The landscape governing offshore energy development is undergoing seismic shifts, leaving industry insiders searching for clear paths forward. In this thought-provoking episode, Jim and Ian are joined by two prominent energy attorneys – Laura Smith-Morton from Perkins Coie and Tyler Johnson from Bracewell – who bring decades of experience navigating the complex relationships between governments and private developers.
The National Environmental Policy Act (NEPA) takes center stage as we examine how environmental reviews have evolved over five decades. Recent attempts to streamline these reviews have been followed by court challenges and regulatory reversals, creating a whiplash effect for project developers trying to navigate permitting pathways.
Our conversation explores the contrasts between offshore oil/gas and wind development frameworks and how these differences create dramatically different risk profiles for investors considering where to deploy capital in an increasingly global energy marketplace.
Perhaps most concerning is the ripple effect of policy uncertainty throughout the energy supply chain. From shipbuilders constructing specialized vessels to training programs preparing workers for offshore careers, the impacts extend far beyond the private sector developers themselves. Yet amid these challenges, we discover surprising areas of bipartisan agreement that can be converted to sustained action.
Subscribe now and join the conversation about how legal frameworks and policies can shape the future of energy development on America's outer continental shelf.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Laws, rules and contracts provide the foundation
for all offshore energy leasingand development in the United
States and they provideaccountability, transparency,
predictability and certaintyneeded to enable the
coordination and, dare I say,partnership that's required
between the government, theprivate sector and the public to
make offshore energy successful.
(00:31):
But laws and rules aren'tstagnant.
They constantly evolve to meetsociety's expectations, the
desire for increasedefficiencies and, of course,
shorter timelines and, of course, the changing political winds.
To discuss this moment and theevolution of those laws, rules
and contracts guiding offshoreenergy, jim and I are happy to
(00:57):
have not one but two specialguests join us right now for
this episode of the OffshoreEnergy Podcast.
I'm Jim Bennett and I have over40 years of experience
developing energy in the ocean.
I'm Ian Vopero and I've spentthe last 20 years developing
offshore energy projects aroundthe world, and this is the
(01:21):
Offshore Energy Podcast.
Hey, jim, good afternoon.
Speaker 2 (01:27):
Good afternoon, ian.
How are you sir?
Speaker 1 (01:30):
I'm okay, I'm pretty good.
Spring is in the air, finallyup here in New England, and that
means lacrosse, and my belovedBU Terriers have had great
seasons.
The women's team has had a 500season against really formidable
opponents, and the men's teamcontinues on into the Patriot
(01:54):
League tournament.
Next game on Friday at WestPoint.
So let's go.
Scholar athletes, bu Terriers.
Speaker 2 (01:57):
Well, that's all well and good, but I have to tell
you that the next generation'ssuperstar in lacrosse had his
first practice forfour-year-olds down here in
Virginia and he's my grandson,so watch out.
What's that, bu, is that?
Speaker 1 (02:16):
the BU Terriers.
That's where I played.
Everything else good.
I know you've been havingexciting times.
Speaker 2 (02:22):
Well, absolutely.
We're down in Virginia Beachwhere the International
Partnering Forum is beingconducted this year, and it's
interesting, to say the least,because we are living in
interesting times, as they say.
And that's what we're going totalk about, from kind of the
legal aspects of things, withregard to all the changes that
(02:44):
we're facing and how we're goingto be moving forward.
Speaker 1 (02:49):
It sounds great.
What a topic, how timely.
And we've got two specialguests joining us today Laura
Smith-Morton from Perkins Coieis joining us.
Hi, laura.
And Tyler Johnson fromBracewell.
Hi, ty, great to see you guysand Tyler Johnson from Bracewell
.
Speaker 3 (03:07):
Hi, ty, great to see you guys, ian.
Hey, thanks so much for havingme here.
So a bit of background.
I am a partner at Perkins Cooey, which is a national law firm.
My focus is energyinfrastructure development and
I've been around the space.
I've done offshore and onshoreenergy and transmission.
