Monday, July 22, 2013

DOI Announces Virginia OCS Wind Energy Lease Sale

Jul 22: Department of  Interior (DOI) Secretary Sally Jewell and Bureau of Ocean Energy Management (BOEM) Director Tommy Beaudreau announced that BOEM will hold its second competitive lease sale for renewable energy on the U.S. Outer Continental Shelf (OCS). The auction, scheduled to take place on September 4, will offer nearly 112,800 acres offshore Virginia for commercial wind energy leasing. In June, Secretary Jewell and Director Beaudreau announced the nation's first wind energy lease sale for an area offshore Rhode Island and Massachusetts, which will be held on July 31. 

    Secretary Jewell said, "The competitive lease sale offshore Virginia will mark an important transition from planning to action when it comes to capturing the enormous clean energy potential offered by Atlantic wind. Responsible commercial wind energy development has the potential to create jobs, increase our energy security, and strengthen our nation's competitiveness."

    Under the terms of the Final Sale Notice, the wind energy area offshore Virginia will be auctioned as a single lease. The area is located 23.5 nautical miles from the Virginia Beach coastline and has the potential to support more than 2,000 megawatts of wind generation -- enough electricity to power approximately 700,000 homes. A release from DOI indicates that as part of President Obama's comprehensive Climate Action Plan [
See WIMS 6/25/13 & See WIMS 6/26/13], he challenged DOI to re-double efforts on the renewable energy program by approving an additional 10,000 megawatts of renewable energy production on public lands and waters by 2020.

    The area, composed of 19 full OCS blocks and 13 sub-blocks, was selected after intensive work with the Commonwealth and stakeholders to avoid existing uses of the OCS offshore Virginia, including sensitive ecological habitat and shoals along the coast north of the mouth of the Chesapeake Bay, military training areas, marine vessel traffic, a dredge disposal site, and areas of concern specified by the National Aeronautics and Space Administration Goddard Space Flight Center's Wallops Flight Facility. The area available for auction is identical to the one announced in the Proposed Sale Notice that was published in the Federal Register on December 3, 2012, for a 60-day public comment period. BOEM carefully considered public comments before developing the Final Sale Notice. The Final Sale Notice will be published in the Federal Register tomorrow (July 23).
    The following companies are eligible to participate: Apex Virginia Offshore Wind, LLC; Virginia Electric and Power Company (Dominion Virginia Power); Energy Management, Inc.; EDF Renewable Development, Inc.; Fisherman's Energy, LLC; IBERDROLA RENEWABLES, Inc.; Sea Breeze Energy, LLC; and Orisol Energy U.S., Inc. Beaudreau said, "After careful review, BOEM has determined that these companies are legally, technically and financially qualified to participate in the upcoming lease sale. We applaud their leadership and look forward to overseeing a fair and competitive leasing process."
    U.S. Sen. David Vitter (R-LA), Ranking Member on the Environment and Public Works (EPW) Committee responded indicating that "Interior has already granted one other lease, without competitive bidding. As the Administration moves forward with more offshore wind energy off the east coast, the ban on oil and gas leasing, which started when President Obama took office, continues in the same region." He said, "Energy sources that can work to be sustainable and affordable are something we can all support, but the Administration has a bad habit of picking energy industry winners and losers. According to the Interior's own analysis, the government assistance the wind industry receives in leasing and special tax credits exceeds the money they can generate for the Treasury in offshore production. Alternative energy has potential for our 'all of the above' energy future, but the Administration needs to quit ignoring the economic benefits of traditional energy."
    Senator Vitter indicated in a release that in November 2012, Senators Vitter and Lamar Alexander (R-TN) wrote a letter to former Interior Secretary Ken Salazar, noting that the agency will not allow offshore oil and gas leasing in the Atlantic Outer Continental Shelf (OCS), and requested data on the economics of the wind lease sale to compare with "the value of a similar lease for oil and gas on equivalent acreage." Seven months later on June 5, 2013, the Senators finally received a response from Interior which they indicate "provides limited analysis that further undermines justification for offshore wind." Sen. Vitter indicated, "As part of Interior's response, they explain that a minimum bid for oil and gas offshore lease sales are $100 per acre for deepwater leases, compared to $1 or $2 per acre for the upcoming wind lease sales. In addition, there is strong indication that the royalty rate is a fraction of the tax credit, thus meaning federal subsidies more than cover what these projects are expected to pay in royalties."
    Access a lengthy release from DOI with additional details and links to more information (click here). Access a map of the Virginia wind energy area (click here). Access the Proposed Sale Notice, public comments and responses on BOEM's website (click here). Access a release from Sen. Vitter with links to the letter, response and analysis by the Heritage Foundation (click here). [#Energy/Wind]