State Mineral and Energy Board approves first-ever offshore wind agreements
Published 1:50 pm Thursday, December 14, 2023
- Three wind turbines stand in the water off Block Island, R.I, the nation’s first offshore wind farm, Aug. 15, 2016. In a first-of-its kind auction for the Gulf of Mexico, a company bid $5.6 million Tuesday to lease federal waters off the Louisiana coast for wind energy generation. (Associated Press Archives)
Special to the American Press
Gov. John Bel Edwards and Louisiana Department of Natural Resources Secretary Tom Harris announced today that the State Mineral and Energy Board has approved the state’s first-ever wind operating agreements in state offshore waters at its December meeting.
The board approved a 6,162-acre property agreement for Diamond Offshore Wind La (DOW Wind) off the coast of Terrebonne and Lafourche parishes and a 59,653-acre agreement for Cajun Wind off the coast of Cameron Parish.
“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,” Edwards said. “I appreciate the work Secretary Harris and his staff have done negotiating these agreements and would also like to thank our legislative partners who helped in crafting legislation to encourage wind energy leasing in our state.”
Harris noted that the two agreements had different payment structures to the state, with the DOW Wind covering a smaller area, but paying more in up-front costs and rental fees per acre, while the larger agreement with Cajun Wind had a lower per-acre fee for up-front and rental payments but a higher energy royalty over the length of the agreement. While the DOW Wind property agreement paid $308,101 up-front on its 6,100-acre agreement, Cajun Wind paid $357,923 on its 59,000-acre agreement. However, DOW Wind is paying 1.5 percent of gross revenues in energy royalty over the life of the agreement, while Cajun Wind is paying 2.2 percent.
“One agreement offers more on the front end, while the other pays more over time. These being the first wind energy operating agreements for the state, we were breaking new trails in negotiating these agreements, and I believe we have established that we can be flexible in how we set up payment structures while still ensuring that the state and its people are appropriately compensated for using our resources,” Harris said.
“Legislation passed in recent years clarifying and codifying rules on leasing state offshore areas for wind energy projects helped Louisiana draw interest from operators,” he said.
“It gave potential operators and developers a readily understandable set of rules to work by in planning these kinds of projects,” Harris said. “That kind of predictability is very important when you are asking companies to commit the kind of investment we are going to be seeing off our shores.”
Edwards said that wind energy projects are a natural fit for Louisiana’s working coast, which already has infrastructure and a network of support industries with decades of experience in designing and operating complex projects in the offshore environment.
“Wind energy projects off Louisiana’s coast will benefit from having transportation, fabrication and engineering expertise that has long supported our traditional offshore industry already in place,” Edwards said. “And our existing ports and offshore support companies will benefit from new customers and new opportunities to work and grow jobs.”
