Louisiana Welcomes Offshore Wind Lease Agreements With Danish and Japanese Companies

Wind turbines located at the Block Island Wind Farm near Block Island, R.I., on July 7, 2022. John Moore/Getty Images

Portions of Louisiana’s Gulf Coast have been sold off to two foreign companies for the development of offshore wind turbine farms.

Gov. John Bel Edwards, a Democrat, and the state Department of Natural Resources Secretary Tom Harris both announced that the Mineral and Energy Board approved granting 60,000 acres off the coast of Cameron Parish to the Danish firm Vestas, as well as 6,162 acres off the coast of Terrebonne and Lafourche parishes to the Japanese company Diamond Offshore Wind (DOW), owned by Mitsubishi.

“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,” Mr. Edwards said in his announcement.

DOW paid an up-front cost of $308,101 for its land, while the Danish Vestas—which is calling its Louisiana wind farm “Cajun Wind”—paid $357,923.

The two agreements have different pay structures, with DOW—covering less acreage—committing to pay 1.5 percent of gross revenues in energy royalty but “paying more in up-front costs and rental fees per acre,” while Vestas pays 2.2 percent and lower fees per acre, the announcement said.

“One agreement offers more on the front end, while the other pays more over time,” Mr. Harris said. “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.”

‘A Natural Fit’

Mr. Edwards called the incoming wind farms “a natural fit” for the state’s Gulf Coast because of its existing offshore infrastructure for oil and gas.

“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,” he said. “And our existing ports and offshore support companies will benefit from new customers and new opportunities to work and grow jobs.”

Vestas’ footprint in the United States has been primarily through manufacturing. Headquartered in Portland, Oregon, it has several manufacturing facilities in Colorado.

DOW is developing a floating wind farm off the coast of Maine.

American Clean Policy (ACP), a pro-wind energy advocacy organization, previously praised Mr. Edwards’ work to open the Gulf Coast for wind energy, calling the Gulf a “pioneer region.”

“Much like the Atlantic coast a decade ago, it will take steadfast local, state, and national support for the market to fully mature,” ACP said in an August statement following an offshore wind lease auction.

The U.S. Court of Appeals for the 5th Circuit recently dismissed environmental groups’ challenge of an offshore oil and gas lease in Louisiana that they believe will harm the habitat of the endangered Rice’s whale, which lives exclusively in the Gulf of Mexico.

Environmental groups have also raised the alarm about offshore wind farms harming whale species along the Atlantic coast.