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GoM Wind Sale Canceled Due to Low Interest, BOEM Gets Unsolicited Request

offshore wind
Lack of competative interest led BOEM to cancel the planned Gulf of Mexico auction (file photo)

Published Jul 26, 2024 2:34 PM by The Maritime Executive


Efforts to move offshore wind energy forward in the Gulf of Mexico took a surprising turn on Friday as the Bureau of Ocean Energy Management again reported low overall interest in the area. However, they did receive a single unsolicited request for two possible lease areas. 

BOEM announced in March that it was planning to move forward with the second offshore lease auction for properties in the Gulf of Mexico. They proposed four potential lease areas off the coast of Louisiana and Texas with a total of over 410,000 acres. To possibly create further interest in the region, they added provisions for the wind energy to be used in the production of hydrogen or other energy products. 

The comment period closed in May, and today BOEM reports it is canceling the sale “due to a lack of competitive interest.” The comment period generated 25 responses and one company that expressed interest in participating in the proposed auction sale. BOEM said however it may decide to move forward with a lease sale in the future.

Hecate Energy Gulf Wind however submitted an unsolicited lease request for two potential properties that were part of the areas initially defined in 2021. The government had proposed 14 potential wind areas along the coastline of the Gulf of Mexico ranging from Louisiana west to Texas. Hecate, based in Chicago, has a large pipeline of renewable energy projects mostly for solar as well as onshore wind and power storage.

The areas targeted by Hecate are on the Outer Continental Shelf located near southeast Texas. One is over 74,000 acres and the other is over 142,000 acres. The areas are different than the ones in the now canceled sale proposal.

Under the process established for BOEM, the bureau will now issue a request seeking competitive interest for the areas targeted by Hecate. They plan to publish the request on Monday, July 29, and if other companies come forward to express interest or comment on the situation, BOEM could move forward with a competitive lease sale for the two areas. If no companies register interest, BOEM may decide to move forward with a noncompetitive lease.

Oceantic Network (formerly the Business Network for Offshore Wind), issued a statement saying the latest developments demonstrate that the Gulf of Mexico offshore wind market is moving forward with key policies failing into place. They highlight Louisiana working on its state offshore wind roadmap. The Department of Energy is working on a wider transmission study for the region while the group highlights the contribution of the region to the industry. Notably, many of the vessels to support the offshore wind industry are being built at Gulf of Mexico shipyards.

Companies, so far, however, have shown limited interest in developing offshore wind farms in the region. Analysts in the past had said that the Gulf of Mexico features slower wind speeds and higher hurricane risks. Further, Gulf Coast states generally had lower electricity prices and no state purchase mandates to support the offshore wind energy industry.

BOEM ran the first-ever offshore wind auction in the Gulf of Mexico in August 2023 and only RWE submitted a bid. The company paid $5.6 million for one of the three areas in the sale but told reporters it was still considered how the site might be developed long-term.