I am a regulatory attorney, sofocus primarily on permitting
(03:27):
and environmental review ofprojects from start to
completion.
And then just a second note Ispent really more than two
decades in the energy space andthat included a number of years
at Department of Energy, noaaand a tour through the White
House.
So I have sort of the insideand outside view of how energy
is developed.
It's great to be here.
Speaker 4 (03:48):
Great Thanks for inviting me and I really
appreciate being here, lookingforward to a fun discussion
today.
I'm a partner with Bracewell.
I've been with Bracewell myentire legal career working on
energy regulatory work, alwayswith the energy industry and
since really the founding of themodern offshore wind regulatory
regime, always with the energyindustry and since really the
founding of the modern offshorewind regulatory regime, working
(04:09):
with developers of offshore windprojects.
So really excited to talk aboutoffshore wind energy.
And then I've always been inthe energy industry, not even as
a lawyer, but I was a nuclearengineer on a submarine in a
former life.
So happy to continue thetradition here with the energy
podcast.
Speaker 1 (04:29):
It's really a pleasure to have you guys.
You guys are both veryexperienced in law and
frameworks around offshoreenergy.
You know our first question islooking for your perspective
from your careers, what are thekey guardrails that have
historically framed thisinterplay between the public and
private sector?
We particularly see it gettingpulled really hard in different
(04:50):
directions lately.
What have you guys experienced?
Laura, would you like to gofirst?
Speaker 3 (04:56):
Sure, I think where I would start is and this is
thinking about offshore energyas a huge infrastructure
construction project, right?
So let's just start with alarger frame.
These type of infrastructuresprojects are governed by
multiple federal, state andlocal laws.
(05:18):
So I mean, as folks may know,of course, to build on any
landscape, it doesn't matter ifyou're onshore or offshore you
have to have close coordinationwith all the agencies that are
regulating these projects andthe private sector, right?
So the folks who are actuallybuilding the projects, and we
also, by the way, can't forgetabout the public.
(05:38):
So anybody whose lands you'rebuilding on, you have to think
about them.
So I think that's just one ofmy general frame.
But in terms of the guardrails,you know, again, we're speaking
as lawyers, right?
So that's our framework for thelast 30 years, horrifyingly
enough, but you know, here,offshore energy, it's the Outer
Continental Shelf Lands Act,energy Policy Act of 2005 gives
(06:03):
Interior, who is our, you know,our prime agency managing the
OCS, the jurisdiction over theseoffshore projects.
And you know Ty will talk aboutthis more, but it's broadly,
you know, the private sector.
So, again, offshore wind, oiland gas developers any of the
infrastructure development ofthe ocean has to compete for the
(06:24):
lands that the government hasdesignated for leasing.
And then, when they're in, youknow the leasing process itself.
The guardrails againcoordination with the federal
government along the way,collection of data, analysis of
all potential impacts, lookingat it under the guardrails We'll
talk about this a little bitlater.
The National EnvironmentalPolicy Act I'll start with that
(06:46):
and from now on we can just sayhere and after, called NEPA.
But all of that meansprivate-public collaboration.
Speaker 4 (06:57):
It's a good question, ian.
Before I jump to theinteresting substance there, I
want to say that I'm a longtimelistener to your podcast,
first-time participant.
I've been very much lookingforward to this and I hope it's
as exciting as my favoriteanalog podcast, that is, the
long-running car talk on NPR weclick back the Tablet Brothers
(07:20):
so that is the model thestandard that I'm holding you
guys to.
So I hope it'll be asentertaining, though, sadly, I
think Laura and I have to followthe standard that I'm holding
you guys to, so I hope it'll beas entertaining, though, sadly,
I think Laura and I need tostart with a disclaimer that
we're both lawyers, we haveclients in the industry and
we're here participating on ourown behalf and not on behalf of
anyone else.
Speaker 3 (07:36):
Thank, you so with that.
Speaker 4 (07:39):
I do expect a lot of humor and jokes from you as we
get through this, but ontoguardrails and the development
of energy infrastructure.
