New York’s Prized Sea Scallop Faces Off Against Offshore Wind

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Bloomberg |Chris Martin and Jennifer A Dlouhy | May 23, 2019

Developers pushing to install massive wind turbines in the waters off New York and New Jersey have run into a delicate yet mighty foe: the Atlantic sea scallop.

Prized for their sweet and tender meat, scallops are abundant off Long Island and the Jersey Shore. That happens to be where the Trump administration wants to auction leases for offshore wind farms for what’s envisioned to be a $70 billion U.S. industry.

Efforts by fishermen to block the projects could have sweeping implications for both seafood lovers and the push to bring clean energy to the most densely populated corner of America. The area in the Atlantic, which could fit enough windmills to power all of New York City, is home to some of the world’s richest scallop beds. And erecting turbines nearly as tall as the Chrysler Building could make mollusks much harder to harvest.

“It’s an insane amount of ocean to occupy, and it will leave a trail of destruction,” said Bonnie Brady, executive director of the Long Island Commercial Fishing Association.

Where to Build Wind Farms

The U.S. has trailed Europe and Asia in developing offshore wind. But New York, New Jersey and other states are pushing to catch up, envisioning turbines at sea as a way to bring clean power to crowded coastal regions. The Bureau of Ocean Energy Management has already sold more than a dozen leases for sites from North Carolina to Massachusetts. Next year, it wants to auction more, including in areas encroaching on the prized scallop beds.

The federal government has already trimmed the size of the area. Slashing it more could raise development costs and threaten plans by New York and New Jersey to get 5.9 gigawatts of electricity from offshore wind by 2030.

“The U.S. is the biggest offshore wind opportunity outside of Europe,” Sunny Gupta, head of new market development at Orsted AS, the world’s largest offshore wind developer. “We’re not here just to build projects, we’re on track to build an efficient regional supply chain. Don’t do it small.”

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Offshore Wind Will Need Bigger Boats. Much Bigger Boats

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Bloomberg | Lars Paulsson, Jeremy Hodges & Chris Martin | May 13, 2019

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How do you install a wind turbine almost the size of the Chrysler building in the open ocean? Just get a boat with deck space larger than a football field and a crane that can lift the weight of 1,100 Chevy Suburban SUVs.

Those specialist ships are scarce, numbering about a dozen in the world. And at a cost of more than $300 million, they each need to be capable of hoisting generators the size of shipping containers atop steel towers hundreds of feet tall.

While wind turbine manufacturers led by MHI Vestas Offshore Wind A/S and General Electric Co. are expanding the size of their machines quickly, the small cadre of mainly closely-held specialist shipowners that does the installations is hesitant to build more ships before they know how big the vessels need to be. That indicates a looming ship shortage in the next decade, threatening the outlook for a seven-fold jump in offshore wind capacity by 2030.

“The installation companies will have to adapt to meet expected demand,” said Michael Simmelsgaard, head of offshore wind at Vattenfall AB, a utility with projects from Britain to Scandinavia. “We will see ships entering the market that were not originally used for turbines, but for offshore oil and gas.”

Those ship owners include Deme Group, controlled by Belgian engineering company Compagnie d’Entreprises, or CFE, and Jan De Nul Group, based in Luxembourg. Both are building new ships. But for now, analysts say the industry have underestimated the challenge faced by ever-larger machines.

That concern doesn’t seem to register with the ambitions of renewable energy developers. Europe’s biggest utilities are investing more than $10 billion this year alone on getting electricity from sea breezes. BloombergNEF expects offshore wind capacity to jump to 154 gigawatts by the end of the next decade from about 22 gigawatts now as the thirst for cleaner electricity grows. Most offshore wind farms are in northwest Europe, but China, the U.S., and South Korea will be big markets in the future.

