Monthly Archives: July 2017

Enlarge / An image of an offshore wind turbine, from Dong Energy.

Dong Energy

This week, Virginia utility Dominion announced that it would partner with Danish firm Dong Energy to build two offshore wind turbines as test cases for a commercial-sized installation.

Currently, the US only has one 30MW commercial offshore wind farm off Block Island in Rhode Island. Renewable energy proponentshave sought to expand offshore winds reach for years in the hope it wouldre-create the low-cost energy boom that has occurred in the US with onshore wind. The offshore resource has a lot of promiseturbines can be built bigger out at sea, so they can generate more power, and wind is generally less variable.

But building offshore wind infrastructure is still expensive; its new territory for US contractors. Few utilities have experience managing offshore wind energy. Partnering with Dong Energy will bring some expertise across the pondthe company has constructed many large offshore wind installations in Europe, and it even submitted a subsidy-free bid to German energy regulators for a new installation to go up in 2020.

This new project, called the Coastal Virginia Offshore Wind Project, will consist of just two 6MW test turbines, 27 miles off the coast of Virginia Beach, where they cant be seen from the shore. The turbines will be built next to a 112,800-acre site leased by Dominion Energy from the Bureau of Ocean Energy Management (BOEM). The site is large enough that it could be used to build out a 2,000MW offshore wind installation someday.

But thats far in the future. In a phone conversation with Ars, Dominions communications director, David Botkins, said a lot has to happen before the utility would commit to building that much offshore wind. These first two test turbines, which wont be completed until 2020, will only generate 12MW together and will send electricity back to shore via a 34 kilovolt distribution line. Its never been done before in the mid-Atlantic United States. First weve gotta get these two turbines constructed,"Botkins said. "Then we have to take the time to see how they perform under a regimen that includes exposing them to potential hurricane-force wind and studying marine and aquatic life impact, water currents, et cetera, et cetera.

The project is not without its controversy. In 2016, Dominion reportedly let a $40 million Department of Energy (DOE) grant offer lapse, which made Governor Terry McAuliffe unhappy, according to the Richmond Times-Dispatch. Botkins told Ars that the lapse was a purely economic decision. We had to go out for bid on two separate occasions because on the first round of bids the price came in way too high to justify moving forward. The second round was a little bit better but not much, he said. He added that he thought at that point, the DOE decided to move forward with funding Block Island.

As a result, the two test turbines, which will be 600ft tall with a 500ft rotor diameter, arent receiving any federal funding. The project is supposed to cost $300 million and will be wholly owned by the utility, which will seek to recoup the costs through rate increases. Botkins told Ars that no rate recovery proposals have been made yet.

Other Atlantic states have moved forward with offshore wind projects in recent months. New York entered a deal with Deepwater Wind, the company that built the Block Island installation, in January. That project will consist of a 90MW wind farm 30 miles southeast of Montauk, and it's set to be completed by the end of 2022 if all goes well. Massachusetts has also called for 1,600MW of offshore wind by 2027.

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Virginia utility agrees to install two offshore wind turbines for study - Ars Technica

Starting in 2020 Marylands electricity consumers will be paying higher electric bills in order to subsidize two wind projects to be developed off the Ocean City waterfront. Over the lives of these projects the subsidies will total more than $2 billion. Despite this exorbitant cost the projects will deliver no environmental benefits and, most likely, will contribute to global warming. How did this lose-lose situation come about?

Offshore wind development was a pet project of former Governor OMalley. After several tries he finally got the legislators to pass the Maryland Offshore Wind Act of 2013. The act authorizes the Maryland Public Service Commission (PSC) to raise electric rates to support offshore wind projects but exempts large industrial and agricultural customers from these rate increases, forcing Marylands residential and smaller business customers to carry the full burden.

