BOEM proposes Renewable Energy Modernization Rule for offshore wind

The U.S. Department of Interior's Bureau of Ocean Energy Management (BOEM) has announced a proposed rulemaking to amend its regulations governing offshore wind and other clean energy development on the U.S. Outer Continental Shelf (OCS). BOEM describes its proposed rule as "a major modernization of the regulations", reflecting lessons learned from the past 13 years. If finally adopted, BOEM projects that its Renewable Energy Modernization Rule would save the renewable energy industry $1 billion over 20 years, by reshaping the way the U.S. federal government leases sites on the OCS for offshore wind development.

The Energy Policy Act of 2005 authorized BOEM's predecessor, the Minerals Management Service (MMS), to issue leases, easements, and rights of way to allow for renewable energy development on the OCS. MMS first promulgated regulations governing renewable energy development on the OCS in 2009. In the ensuing years, the agency was restructured several times; since then, BOEM has conducted 11 auctions and issued 27 active commercial leases under its regulations implementing the OCS Lands Act.

According to BOEM, its accumulated experience and industry feedback have enabled the agency to identify "opportunities to modernize its regulations to facilitate the development of offshore wind energy resources to meet U.S. climate and renewable energy objectives." BOEM's proposed Renewable Energy Modernization Rule, issued on January 12, 2023, contains reforms including proposals for incremental funding of decommissioning accounts; more flexible geophysical and geotechnical survey submission requirements; streamlined approval of meteorological (met) buoys; revised project verification procedures; reform of BOEM’s renewable energy auction process; and greater clarity regarding safety requirements. 

In its notice of proposed rulemaking, BOEM asserts:

This proposed rule would facilitate the development of OCS renewable energy and would promote U.S. climate and renewable energy objectives in a safe and environmentally sound manner while providing a fair return to the U.S. taxpayer. These important goals would be accomplished by modernizing regulations, streamlining overly complex and burdensome processes, clarifying ambiguous provisions, enhancing compliance provisions, and correcting technical errors and inconsistencies. Through these changes, the Department aims to reduce administrative burdens for both developers and the Department’s staff, reduce developer costs and uncertainty, and introduce greater regulatory flexibility in a rapidly changing industry to foster the supply of OCS renewable energy to meet increasing demand, while maintaining environmental safeguards. 

These updates are necessary to ensure a durable and appropriate process is in place to advance renewable energy on the OCS.

BOEM's proposed rule contains eight major components, categorized under the following headings:

1. Eliminating unnecessary requirements for the deployment of met buoys.
2. Increasing survey flexibility.
3. Improving the project design and installation verification process.
4. Establishing a Public Renewable Energy Leasing Schedule.
5. Reforming BOEM's renewable energy auction regulations.
6. Tailoring financial assurance requirements and instruments.
7. Clarifying safety management system regulations.
8. Revising other provisions and making technical corrections.

Comments will be due 60 days after the notice's publication in the Federal Register.

US Atlantic offshore wind leasing plan up for comment

U.S. ocean energy regulators have extended a deadline for public comment on a proposed path forward for offshore renewable energy leasing on the Atlantic Outer Continental Shelf. The Bureau of Ocean Energy Management's "Proposed Path Forward for Future Offshore Renewable Energy Leasing on the Atlantic Outer Continental Shelf" lists factors the agency proposes to consider in identifying areas for possible future offshore wind leasing.

BOEM is an agency of the Department of the Interior, charged with advancing the responsible development of offshore energy and marine mineral resources covering over 1.7 billion acres of the Outer Continental Shelf. As of May 2018, BOEM has held seven competitive lease sales, yielding over $68 million in high bids for almost 1.4 million acres in federal waters. BOEM now has 13 offshore wind energy leases, capable of supporting 17 gigawatts of generating capacity, covering every state from Massachusetts to North Carolina (Cape Cod to Cape Hatteras).

On April 6, 2018, BOEM published a Request for Feedback in the Federal Register, presenting the agency's "Proposed Path Forward for Future Offshore Renewable Energy Leasing on the Atlantic Outer Continental Shelf." In that notice, the agency said it is conducting a high-level assessment of all waters offshore the United States Atlantic Coast for potential future offshore wind lease locations, and proposes to rely on specific factors to help it assess which geographic areas along the Atlantic are the most likely to have highest potential for successful offshore wind development in the next three to five years.

