Expert Opinions: The Future of the Gulf of Mexico

The upcoming year has the potential to be monumental for offshore energy, provided our policymakers seize the opportunity.

After years of anticipation, the first wave of offshore wind projects is on the brink of realization. The Vineyard Wind 1 project is set to commence power generation off Martha’s Vineyard by the end of 2023. Soon after, South Fork wind will begin producing electricity off the coast of New York.

Construction is slated to start on several other noteworthy projects, including projects offshore Maryland, Rhode Island, and Virginia. All these ventures are expected to make significant progress in the coming year.

DEVELOPMENT OPPORTUNITIES

With over 2.8 terawatts of untapped offshore wind energy potential in waters too deep for traditional fixed foundations, floating wind technology is essential to unlock this massive resource. The US awarded five leases in the deep waters offshore California, opening the door to floating wind leadership.

Offshore carbon capture and storage (CCS) is closer than ever. The Department of the Interior was tasked with developing the first offshore CCS regulations. While the release of the rules has been delayed, there is optimism they will provide a strong regulatory foundation for rapid CCS growth in the U.S. offshore.

The US is well-positioned for global leadership in both offshore wind and CCS thanks to the skill and expertise of its offshore oil and gas industry. Operating in the marine environment presents unique challenges. The world-class companies that have cultivated the Gulf of Mexico into a premier, lower-carbon energy region can leverage their experience to drive emerging energy segments.

POLITICAL LANDSCAPE

However, substantial political challenges persist. The new federal offshore oil and gas leasing plan offers the fewest lease opportunities in the history of the program. It schedules only three offshore oil and gas lease sales in the Gulf of Mexico, to be held in 2025, 2027, and 2029.

The Gulf of Mexico is a critical economic hub, providing hundreds of thousands of jobs, drawing billions in investments, and generating significant government revenue. It's a notable source of low-carbon oil on a global scale. Increasing domestic offshore oil production is vital for national security, bolstering global stability, and reducing the risk of oil supply weaponization by nations like Russia and Iran.

From 2022 to 2023, nine new offshore oil and gas projects started, with some expected to produce over 100,000 barrels per day. However, they won't fully offset declining Gulf of Mexico production through the decade. Washington's policies are crucial for Gulf oil production. As global energy demand rises, the Gulf can remain an environmentally advantageous resource.

The Inflation Reduction Act sets offshore oil and gas lease sales as a condition of the issuance of offshore wind leases. With the two tied together, the Biden Administration should follow the smart path of lease sales throughout each calendar year for both offshore oil and gas and wind.

The advantages of the Gulf of Mexico extend beyond party lines and regional boundaries, its imperative policymakers chart a course correction to ensure that our offshore energy resources remain a source of strength for our nation.

For more information, visit: www.noia.org.

This story was originally featured in ON&T's December Special Edition 2023 issue. Click here to read more.