U.S. offshore wind energy planning and development is front and center and accelerating at light speed. The Biden Administration announced a commitment to create 30 gigawatts of electricity via U.S. offshore wind by 2030. Congress provided a boost to offshore wind development late last year with a 30 percent investment tax credit to projects that start construction before 2026. In October 2021, U.S. Department of Interior (Interior) Secretary Deb Haaland announced plans to spur that development by offering up to seven offshore wind lease sales by 2025 in federal waters off the East, Gulf, and West coasts. In addition, at the recent COP26 in Glasgow, Secretary Haaland challenged other countries to join the U.S. in setting ambitious targets for offshore wind development, and provide the investments required to achieve them. The Bureau of Ocean Energy Management (BOEM) within Interior has been busy making these policy statements a reality. BOEM approved the first commercial-scale offshore wind project in the U.S. off the coast of Massachusetts, announced upcoming lease sales for areas off New York and North Carolina, identified wind energy areas for potential leasing off the coast of California and is exploring new areas in the Gulf of Mexico, and will be reviewing at least 16 construction and operation plans for offshore wind facilities by 2025. And, that’s just the start of it.

For developers, utilities, and investors considering offshore wind opportunities, early consideration should be given to, among other things, (1) potential risks under federal environmental laws related to acquiring such leases and bringing a commercial offshore wind project online, and (2) actions that can be taken to minimize such risks.
BOEM’s current renewable energy leasing program for the Outer Continental Shelf (OCS) occurs in four distinct phases:

Read more about our research and conclusions here:

https://www.mayerbrown.com/en/perspectives-events/publications/2022/01/the-law-off-the-land-why-offshore-wind-developers-utilities-and-investors-should-give-early-consideration-to-environmental-law-risks

On Friday, December 17, 2021, Massachusetts and Maryland selected a total of four offshore wind projects in their latest solicitation rounds to bring an additional 3.2 GW of new offshore wind capacity to the states.

Maryland

The Maryland Public Service Commission (Commission) awarded offshore renewable energy credits to two developers planning to expand offshore wind facilities off the coast of Ocean City: 800 MW (at $71.61/MWh) were awarded to Orsted, the developer of the Shipjack Wind II project, and 800 MW (at $54.17/MWh) were awarded to US Wind, Inc., the developer of the Momentum Wind project. The agreements were awarded in response to the Commission’s call for proposals for Round 2 offshore wind projects. The Commission called on the developers to create a minimum of 10,324 direct jobs during the development, construction and operating phases of the projects; commit to certain goals to engage small, local and minority businesses; pass 80 percent of any construction costs savings to ratepayers; and contribute $6 million each to the Maryland Offshore Wind Business Development Fund. Each agreement carries a 20-year term from the date of entering operation. The credits will support the next phase of the developers’ respective projects as they seek to expand.

Read more about our research and conclusions here:

https://www.mayerbrown.com/en/perspectives-events/publications/2021/12/md-and-ma-award-32-gw-of-new-offshore-wind-capacity

On November 12, 2021, in furtherance of the Biden administration’s goal of deploying 30 gigawatts (GW) of offshore wind energy by 2030, the US Department of the Interior announced its designation of the Morro Bay Wind Energy Area (WEA) offshore central California. The WEA is about 240,898 acres (376 square miles) and roughly 20 miles off the coastline. The Morro Bay WEA includes portions of the area first analyzed in the Bureau of Ocean Energy Management’s (BOEM) October 2018 Call for Information and Nominations, and it also includes two extensions analyzed in BOEM’s July 2021 Call for Information and Nominations.

BOEM will now move forward with preparing an Environmental Assessment (EA) under the National Environmental Policy Act to consider potential impacts from site characterization activities and site assessment activities within the WEA. BOEM’s initiation of the EA kicked off a 60-day comment period, which began on November 12, 2021, and will run through January 11, 2022. After considering all public input, BOEM will publish a draft EA for public comment. The EA will help BOEM decide whether to move forward with the area for a proposed lease sale.

Read more about our research and conclusions here:

https://www.mayerbrown.com/en/perspectives-events/publications/2021/11/interior-department-area-offshore-central-california-officially-designated-for-offshore-wind-energy-development

 

 

 

 

On October 28, 2021, in furtherance of the Biden-Harris administration’s goal of deploying 30 gigawatts (GW) of offshore wind energy by 2030, the US Department of the Interior announced three major offshore wind development proposals.