BOEM said its intent in publishing the Notice was "to start a conversation surrounding its approach to future renewable energy leasing on the Atlantic OCS." Its proposed factors for identifying offshore wind forecast areas include exclusionary factors (which create "no-go" areas for offshore wind) and positive factors (increasing the likelihood that location would fall within a forecast area). Under BOEM's proposal, exclusionary factors would include areas prohibited by the Outer Continental Shelf Lands Act for leasing, Department of Defense conflict areas, and charted marine vessel traffic routes. Positive factors for an areas include that it has not previously been removed, is greater than 10 nautical miles from shore, is shallower than 60 meters in depth, is adjacent to states with offshore wind economic incentives or with an interest in identifying additional lease areas, or where industry has expressed interest.

Comments on BOEM's proposed path forward for offshore renewable energy leasing on the Atlantic were slated to be due on May 21, but on May 18, 2018, the Bureau of Ocean Energy Management announced that it would accept comments through July 5, 2018.

BOEM says this "Atlantic assessment is intended to inform future area identification processes, not replace them" -- so after reviewing comments it receives, BOEM will coordinate with its intergovernmental renewable energy task forces and conduct additional stakeholder outreach.

BOEM proposes Massachusetts offshore wind lease auction

U.S. ocean energy regulators have announced the proposed lease sale of two new areas offshore Massachusetts for commercial wind energy leasing, totaling about 390,000 acres.

On April 6, 2018, U.S. Secretary of the Interior Ryan Zinke announced that the Bureau of Ocean Energy Management would publish a Proposed Sale Notice for Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Massachusetts on April 11, 2018.

Through that Proposed Sale Notice, BOEM described its plans to conduct Atlantic Wind Lease Sale 4A. That auction would offer two lease areas offshore Massachusetts for potential commercial wind energy development: Lease OCS-A 0502 consisting of 248,015 acres, and Lease OCS-A 0503 consisting of 140,554 acres. These lease areas were previously offered in 2015, but were not sold.

The Proposed Sale Notice solicits reaffirmations of continued interest from previously qualified prospective bidders -- including 11 entities that qualified to participate in the 2015 Massachusetts lease sale. It also solicits qualification packages from any prospective bidders that BOEM has not previously qualified for a Massachusetts lease sale. The proposal also comes with a 60-day public comment period.

Following the public comment period, if BOEM proceeds with the Massachusetts lease auction, the agency will eventually publish a Final Sale Notice announcing the time and date of the lease sale. 

To date, the Bureau of Ocean Energy Management has awarded 13 commercial offshore wind leases, including sites off every state from Massachusetts to North Carolina.

US proposes offshore oil and gas leasing expansion

The Trump administration is taking steps that could ultimately lead to a significant expansion of U.S. outer continental shelf acreage available for oil and gas leasing.

Under federal law, the U.S. Bureau of Ocean Energy Management is charged with administering site leasing for energy development on the outer continental shelf. The Outer Continental Shelf Lands Act requires the Secretary of the Interior, through BOEM, to develop a five-year national plan for oil and gas sales in federal waters. The law requires the Secretary to balance criteria including environmental impacts, energy needs and resources, and adverse effects on the coastal zone.

On January 4, 2018, Secretary of the Interior Ryan Zinke announced a new Draft Proposed Program. He described its release as "an early step in a multi-year process to develop a final National OCS Program for 2019-2024," and as consistent with an April 2017 Executive Order implementing an "America-First Offshore Energy Strategy."

The Draft Proposed Program includes 47 potential lease sales -- the largest number of lease sales ever proposed for the National OCS Program’s 5-year lease schedule.  The plan includes 19 sales off Alaska, 7 in the Pacific Region, 12 in the Gulf of Mexico, and 9 in the Atlantic Region. Some of these areas have not seen leases sold in decades; for example, there have been no sales in the Atlantic since 1983 and there are no existing leases.

By contrast, the draft program includes 8 Atlantic lease sales between 2020 and 2024, covering federal waters offshore Maine, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Delaware, Virginia, North Carolina, South Carolina, Georgia, and Florida. The Pacific leases would similarly be the first sold in that region since 1984.

According to the press release announcing the draft's release, "Inclusion of an area in the DPP is not a final indication that it will be included in the approved Program or offered in a lease sale, because many decision points still remain. By proposing to open these areas for consideration, the Secretary ensures that he will receive public input and analysis on all of the available OCS to better inform future decisions on the National OCS Program."

