Leveraging Offshore Gas Drilling to Build Offshore Wind

Can allowing this…

The Trump administration is opening up the East Coast of the United States to oil and gas drilling, but it’s not clear how much enthusiasm there is. A recent sale of drilling rights in the Gulf of Mexico has attracted only “moderate” interest, reports the Financial Times, an indication that the oil & gas industry is more focused on expanding production in the country’s vast shale basins.

… help us get to this?

Last year the Department of the Interior cut the royalty rate it had been charged on production from leases in shallow water (less than 200 meters deep) from 18.75% to 12.5% in the hope of stimulating greater interest. But drillers submitted bids for only 148 of 14,000 tracts offered.

If the Trump administration can’t gin up much excitement in the Gulf of Mexico, where a mature oil & gas exploration and drilling infrastructure exists, it’s unlikely to do any better in the southern Atlantic states where no such infrastructure is to be found. Also discouraging interest is the reality than any effort to start drilling would ignite a firestorm of opposition. Why bother when shale can be fracked elsewhere with minimal fuss and muss?

But that’s today. Who can say what economic conditions and public opinion will look like in three or four years? What if public opinion could be swayed to look upon offshore drilling as a pathway to developing a viable offshore wind industry?

Environmental groups and Virginia Beach civic interests oppose offshore drilling, raising the specter of another Deepwater Horizon disaster — even though (a) any drilling off the Virginia coast would be in shallow water, while Deepwater Horizon occurred in… you guessed it… deep water, and (b) most, if not all, of the drilling would be for natural gas. I’ve never heard of a natural gas spill, and neither have you.

Indeed, the Commonwealth’s official energy policy supports offshore oil and gas drilling, with the caveat that no drilling occur within 50 miles of the shore. A 2005 study by the Virginia Secretary of Commerce and Trade found that natural gas exploration was safe, although if oil is discovered that the Commonwealth must “carefully consider the risk of spills.”

Is it not possible to work out a compromise that could allow drilling to move forward when market conditions permit while providing tough environmental safeguards? Here’s how we can do it.

First, let’s just take oil drilling off the table. Let’s make it official Virginia policy to permit no oil drilling because we want zero risk of oil spills. Drilling and production should be limited to natural gas only. (Do some wells produce both oil and gas? Can the gas in such wells be extracted while the oil is kept in the ground? I concede that some technical questions may need to be answered.) The vast majority of the energy wealth off the Atlantic coast is natural gas, so imposing an anti-oil restriction should not cripple the economics of offshore energy production.

Second, Virginia should get the first-mover advantage of establishing an East Coast offshore drilling industry. As the largest metropolitan area on the Atlantic coast between Miami/Fort Lauderdale and New York — and one with a large ship repair industry, at that — Hampton Roads would be the logical location for offshore companies to set up and do business. Thus, Virginia could get a significant economic-development bonus from the opening up of offshore drilling.

Third, an offshore drilling industry was the precursor in Europe to developing an offshore wind industry, and it could be the precursor in Virginia, too. The two sectors share many skills, competencies, services and specialized equipment. If Hampton Roads can develop an offshore drilling industry, it can lower the costs and risks of getting offshore wind companies to locate here. The lack of an existing industry is perhaps the biggest barrier to developing Virginia’s offshore wind resources — a desiderata of environmentalists and economic developers alike.

The immediate hold-up to large-scale development of wind resources is the need to test the performance of wind turbines in the Atlantic Ocean, which has different seabed conditions and is subject to hurricanes. That won’t happen until the State Corporation Commission approves Dominion Energy’s proposed VOWTAP project, two costly test turbines that could never be justified on the basis of their electricity production alone.

But if the SCC approved VOWTAP, and if the turbines proved their efficacy in Virginia offshore conditions, and if a gas drilling business ecosystem had a toehold in Virginia, then the chances would improve immeasurably to persuade European wind companies to invest in Virginia for the purposes of building and maintaining a fleet of offshore wind turbines at an economical price. Virginia then could become the hub of offshore wind production for much of the entire Atlantic coast.

If we play our cards right, it should be possible to fulfill former Governor Bob McDonnell’s dream of making Hampton Roads the energy capital of the East Coast while not only protecting the environment but improving it.

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27 responses to “Leveraging Offshore Gas Drilling to Build Offshore Wind

  1. So, do I understand this right? Virginia officially supports off-shore drilling activity, but only beyond 50 miles from shore? That is, in federally controlled waters?

    What’s the difference in that and saying Virginia opposes off-shore drilling in ITS coastal waters?

    • You must have got 760 on your Verbal SAT scores. Very Very few (perhaps one out of 500) post 1970 college graduates could make that mental leap of analysis.

