Vestas and Mitsubishi get green light to take offshore wind into US oil and gas heartland

The US state of Louisiana has approved operating agreements that will pave the way for subsidiaries of Danish wind turbine giant Vestas and Japan’s Mitsubishi to develop their own offshore wind projects in the backyard of the US oil and gas industry.

Louisiana’s Governor John Bel Edwards congratulated lawmakers for “crafting legislation to encourage wind energy leasing in our state”.

“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 commented.

DNR Secretary Tom Harris pointed out that the DOW Wind agreement, although covering a smaller area, was more front-end weighted in terms of payments and had higher rental fees per acre, although the larger area would ultimately provide more royalties over the life of the agreement.

The DOW Wind agreement, which included a $308,101 up-front payment, came with 1.5% energy royalty on gross revenues, while Cajun Wind paid $357,923 and will deliver a 2.2% energy royalty.

“These being the first wind energy operating agreements for the state, we were breaking new trails in negotiating these agreements,” Harris said.

“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. Legislation passed in recent years clarifying and codifying rules on leasing state offshore areas for wind energy projects helped Louisiana draw interest from operators."

Louisiana, which has a long history of leasing maritime areas for oil and gas production, has been at pains to provide a user-friendly set of rules to work to facilitate planning of projects.

“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,” Harris said.

Offshore veteran

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.”