On the Clock: Gulf of Mexico Enters the Offshore Wind Development Race
The Gulf’s offshore wind future is no breezy affair as governments and industries must work together to meet lofty goals.
Offshore wind farms could in the next decade find a home in the Gulf of Mexico (GOM), more than 8 decades after the first oil flowed from its first offshore field.
The Bureau of Ocean Energy Management in July identified the first two draft wind energy areas (WEAs)—one off the coast of Louisiana, the other off Texas—that could harness the Gulf’s steady breezes.
Offshore wind is a key piece in President Biden’s strategy of addressing climate change by transitioning the US onto renewable energy. His administration in March 2021 set a target of deploying 30 GW of offshore wind capacity by 2030, “enough to power 10 million homes with clean energy, support 77,000 jobs, and spur $12 billion per year in private investment in offshore wind projects”, according to the announcement.
This is the equivalent to more than 2% of the US utility-scale electricity generating capacity and about 25% of the total US wind electricity generating capacity, according to a Congressional Research Service report. In 2020 the country’s total generating capacity was about 1,212 GW, with about 119 GW of that produced from wind energy resources—virtually all onshore.
Currently, the US has only two commercial offshore wind farms bringing the US total of offshore wind capacity to 42 MW. The five-turbine Block Island Wind Farm off the Rhode Island coast has a capacity of 30 MW, and the two-turbine Coastal Virginia Offshore Wind Project has a current capacity of 12 MW.
New Energy, Historic Basin
Interest in the Gulf’s offshore wind potential has increased in recent months as development efforts off the country’s East and West Coasts continue to advance and the Biden administration has pledged hundreds of millions of dollars in federal funding.
One of the Gulf’s WEAs is located about 24 nautical miles (nm) off the coast of Galveston, Texas. The area under review totals 546,645 acres and has the potential to power 2.3 million homes with clean wind energy.
The other WEA is located about 56 nm off the coast of Lake Charles, Louisiana, totaling 188,023 acres and has the potential to power 799,000 homes. This stretch of the Gulf Coast is historically significant as the location of the first free‑standing platform to produce oil from the Gulf’s Creole field, installed about 1.5 miles offshore Cameron, Louisiana, in 1938.
The GOM oil and gas industry has grown from humble beginnings to become one of the country’s most important energy resource and infrastructure regions. It is its energy infrastructure—its ports, its vessels, and its skilled workforce—that offshore wind developers find attractive.
While the Gulf’s winds are not as strong as Atlantic and Pacific winds—about 7.5 to 8.5 m/s as compared to 8.0 to 10 m/s—this proximity to the oil and gas supply chain that can be leveraged and a milder climate that decreases operating costs and increases turbine access are considered its strongest advantages, according to the National Renewable Energy Laboratory (NREL).
In 2016 NREL reported that the Gulf holds about 15% of the US’ gross offshore wind energy potential and 25% of the country’s technical offshore wind energy potential. A 2020 study conducted by NREL quantified the Gulf’s gross offshore wind resource capacity at 1.87 terawatts (TW).
With average wind speeds, maximum water depth of 1000 m (3,281 ft), and land-use/environmental considerations, the Gulf’s technical offshore wind resource potential capacity is 508 GW, according to NREL. It reported that a single 15-MW turbine operating in the Gulf for 3 years would make 1 TW-hour of electricity.
Factors like water depth and seafloor composition contribute to the potential of the GOM being developed with floating offshore wind platforms rather than fixed-bottom towers, making for a slightly more-expensive project, according to Samantha Woodworth, senior research analyst, with the energy consultancy Wood Mackenzie.
“However, there has been significant investment made into the offshore wind industry at this point, compared to when they were doing pilot projects back in the day. The learning curve for getting these projects to commercialization is very steep, and while we’re not there yet, we’re certainly on the way to getting floating offshore commercialized,” she said.
Woodworth noted that other factors pointing towards successful deployment of floating wind in the Gulf of Mexico include the application of best practices to be learned from the expected deployment of floating wind developments offshore California, along with well-established global entities working on both big installations along the East Coast, as well as floating offshore wind in Europe, and increased backing from state and federal governments.
“Having a set plan and knowing the federal government is backing the industry has made a lot of developers even more bullish,” she said.
It is a point echoed by Alexander Fløtre, vice president and product manager Offshore Wind Energy Service Research for Rystad Energy, an Oslo-based energy consultancy.
“We see a governmental plan that is now in progress, with a clear roadmap of areas to be investigated, and specific timelines for the actual lease sales,” Fløtre said.
“That, coupled with the fact that offshore wind is really starting to take off on a global scale, with a lot of previously oil and gas focused companies now trying to become broader energy companies. Many of these companies focus especially on developing floating offshore wind, to position themselves for the next wave of growth,” he added.
The State of Louisiana in February 2022 set a target of 5 GW of installed offshore wind capacity by 2035 in its first-ever climate action plan.
Following on to that goal—and seeing the opportunity to take a different, yet familiar, approach—Governor John Edwards in June signed into law House Bill 165 that created a legal framework to allow offshore wind leasing for the first time in Louisiana waters.
The law also has a provision that lets the state take a cut of wind farm revenues while also charging for leases, much in the same way that the state requires the oil and gas industry to share revenues and pay for lease areas.
As for Texas, there are currently no plans at the state level for offshore wind projects. The state has had numerous projects floated for its coastline since the turn of the century.