Even if an area is offered in a lease sale, it may not draw commercial interest; even if leased, an area might not actually be used for exploration and production. But the draft plan significantly expands the acreage that would be available for leasing -- according to the Secretary, "the current program puts 94 percent of the OCS off limits," while the proposed program "proposes to make over 90 percent of the total OCS acreage and more than 98 percent of undiscovered, technically recoverable oil and gas resources in federal offshore areas available to consider for future exploration and development."

BOEM has solicited public comment on the draft plan, which will inform several further rounds of proposals and comment, before a Proposed Final Program (PFP) is considered. In the meantime, until a new program is finalized and adopted, the present 2017-2022 Five Year Program remains in effect.

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.”

US considers Arctic offshore oil exploration

U.S. regulators are evaluating an application by a company seeking to explore for oil in the Arctic.

On June 12, the federal Bureau of Ocean Energy Management or BOEM announced that it had deemed Eni US Operating Co.'s exploration plan (or EP) to be submitted, and invited public comment on the plan. The company is a subsidiary of the Italian gas and oil company Eni S.p.A.

Under federal law, an Exploration Plan describes all exploration activities planned by the operator for a specific lease or leases, including information on locations, timing, drilling processes, and actions to be taken to meet safety and environmental standards and to protect access to subsistence resources. 

According to its Exploration Plan for the Nikaitchuq North Project dated March 2017, Eni proposes to drill into submerged lands on the Outer Continental Shelf beneath the Beaufort Sea, from its existing Spy Island drillsite which is located in Alaska state-jurisdictional waters.  Eni has secured federal leases for the "Alaska – Harrison Bay Block 6423 Unit".

BOEM's decision to deem the Exploration Plan as submitted triggers various deadlines:

• BOEM has opened a 10-day public comment window to provide information on issues that should be examined in the application's Environmental Assessment.  This window closes at midnight Eastern Time on Thursday, June 22.
• BOEM opened a 21-day public comment window for comments on the Exploration Plan itself.  This window closes at midnight Eastern Time on Monday, July 3.
• BOEM has 30 days within which it must evaluate the Exploration Plan, including a site-specific Environmental Assessment under the National Environmental Policy Act. By the end of the 30-day period BOEM may approve the EP, require modifications to the EP, or disapprove the EP.

While the Obama administration placed an indefinite hold on further leasing in much of the Beaufort Sea and other U.S. Arctic waters in December 2016, the Trump administration has expressed interest in reversing this decision in favor of expanded U.S. Arctic oil exploration and production.  The Arctic Ocean is home to significant fossil fuel resources, but environmental and logistical concerns have recently proved challenging. 

NY blueprint for offshore wind master plan

A New York state energy office has released its Blueprint for the New York State Offshore Wind Master Plan.

The New York State Energy Research and Development Authority, known as NYSERDA, promotes energy efficiency and the use of renewable energy sources.  It mission is to advance innovative energy solutions in ways that improve New York's economy and environment.

New York recently adopted a Clean Energy Standard, which will require that 50% of New York State’s electricity come from renewable resources by 2030.  NYSERDA has described offshore wind as playing "a critical role in turning this aggressive goal into a reality."  NYSERDA has been tasked with leading the state's development of a master plan for New York offshore wind development.

On September 15, 2016, NYSERDA released its Blueprint for the New York State Offshore Wind Master Plan.  The Blueprint presents NYSERDA’s vision of the process, steps, and timeline to develop the master plan.  While the Master Plan's release is scheduled for 2017, NYSERDA noted that releasing an initial Blueprint serves to outline New York State’s comprehensive offshore wind strategy and advance the State’s Reforming the Energy Vision (REV) strategy to build a cleaner, more resilient, and affordable energy system for all New Yorkers.

NYSERDA has also expressed interest in bidding in an auction to be held by the U.S. Bureau of Ocean Energy Management, for the right to lease offshore wind development sites in federal waters over the Outer Continental Shelf.  The 81,000-acre lease area is located south of Long Island, off the Rockaway Peninsula.  BOEM is expected to hold the lease sale later this year.

Kitty Hawk NC offshore wind leasing

The U.S. Department of the Interior has proposed leasing federal ocean space offshore North Carolina for commercial offshore wind development.  On August 12, 2016, the Bureau of Ocean Energy Management announced a proposed lease sale for the 122,405-acre Kitty Hawk Wind Energy Area.  The proposal could lead to leasing of sites offshore North Carolina for one or more marine renewable energy projects.

