BOEM Proposes Second GoM Wind Auction Possibly Adding Hydrogen Production

The U.S. Bureau of Ocean Energy Management is moving forward to explore the next round of wind energy auctions in the Gulf of Mexico. They plan to release tomorrow the details for four potential lease areas off the coast of Louisiana and Texas. As part of the proposals, they are looking at adding alternative energy products such as the production of hydrogen as part of the wind lease.

The proposals total over 410,000 acres in the current drafts which BOEM estimates could potentially power 1.2 million homes. The four leases are in three blocks west of the first site that was won by RWE in the 2023 auction. The new proposals range in size between approximately 97,000 acres and 108,230 acres, although the final scope of each lease will be determined after a 60-day comment period running till May 20. 

As part of the review, BOEM reports it is also seeking comment on potential lease revisions to include the production of hydrogen or other energy products using wind turbine generators on the lease.

BOEM is requesting feedback on various aspects of the proposed lease areas, including the size, orientation, and location of the four lease areas and which areas, if any, should be prioritized for inclusion or exclusion from the proposed lease sale. BOEM is considering lease stipulations to ensure that communities, particularly those that are historically underserved, are considered and engaged early and often throughout the offshore wind energy development process.?Proposed bidding credits include funding for fisheries compensatory mitigation and workforce development. 

The proposed second auction would feature four leases contained in the western blocks defined in the Gulf of Mexico (BOEM)

The auctions would be conducted simultaneously for each of the four lease areas, which are in the western portion of the Gulf of Mexico near Houston, Texas. If BOEM decides to proceed with the auction, the next step would be the publication of a final sale notice.

The first Gulf of Mexico wind auction conducted in August 2023 failed to attract strong interest from the industry. RWE was the only bidder paying just $5.6 million for one of the three areas, while saying that it was still considered how the site might be developed long-term. 

Analysts highlight that the Gulf of Mexico features slower wind speeds and higher hurricane risks versus areas previously offered off the New England and Atlantic coast. Further, Gulf Coast states generally have lower electricity prices and no state purchase mandates to support the offshore wind energy industry.