Kim Hairston, Baltimore Sun

Left to right, Lt. Gov. Anthony Brown sits with Thomas V. Mike Miller, Jr., Senate President, Gov. Martin O'Malley and Michael E. Busch, House Speaker, as they sign HB 226 Maryland Offshore Wind Energy Act of 2013 into law in the Governor's reception room.

Left to right, Lt. Gov. Anthony Brown sits with Thomas V. Mike Miller, Jr., Senate President, Gov. Martin O'Malley and Michael E. Busch, House Speaker, as they sign HB 226 Maryland Offshore Wind Energy Act of 2013 into law in the Governor's reception room. (Kim Hairston, Baltimore Sun)

However, the act includes two important consumer protections. One prohibits the PSC from approving any project that does not demonstrate positive net economic, environmental and health benefits to the State based on a cost-benefit analysis that includes: any impact on residential, commercial, and industrial ratepayers over the life of the offshore wind project. The other caps the combined costs imposed by all approved projects at a maximum of $1.50 per month for residential customers and at a maximum of a 1.5 percent increase for business customers bills.

Last year two out-of-state wind developers submitted proposals to the PSC. To evaluate the proposals, commissioners hired an outside consultant who concluded that, starting in 2020, the two projects combined would raise residential customers bills, on average, by about $1.40 per month and raise business customers bills, on average, by about 1.4 percent. Although these increases appear modest, over the 20-year lives of the projects they will total to more than $2 billion (in todays dollars of purchasing power).

The PSC and the Maryland Energy Administration defend the projects, claiming they will create jobs and spur economic growth. Indeed, the PSCs consultant estimated that they would create 9,700 direct and indirect jobs. Dividing $2 billion by 9,700 reveals that the state is spending more than $200,000 per year for each job created.

Many of these jobs will be for skilled construction workers, likely earning around $100,000 per year. Furthermore, many of these workers will likely live out of state and commute to the job sites. Surely the state can find cheaper, more efficient ways to create jobs. For example, wouldnt this money be better spent creating job opportunities for Baltimores inner-city poor?

Despite the acts requiring each project to pass a cost-benefit test, the PSC appears to have never compared the ratepayers costs to support these projects with the monetary value of the benefits the projects are expected to deliver. Because these offshore wind projects will likely produce energy costing three to four times more than renewable energy produced by onshore wind or large-scale solar it is unlikely that either project can pass a bona fide cost-benefit test.

The PSC appears to have revealed its true agenda in stating, the State has already made the policy decision to authorize [offshore wind] development and the ratepayer impacts that may result from it. Really? Then why did the legislators include a cost-benefit analysis requirement in the act?

The PSC and the Maryland Energy Administration also claim the projects will reduce carbon emissions. However, the PSCs own consultant concluded that while carbon emissions in Maryland would decrease carbon emissions will increase in the central and western areas serviced by PJM, the operator of the Mid-Atlantic's high-voltage regional electric system. So, the consultants concluded, overall emissions in PJM would increase.

Carbon emissions have no adverse local effects, therefore reducing them in Maryland will not benefit the state. But increasing regional emissions will contribute to global warming, which will harm the state. Because of its extensive shore line Maryland is particularly susceptible to rising sea levels.

Neither of these offshore wind projects should have been approved. The PSCs decision is appalling. We Marylanders deserve better.

Robert Borlick (rborlick@borlick.com) is an energy economist with more than 40 years of consulting experience. He lives in Montgomery County Maryland.

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Md. offshore wind projects may hurt, instead of help, environment - Baltimore Sun

Jordan Blum, Houston Chronicle

The Ensco 8501 semi-submersible rig is seen in the Gulf of Mexico, 70 miles southeast of Louisiana, where it is about to begin drilling a bypass well for Noble Energy. Obama administration officials toured the 2.5-year-old rig on Wednesday. Jennifer A. Dlouhy / Houston Chronicle

The Ensco 8501 semi-submersible rig is seen in the Gulf of Mexico, 70 miles southeast of Louisiana, where it is about to begin drilling a bypass well for Noble Energy. Obama administration officials toured the

Ensco, which has many shallow-water jack-up rigs, says it doesn't have much overlap with Atwood Oceanics.