First, the Bureau of Ocean Energy Management (BOEM) announced a proposed lease sale for offshore wind development for approximately 128,000 acres in the Carolina Long Bay area offshore the Carolinas. The proposed lease sale area will include a majority of the Wilmington East Wind Energy area and has the potential for more than 1.5 GW of offshore wind energy. The Proposed Sale Notice, which will be published in the Federal Register on November 1, contains information pertaining to the proposed lease sale area, certain provisions and conditions of the lease, auction details, lease forms, criteria for evaluating competing bids, award procedures, appeal procedures and lease execution procedures. BOEM is requesting public comments for 60 days on, among other things, potentially dividing the proposed lease area into as many as three lease areas and using a “multi-factor auction format,” which would include a monetary bid and bidding credits to determine the outcome of the auction. BOEM plans to host an auction seminar to discuss the auction format for prospective bidders.

Read more about our research and conclusions here:

https://www.mayerbrown.com/en/perspectives-events/publications/2021/10/interior-department-three-milestones-for-offshore-wind-energy-development-in-the-atlantic-and-gulf-of-mexico

We recently undertook some research and found that private equity funds bought £11.9 billion of European oil and gas businesses in 2021, up from just £232 million in 2020. While historically some private equity funds have been long-term investors in the oil and gas industry much of the investment has been within the lower-risk midstream and services segments of the market, which offer more insulation to investors from volatility in oil prices, these figures show that the higher-risk exploration segment is rapidly becoming more attractive to private equity investors. The reasons for this include oil and gas businesses reshaping their portfolios to meet energy transition goals, a period of low oil prices against the backdrop of the Covid-19 pandemic, and the growth in the decommissioning industry. Read more about our research and conclusions here: https://www.mayerbrown.com/en/news/2022/private-equity-funds-accelerate-acquisitions-of-oil-and-gas-assets

The Mayer Brown Oil & Gas Lawyers’ Forum is back and the next session will take place on Wednesday 29 September at 12:45 p.m. (BST)/ 7:45 a.m. (EDT) when we will hold a discussion on Managing Cyber Risk in the Oil & Gas Sector with partners Mark Stefanini and Oliver Yaros in London and Stephen Lilley and Veronica Glick in Washington DC.

The Mayer Brown Oil & Gas Lawyers’ Forum is a webinar, held regularly since March 2020 and hosted by Oil & Gas lawyers from the firm’s London office. At a time of unprecedented challenges and significant change for the oil & gas sector, the Forum addresses topics of interest for lawyers working in the industry. We are always pleased to welcome new members to the Forum – please get in touch if you would like to join. We have more sessions planned for the remainder of 2021 and are always keen to hear what topics would be valuable. Please contact jyoung@mayerbrown.com for more information.

 

 

Kwasi Kwarteng, UK Business and Energy Secretary is reported to have said on 20 September that “My task is to ensure that any energy supplier failures cause the least amount of disruption to consumers”.

Wholesale day-ahead gas prices in the UK are reported to have jumped some 9% on 20 September alone. The rise is as a result of a number of factors including increased demand in Asia, lower supplies of gas from Russia and increase in demand as countries emerge from lockdown restrictions and economies start to pick up once more.

Such rapid and significant price increases typically disproportionately impact smaller suppliers and indeed it is widely anticipated that a number of the smaller suppliers will fall into insolvency over the coming weeks and months. The specific process is unique to the energy industry.

Continue Reading Testing times for the “Supplier of Last Resort” regime as UK gas prices continue to rise

The Public Utility Commission of Texas (PUCT) has issued draft regulations to implement new electric weather-related requirements set forth in Texas Senate Bill 3, which was enacted in response to what the PUCT described as the February 1-5, 2021, “Southwest Cold Weather Event.” This Legal Update discusses the two-phase approach the PUCT has proposed.

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On August 20, 2021, the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos,”CNH”) published in the Federal Official Gazette the Resolution CNH.E.22.008/2021 by which several provisions of the guidelines that regulate the Exploration and Development Plans for the Extraction of Hydrocarbons are modified, added and repealed (the “Resolution”).

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The UK’s Hydrogen Strategy landed this month, sending a strong message that the UK government is listening and willing to commit to private sector partners in order to reach short term and long term hydrogen market goals. However, the scale of the challenge remains huge, requiring the simultaneous development of hydrogen production capabilities and end users in a race against time to meet CB6 and net zero commitments.

Read this overview by Mayer Brown lawyers, Kirsti Massie and Katie Trim of the latest government issued timelines and overview of the Cluster Sequencing process.