Louisiana – Louisiana Governor John Bel Edwards and Louisiana Department of Natural Resources (DNR) Secretary Tom Harris shared the news that the State Mineral and Energy Board has given the green light to the state’s inaugural wind operating agreements in offshore waters at its December meeting. The board has granted approval for a 6,162-acre property agreement for Diamond Offshore Wind La (DOW Wind) near Terrebonne and Lafourche parishes, as well as a 59,653-acre agreement for Cajun Wind near Cameron Parish.
According to Harris, there are differences in the payment structures of the two agreements made with the state. The DOW Wind agreement covers a smaller area but has higher up-front costs and rental fees per acre. On the other hand, the Cajun Wind agreement covers a larger area but has lower up-front and rental payments per acre. However, the energy royalty for the DOW Wind agreement is 1.5 percent of gross revenues over the entire agreement duration, whereas the Cajun Wind agreement has a higher energy royalty of 2.2 percent. In terms of specific numbers, DOW Wind paid $308,101 up-front for its 6,100-acre agreement, while Cajun Wind paid $357,923 for its 59,000-acre agreement.
Edwards emphasized that wind energy projects are well-suited for Louisiana’s working coast, where existing infrastructure and a well-established network of support industries with extensive experience in designing and managing complex offshore projects make it an ideal location.
“For generations, the state of Louisiana has been a leader in energy production and offshore wind energy is the next chapter in that great history as we expand our options for clean energy production and open new avenues for the development of our state economy,” Edwards said. “I appreciate the work Secretary Harris and his staff have done negotiating these agreements and would also like to thank our legislative partners who helped in crafting legislation to encourage wind energy leasing in our state.”
“One agreement offers more on the front end, while the other pays more over time. These being the first wind energy operating agreements for the state, we were breaking new trails in negotiating these agreements, and I believe we have established that we can be flexible in how we set up payment structures while still ensuring that the state and its people are appropriately compensated for using our resources,” Harris said.
“Legislation passed in recent years clarifying and codifying rules on leasing state offshore areas for wind energy projects helped Louisiana draw interest from operators,” he said.
“It gave potential operators and developers a readily understandable set of rules to work by in planning these kinds of projects,” Harris said. “That kind of predictability is very important when you are asking companies to commit the kind of investment we are going to be seeing off our shores.”
“Wind energy projects off Louisiana’s coast will benefit from having transportation, fabrication and engineering expertise that has long supported our traditional offshore industry already in place,” Edwards said. “And our existing ports and offshore support companies will benefit from new customers and new opportunities to work and grow jobs.”