Ensco, which has many shallow-water jack-up rigs, says it doesn't have much overlap with Atwood Oceanics.

The main deck of the ENSCO 8505 is 97 feet high; the derrick is another 201 feet. The main deck tower Is more than six stories above the dock level. April 11, 2012

The main deck of the ENSCO 8505 is 97 feet high; the derrick is another 201 feet. The main deck tower Is more than six stories above the dock level. April 11, 2012

ENSCO DS6 Drillship taking on fuel bunkers in Walvis Bay, Namibia during the transit to Angola and start of contract with BP.

ENSCO DS6 Drillship taking on fuel bunkers in Walvis Bay, Namibia during the transit to Angola and start of contract with BP.

Ensco leads way as offshore drilling bottoms out

The struggling offshore energy sector may have finally bottomed out, analysts said, with Ensco leading the rebound by winning several new West African drilling contracts.

Lond0n-based Ensco, which has its operational headquarters in Houston, said it won deepwater drilling contracts with "Big Oil" giants like Chevron, Royal Dutch Shell and Paris-based Total offshore of Nigeria and the Ivory Coast.

"We believe that this new work positions us well for follow-on opportunities, benefiting future utilization for our rig fleet," said Ensco CEO Carl Trowell.

Ensco also is leading in industry consolidation with its pending acquisition of Houston's Atwood Oceanics, another deepwater drilling player.

Ian Macpherson, an analyst at the investment bank Piper Jaffray & Co., said the news supports a "bottoming thesis" for what's proving to be a more "resilient-than-expected" offshore sector that will still continue to struggle for the foreseeable future.

Houston energy investment banking firm Tudor, Pickering, Holt & Co. called it the first encouraging sign for ultra-deepwater rig demand "in a long while." It's an encouraging sign that major players like Chevron and Shell have figured out ways to reduce costs enough to start moving forward with some deepwater projects, especially in historically expensive offshore Nigeria.

On the flip side, these projects are still few and far between and the rig contractors likely are giving deep discounts to win work, the firm added.

In terms of details, Ensco said it's reactivating a drillship in August to work offshore of Nigeria for Chevron on a two-year contract. Likewise, another rig idled since last year will drill for Total offshore of the Ivory Coast starting in November.

Lastly, Ensco is moving up the construction timeline for a brand-new floating rig so it can go to work for Shell early next year offshore of Nigeria.

These new Ensco contracts are positive news and show the deepwater drilling market may have stopped sinking, if not showing small signs of recovering, said James West, an analyst at investment bank Evercore ISI in New York. Apart from low oil prices, geopolitical disputes also have stalled energy production in Nigeria and these deals indicate Africa's largest nation is moving forward, West added.

It's also a particularly good week for Ensco because Houston's Talos Energy announced a "historic oil discovery" offshore of Mexico using an Ensco floating drilling rig. Talos' Zama-1 well is the first offshore exploration well drilled by a private company in Mexico's history.

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Ensco leads way as offshore drilling bottoms out - Chron.com

Summer is in full swing at the Jersey shore. Over the next couple of months and into the fall, millions of visitors will head down the shore for the beaches, fishing, boating and ecotourism activities like whale and dolphin watching.

Its hard to imagine New Jersey without its thriving shore tourism economy an economy dependent on a healthy ocean and a clean coastline stretching from Sandy Hook to Cape May. The same goes for its commercial fishing industry, which supplies fresh seafood to countless restaurants and markets.

OCEAN CITY Cape May County has collected a variety of best beach awards over the years, an

But tourism and commercial fishing in New Jersey are once again being threatened by a bad idea that comes back again and again: ocean drilling for oil and gas along the coast of this state were in.

In April, President Trump signed an executive order reopening the possibility of drilling in the waters off the East Coast, including New Jersey. Then, on June 5, the Trump administration proposed to issue five permits for offshore seismic testing a first step to oil exploration.