The path to federal leasing of commercial wind development sites offshore North Carolina began in 2012, when the Bureau of Ocean Energy Management published a Call for Information and Nominations (or “Call”) in the Federal Register, to evaluate industry interest in commercial wind leases in three areas offshore North Carolina and to request comments regarding site conditions, resources and other uses within the Call areas.

In 2014, BOEM announced its identification of three Wind Energy Areas offshore North Carolina, including the Kitty Hawk, Wilmington West, and Wilmington East Wind Energy Areas.

In 2015, BOEM published an Environmental Assessment of potential environmental and socioeconomic impacts associated with issuing commercial wind leases and approving site assessment activities on the lease areas, followed by a revised Environmental Assessment and a "Finding of No Significant Impact."  This so-called FONSI concluded that reasonably foreseeable environmental effects associated with the commercial wind lease issuance and related activities would not significantly impact the environment.

Most recently, BOEM published a Proposed Sale Notice (PSN) and Request for Interest (RFI) for Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore North Carolina in the Federal Register on August 16, 2016.  The notice applies to the Kitty Hawk Wind Energy Area. BOEM has rolled the Wilmington East and Wilmington West areas into its planning and leasing process for Call Areas offshore South Carolina, given their proximity and shared attributes.

If a developer is interested in bidding on the Kitty Hawk site lease rights, it must first submit a qualification package to BOEM.  If BOEM finds the developer to be legally, technically and financially qualified by the time the Final Sale Notice is published, the developer is eligible to participate in the lease sale.  Eligible bidders must notify BOEM within the 60-day comment period established by the notice.

Vineyard Wind offshore project changes hands

Danish fund management company Copenhagen Infrastructure Partners has acquired Offshore MW LLC, the holder of an offshore wind energy lease issued by the U.S. Bureau of Ocean Energy Management over an area south of Massachusetts.

Copenhagen Infrastructure Partners describes itself as a fund management company founded in 2012. On August 25, 2016, CIP announced that on behalf of its fund Copenhagen Infrastructure II it had acquired 100% of Offshore MW LLC.

Acquired company Offshore MW LLC is developing the Vineyard Wind project over the Outer Continental Shelf south of Massachusetts.  The site is part of the Massachusetts Wind Energy Area originally designated by BOEM for leasing in 2012.  Offshore MW won the lease rights through a competitive lease auction held by the Bureau of Ocean Energy Management on January 29, 2015, in which it submitted the winning bid for Lease Area OCS-A 0501.  That lease area covers 166,886 acres, or roughly 260 square miles of sea space in federal waters off Massachusetts. 

According to CIP, it will continue with the Massachusetts project's development.  The Vineyard Wind project could receive a boost from recently enacted Massachusetts legislation that will require utilities to purchase about 1,600 megawatts worth of offshore wind energy by 2027.  That law, known as H. 4568, "An Act to promote energy diversity," requires electric distribution companies to issue an initial joint competitive solicitation for offshore wind proposals by June 30, 2017.

BOEM advances California offshore wind leasing

U.S. ocean energy managers are moving closer to leasing sites in federal waters offshore California for wind energy development.  Acting in response to a lease area requested by Trident Winds, LLC, this month the Bureau of Ocean Energy Management (BOEM) issued a Request for Interest in that area to evaluate whether any other developer is interested in competing for a lease.

Trident Winds has initiated development of a commercial scale offshore wind farm off Point Estero, California.  Its Morro Bay or MBO Project would be located in federal waters about 33 nautical miles northwest of Morro Bay; the site features water depths of 2,600 to 3,300 feet.  In light of these site conditions, Trident Winds' proposed project would consist of 100 floating foundations, each supporting a wind turbine generating 7-8 megawatts of energy.  Electricity would be brought ashore via a single transmission cable.

Trident Winds requested a commercial wind lease from BOEM on January 14, 2016, covering a 67,963-acre proposed lease area.  Because BOEM had not previously solicited interest in leasing this area, BOEM treated Trident Winds' request as "unsolicited."  Under BOEM's offshore renewable energy program, when presented with an unsolicited lease request, BOEM first evaluates whether the developer is qualified to hold a lease on the Outer Continental Shelf.  In the case of Trident Winds, BOEM made this determination following consultation with the state of California.

