental Shelf sites for energy production.  In 2012, Deepwater Wind applied to the BOEM for a right-of-way about eight nautical miles long and 200 feet wide.  Before reviewing this application, BOEM was required to determine whether there are other developers interested in constructing transmission facilities in the same area.  Therefore, BOEM published a Commercial Renewable Energy Transmission on the Outer Continental Shelf (OCS) Offshore Rhode Island, Notice of Proposed Grant Area and Request for Competitive Interest (RFCI) in the Area of the Deepwater Wind Block Island Transmission System Proposal in the Federal Register on May 23, 2012 under Docket ID BOEM-2012-0009.  BOEM also solicited public comment on site conditions and multiple uses within the right-of-way grant area. 

Following the public comment period, BOEM determined there was no overlapping competitive interest in the proposed right-of-way grant area off Rhode Island and published a "Notice of Determination of No Competitive Interest" in the Federal Register on August 7, 2012 under Docket ID: BOEM-2012-0068.

Because most of the activities and permanent structures related to the entire wind farm project will be sited in state waters and on state lands, the U.S. Army Corps of Engineers is the lead federal agency for analyzing the potential environmental effects of the project under the National Environmental Policy Act.   In September 2014, the Corps completed its Environmental Assessment (EA) for the wind farm and transmission system, and issued a Finding of No Significant Impact (FONSI).   BOEM subsequently adopted the Corps EA after conducting an independent review that found no reasonably foreseeable significant impacts are expected to occur as the result of the preferred alternative, or any of the alternatives contemplated by the EA.  On October 27, 2014, BOEM issued a FONSI for the issuance of a ROW grant, and approval of the General Activities Plan (GAP), with modifications.

On November 17, 2014, BOEM announced the agency offered the ROW grant to Deepwater Wind for the Block Island Transmission System.

Virginia offshore wind site leases to be auctioned

Next month the United States will auction off the rights to develop offshore wind energy projects off the Virginia coast.  The Virginia auction's results will shape the development of offshore wind in North America, as it will represent the nation's second competitive lease auction for commercial offshore wind projects.

As part of the Obama administration's efforts to promote the use of federal lands for the generation of renewable electricity, the federal Bureau of Ocean Energy Management is holding a series of auctions of the rights to lease sites in federal waters over the outer continental shelf.  On July 31, BOEM held an auction for sites off Massachusetts and Rhode Island.  In that auction, Deepwater Wind New England, LLC submitted the winning bid of about $3.8 million for the rights to lease two parcels covering 164,750 acres offshore New England.

BOEM will hold its second competitive lease auction on September 4 for sites off Virginia.  The Virginia auction will be for a single lease for a designated wind energy area covering about 112,799 acres.  The western edge of the lease area is located about 23.5 nautical miles off the Virginia Beach coastline.  If fully developed, BOEM expects the Virginia lease area to support more than 2,000 megawatts of wind generation.

The Virginia Wind Energy Area is outlined in blue in this map provided by BOEM.

BOEM's current offshore wind leasing program - known as "Smart from the Start" - features a process reliant on multiple rounds of proposals and calls for public feedback.  For Virginia waters, that process began in February 2012 when BOEM published a Call for Information and Nominations in the Federal Register.  The Call was designed to evaluate competitive interest for the area, as well as to seek public feedback on existing uses and other considerations relevant to leasing the sea space.  Simultaneously, BOEM published a Notice of Availability for the final Environmental Assessment and Finding of No Significant for commercial wind lease issuance and site assessment activities on the Atlantic outer continental shelf offshore New Jersey, Delaware, Maryland, and Virginia.

BOEM received eight nominations of interest in the lease area in response to the Call.  The eight companies responding with interest were:

• Apex Virginia Offshore Wind, LLC
• Arcadia Offshore Virginia, LLC
• Cirrus Wind Energy, Inc.
• Dominion Virginia Power
• enXco Development Corporation
• Fisherman’s Energy, LLC
• Iberdrola Renewables Inc.
• Orisol Energy US, Inc.

As with the recent auction for sites off Rhode Island and Massachusetts, some of these companies may not choose to participate in the auction.  While BOEM had found nine companies to be legally, technically, and financially qualified to participate in the New England auction, only three actually submitted bids.  For example, Fisherman's Energy and Iberdrola Renewables both qualified for the New England auction, but did not bid.

Assuming interest remains in the Virginia sites, the September auction is expected to yield a single winner.  That winning bidder will pay the amount specified in the final bid for the right to lease part or all of the Virginia wind energy area.  Development of an offshore wind project would then require a series of additional steps, ranging from financing to permitting to interconnection with the mainland grid.  Whether the auction actually leads to offshore wind development off Virginia will thus depend on a number of factors, but the September auction will represent an important step toward the development of the United States' offshore wind resources.

Maine may streamline tidal power permitting

The Maine legislature is considering a proposal to streamline the permitting process for some tidal energy projects. The bill, "An Act To Streamline the General Permit Process for Tidal Power", would relieve a perceived conflict between state and federal law over the permitting process.

Tidal energy has been harvested along the Maine coast for hundreds of years. While tide mills' heyday predated modern regulation of energy projects and their environmental impacts, anyone developing a modern tidal power project must navigate multiple layers of rules and requirements. The recent resurgence of interest in tidal energy has led to an often overlapping patchwork of regulations.

These rules can be hard to interpret, and occasionally lead to chicken-or-the-egg conundrums. For example, a 2009 Maine law created an expedited general permit process for certain small tidal power projects. Under that process, projects capable of generating up to 5 megawatts of power can qualify for an easier permitting path if their primary purpose is demonstrating or testing tidal technology. (By way of comparison, 5 megawatts is roughly equivalent to 6,705 horsepower - imagine what a tide miller could have done with that!)

Prior to filing a permit application with the Maine Department of Environmental Protection under the 2009 law, an applicant must first obtain a finding from the Federal Energy Regulatory Commission that the project will have no significant adverse impact on environmental quality. Unfortunately, before issuing that finding federal regulators want applicants to show that they are already seeking state approval. This regulatory conflict makes it hard for people who want to develop or redevelop a tidal resource to move forward.

To fix this problem, the DEP, Senator Mike Thibodeau of Waldo County, and Representative Joyce Maker of Calais proposed an amendment to Maine law. Their bill, known as LD 437, would enable the DEP to start processing an application without needing to wait for the federal environmental assessment. After a public hearing earlier this month, the legislature's Joint Standing Committee on Environment and Natural Resources voted to recommend that the bill ought to pass as amended.

Next steps for the tidal streamlining bill include consideration by the full Senate and House. Given the committee's vote, the bill seems likely to find further support in the two chambers. While its enactment may not launch a tide of new tidal power developments in Maine, relieving this piece of the regulatory tangle should help people test and demonstrate tidal power technologies old and new.