Louisiana could build first Gulf of Mexico offshore wind farm by 2026

As the U.S. Bureau of Ocean Energy Management (BOEM) is working towards the first offshore wind auction for the Gulf of Mexico early next year, current legislative developments in Louisiana could lead to the state being the first to build an offshore wind farm in the Gulf, as well as to expanding the wind lease areas in state waters and tweaking its lease sale approach.

On 3 May, a legislative measure on offshore leasing, including the size of the wind lease areas and leasing rules in relation to the state, cleared the Louisiana House of Representatives. The bill, HB165, is expected to pass the Senate in the upcoming weeks, before it is enacted by the Governor.

Currently, the law in Louisiana allows for oil and gas leases to cover a maximum of 5,000 acres and authorises the State Mineral and Energy Board to enter into agreements with the developers/owners which enable the state to receive a share of revenues from the production of oil and gas, and other minerals.

Amendments to the present law, sponsored by Rep. Jerome Zeringue and co-sponsored by Rep. Joseph Orgeron, set the maximum acreage for offshore wind at 25,000 acres and add wind energy as a source for which the State Mineral and Energy Board may enter into operating agreements for the state to receive a share of revenues.

The bill also removes some of the requirements for the Board and grants it the authority to accept the bid it finds to be most advantageous to the state.

Namely, the bill proposes to remove the requirement of setting a minimum dollar amount and a minimum percentage of revenue to be produced by each wind turbine, which then need to be approved by the House Committee on Natural Resources and Environment and the Senate Committee on Natural Resources prior to the advertisement for bids for each lease.

“The State Mineral and Energy Board has authority to accept the bid it finds is most 26 advantageous to the state and may lease upon whatever terms it considers proper. Such lease shall include a provision permitting the state, at its option, to take in kind all or any of the portion due it as royalty”, the bill reads.

The co-sponsor of the bill HB165, Rep. Joseph Orgeron, has also sponsored a resolution on offshore wind that was adopted by Louisiana’s House of Representatives on 2 May.

The House Resolution 25 requests the state’s Public Service Commission to study the benefits and the feasibility of building a pilot offshore wind project in state waters by 2026.

The document cites findings by the National Renewable Energy Laboratory (NREL) that Louisiana has the fourth highest offshore wind energy potential of any U.S. state and that a single 600 MW offshore wind farm has the potential to create 4,470 jobs and bring USD 445 million in gross domestic product during construction.

According to the resolution, the state’s ports and shipyards are ideally located and equipped to handle the large offshore wind components, and the oil and gas supply chain has the experience and the infrastructure to transition into the offshore wind industry.

The foundations for the first offshore wind farm in the U.S. were designed and manufactured by Louisiana businesses, Keystone Engineering and Gulf Island Fabrication, and the first Jones Act-compliant service operations vessel (SOV), Eco Edison, is being built by Louisiana-headquartered Edison Chouest Offshore.

Offshore wind development could provide a new source of state and local revenue as well as workforce and economic development opportunities, and could also support the production of green hydrogen, for which Louisiana has begun positioning as a hub, according to the resolution.

Louisiana has already set a target of 5 GW of offshore wind capacity by 2035 in its first ever Climate Action Plan, which was unanimously approved by the state’s Climate Initiatives Task Force on 31 January.

The Climate Action Plan came shortly after BOEM announced it was preparing a draft environmental assessment (EA) for offshore wind activities in federal waters of the Gulf of Mexico, where the agency is looking to narrow the identified wider area before advancing any Wind Energy Areas (WEAs) for leasing.

The draft EA, which will be completed this Summer, is reviewing an area which covers almost 30 million acres offshore Louisiana and Texas, just west of the Mississippi River to the Texas/Mexican border.

The agency plans to designate WEAs for leasing by the end of this year and to hold its first lease sale for Gulf of Mexico in early 2023.