There are, I think, a number ofvectors by which the public and
by the public I mean thegovernment at its various levels
(07:59):
works with private industry todevelop energy infrastructure.
And the first I think of isincentives right, how is the
public incentivizing industry todevelop the different types of
energy that is prioritizing?
And so one example that comesto mind is the Inflation
Reduction Act, right, what arekind of the tax incentives that
(08:21):
the government is using to helpdevelop that energy
infrastructure?
So that's kind of one kind ofexample of partnership coming
together.
The second is offtakes right,where you've got energy projects
, you need to have some type ofa bankable offtake agreement to
enable the project to beconstructed.
(08:42):
And that's where the stateshave come in for offshore wind
in particular, focusing just onthe generation of electrons, not
on the oil and gas side of theenergy house, but those state
offtakes where states andprivate industry are coming
together, usually throughcontract, to enter into a
partnership to develop offshoreenergy.
(09:04):
The third kind of vector,partnerships or nature of
partnerships I think of, is in apermanent context, right.
So private industry comes inwith a proposal and the agencies
review those proposals pursuantto a regulatory statutory
framework to get approvals, withpublic input, to develop the
energy infrastructure.
(09:25):
So what are the guardrailsaround those different types of
partnerships?
Well, one, it's a maturestatutory and regulatory
foundation that's kind ofbringing in private industry to
make those long-term commitmentsand partnerships with the
different state and federal andpublic entities.
(09:48):
The second kind of guardrail Isee is a contractual one.
Right, so these offtakeagreements are contracts, right,
private industry is enteringinto a contract or relationship
with a public entity, offshorelessees are entering into a
lease with the federalgovernment that defines certain
rights and obligations by bothparties.
Right, so those are guardrails.
And then, of course, all ofthis is kind of overseen by the
(10:12):
rule of law and the courts toensure that everybody abides by
and honors their commitments.
But going back to the first one,kind of the mature statutory
regulatory environment that haskind of the first guardrail.
Here too, I think it'simportant to note that you know
this framework.
The stability of the immaturityof that framework is important,
(10:33):
but it can be changed, ofcourse.
Right, congress passes statutes, agencies change regulations,
but there's always due processor opportunity for input into
those kind of foundationalelements so that the private
industry has an opportunity toweigh in and let the public
entities know about potentialimpacts, adverse or positive,
(10:57):
that would result from changesto that statutory regulatory
regime.
So those are kind of what I seeas guardrails kind of at a high
level.
Speaker 2 (11:06):
Yeah, I'd like to note that those, indeed, are the
guardrails, but over time theprogram has developed a bit and
the actual players in thisprocess are not necessarily the
same today as they were when theprocess began.
(11:26):
And from my experience mybackground is in, like Laura
says, the OCS Lands Act, whichis the basis for the Energy
Policy Act of 2005.
And there's similaritiesbetween oil and gas and
renewables.
But when the program wasgetting started back 2009, 2010,
(11:50):
you were talking about a muchsmaller group of people that
were involved in the process,and what's been your experience
as that has developed over timefrom those initial efforts to
what is now a very, very large,robust and very expansive
process?
Speaker 4 (12:11):
You know, the first offshore wind project, cape Wind
, you know kind of started inthe early aughts and met with an
inglorious end after BOEM'skind of modern regulatory regime
came into effect in 2009.
So they were seeking permitsfrom the US Army Corps of
Engineers and they were kind ofa lone kind of lead, you know,
(12:33):
point in the spear, trying todevelop a regulatory regime or
adapt to a changing regulatoryregime.
And this goes to the first kindof guardrail that I mentioned.
Right, they were already indevelopment permits pending with
the Army Corps of Engineerswhen EPAC-05 was passed, which
changed the other kind ofself-plans act and kind of led
to the permits that itultimately needed.
(12:53):
Those were challenged with somesuccess in courts thereafter.
But now we've got a much moremature industry.
