Louisiana Greenlights First Offshore Wind Ventures in Collaboration with Vestas and Mitsubishi
In a significant move, Louisiana’s Department of Natural Resources granted approval for the state’s inaugural offshore wind operating agreements during its December board meeting. These agreements pave the way for potential wind farm development in Louisiana’s waters. The projects, involving subsidiaries of Mitsubishi and Vestas, present a shift in focus as federal lease auctions for the Gulf of Mexico have commenced with limited interest thus far.
The approved agreements encompass a 6,162-acre property for Diamond Offshore Wind, a Mitsubishi subsidiary, situated off the coast of Terrebonne and Lafourche parishes. Additionally, a larger 59,653-acre agreement for Cajun Wind, a Vestas subsidiary, was approved off the coast of Cameron Parish.
While specific details regarding the size and timeline of the wind farms were not disclosed, sources suggest they may not be large-scale projects but benefit from proximity to the shore. This marks a transformative moment for Louisiana and the Gulf Coast, signaling a shift toward clean energy.
Louisiana Governor John Bell Edwards expressed enthusiasm, stating, “For generations, the state of Louisiana has been a leader in energy production, and offshore wind energy is the next chapter in that great history as we expand our options for clean energy production and open new avenues for the development of our state economy.”
State Secretary Tom Harris emphasized that negotiating these agreements marked a pioneering effort, with the state enacting legislation to clarify and codify rules for leasing state offshore areas for wind energy. The agreements involve different payment structures to the state, reflecting the evolving nature of the industry.
Diamond Offshore Wind, covering a smaller area, incurs higher upfront costs and rental fees per acre, with an agreement for $308,101 upfront on the 6,100 acres and 1.5 percent of gross revenues in energy royalties. Cajun Wind, covering a larger area, features a lower per-acre fee for upfront and rental payments but a higher energy royalty over the agreement’s duration, paying $357,923 on its 59,000-acre agreement and 2.2 percent in royalties.
Louisiana aims to leverage existing expertise in transportation, fabrication, and engineering to support offshore wind projects. Governor Edwards anticipates benefits for ports and offshore support companies, foreseeing new customers and job growth.
This development follows the federal government’s Gulf Coast offshore lease auctions for the wind sector, with RWE securing a lease near Lake Charles, Louisiana. The Bureau of Ocean Energy Management is poised to offer four more Gulf of Mexico parcels, including one 82 miles off the Louisiana coast, in its upcoming auction in 2024.