Following this qualification determination, BOEM's next step is to determine whether it is appropriate to issue the company a lease on a non-competitive basis, or whether a competitive process is required.  To inform this competitive interest determination, on August 17, 2016, BOEM published a Potential Commercial Leasing for Wind Power on the Outer Continental Shelf (OCS) Offshore California, Request for Interest in the Federal Register, with a 30-day public comment period.  If BOEM finds competitive interest, it will initiate a competitive leasing process for the California site. If no expressions of interest are received, BOEM will proceed with its noncompetitive leasing process.

At the same time, BOEM is also seeking public comment on the project proposal, its potential environmental consequences, and other uses of the project area such as navigation, fishing, military activities, recreation.   BOEM will also use responses to shape its decisionmaking and to flag potential issues for analysis under the National Environmental Policy Act.

So far, BOEM has awarded 11 commercial wind energy leases for sites off the Atlantic coast, nine of which came from competitive lease sales that generated about $16 million in winning bids.  BOEM has also recently announced proposed lease sales for sites offshore North Carolina and New York.  In the Pacific, BOEM is evaluating 3 unsolicited lease requests offshore Hawaii and has published a Call for Interest in Hawaiian site leasing.

NY offshore wind leasing advances

The U.S. Bureau of Ocean Energy Management is moving closer to leasing ocean sites offshore New York for commercial offshore wind development.

On June 2, 2016, the Department of the Interior and BOEM announced the proposed lease sale for 81,130 acres offshore New York for commercial wind energy leasing.  The area available for leasing includes a Wind Energy Area designated by BOEM earlier this year.  Roughly triangular, the WEA starts about 11 nautical miles offshore Long Beach, and runs about 26 nautical miles southeast.

Under BOEM's leasing procedures, the agency published a “Proposed Sale Notice (PSN) for Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore New York” in the Federal Register on June 6, 2016.  The PSN includes a 60-day public comment period ending on August 5, 2016.

Any companies wishing to participate in the lease sale must also submit a qualification package by that date, demonstrating legal, technical, and financial qualification to participate.  To date, seven companies have qualified to participate in a future auction for the New York Wind Energy Area.

As required by federal environmental law, BOEM also published an Environmental Assessment (EA) considering potential impacts associated with issuing a lease, associated surveys, and approving the installation of resource assessment facilities in the area.  The EA is available for public comment for 30 days.

BOEM has scheduled a public seminar Wednesday, June 29, 2016 in New York City to describe the auction format, explain the auction rules, and demonstrate the auction process through meaningful examples.  Other public meetings will focus on the agency's planning and leasing efforts regarding New York offshore wind energy activities, as well as the EA.

So far, BOEM has awarded 11 commercial offshore wind leases, generating approximately $16 million in winning bids for over 1,000,000 acres in federal waters.  Previous competitive lease sales have resulted in 9 leases: two offshore New Jersey, two in an area offshore Rhode Island-Massachusetts, another two offshore Massachusetts, two offshore Maryland and one offshore Virginia.

Auction set for NJ offshore wind sites

The U.S. government has scheduled an auction for the rights to lease two areas of federal ocean space off New Jersey for offshore wind energy development.  The auction, to be held November 9, 2015, will be the fifth competitive lease sale for renewable energy on the outer continental shelf.

Under the Outer Continental Shelf Lands Act, the Department of the Interior has responsibility for managing use and development of the federally controlled outer continental shelf and the waters above it.  The Bureau of Ocean Energy Management exercises key functions in support of this role, managing resource evaluation, planning, and site leasing for energy activities ranging from oil and natural gas exploration and production to hydrokinetic, offshore wind, and other renewable ocean energy projects.

Since early in the Obama administration, BOEM has worked to offer leases to federal ocean sites for offshore wind development or related activities.  To date, BOEM has awarded seven offshore wind site leases through competitive lease sales, plus two more commercial wind leases offshore New Jersey awarded through earlier interim policies.  BOEM's competitive processes have generated over $14.5 million in high bids for over 700,000 acres in federal waters off states including Massachusetts, Maryland, Virginia, and Rhode Island.

Since at least 2009, BOEM has been involved in efforts to lease sites off New Jersey for offshore wind development, including multiple task force meetings, a 2011 Call for Information and Nominations – Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore New Jersey, and a 2014 Proposed Sale Notice.  That notice described a 343,833-acre Wind Energy Area split in two parts, known for leasing as OCS-A 0498 and OCS-A 0499:

BOEM has now announced that it will publish a Final Sale Notice setting a commercial lease sale for November 9, 2015, for the Wind Energy Area offshore New Jersey.  Similar in format to other recent BOEM offshore wind site auctions, the New Jersey sale will include consideration of both monetary factors (the bid) and nonmonetary factors (i.e., whether a bidder has obtained a Power Purchase Agreement or New Jersey Offshore Renewable Energy Certificate award).