Trumps executive order would undo an executive order signed by President Barack Obama last December that reinstated a moratorium on offshore drilling from Massachusetts to Virginia.

New Jerseys congressional delegation has objected strenuously to both the offshore drilling and seismic testing proposals.

With just under a month until Memorial Day weekend, New Jersey's beaches still sit largely empty.

In a letter to Interior Secretary Ryan Zinke, Congressman Frank Pallone, Senators Robert Menendez and Cory Booker, and seven other congressional representatives said drilling off the Atlantic Coast would have severe economic and environmental impacts on New Jersey.

Tourism along the Jersey shore generates almost $40 billion each year and supports half a million jobs including the fishing, boating and recreational industries, according to the letter. Allowing offshore drilling would unnecessarily threaten the economies of the communities that rely on a thriving coastline. Fragile marine ecosystems and species would also be placed in danger of a potential future environmental disaster resulting from a blowout or other failure offshore.

In a separate letter to the National Marine Fisheries Service, New Jerseys entire congressional delegation Democrats and Republicans alike expressed concern about the proposal to issue permits for seismic testing.

Seismic testing is not benign. Large air guns are towed behind ships, repeatedly firing loud blasts at the ocean floor. The sound waves produced by these blasts bounce back to the surface and help measure the presence of oil or gas.

These blasts are harmful.

Seismic testing can disrupt migratory patterns, cause marine wildlife to abandon important habitats and disrupt mating and feeding, the legislators said. The sound wave tests can also destroy fish eggs and larvae. These tests can also cause deafness in whales and dolphins, both of which rely on hearing to reproduce, locate food and communicate.

Two pieces of legislation have been introduced to stop offshore drilling. One would prevent the Trump administration from renewing the five-year oil and gas leasing process, while the other,known as the Clean Ocean and Safe Tourism, or COAST, Anti-Drilling Act, would permanently ban offshore drilling in the Atlantic Ocean.

These bills must become law. The severe harm that would occur from drilling and testing on marine fisheries and whale and dolphin populations is unacceptable. And a catastrophic oil spill would cause long-term degradation of New Jerseys beaches.

Organizations like Clean Ocean Action and the American Littoral Society have worked hard to protect our oceans for decades.

Citizens of New Jersey spent a lot of years cleaning up the ocean;we didnt do that to turn over our waters to big oil, said Tim Dillingham, executive director of the American Littoral Society. We know where we drill we spill, and thats unacceptable to the shore economies that depend on a clean ocean.

The economies of New Jersey and other coastal states depend heavily on tourism, which would fail without a healthy marine environment. In New Jersey alone, tourism and fishing industries bring in $50 billion a year and employ more than 500,000 people. Offshore drilling and seismic blasts must be permanently prohibited.

You can help. Contact your congressional representatives and let them know you fully support their efforts to permanently stop offshore drilling and seismic testing along the Atlantic Coast.

For more information about protecting the coasts see littoralsociety.org and cleanoceanaction.org.

For more information about preserving New Jerseys land and natural resources see njconservation.org or email Michele Byers at info@njconservation.org.

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Ban offshore drilling and seismic testing off NJ coast - Shore News Today

Exxon adds 2.8 million acres offshore

Exxon Mobil has added 2.8 million acres to its portfolio in the South American Guyana-Suriname Basin, off the coast of Surinames capital, Paramaribo.

The company announced on Thursday it signed a production-sharing contract with the national oil company of Suriname to develop block 59, in water as deep as 12,000 feet.

RELATED: WoodMac chief says not to count out deep-water drilling

It is Exxons first foray into Suriname waters. The Irving-based oil giant, however, operates three neighboring blocks off the coast of Guyana, including the huge Liza field Exxon discovered in 2015.

Steve Greenlee, president of ExxonMobil Exploration Company, praised the deal and said the company looks forward to evaluating its potential.