Installing turbines is a feat of engineering. First, foundations weighing hundreds of tons are rammed or anchored into to the seabed at depths of 50 meters or more. Then, a massive crane hoists steel towers each the size of a small skyscraper on to the footings. Finally, the generator housing, or nacelle, is perched on top and the blades are put in place. Those nacelles already are about the size of a truck.

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Offshore Wind Bonanza Beckons Developers in High-Stakes Auction

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Bloomberg | Jennifer Dlouhy | December 13, 2018

Eleven companies were vying on Thursday for the opportunity to install wind turbines in Atlantic waters off Massachusetts, setting the stage for a record-breaking auction driven by growing demand for renewable power in Northeast U.S.

After eight rounds of sealed bidding, companies had already pledged $24 million toward the three offshore wind leases that are up for grabs -- eclipsing the $9.07 million the U.S. government collected for territory off the North Carolina coast in 2017.

And with the prospect of dozens of bidding rounds before victors are declared, analysts and industry lobbyists said the total could exceed the previous high-water mark: Norwegian energy company Equinor ASA’s $42.47 million bid in 2016 for the rights to build an offshore wind farm near New York.

“The unprecedented interest in today’s sale demonstrates that not only has offshore wind arrived in the U.S., but it is set to soar,” said Randall Luthi, head of the National Ocean Industries Association.

Some 19 companies were deemed qualified by the U.S. Interior Department to participate in the auction -- higher than in any of the previous seven competitive sales of wind leases in U.S. federal waters. The firms included units of established offshore wind developers, renewable power companies that have primarily focused on land, as well as oil companies, such as Equinor and Royal Dutch Shell Plc.

The number of companies that were actively bidding at the start of Thursday’s sale was nearly twice the most-recent record, in 2016, when six developers vied for the New York offering. The Interior Department’s Bureau of Ocean Energy Management, which is conducting the sale, will name participants after the auction ends, potentially some time Friday.

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Trump Said to Advance Seismic Surveys for Oil in Atlantic

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Bloomberg | Jennifer Dlouhy | November 29, 2018

The Trump administration is taking a major step toward allowing a first-in-a-generation seismic search for oil and gas under Atlantic waters, despite protests that the geological tests involve loud air gun blasts that will harm whales, dolphins and other animals.

The National Marine Fisheries Service is set to issue “incidental harassment authorizations” allowing seismic surveys proposed by five companies that permits them to disturb marine mammals that are otherwise protected by federal law, according to three people familiar with the activity who asked not to be named before a formal announcement.

The firms, including TGS-NOPEC Geophysical Co. Asa and Schlumberger Ltd. subsidiary WesternGeco Ltd., still must win individual permits from the Interior Department’s Bureau of Ocean Energy Management before they can conduct the work, but those are widely expected under President Donald Trump, who has made “energy dominance” a signature goal.

The seismic surveys to identify oil and gas reserves would be conducted in Atlantic Ocean waters along the U.S. East Coast, from Delaware to central Florida.

The research involves periodic blasts from large compressed air guns, which send out sound waves that penetrate the sea floor. When the sound waves bounce back, they are captured by sensors towed behind seismic vessels. The resulting data is used to produce detailed maps of underground geological features.

Conservationists say the blasts are so loud they jeopardize the hearing of dolphins, cause whales to beach themselves and disrupt animals’ mating and feeding habits. Scientists have warned that the surveys could cause long-lasting damage to marine animals.

The harassment authorizations are expected to lay out steps the geophysical companies must take to mitigate damage to animals, including limitations blocking surveys during the calving season for the critically endangered North Atlantic Right Whale. There are under 500 remaining North Atlantic Right Whales, which travel each winter from their feeding grounds near Canada and New England to warmer waters off South Carolina, Georgia and Florida.

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INSIGHT: Unleashing the Potential of Offshore Wind

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Bloomberg Environment | June 25, 2018

The next revolution in global energy production may be one you have to squint to see.