In October 2005 Wind Energy Systems Technology (WEST) announced a project planned 7 miles offshore Galveston that promised to be the first and largest wind farm in the US, with 50 turbines producing 150 MW of electricity by 2010.
The 11,000-acre Galveston Wind Farm would have supplied 40,000 homes with power, if it had come to fruition. A 2008 article in The New York Times stated at the time that New Iberia, Louisiana’s WEST was still looking for the $311 million to build the farm. A check of 4C Offshores’ online database lists the project as dormant.
In May 2006 the Houston-based Superior Renewable Energy leased 40,000 acres off the coast of Padre Island National Seashore to build an even larger offshore wind farm, with 170 400-ft-tall wind turbines generating 500 MW of power, enough to power 125,000 homes.
One year later, Superior Renewable Energy relinquished its 30-year lease with the state, citing at the time that the multibillion-dollar project did not make economic sense.
Several years later, in 2014, the Austin-based Baryonyx Corporation withdrew its permit application for its GoWind Offshore Wind Demonstration Project. This ended development of its proposed 18-MW offshore wind farm that would have comprised three 6-MW direct-drive turbines located about 5 miles off the coast of Texas’ South Padre Island.
Ducks in a Row
So, what will it take to ensure that the state will finally see the success of floating wind offshore its coast?
“I would say it is the federal attention that is being given to really building out the US offshore wind energy industry. The interest has been there because the wind potential is phenomenal,” said Ken Medlock, the senior director of the Center for Energy Studies at Rice University.
“The potential has always been there, but it was about getting over the hump in terms of getting all the commercial ducks in a row. We can build this turbine, generate power for this amount, and deliver it to the grid and—given the grid power is at price x and we can do it at this cost—then it should be profitable,” he said. “You can go to a bank or an equity investor and make the argument. But the devil is in the details.”
Those details, Medlock explained, include the interconnections that must happen for a project to be successful.
“Subsea cables have to be laid and interconnected to the grid, all of the supporting infrastructure to make offshore development happen, like personnel to fabricate facilities, the ships that are needed, and the crews capable of installing these massive facilities.
“None of that really exists. Some of it is transferable from the oil and gas industry,” he said. “But not all of it.”
The development of some of that support infrastructure is needed as well, Medlock noted.
“It gets into a chicken-and-egg discussion: If I’m looking for finance to do something, but none of the support infrastructure is there, how do I make the case to a bank or an equity investor who is going to put capital at risk that I’ll be able to deliver this project on time?
“The federal government being engaged really kind of greases the skids. It can de-risk the development of those supply chains by being involved at various levels. And that can help move things forward more quickly,” Medlock said.
Classic Scarce Resource Problem
Establishing the supply chain is the greatest challenge in the Biden administration’s 30 GW by 2030 plan. The White House announced in June the launch of the new Federal-State Offshore Wind Implementation Partnership, with a primary goal of expanding key elements of the offshore wind supply chain. This includes everything from manufacturing facilities to port capabilities to workforce development.
The administration also announced steps to advance a National Offshore Wind Supply Chain Roadmap. It also designated offshore wind vessels as “Vessels of National Interest” to facilitate more offshore wind construction.
Regarding the supply chain, the NREL in March released a report that estimated achieving 30 GW of offshore wind capacity will require at least:
- 2,100 wind turbines and foundations
- 6,800 miles of cable
- 5–6 wind turbine installation vessels
- 10 feeder barges to transport components
- 4 cable-lay vessels
- An average annual workforce between 12,300 and 49,000 full-time equivalents.
“The offshore wind pipeline represents a strong demand for manufacturing and workforce capabilities in the United States,” said Matt Shields, NREL senior offshore wind analyst and principal investigator of the study, in a release. “By understanding the barriers we face, we can better work to overcome them and move toward our goal of 30 GW of offshore wind by 2030 while also generating significant local economic benefits.”
The addition of offshore wind to the Gulf’s energy production mix will further tighten an already tight supply chain.
“It’s a classic scarce resource problem. All that means is, everybody’s bidding for the same service that means the cost of the service goes up. Unless you can expand capacity. It is an impediment for growth without a doubt,” said Medlock.
“Supply chain concerns will continue to linger until there’s real movement in the industry. What I mean by that is unless there is a clear direction that offshore wind is going to expand, then you’re not going to see the investments made in the support infrastructure needed to make that happen,” he added.
“That’s where the federal government’s announcement is a signal to the market; it is what has been missing in the past. If there is a way to make a clear line of sight to what the endgame is, then it becomes easier to justify the rather large investment,” he said.
A More-Realistic Goal
There are fewer than 2,700 days between 1 September 2022 and 1 January 2030, or less than 7.5 years to accomplish the monumental challenge of installing 30 GW of offshore wind power by 2030. Is the goal attainable?
“We don’t believe that 30 gigawatts by 2030 will be reached and there are several reasons for that,” said Fløtre. “Rystad’s base case now is going to be around 21 gigawatts by 2030. We think it is more likely that, for example, states such as New York and New Jersey will reach their solicitation targets by 2035 rather than the federal capacity target being reached by 2030.
“There is a lot of activity that must happen at the same time, and there is little staging between developers in the second half of this decade. Secondly, grids need to be upgraded and a domestic value chain needs to be built up, and the Jones Act adds a layer of complexity to the installation stages in the US,” he said. “While somewhat sped up, there is still a lot of work needed to be done on the permitting side. The opening of new areas can support reaching the 30 gigawatts post-2030, although we do not expect it to have a material impact before 2030, due to the mentioned challenges.”