Different tracks: Offshore oil, wind

The dualling offshore energy sector appears to be playing off the real estate adage “location, location, location.” 

For now, the oil-rich Gulf of Mexico is in the driver’s seat, though prices have not reached the triple digit highs expected this summer because of OPEC decision to cut production.

It's quite different in the Northeast, where the offshore wind market is sustaining heavy blows from inflation, infrastructure limitations and judicial scrutiny.

A negative cost imbalance has forced the temporary scrapping of one developing wind farm, while developers face something O&G operators have been all too familiar with: Lawsuits.

Energy security and affordability concerns have overshadowed transition to offshore wind and other renewable energy sources.

BP, which holds a 50% interest with Equinor in the Beacon Wind and Empire Wind offshore wind farms off New York, has cut back its renewable investments in favor of capturing higher returns from O&G assets by investing "up to $8B more this decade in our transition growth engines and about $1B more each year in today’s energy system, which depends on oil and gas,” said CEO Bernard Looney. 

BP began flowing oil in April from its Argos floating production system (FPS) in the Mad Dog 2 deepwater Gulf development. It’s estimated it will produce up to 140,000 bbl/d from 14 wells in roughly 4,500 feet of water. 

Shell Offshore, which holds a stake in a Northeast wind farm, entered 2023 with the start-up of the Vito FPS in Mississippi Canyon, which will produce an estimated 100,000 bbls. from four blocks in 4,000 feet of water. Vito serves as the design standard for the Whale production system, which is expected to begin production in 2024 in Alaminos Canyon.

Developments are expected to increase Gulf of Mexico oil production by 120,000 barrels per day (bbl/d) this year, according to the U.S. Energy Information Administration (EIA), which reported average 2022 pro- duction in the Gulf of 1.78M bbl/d. 

The Bureau of Ocean Energy Management is expected to announce a date for the GoM’s first federal wind lease offering. The landmark offshore wind sale was to be set following the 60-day public comment period that ended on April 22. (Work Boat 06/28/23) Offshore wind, oil on different tracks | WorkBoat