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Statoil wins NY offshore wind lease auction with nearly $42.5M bid

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Statoil wins NY offshore wind lease auction with nearly $42.5M bid

Norwegian energy giant Statoil ASA has won an offshore wind lease in federal waters off of New York for almost $42.5 million.

The U.S. federal government selected Statoil subsidiary Statoil Wind US LLC as the provisional winner of the Dec. 15 auction after 33 rounds of competitive bidding for a lease area encompassing more than 79,350 acres that has the potential to accommodate more than 1 GW of offshore wind projects. The OCS-A 0512 lease area, known as the New York Wind Energy Area, starts 11.5 nautical miles from Long Island's Jones Beach and consists of five full Outer Continental Shelf blocks and 143 sub-blocks.

Irene Rummelhoff, Statoil's executive vice president for new energy solutions, said in a news release that that her firm is looking forward to working with New York's state agencies and helping New York meet its energy needs. The Norwegian offshore wind developer intends to start with a phase development of 400 MW to 600 MW that it says will "provide New York City and Long Island with a significant, long-term source of renewable electricity."

"Statoil is well positioned to take part in what could be a significant build out of offshore wind in New York and other states over the next decade," continued Rummelhoff. "This effort is in line with the company's strategy to gradually complement our oil and gas portfolio with viable renewable energy and other low-carbon solutions."

The other bidders for the auction held by the U.S. Department of the Interior's Bureau of Ocean Energy Management, or BOEM, included state agency New York State Energy Research and Development Authority, or NYSERDA, Avangrid Inc. subsidiary Avangrid Renewables LLC, DONG Energy subsidiary DONG Energy Wind Power U.S. Inc., Innogy America LLC subsidiary Innogy US Renewable Projects LLC, and wpd offshore Alpha LLC.

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Statoil's winning bid could be a setback for the administration of Gov. Andrew Cuomo. Even though Statoil will still be working with NYSERDA to develop the area, Cuomo had wanted the state agency to be selected as the developer so it could control the timing and costs of offshore wind development as New York seeks to procure 50% of its electricity from renewables by 2030.

BOEM Director Abigail Ross Hopper said in a news release that her agency is "extremely pleased" with the sale and from 33 rounds of bidding — "the most we have seen for any of our lease sales to date."

Gordian Raacke, executive director of the Renewable Energy Long Island advocacy group, in a news release commended NYSERDA and the Long Island Power Authority, or LIPA, for supporting the development of offshore wind. LIPA is already poised to enter into a power purchase agreement with the 90-MW South Fork offshore wind farm that is being developed by Deepwater Wind about 30 miles southeast of Long Island.

"The strong interest in the New York offshore wind auction demonstrates that this industry is ready to make the big capital investments needed to allow Long Island and New York to harvest this clean and reliable offshore energy source," Raacke said.

Statoil's lease is still contingent upon a pending anti-competitiveness review of the auction by the U.S. Department of Justice and the Federal Trade Commission. The company can also submit a site assessment plan to BOEM for approval during a preliminary one-year term. Upon the plan's approval, Statoil has four-and-a-half years to submit to BOEM a construction and operations plan, detailing the project's development. Once BOEM receives the construction plan, the agency will conduct an environmental review of the project and reasonable alternatives. If the proposed project's construction is approved by BOEM, Statoil will have 25 years to build and operate the project.