No offshore wind projects are in commercial operation in the U.S., although Deepwater Wind is currently constructing its Block Island Wind Farm in state waters offshore Rhode Island.

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.

Feds to hold first offshore wind auction

The U.S. Department of the Interior has announced plans to hold a competitive lease sale for renewable energy on the Outer Continental Shelf offshore Rhode Island and Massachusetts.  According to a Final Sale Notice published in today's Federal Register, the auction, scheduled to be held by the Bureau of Ocean Energy Management on July 31, will be the first auction of its type for offshore wind site leases in U.S. waters.

Map of the Rhode Island and Massachusetts Lease Areas, courtesy of BOEM.

The auction will cover about 164,750 acres of sea space in a previously defined Wind Energy Area located 9.2 nautical miles south of the Rhode Island shore.  For leasing purposes, the BOEM has divided the area into two leases.  The North Lease Area (Lease OCS-A0486) consists of about 97,500 acres, and is estimated to have the potential for an installed capacity of 1,955 megawatts of electric generation.  The South Lease Area (Lease OCS-A0487) covers about 67,250 acres, and is estimated to have the potential for an installed capacity of 1,440 megawatts.

Based on a review by the National Renewable Energy Laboratory, the Bureau of Ocean Energy Management has concluded that the North and South Lease Areas have significantly dissimilar attributes that make the North Lease area "a more competitive and cost effective area for near term commercial development."  The Bureau thus set the minimum bid for the North Lease Area will be $2 per acre, or $194,996, while the minimum bid for the South Lease Area will be $1 per acre, or $67,252.

BOEM has pre-screened and approved nine companies as bidders in the auction:

• Deepwater Wind New England, LLC
• EDF Renewable Development, Inc.
• Energy Management, Inc.
• Fishermen’s Energy, LLC
• IBERDROLA RENEWABLES, Inc.
• Neptune Wind, LLC
• Sea Breeze Energy, LLC
• U.S. Mainstream Renewable Power (Offshore) Inc.
• US Wind Inc.

Bidders' proposals will be evaluated based on a variety of factors, including their cash bids as well as nonmonetary factors including whether a bidder holds a Joint Development Agreement or a Power Purchase Agreement. 

BOEM has described the auction as the "first-ever competitive lease sale for renewable energy on the U.S. Outer Continental Shelf."  How the auction runs -- and its results -- will be informative as to the future of offshore wind in U.S. waters.

February 16, 2011 - Louisiana natural gas production

Natural gas is a key component of the U.S. energy mix.  Even here in New England, relatively far from gas production zones, gas-fired generation accounts for more than a third of the electricity produced.  Where local distribution companies operate, consumers can also use gas for heating.

Louisiana is a major source of natural gas supply in the U.S.  While the Outer Continental Shelf (OCS) offshore Louisiana provides a large part of the gas flowing out of the state, north Louisiana’s Haynesville Shale is seeing increased production.  Laid down as sediments in a shallow marine environment during the Jurassic (about 150 million years ago), the Haynesville Formation includes shale units that are now about 2 miles deep beneath northwestern Louisiana, southwestern Arkansas, and eastern Texas.

Gas production from the Haynesville Shale is booming, thanks in part to hydraulic fracturing or “fracking”.  That's the same technique of cracking open the gas-containing strata by forcing high-pressure water, chemicals, and mechanical "proppants" underground to hold the layers of rock open and let the gas flow out.  About 61% of Louisiana’s gas production came from the formation, bringing the state's total 2010 production to around 2 trillion cubic feet of natural gas.  That level of production is not only 36% above 2009 levels, but is moreover the highest level of production since 1984.

The environmental impacts of this technique are still under evaluation, but customers are already feelign one impact of fracking: low gas prices, as the nation's supply has risen significantly. According to the federal Energy Information Administration, natural gas prices are predicted to average $4.02 per thousand cubic feet in 2011, about 9% below 2010's average pricing.

Will gas continue to be produced at these levels?  Will these low prices continue?  Are any other regulations needed to protect safety and the environment?  If so, what will that mean for gas pricing?