The second Gulf of Mexico wind lease auction has been canceled for lack of interest, but an unsolicited request has been submitted for wind lease elsewhere in the Gulf. 

The U.S. Bureau of Ocean Energy Management said July 26 that just one company expressed interest in the four lease areas that had been targeted for auction in September 2024. Two more auctions tentatively are scheduled in 2025 and 2027; BOEM said those may still go forward if there is industry interest. 

There is some industry interest, apparently: 

Also on July 26, BOEM announced that Hecate Energy Gulf Wind had requested to lease two areas southeast of Texas totaling 142,000 acres. They were not among the four areas that would have been offered in the second Gulf of Mexico wind auction this year. 

As required by the Outer Continental Shelf Lands Act, BOEM is issuing a request for competitive interest for the two areas Hecate is requesting.  

If BOEM receives one or more indications of interest from qualified companies, it may offer the two areas in a competitive auction. If BOEM gets no response, it may award Hecate rights to the areas through a noncompetitive lease issuance. 

Hecate Energy submitted a similar unsolicited request to BOEM in March 2022 for a lease area in federal waters off Washington state for a floating wind farm it called Cascadia Offshore Wind. 

Two years later, no such lease has been awarded, and BOEM could not immediately provide any information on the status of the request. 

Advantages and Challenges

Even amid the challenges the offshore wind industry is working through as it tries to build momentum in the United States, the Gulf of Mexico stands out for several reasons. 

Decades of shipbuilding and offshore fossil fuel development give the region the closest thing to a ready-made workforce and industrial base to support offshore wind that exists in the United States. (See IPF24: Louisiana Manufacturers Expand into Offshore Wind.) 

And there is interest in a new source of emissions-free electricity to produce green hydrogen in the Gulf region. 

But two years after the landmark Inflation Reduction Act, there still is no final tax guidance on which to base a green hydrogen financing scheme. 

Electricity is relatively cheap in the region, and state leaders have not been clamoring for offshore wind the way Northeast and California officials are. 

The seabed is softer than on the Atlantic and Pacific coasts, creating different considerations for turbine foundations. 

The wind typically is weaker in the Gulf than along the East and West coasts, except during the hurricanes that rip through each year. So, equipment must be designed simultaneously to optimize output in light wind and minimize damage in heavy wind. 

And of course, the young U.S. offshore wind sector has been reeling from supply chain constraints and soaring costs. 

Against this background, BOEM offered three lease areas in its first-ever Gulf offshore wind auction in August 2023.  

The auction ended quickly. Two companies submitted bids for one lease area, but only one advanced to the second round of bidding. (See Gulf of Mexico Wind Energy Auction Falls Flat.) 

RWE got rights to the 102,480-acre OCS-G 3733 — potential capacity 1,244 MW — for $5.6 million. 

By contrast, RWE and National Grid Ventures paid $1.1 billion for the 125,964-acre OCS-A 0539 off the New York-New Jersey coast — potential capacity 3,000 MW. That auction was held in February 2022, before the industry was slammed by macroeconomic factors. 

At least some of the factors that rendered the first Gulf of Mexico wind auction a dud apparently are still in play. 

BOEM said July 26 that it received 25 comments in response to the proposed sale notice it issued four months earlier but only one expression of interest in participating in an auction. 

Glass Half Full

Amy Krebs, vice president of offshore wind for Hecate Energy, said via email: 

“Hecate Energy is excited to see BOEM advance our request for an unsolicited lease in the Gulf of Mexico. Hecate has a long history of developing energy in the Gulf Region and sees the long-term potential for offshore wind in the Gulf of Mexico. This initiative, while still in the early stages, represents a significant step forward in our journey [toward] a sustainable energy future and demonstrates our commitment to driving economic development in the region.” 

BOEM took a forward-looking approach in announcing the news. Gulf of Mexico Regional Director James Kendall said in a prepared statement that BOEM will continue to explore the opportunities off the nation’s southern coastline: 

“The Gulf region benefits from great offshore wind resources and existing energy infrastructure. The interest from industry leaders such as Hecate and RWE demonstrates the commercial potential in the region.” 

National trade group Oceantic Network likewise focused on the positive — the continuing development of industry in the region to support offshore wind power elsewhere, if not immediately in the Gulf itself. 

Spokesperson Sam Salustro said: 

“The Gulf of Mexico is the U.S. offshore wind industry’s supply chain engine, providing the workforce, offshore expertise, vessels and fabrication yards that are building out our first East Coast projects, and is poised to become a major regional market of its own. Today’s decision moves offshore wind energy forward in a deliberate and sustainable manner for the region by creating pathways for key pioneering projects. This development enables critical support structures to advance, ensuring the development of a robust market that leverages the Gulf’s unique infrastructure and capabilities.” 

Greater New Orleans Inc. (GNO) on July 26 listed some of the pieces in motion: 

Louisiana is beginning to create a comprehensive offshore wind road map, the U.S. Department of Energy is assessing transmission needs in the region to support offshore wind, Louisiana has an agreement on two potential wind farms in state waters, and the regional supply chain is strong. 

GNOwind Alliance program manager Cameron Poole said in a prepared statement: “These are objectively exciting developments, and demonstrate the ingenuity being deployed to find creative solutions for OSW in the Gulf of Mexico. The proposal by Hecate Energy demonstrates continued interest by developers to serve the Gulf market, and [cancellation of the second BOEM auction] will ensure that future competitive opportunities to secure lease rights will be best aligned with regional and local activities that are crucial to the success of any offshore wind development.” 

Oceantic noted that it and the Pew Charitable Trusts both released favorable reports about offshore wind supply chain capacities already in place in the Gulf Region. 

Oceantic said 23% of 1,500 U.S. offshore wind supply contracts already signed have gone to Gulf-based firms and said nearly $1.3 billion worth of vessel construction and retrofit work has been commissioned in Gulf shipyards.