US Interior's 5-year lease plan for offshore wind raises oil auction concerns

US Interior Secretary Deb Haaland has unveiled a five-year offshore wind leasing plan, including up to 12 potential wind energy lease sales through 2028, which stoked uncertainty over meeting the Inflation Reduction Act's corresponding oil and gas leasing requirements.

The plan would direct the Bureau of Ocean Energy Management to hold four wind energy lease sales in 2024, one each in 2025 and 2026, two in 2027, and four in 2028, Haaland said April 24 while addressing the International Partnering Forum in New Orleans.

The leasing schedule anticipates conducting future lease sales for areas in the Atlantic, Gulf of Mexico, Pacific and waters offshore of US territories in the next five years.

Haaland also said that the bureau finalized regulations April 24 to regularly update the five-year offshore wind leasing schedule. The final rule reforms BOEM renewable energy auction regulations while clarifying safety management system regulations for offshore wind, and strengthening oversight of critical safety systems and equipment.

The final rule aims to increase certainty and reduce costs associated with the deployment of offshore wind projects by roughly $1.9 billion over 20 years. It accomplishes this by modernizing regulations, streamlining overly complex processes and removing unnecessary ones, clarifying ambiguous regulatory provisions, and enhancing compliance requirements.

BOEM Director Elizabeth Klein said the final rule incorporates lessons learned since the agency first published its offshore renewable energy regulations nearly 15 years ago, adding that the routine issuing of a five-year leasing schedule for offshore wind will ensure a long-term portfolio of leases.

Lease sale schedules

But industry officials representing offshore oil and gas interests immediately admonished the Interior Department, saying its separate five-year plan for holding offshore oil and gas auctions along with the renewables schedule could create uncertainty across the oil, gas and wind sectors due to the Inflation Reduction Act. That law mandates that at least 60 million acres be offered in offshore oil and gas lease sales within the year prior to issuing any offshore wind leases, and Interior's oil and gas schedule has no auctions planned in certain years.

The focus should be on sustaining regular lease sales for all offshore energy resources, said Erik Milito, president of the National Ocean Industries Association, representing offshore fossil fuel and renewable energy producers. Ensuring energy continuity helps promote economic growth while maintaining US competitiveness in the global energy market, he added.

"Any actions to delay or reduce Gulf of Mexico oil and gas lease sales could inadvertently delay offshore wind lease sales," Milito said. "Periods of inactivity in lease sales -- whether for wind or oil and gas -- only increase uncertainty and risk driving investment dollars overseas."

No oil, gas auction for 2024 in federal waters

Interior finalized the 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program in December 2023 with the fewest oil and gas lease sales in history, and 2024 will mark the first year since 1966 without an oil and gas auction held for acres in federal waters.

Under that program, BOEM intends to convene just three auctions to be held in 2025, 2027 and 2029, all for acreage in the Gulf of Mexico as no auctions are contemplated off the coast of Alaska. However, Interior officials have declined to commit to lawmakers that all three auctions will actually be held, saying instead that it will be up to the secretary to decide after environmental reviews are completed for each individual sale.

Although Milito supports the predictability the new offshore wind schedule would lend to the industry, he is unsure how Interior plans to comply with the directives of the IRA.

With potentially only three oil and gas lease sales scheduled over the next five years, Milito said BOEM "may struggle to comply with the Inflation Reduction Act and conduct offshore wind lease sales annually as contemplated in the new schedule -- a crucial factor for supporting renewable energy growth along America's coastlines."

BOEM spokesperson Tracey Moriarty said the agency factored in the IRA obligations while it was developing the renewable energy leasing schedule.

"The exact timing of oil and gas lease sales could affect the timing of renewable energy leasing," Moriarty added in an April 24 email.