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Shell’s Offshore Wind Play Energizes Renewables Industry

By Bobby Magill: July 20, 2018

If Royal Dutch Shell Plc wins a federal lease to build an offshore wind farm in New England this fall, the company will be the first oil major with experience drilling in U.S. waters to enter the fledgling domestic offshore wind market.

Shell’s interest in U.S. offshore wind development is seen within the industry as marking a shift toward the mainstream of the domestic energy sector, as offshore wind strengthens ties with the oil industry while harnessing one of the nation’s largest untapped sources of carbon-free electricity.

An oil major with U.S. experience could help accelerate offshore wind development and demonstrate the strength of an entirely new domestic renewable energy industry, Liz Burdock, executive director of the Business Network for Offshore Wind, told Bloomberg Environment.

“When a market leader such as Shell indicates its interest publicly, it shifts offshore wind from the peripheral to a major investment opportunity that captures people’s attention,” she said.

Shell Vying for Massachusetts Lease

Shell has submitted paperwork to the federal Bureau of Ocean Energy Management to participate in a federal offshore wind lease sale for waters off the coast of Massachusetts this fall, Shell spokesman Curtis Smith told Bloomberg Environment.

“We will continue to evaluate future offshore wind lease sales as proposed by the Department of the Interior, and plan to assess upcoming state solicitations throughout the Northeast,” he said.

Shell also qualified to participate in a 2017 offshore wind lease sale off the coast of North Carolina but declined to bid.

BOEM spokesman Stephen Boutwell declined to confirm the companies that have submitted filings to participate in the Massachusetts lease sale.

Offshore wind, which has been growing in Europe for decades, is on the frontier of energy development in the U.S. North America’s first, and so far only, offshore wind farm was completed in 2016 off the coast of Block Island, R.I. The next set of ocean-bound wind turbines is expected to begin operating in the early 2020s.

The Obama administration began leasing the Atlantic Outer Continental Shelf in 2012. Since then, BOEM granted 13 leases between North Carolina and Massachusetts as a slate of European and domestic offshore wind developers rushed to get an early piece of the U.S. offshore wind market.

Partnering With Oil

Offshore wind developers are expected to heavily rely on the oil and gas industry to gain a foothold on the Atlantic Outer Continental Shelf, where BOEM is authorizing wind farm development 10 miles or more from the coastline.

Wind developers are already using offshore oil and gas contractors for geotechnical and turbine siting services, turbine foundation construction, and other services, Nicolette Nye, vice president of communications and industry affairs for the National Ocean Industries Association, told Bloomberg Environment.

“The size of the business opportunity in offshore wind in the U.S. has attracted hundreds of millions of dollars in investment in the last few years,” she said. “It is expected to bring billions of investment in the years to come. It should be no surprise that energy companies with experience of working in the offshore space are interested in building energy projects in the offshore space.”

Offshore oil and gas industry expertise will help the wind industry construct, operate, and decommission offshore wind farms, Burdock said.

Experience in the Gulf

Shell, which has been drilling for oil in the Gulf of Mexico since the 1970s, is expected to bring experience navigating U.S. environmental and drilling regulations that European wind developers entering the market lack.

Orsted A/S, formerly Denmark-based DONG Energy, and Equinor ASA, formerly Norway-based Statoil, which have historically focused on fossil fuels and are now planning to build offshore wind farms in the U.S., are new to local, state, and federal regulations.

“The decades of experience Shell brings across a wide range of offshore activities will add to the integrated, collaborative approach required to support and accelerate the U.S. offshore wind energy market,” Smith said.

Shell’s advantage lies in its ties to the U.S. oil and gas supply chain, expertise with the U.S. regulatory system, and experience with engaging with the public, Burdock said.

“The European model and their practices will not work exactly the same way in the U.S. as they have in Europe,” Burdock said. “The U.S. has different constraints and obstacles that U.S. O&G (oil and gas) expertise can help solve so projects can be built here faster and for less costs.”

Climate Concerns

Shell, which has publicly supported the carbon-cutting goals of the Paris climate agreement, is investing in wind and solar energy worldwide, including 400 megawatts of onshore wind in the U.S. as the company maps out waysfor the world to cut carbon emissions to nearly zero by 2070.

But because the company has yet to bid on an offshore wind lease and has not invested heavily in onshore wind in the U.S., the company’s long-term commitment to renewable energy remains unclear, John Rogers, senior energy analyst at the Union of Concerned Scientists, told Bloomberg Environment.

“Shell has spent decades and invested a lot in efforts to hurt understanding of climate science and clean energy,” Rogers said. “We need to know what kind of ‘stick-to-it-iveness’ they’re going to have in this space.”

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