Dive Brief:
- The Bureau of Ocean Energy Management announced Friday that it’s canceling the Gulf of Mexico offshore wind lease auction due to take place later this year because of a “lack of competitive interest,” but is exploring other options for a sale in the region after receiving an unsolicited lease request from Hecate Energy.
- On Monday, BOEM issued a Request for Competitive Interest, or RFCI, to assess whether there is competitive interest in the two lease areas that Hecate Energy is requesting — which differ from the lease areas that BOEM planned to auction this year.
- “If BOEM does not receive competing indications of interest from qualified companies, BOEM may move forward with a noncompetitive lease issuance to Hecate Energy,” the agency said in a release.
Dive Insight:
John Filostrat, BOEM’s director of public affairs for its Gulf of Mexico office, said in a comment that BOEM nonetheless remains confident in the region’s potential thanks to “existing energy infrastructure, workforce, and businesses expertise.”
“Offshore wind energy is a new industry in the Gulf of Mexico,” Filostrat said. “It will take some time to develop, but we are confident that industry interest remains for the offshore wind market in the Gulf.”
Filostrat said this is the first RFCI for the Gulf of Mexico, but BOEM has previously issued them for lease areas in the Pacific, Gulf of Maine and New York Bight. A noncompetitive offshore wind lease issuance also wouldn’t be BOEM’s first — that lease type was issued for the 120-MW Skipjack Wind 1 and the 12-MW Coastal Virginia Offshore Wind research lease.
BOEM said that it received 25 comments in response to its March proposed sale notice about the auction, but only one company expressed interest in participating. The agency said it might still move forward with a second auction “at a future time, based on industry interest.”
The areas selected by Hecate Energy are off the coast of southeast Texas and were identified as suitable wind energy areas by BOEM in 2021, the agency said. They total 74,113 and 68,239 acres, respectively, for a total of 142,352 acres. Hecate Energy made the request in February, proposing a project that would generate up to 3 GW, according to BOEM.
The canceled auction would have offered four offshore wind energy areas totaling 410,060 acres offshore Louisiana and Texas — two of those being lease areas that failed to sell during the first Gulf of Mexico auction in 2023.
The 2023 auction saw tepid interest overall, along with low prices. Of the three leases auctioned, only one was sold — that lease went to RWE Offshore US Gulf, which bid $5.6 million for a 1.24-GW capacity, 102,480-acre tract offshore Lake Charles.
The region has a “Goldilocks issue,” Cameron Poole, an energy and innovation associate at economic development agency Greater New Orleans, said in a recent interview.
“Our wind resources aren't, on average and day to day, the strongest for the existing set of turbine classes,” Poole said. “So that becomes a bottom line issue — how profitable is any prospective Gulf of Mexico project? And then inversely, we have, of course, the hurricane prevalence.”
In a comment about the cancellation of the auction, Poole said, “GNOwind [Alliance] members have held that this came down the pike way too quickly. Since the process was initiated last August, right off the heels of the first auction, we had advocated for a delay in proceeding with the next competitive opportunity.”
“The timeline gave little time for the work on the ground to yield results to support this interest,” he said.
According to Poole, developers have made clear that they want to see more coordination at the state level regarding offtake and procurement, as well as more technological advancement, in order to buy into the market more confidently.
Louisiana is working on a strategic roadmap for offshore wind, Poole said, and “innovators like Gulf Wind Technology are continuing to advance their proposed solutions for turbines operating in these conditions,” but “these efforts all take time.”
“As much as it is crucial for BOEM to provide consistent opportunities for developers to dive into this complex market, it’s just as important that those opportunities align with progress,” he said. “In this instance, the opportunity far preceded the ability for the state and federal level activities to bear fruit. As such, we remain optimistic that the right work is being done now to ensure continued progress in the Gulf in the future.”
