U.S. Gulf Coast May Have a Low-Carbon Future

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Low-carbon barrels, supported by an evolving energy landscape, and a push for offshore wind makes the Gulf of Mexico an "irreplaceable" part of the U.S. energy sector, advocates said in the wake of a new review.

The Bureau of Ocean Energy Management (BOEM) issued its final environmental assessment on the impact of new wind energy developments under consideration for the U.S. territorial waters of the Gulf of Mexico.

This, the bureau said, opens the door for the first-ever wind lease for the Gulf of Mexico as there were no adverse environmental impacts uncovered in its review.

"The completion of our environmental review is an important step forward to advance clean energy development in a responsible manner while promoting economic vitality and well-paying jobs in the Gulf of Mexico region," said BOEM Director Liz Klein.

The BOEM outlined two potential wind energy lease areas off the coast of Texas and Louisiana that cover around 682,000 acres. The government said those two blocks "appear to be most suitable for wind energy development."

The final review was praised by the National Ocean Industries Association, which works on behalf of the offshore energy industry, as a step toward a more diverse energy mix on the Gulf Coast.

"The Gulf of Mexico has long been renowned for its position as a premier offshore energy hub, leading through low carbon barrels of oil, and this achievement underscores its history of innovation and leadership," NOIA President Erik Milito said. "New offshore wind lease sales - along with the resumption of a long-term oil and gas leasing program - offers a foundation for the continued success of the Gulf of Mexico's remarkable and irreplaceable energy portfolio."

The National Renewable Energy Laboratory estimates the U.S. territorial waters in the Gulf could generate around 510,000 megawatts of energy annually. That's more than enough to meet the demands of littoral states and is more than the estimated capacity for the five Great Lakes and the Pacific Ocean combined.

Low-carbon barrels, meanwhile, could come from the race to develop carbon capture and storage (CCS) facilities along the Gulf Coast. Canadian energy company Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta) signed a preliminary agreement with the low-carbon subsidiary of Occidental Petroleum Corporation (NYSE:OXY) (Houston, Texas) late last year to build up CCS in the Corpus Christi area of the U.S. Gulf Coast. Elsewhere, Chevron Corporation (NYSE:CVX) (San Ramon, California) and a handful of its peers are interested in developing CCS in the Houston area. Those partners estimate sequestrations to the tune of 50 million metric tons of carbon dioxide (CO2) per year by 2030.

The Department of Energy, meanwhile, estimates the entire Gulf Coast region could capture the equivalent of 130 years of industrial- and power-based emissions of CO2.

The United States is behind the curve on many of these developments. There are only two wind farms in commercial service installed in U.S. territorial waters and both of those are in the Atlantic. The U.S. military, meanwhile, has objected to some fossil fuel developments off Florida given their proximity to training grounds, which could be an obstacle to wind energy development.

New permitting processes outlined in the proposed resolution to resolve the impasse over the debt ceiling, however, could facilitate further development. Revisions to the National Energy Policy Act would ensure reviews do not take longer than two years, provided the deal overcomes opposition from fringe partisan concerns on both sides of the aisle.

The administration set a goal of permitting 30 gigawatts of offshore wind by 2030, a lofty goal considering the starting point. Elsewhere, net-zero ambitions are supported by broad-based tax incentives from the Inflation Reduction Act.

The goal post for the U.S. energy transition is high, though cutting through some of the red tape could ease some of the delays. The debt package already streamlined the 303-mile Mountain Valley natural gas pipeline in West Virginia and even more progress is possible, should the measure find its way to the president's desk.

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