With stabilizing oil prices and lower breakeven points, interest in the US offshore is increasing.
Randall Luthi, president of National Ocean Industries Association (NOIA), said the interest extends well beyond the existing regions open for oil, gas and wind development. The 2017-2022 OCS Oil and Gas Leasing Program now in effect makes available less than 10% of the outer continental shelf (OCS) to oil and gas activities and doesn’t offer access to any new acreage, but a new five-year plan that opens up 90% of the OCS has been proposed.
“Our feedback was very positive to that,” Luthi said. “It is a great idea that they evaluate a much greater area.”
The government accepted feedback on that plan through early March. The second draft of the proposed 2019-2024 OCS plan, intended to replace the 2017-2022 plan, will likely include less than the 90% of acreage, he said.
“One area we focused on was the Eastern Gulf of Mexico,” which is closed to the oil industry under a congressional moratorium through 2022, Luthi said. “But they can take comments and evaluate it. We’ll see if they consider it in the next round,” which will then receive public comment and review before a final 2019-2024 plan is formalized.
“There appears to be an appetite for more offshore areas, not only for oil and gas, but also for offshore wind,” Luthi said.
A December 2018 lease sale for wind acreage drew winning bids of $135 million from each of three companies while previous wind acreage sales had drawn a top bid of $43 million.
“You’re starting to talk some real money for a lease sale,” Luthi said. “We think the trajectory is correct.”
The trend represents some good news for some of the sectors of the offshore industry.
A March 2019 forecast by Special Initiative on Offshore Wind projects that America’s nascent offshore wind industry presents a nearly $70 billion CAPEX revenue opportunity to businesses in the offshore energy supply chain through 2030.