U.S. BOEM Announces Additional Gulf of Mexico Wind Energy Areas
The U.S. Bureau of Ocean Energy Management (BOEM) has announced the finalization of four new Wind Energy Areas (WEAs) in the Gulf of Mexico offshore Louisiana and Texas, totaling approximately 763,000 acres. This follows BOEM’s first-ever Gulf of Mexico offshore wind lease sale in August, which resulted in a high bid of only $5.6 million from RWE Offshore US Gulf, LLC for the Lake Charles, Louisiana Lease Area and two lease areas off Texas that received no bids. With this designation, BOEM stated that it hopes to, among other things, increase the potential for competition in the area and develop a predictable leasing pipeline.
The New Wind Energy Areas
From June through August 2023, BOEM engaged with federal agencies, Tribes, affected states, ocean users, and other stakeholders to solicit input and feedback on the remaining 11 draft WEAs that were identified in the Gulf of Mexico. All Gulf of Mexico WEAs are identified in the below figure.
Based on feedback received, BOEM finalized the following four WEAs:
- Option J: Comprising 495,567 acres located approximately 47.2 miles off the coast of Texas, this WEA has the potential to support projects capable of powering 2.1 million homes;
- Option K: Spanning 119,635 acres situated approximately 61.5 miles off the coast of Texas, this WEA could support projects that would provide electricity to 508,200 homes;
- Option L: Encompassing 91,157 acres located approximately 52.9 miles off the coast of Texas, this area has the potential to support projects that could power 387,450 homes; and
- Option N: Covering 56,978 acres located approximately 82 miles off the coast of Louisiana, this WEA may support projects that could power approximately 242,000 homes.
These four WEAs join WEA I, which was designed as a final WEA on October 31, 2022, and leases for which did not receive bids during the recent Gulf of Mexico lease sale.
Next Steps
On May 30, 2023, BOEM published a final Environmental Assessment (EA) pursuant to the National Environmental Policy Act that analyzed the issuance of up to 18 outer continental shelf wind energy leases and the potential impacts from activities expected to take place after lease issuance, including site characterization activities (such as biological, geological, geotechnical, and archaeological surveys) and site assessment activities (such as meteorological and oceanographic buoy deployment). The EA covered the entire Gulf of Mexico Call Area, including the four new final WEAs. As such, BOEM does not need to conduct additional NEPA analysis before holding another Gulf of Mexico lease sale. Next, BOEM will issue a Proposed Sale Notice (“PSN”) with a 60-day public review and comment period later this year or early next. The PSN will identify, among other things, the proposed areas to offer for lease in the WEAs, auction format, and qualified bidders to date.
Recent Gulf of Mexico Auction
The recent BOEM Gulf of Mexico auction results from August demonstrated a lack of competitive bidding compared to previous auctions in other regions. Considering that only one of the three lease areas was awarded during the August wind lease sale, with an extremely low winning bid of $5.6 million (approximately $54 per acre) compared to the $157.7 million that RWE Offshore Wind Holdings, LLC paid for a 63,338-acre lease area (approximately $2,490 per acre) in the California auction, it appears that the broader offshore wind industry was hesitant to invest in these particular lease areas in the Gulf of Mexico. This hesitancy could be attributed to various global, U.S., and regional factors, such as supply chain disruptions, ongoing renegotiations of existing offshore wind project agreements, lack of state mandates for renewable energy procurement, and state anti-renewable legislation. For more information, see the Linklaters client alert on the auction.
Regardless of the recent BOEM Gulf of Mexico auction results, the interest in offshore wind in the region appears to remain strong. BOEM has stated that there is sufficient justifiable industry interest and economic value to identify additional final WEAs in the Gulf of Mexico for a potential lease sale. In addition, Louisiana has set an ambitious goal to procure 5,000 megawatts of offshore wind by 2035 and there are ongoing discussions with developers for potential wind projects in state-controlled waters.