Exxon is partnering with New York exploration and production company Hess Corp. and the Norwegian oil major Statoil in the deal. Each hold a third of the interest in the block, but Exxon is operating the endeavor.

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Exxon adds 2.8 million acres offshore - Houston Chronicle - Chron.com

Offshore wind could be subsidy-free in the UK before 2040, according to the most ambitious scenario The report sets out four pathway scenarios of varying ambition for the UK's energy future to 2050. In its most ambitious pathway, named two degrees, National Grid suggests offshore wind may reach a subsidy-free level.

"The majority of growth is seen in offshore wind, which, as a less mature technology, has greater potential for further cost reductions.

"Offshore wind currently receives support through the contracts for difference mechanism, however two degrees assumes considerable offshore build without subsidy, reflecting falling costs," the report stated.

The two degrees scenario shows the cost optimal pathway to meet the UK's 2050 carbon emissions reduction target.

"All scenarios anticipate a growth in wind capacity, from approximately 15GW in 2016 to 26GW in 'steady state' [least ambitious pathway] and just less than 50GW in 'two degrees' by 2040," the report adds.

"Both onshore and offshore wind experience continued technological improvements, associated cost reductions, and new opportunities to co-locate assets with storage, all of which leads to growth," according to National Grid.

With the addition of wind on the system, National Grid recognised the growing importance of storage and balancing systems.

"As traditional sources of energy supply are replaced by new ones, and demand becomes more dynamic, the energy system will be more complex to manage. Responsive balancing products and services will be needed to deliver flexibility across both the electricity and gas systems," the report states.

The report also finds the UK's energy demand is set to increase beyond 2030, as the growth of electric vehicles increases.

Trade body RenewableUK said that growth in demand should and could be met by renewables.

"The surge in electricity demand envisaged by National Grid to power electric vehicles will need to be met by a wide range of clean sources, including onshore and offshore wind, wave and tidal energy, if we're to meet our carbon reduction commitments and deliver the modern energy system that consumers need," said RenewableUK executive director Emma Pinchbeck.

"It's worth noting that National Grid's new two degrees scenario is the only one in which the UK's vital carbon reduction goals are met. This could be more ambitious, as the Paris Agreement aims to limit the global temperature increase even further to 1.5 degrees," Pinchbeck added.

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National Grid sees subsidy-free offshore wind by 2040 | Windpower ... - Windpower Monthly (subscription)

Ampelmanns A-Type gangway links offshore service vessels to production platforms

Ampelmann and Uptime International have won contracts for their gangway walk-to-work solutions in offshore gas and renewables markets. Ampelmann secured a contract in Venezuela that will spread the use of its gangway technology into the Caribbean.

The Cardon IV group ordered an A-type system for its operations on the Perla fieldoff Venezuela. The walk-to-work system was deployed on Bumi Armadas 2010-built offshore support vessel Armada Tuah 85 to provide access for the workforce to the Perla platform.

The A-type system is a full active motion compensated access gangway, designed to transfer personnel safely and efficiently to offshore structures. Cardon IV has chosen Ampelmann as its partner in this long-term project for the next two years, said Ampelmann business development manager for Latin America Andres Garcia.

Uptime International has won a contract from Cemre Marin to deliver one of its walk-to-work systems to a service operation vessel that is being built at the Cemre Shipyard in Turkey. The vessel is being built for French vessel owner Louis Dreyfus Armateurs for delivery in 2018.

The vessel will provide service support for four offshore windfarms off the German coast. These are the Borkum Riffgrund 1 and 2 and Gode Wind 1 and 2 windfarms operated by Dong Energy.

The Uptime system will be an active motion compensated gangway and an adjustable pedestal integrated with an elevator tower. The vessel was designed by Salt Ship Design for personnel and cargo transfer to these offshore windfarms.

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Gangways ordered for offshore gas and windfarm support vessels - OSJ Magazine