      • Ha ha, I am a post 1970 graduate, but I didn’t score a 760 on my SATs. Close, but not that good.

        • Well then, ya must of been awfully close to 760 on them SATs, ’cause you knocked to the pegs out from under old Bacon.

          Here Bacon’s got a short title chock full of “Offshore” and the dummy ain’t talkin’ about any “offshores” at all – not a single damn one, but instead about bunches of blue-water rigs instead of littoral stuff.

          I figure what must of happened here is:

          1/ Bacon ain’t even close to 760 SATs and got into UVA by fluke,
          OR
          2/ Poor Bacon is losin’ his edge,
          OR
          3/ Some dummy on Bacon’s very large support staff got fired,
          OR
          4/ some combination of 1, 2, or 3 above.

          Anyway, thanks much for pushing us back across the line into the real world again. Without you, we’d of been reading the Wash. Post.

          • OK, wise guys, here’s a map of Virginia’s continental shelf:

            Limiting drilling to beyond 50 miles does severely restrict the amount of Virginia’s offshore that can be drilled. But about half can be exploited. With horizontal drilling, drillers might be able to extend their reach even more.

          • Reed Fawell 3rd

            Jimbo –

            That map you’re showing up there is in Kilometers not miles!

            Think about it. Ya got 1.609344 kilometers in just a single mile. Now, do some computin’. Old Don will tell ya that ya got 80.4672 Kilometers in 50 miles of Littoral shelf there of Virginia coastline.

            For additional expertise going to the root of the matter, see Penelope Fitzgerald’s exquisite work on subject labelled OFFSHORE, dealing with littoral rigs on the Thames. It’s dispositive on all general matters offshore. “whom the wind drives, or whom the rain beats, or those who clash with such bitter tongues

            For further information See:

            https://en.wikipedia.org/wiki/Offshore_(novel)

          • Kilometers? Ouch, Reed, you nailed me on that one!

          • Reed Fawell 3rd

            Jim =

            Sorry about the comparison to Wash. Post. That is a bridge way too far. I apologize.

  2. I keep asking BR readers if the drilling goal is natural gas or oil? Whereas I also presume natural gas development might avoid the risk of oil spills. The answer: seems to be Nat Gas.

    Thanks I think to Bacon’s Rebellion, I get a daily news summary called “US Energy News” and yesterday they had a link to this article:
    http://www.naturalgasintel.com/articles/113999-zinke-states-against-expanded-offshore-drilling-will-be-very-happy-with-plan-in-fall

    The article seems to say the off-shore Virginia play is thought to be natural gas, so that finally answered my question.

    I assume recovering nat gas from 70 miles off-shore is a huge financial undertaking that may not have interest for anybody in the short term.

    However, long term future is the name of this game. Does not bother me too much…whatever is decided now can be re-thought in the future.

  3. Interesting article TBILL..

    “… At issue is a draft proposed program (DPP) for the OCS Oil and Gas Leasing Program for 2019-2024, which the DOI’s Bureau of Ocean Energy Management unveiled earlier this year. Zinke said the only oil and gas play of any significance along the East Coast lies about 70 miles offshore and runs from northern Georgia to Virginia. He called the geologic structure the “Mid-Atlantic” play, but conceded that DOI doesn’t have a lot of information about it. The department assumes it is a natural gas play, he said.”

    so does that mean NOT in the Chesapeake Bay but instead WAY “offshore”? For gas – how do we capture it and get it to shore anyhow? Anyone know?

    and no.. I’m not buying the idea of using oil/gas drilling platforms for wind energy… go FISH !!!

  4. Offshore fossil for offshore wind is a rather glib argument. Meanwhile, this piece of boosterism (McDonnell? Really?) neglects to say that three major segments of Virginia’s economy — the military,seafood and tourism industries — absolutely do not want offshore fossil. Funny this isn’t mentioned.Shale gas onshore is far more cost effective from a biz point of view.

    • Wow, I allude to McDonnell’s idea for making Hampton Roads the energy center of the East Coast and you accuse me of “boosterism?”

      What’s the opposite of boosterism? Negativism? Does that make you a nattering nabob of negativism?

      The piece you penned several years ago, Five Reasons Why Virginia Sucks (or something close to that), still shows up periodically among the key word searches that bring readers to Bacon’s Rebellion.

      Maybe I should charge you with suckism.

  5. Drilling in the Chesapeake Bay is a non-starter – the “firestorm of opposition” would be wide and deep, non-partisan and from way more than just the environmental community. It is a monumentally dumb idea. The Bay is, at best about 25 miles wide and even small spills could quickly do decades worth of damage to marshes, oysters, crabs and fisheries not even mentioning damaged to real estate and tourism.