Over the last several years, large-scale deployment of offshore wind has emerged as a significant resource. This acceleration is spurred by experience in Northern Europe where continued improvements in turbines and other technology, learning-curve benefits, and economies of scale have slashed costs per megawatt hour by more than 50 percent over the past five years. In some circumstances, projects are being launched without explicit price subsidies. Turbines are being installed farther and farther offshore, where visual impacts (a frequent impediment to wind development) are reduced and winds are stronger and steadier.

Underscoring these benefits, a recent government-funded study by Lawrence Berkeley National Laboratory concludes that the total value in the northeast U.S. of potential offshore wind projects exceeds that of land-based wind. Some analysts forecast global deployment to increase fivefold over the next decade.

To realize the potential of this resource, policymakers and stakeholders must recognize and overcome its unique challenges. This article highlights siting, entitlement, infrastructure, transmission, development, and financing issues that are distinctive for offshore wind, when compared with onshore wind or with other marine projects. We contrast Northern Europe with two frontier regions: the United States, where a number of competing states have launched ambitious efforts, and Taiwan, which has a centralized plan to develop resources off its western coast.

Entitled Location, Financeable Project: A Tale of Three Regions

All energy project developers set out to acquire both a suitable site with all necessary government approvals and a long-term power purchase agreement (PPA) with financeable terms. But the differences for these objectives between onshore and offshore wind can be striking.

Land-based U.S. projects typically are built on privately owned property or on public lands slated for energy uses. Nationwide, there are hundreds or even thousands of suitable locations. For sites built on agricultural land located near existing transmission lines, the uncertainties associated with environmental reviews can be confined. Given the comparatively low costs of onshore wind power and the standardized process, a developer that acquires a suitable site has a good chance of being able to obtain a PPA.

American offshore wind development has proven decidedly more challenging. To achieve economies of scale, the individual project size will be much larger, limiting the number of PPAs that will be awarded. Because projects are now being sited 10 to 20 miles from shore and national governments lay claim to territorial waters for many purposes besides energy, such as fishing, navigation and national security, the sovereign’s role in leasing is much greater and nuanced than for onshore projects. When the military signals that large swaths of offshore locations may be off limits, as was suggested by the Navy for the U.S. West Coast in February 2018, many otherwise suitable options may be unavailable.

The Northern European experience can be profitably compared. Nations bordering the North Sea have established predictable regulatory frameworks for offshore development. Governments are increasingly awarding PPAs and site control concurrently. This enables the pursuit of ambitious programs in which the state not only acts as commercial lessor but also offers long-term policy and financial support through the form of aggressive renewable energy targets and, where necessary, price support mechanisms.

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Rob James is a partner in the San Francisco and Houston offices of Pillsbury Winthrop Shaw Pittman LLP. With over 35 years at Pillsbury, he co-leads the firm’s Projects team, focusing on energy project development, complex commercial agreements, and engineering, procurement and construction contracts, including public-private partnerships. In the electricity sector, in addition to conventional power generation and storage, he advises on solar, wind and geothermal projects. He is the editor and principal author of U.S. Energy: Regulation, Development & Finance (second edition), covering American electricity, oil and gas markets and projects.

Pillsbury senior counsel Andrew Weissman has been at the forefront of high-stakes, cutting-edge issues impacting the energy industry for more than three decades. Andy has helped to transform federal and state energy and environmental policy, assisting in the development of major energy regulatory programs as well as energy and environmental legislation. He is the leader of EBW Analytics Group, which provides independent expert analysis of natural gas, electricity and crude oil markets.

Bryan Stockton, a Pillsbury senior associate, helps clients navigate permitting processes for the construction of new wind, solar, and natural gas power plants; negotiate with regulatory agencies; resolve claims and litigation arising from environmental laws; identify and mitigate liabilities related to complex corporate and real estate transactions; contribute to the rulemaking process in advance of the promulgation of new federal air, water and fuels regulations; and resolve complex compliance issues.

The opinions expressed here do not represent those of Bloomberg Environment, which welcomes other points of view.

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