Vestas and Mitsubishi to Build First Offshore Wind Farms in Louisiana State Waters

Planning & Permitting

December 14, 2023, by Adnan Memija

Steelhead Americas, Vestas’ North American development arm, and Mitsubishi-owned Diamond Offshore Wind (DOW Wind) have signed operating agreements to build the first offshore wind farms in Louisiana waters.

The State Mineral and Energy Board has approved a 6,162-acre property agreement for DOW Wind off the coast of Terrebonne and Lafourche parishes and a 59,653-acre agreement for Cajun Wind (subsidiary of Vestas) offshore Cameron Parish.

Louisiana Department of Natural Resources (DNR) Secretary Tom Harris noted that the two agreements had different payment structures to the state, with the DOW Wind covering a smaller area, but paying more in up-front costs and rental fees per acre, while the larger agreement with Cajun Wind had a lower per-acre fee for up-front and rental payments but a higher energy royalty over the length of the agreement.

According to DNR, while the DOW Wind property agreement paid USD 308,101 up-front on its 6,100-acre agreement, Vestas’ subsidiary Cajun Wind paid USD 357,923 on its 59,000-acre agreement. However, DOW Wind is paying 1.5 per cent of gross revenues in energy royalty over the life of the agreement, while Cajun Wind is paying 2.2 per cent, said DNR.

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

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According to Vestas, while the near-shore Cajun Wind Project remains in an early stage, the operating agreement will allow formal development to commence including wind measurement campaigns, environmental studies, and direct engagement with the local community.

Louisiana Governor John Bel Edwards said that wind energy projects are a natural fit for Louisiana’s working coast, which already has infrastructure and a network of industries with decades of experience in designing and operating complex projects in the offshore environment.

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

The approval of operating agreements follows the first-ever Gulf of Mexico offshore wind lease sale in August which saw two developers bid for one of three available offshore wind area leases.

The lease sale brought a high bid of USD 5.6 million from RWE Offshore US Gulf, LLC for the Lake Charles lease area in Louisiana.