    Obviously the folks who “suggest” this lack any kind of real-world perspective and are myopically focused on one thing – money!

    So now the Trump pro-drilling bots are suggesting “gas” 70 miles offshore and only from Georgia to Virginia…. because of other opposition.

    Not sure how you get electric from 70 miles offshore to the grid.. but perhaps it’s a doable thing but I bet not cheap.

    Offshore gas will not be competitive with domestic gas and it would have to be exported to be economically viable. That may well not be in our own longer-term interests if/when domestic supplies start to dwindle and we still need gas as the essential back-up fuel for using renewable energy such as solar when it’s not available.

    Exporting natural gas supplies may not be in our own longer-term interests if domestic supplies of natural gas start to dwindle and we may have to go offshore to get it – presuming it was not already extracted and gone. You’d actually HOPE that Government would ALSO have that in their perspective the strategic importance of gas whether it be domestic or offshore.

    • Drilling in the Chesapeake Bay is a non-starter…

      As you do so often, Larry, you’re arguing with phantoms. I don’t know of anyone who wants to drill in the Chesapeake Bay — certainly not me.

      • Well no… Jim.. you mentioned Hampton Roads and Virginia Beach and I was having trouble understanding why either of them would be concerned/have an interest if the actual drilling was 50 or more miles off the Eastern Shore of Va…. and further than that from VB and Hampton.

        wouldn’t that be a L O N G way to transport gas or electricity unless it went to the Eastern Shore?

        Because of the configuration of the geography – it would seem that the Eastern Shore would be the best proximity and also pretty sure no one wants drilling at the mouth of the Chesapeake Bay – either.

        • Not sure what you’re driving at. I would imagine that natural gas drilled off the Virginia Coast, like natural gas drilled off the Gulf of Mexico, would be transported by pipeline to storage/transportation facilities on shore. Maybe that would be on the Eastern Shore, although it might make sense to plug into existing gas infrastructure in Norfolk/Virginia Beach.

          • I just think it’s far away from VB and Hampton… and a pipeline to shore? Are you sure of that? I don’t think it’s moved that way…

  6. We also need to flesh out the actual real-world economics of offshore wind energy.

    There seems to be a dichotomy in that on one hand, it is claimed that offshore wind is the lowest cost electricity – bar none – but on the other hand – standing up offshore wind turbines is so expensive that we’re seeing almost none of it except for Brock Island which is a special case of trying to justify getting electric TO that island from the mainland – as well as building wind turbines.

    Or perhaps I am continuing to be ignorant of the issue and Jim can get one of the resident expert commentators to pen a column on the economics of offshore wind… the fact that we are NOT building offshore wind with any great vigor , unlike the explosion of solar, there are few players and even the larger ones are expecting govt incentives and grants.

    • The are a couple of wind projects under consideration, NY is considering offshore NY/NJ.

      What NY ought to do is trash-to-energy instead of exporting all of their waste to VA, NJ. PA etc. But I’d like to see NY generate some of their own electric off-shore., rather than being such a NIMBY importer of elec/exporter of trash.

      • I suspect they pick the cheapest method … on the trash.

        On the towers… a tower that is 300 feet tall can be see 21 miles away… a 200 foot tower about 17 miles… I don’t know how NY is about NIMBY and turbines … probably the same as elsewhere.. although Brock Island clearly can see those turbines.

        It does look like some of the turbines in Europe are 50 miles or more offshore.. so there must be a way to move that electricity to shore…

  7. I’ve never heard of a natural gas spill, and neither have you.

    http://ketchconsulting.com/2013/07/24/confirmed-gas-leak-caused-offshore-evacuation/

  8. “Suckism?” Only an untruthful slime ball would say that.

  9. Maybe to add a little to the context of “offshore” and “spills”:

    ” The Santa Barbara oil spill …..was a blow-out on January 28, 1969, 6 miles (10 km) from the coast” About 3 million gallons.

    “Deepwater Horizon [was about] about 41 miles off the southeast coast of Louisiana, at a water depth of approximately 5,000 feet – 206 million gallons.

    The Exxon Valez was about 10 million gallons but in the middle of Prince William Sound.. essentially a “Bay”
    where oil flowed to the shores… rather than out to sea.

    A good number of the worlds worst oil spills that occurred before the Deepwater Horizon spill actually came from tankers like the Exxon Valdez… not from drilling platforms.

    The point is that drilling per se is only 1/2 of the threat – the other half is the transport and the idea that we might keep the drilling “offshore” but we’d be bringing the oil onshore to refineries “somewhere” on the East Coast , perhaps within the Chesapeake Bay – is also certainly a concern.

