Offshore wind energy efforts continue along the mid-Atlantic with Virginia nearing a “first of its kind offshore wind research lease” from a federal agency and a Maryland delegation partnering with Denmark, which is considered a leader in the field.
Earlier this month, members of a Maryland delegation, including legislators, businesses, and agency heads such as Abigail Ross Hopper, director of the Maryland Energy Administration (MEA), signed an agreement to cooperate on offshore wind energy with the Government of Denmark, according to a Dec. 6 statement from Maryland Gov. Martin O’Malley.
Denmark is a recognized world leader in offshore wind energy innovation and deployment, and the agreement will help leverage its expertise as Maryland implements its Offshore Wind Energy Act, the statement said.
The Maryland General Assembly earlier this year passed the Maryland Offshore Wind Energy Act of 2013, creating a “carve-out” for energy derived from offshore wind in the state renewable portfolio standard, beginning in 2017 and extending beyond 2022.
The members of the delegation and their Danish counterparts developed a framework to partner for the next year and a half, sharing information and building business connections. The delegation also toured some infrastructure and manufacturing clusters supporting the Danish clean energy economy, the statement added.
Building on those efforts, Maryland’s energy staff attended the recently held European Wind Energy Association Offshore 2013 conference in Frankfurt, Germany. MEA staff met with industry experts and obtained technical and logistical knowledge to ensure that the Act delivers on its promise of clean energy investment, according to the statement.
BOEM moves forward on issuing wind energy research lease to Virginia
As reported by PennWell’s GenerationHub, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) on Dec. 6 said it has taken another step toward issuing a wind energy research lease to the Virginia Department of Mines, Minerals and Energy (DMME), after finding there is no competitive interest in the area where the state agency proposes to conduct activities.
DMME proposes to design, develop and demonstrate a grid-connected 12 MW offshore wind test facility on the Outer Continental Shelf (OCS) off the coast of Virginia. The data obtained under the lease will be made publicly available and assist future production of renewable energy within Virginia’s Wind Energy Area, BOEM said.
In December 2012, the U.S. Department of Energy (DOE) announced funding awards for seven proposed “Offshore Wind Demonstration Projects” off the nation’s coasts, with one of the awards given to Dominion Resources (NYSE:D), which partnered with DMME and others to establish the Virginia Offshore Wind Technology Advancement Project (VOWTAP).
Thomas Farrell II, Dominion’s chairman, president and CEO, has said that the company will pursue its ultimate plan of a major utility-scale wind project off the Virginia coast, only if the potential 2,000 MW project is endorsed by the Virginia State Corporation Commission.
According to a Dec. 6 statement from Virginia Gov. Bob McDonnell, Dominion Virginia Power and its team is one of seven projects nationally selected by DOE in 2012 to receive $4m each in federal matching funds to undertake initial engineering, design and permitting for an offshore wind technology demonstration facility.
VOWTAP proposes designing, developing and demonstrating a grid-connected, 12 MW offshore wind facility consisting of two 6 MW Alstom Haliade turbines mounted on “innovative” foundations.
In May 2014, DOE will choose three projects to receive additional federal funding up to about $47m in total and proceed with completion of the front end engineering and design. Ultimately, the statement added, DOE has a target for those projects to be operational by the end of 2017.
“Virginia’s port and maritime assets and the gradual slope of the [OCS] and consistent offshore wind speeds make this a natural geographic location to demonstrate the feasibility and eventually to develop offshore wind resources at a commercial scale,” McDonnell said in the statement. “We have a robust commercial ship building industry and other assets that make Hampton Roads and the commonwealth an attractive candidate to become the center of construction and logistical support to develop the Mid-Atlantic’s coastal energy resources.”
Offshore opportunities for oil, gas in the Atlantic
A new study commissioned by the National Ocean Industries Association (NOIA) and the American Petroleum Institute (API) shows that opening the U.S. Atlantic OCS to offshore oil and natural gas development could create almost 280,000 jobs, spur an additional $195bn in new private investment, contribute up to $24bn per year to the U.S. economy, generate $51bn in new revenue for the government, and add 1.3 million barrels of oil equivalent per day to domestic energy production, between 2017 and 2035, NOIA said on Dec. 5.
The largest employment impact is predicted for North Carolina, 55,422 new jobs, South Carolina, 35,569 new jobs, and Virginia, 24,979 new jobs. Maryland, Delaware, Pennsylvania, New Jersey and New York could see more than 40,000 new jobs, contributions to the economy of more than $3.7bn and an increase in state revenues around $2.7bn by 2035.
NOIA further noted that active oil and gas development off the coasts of Newfoundland and Nova Scotia might mean similar resources are located off the New England coast. In that case, the New England states could see 45,000 new jobs and state revenues of more than $5bn in that same time frame.
According to the study, “The economic benefits of increasing U.S. access to offshore oil and natural gas resources in the Atlantic,” prepared by Quest Offshore Resources, federal offshore lease sales under existing U.S. law would be expected to lead to high levels of offshore oil and natural gas activity.
About 85% of acreage in federal offshore waters is inaccessible to offshore oil and natural gas development, either through lack of federal lease sales or outright moratoriums. Oil and gas development off the Atlantic coast has been restricted since the 1980s, the study added, noting that 51 exploratory wells were drilled in the 1970s and 1980s, mainly in shallow water.
A lease sale off the coast of Virginia was planned for 2011, but was subsequently canceled. The study also noted that no sales in the Atlantic OCS are scheduled and the next five-year plan of OCS lease sales, yet to be released, would begin in 2017.
In a Dec. 5 statement from McDonnell’s office, Virginia Secretary of Natural Resources Doug Domenech said that Virginia objected to the cancellation of its lease sale, adding, “We are encouraging Interior to begin the planning process for the next [five]-year plan immediately and to include a sale off Virginia in the next plan.”
According to the study, it assumes that leasing would begin in the mid- and south-Atlantic OCS in 2018, coinciding with the start of the next BOEM five-year leasing program. Leasing in the north Atlantic OCS is assumed to begin two years later.
Also, the study noted that according to its analysis, demand from operators for Atlantic OCS leases would parallel the strength of historic lease sales within other OCS regions.
The study further noted that leasing in 2018, taking place only in the mid- and south Atlantic planning areas is projected at around 350 leases sold, with leasing activity expected to peak at around 480 leases sold per year.
The study estimated that if there were regular lease sales and no regulatory restraints to development, 69 projects would begin oil and natural gas production in the Atlantic OCS between 2017 and 2035, of which 52 would be deepwater projects and 17 would be shallow water projects.
Also, the study noted that drilling activity in the Atlantic OCS would be expected to begin in 2019, with an average of 30 wells drilled annually from 2017 to 2035 mostly in deepwater.
Among other things, the study noted that the first oil and natural gas production in the Atlantic OCS is projected to begin in 2026, and initial annual production would be just over 6,000 barrels of oil equivalent per day. By the second year, production is expected to increase to more than 65,000 barrels of oil equivalent per day. Production is expected to reach 1.34 million barrels of oil equivalent per day by 2035, about 40% of which is expected to be oil at 550,000 barrels of oil equivalent per day, and 60% natural gas at 790,000 barrels of oil equivalent per day, the study added.
The NOIA political action committee for 2012 contributed $208,500 to federal candidates, 88% to Republicans and 12% to Democrats, according to opensecrets.org.