    ” refineries on the East Coast are clustered on Delaware River and northern New Jersey, with no refineries operating now in the Chesapeake Bay watershed
    Source: U.S. Energy Information Administration, Much of the country’s refinery capacity is concentrated along the Gulf Coast” (from Virginia Places)

    here’s a current map of existing oil refineries:

  10. Sorry to be too long again .. but first … estimates of the amount of oil and gas to be recovered off the coast of VA…. the equivalent of a 1+ year’s worth of oil and a 3+ year supply of natural gas. Is that treasure trove relly worth the risk?

    Here’s some info on Dominion leases for offshore wind:
    • Dominion Virginia Power had the winning bid on 112,800 acres of land 27 miles off Virginia’s coast. Bidding on the plot went for six rounds, escalating from a starting offer of just $225,600.
    • the Department of the Interior, estimates that the lease area can produce up to 2,000 megawatts of wind power, enough to provide electricity for 700,000 homes.
    • Dominion estimates it will be 10 years before it puts any turbines on the plot it won Wednesday. That is an additional $3.5million in lease payments to add to the final cost.
    • Dominion loses $40 million federal grant for Virginia offshore wind project. When Dominion didn’t move forward, the money was withdrawn and sent to Cleveland to test building wind on the lake where freezing is an issue.
    • Dominion has said they did not want to be part of the undersea cable connecting all VA-MA wind farms. (I do not know if the lease includes the rejection of the interconnection to the AWC)

    Bringing tjhe wind ashore … First put forward in 2010 and described by a VA energy writer, The Atlantic Wind Connection, as described on their website, makes wind farms on the wide, shallow and wind happy edge of the continental shelf called the Mid Atlantic Bight, a cheaper and more reliable resource.

    Divided into 3 sections VA is part of the Delmarva Energy Link, “an offshore electrical transmission circuit that will serve wind farms to be built off the coasts of Delaware, Maryland and Virginia … Buried under the ocean floor and running the length of the coastline, the Delmarva Energy Link will bring power to shore at three locations serving Delaware, Maryland and Virginia. When complete, it will be capable of carrying 3,000 megawatts of offshore wind – enough to power more than 1 million homes.”
    The link will …
    • Provide the most efficient and cost-effective transmission solution for delivering offshore wind to consumers
    • Lower energy prices by reducing grid congestion
    • Improve the reliability and resiliency of the grid through linki9ng the farms together.

    The Bay Link, the 3rd and final connector, will provide additional grid reliability and redundancy for New Jersey, Delaware, Maryland, and Virginia, allow the region’s grid to absorb the variability of offshore wind energy production, and permit efficient power flows throughout the mid-Atlantic region.”
    (http://atlanticwindconnection.com/connecting-clean-offshore-power-and-consumers/)

    Forbes listed new projects in progress. All in!
    “2017 was the year of ambitious offshore wind target announcements, including a combined 4,000 megawatts (MW) from New York and Massachusetts, but 2018 is the year of action.
    New York’s recently released offshore wind master plan calls for auctions to secure 800 MW of offshore wind contracts in 2018 and 2019 – more than doubling the amount of U.S. offshore wind deals in place. Not to be outdone, New Jersey’s new governor injected new life into the state’s long-stalled offshore wind market with an executive order to finalize regulations and solicit bids for 1,100 MW of offshore wind contracts – the nation’s largest auction to date – as well as a 3,500 MW by 2030 goal.

    These states may be responding to competition from their neighbors. Maryland recently announced contracts for 386 MW of offshore wind that will come online in 2021, Massachusetts will announce the results of its 2017 request for bids for 400-800 MW of offshore wind in April, Connecticut just finalized a solicitation for up to 250 MW of offshore wind bids, and Rhode Island was America’s offshore wind trailblazer with the 30 MW Block Island wind project.”

    Finally, offshore wind has been slow to develop in the US because it means developing a whole industry development to bring down prices. As one parts manufacturer said years ago .. “You can’t build a factory on 1 order.”
    With over 8,000 components in a modern wind turbine, many offshore wind turbine components can be manufactured here in the United States. Today, about 2/3 of the components in U.S. land-based wind turbines are manufactured domestically. ”

    “There are significant opportunities for U.S. manufacturers to play a similarly substantial role in the offshore wind supply chain. Local sourcing is preferred for towers, castings, forging services, nacelle covers and blades to reduce transportation costs, decrease currency risk, and increase just-in-time turbine availability, product quality and service. As turbines become larger, few suppliers are equipped to produce the unique components and the size makes the components expensive and difficult to transport. The offshore wind industry’s development will open up new markets for local suppliers.” – See more at: http://atlanticwindconnection.com/about-us/opportunity#sthash.iLY8oAW6.dpuf

    Va had a lot of opportunity, but is it now too late? Baltimore is looking to serve the mid-Atlantic with new wind industry investments.

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