(13:14):
There's a lot more players.
It's not a single entity outthere.
So, jim, I think your questionis kind of how does the
sophistication or breadth ornumber of participants in the
industry, how has it changed theindustry in that time?
Well, we're getting a lot morepractice with it, right, I think
that's one point.
I mean 20-something copspending, with about half as many
(13:42):
approved since the regulatoryregime started.
So having that kind offamiliarity, cadence and
practice with the processusually improves it, and I think
we're seeing that with BOEMkind of notwithstanding, kind of
the current changes under thisadministration.
Speaker 3 (14:02):
Yeah, and to follow up on that, this is a little bit
of a different point, which is,you know, the the initially
smart from the start, and I wasback there in the day uh
department of energy and withJim at uh at BOEM.
So, good God, this has beenmore than 15 years at least.
(14:39):
Oh yeah, if we're talking aboutpublic participation and more
stakeholders, there's a lot morehas been to date much more
engagement with the public, manymeetings, opportunities for you
know, and again, not just thescoping meetings, the public
comments, but more guidancebeing issued by BOEM about how
(14:59):
to do this process, working withthe industry.
To come up again, talking aboutguardrails, there's also been,
you know, mitigation guidance.
There's been work with thefishing community for fisheries
mitigation, which has been ahuge, huge aspect.
For instance, it's the last fouryears Public community
(15:20):
engagement in terms of they haveyou know, community engagement
with in the leases.
They've got requirements forpublic notice, they've got more
tribal engagement.
So I think I think that's areally important piece over the
time.
To see the broader when I saypublic, again, ty had mentioned
sort of the public as being theagencies and we're talking about
(15:41):
the public as being the and wehave to have stakeholders plus
tribes, and I'm talking aboutthe public as being big and we
have to have stakeholders plustribes, but just the general who
provides input and how theagency is responding to that and
refining it and taking thatinto account.
So I think that's an importantpiece that's developed over time
.
Speaker 2 (15:58):
Yeah, that's a great point.
It has changed quite a bit overtime.
I know early on there was a lotmore that was heavily focused
on the federal and stateinteraction and since then, just
as you're saying, stakeholderinvolvement, federal agencies,
tribal entities and the privatesector, of course, have become
(16:21):
much, much more involved.
It's a much more complex,difficult process but, I think,
a better process From adeveloper perspective.
Speaker 1 (16:30):
We talked about societal expectations changing.
Even over the course of mycareer, you know we went from
particular for offshore projects.
We went for kind of do it totell me expectations, to consult
with me and finally to and Ithink this is where we are now
is involve me with the designand implementation of offshore
(16:53):
energy projects, not just herein the US but really
internationally.
We've seen that sameprogression too.
Here in the US we have twoindustries that are really at
very different stages ofmaturity Offshore energy and oil
and gas in the Gulf of Americaslash.
Mexico is quite mature.
(17:14):
It's been around since justafter World War II and we've
improved and continued todevelop the frameworks around it
and also the expectations ofthe public, private and
government partnerships requiredto deliver it, while offshore
wind, for example, is much neweron the scene.
You know, ty, you mentioned CapeWind and that's.
(17:35):
You know I was an adult whenCape Wind started.
That seems really odd to me.
What other differences have weseen in the progression of
leasing between these twodifferent sectors and their two
different levels of maturity?
You guys have seen a lot inyour careers.
I'm interested in what standsout to you.
Speaker 4 (17:57):
One point and I think Laura will have more to add on
this is the way areas forleasing are identified.
In the early days it was a bitdeveloper-led, and by developer.
It wasn't just the developersthat we are familiar with now
who are pioneering projects onthe intercom shelf, but some of
(18:19):
it was state agencies like theNew York Public Power Authority.
Right was one of the firstproponents of a first request,
an offshore lease off of NewYork, and then ultimately those
go through a competitivesolicitation process and the
winners of auctions prevail withthose leases.
But where we kind of I thinkoriginally started with
(18:41):
proponents or developers kind oflooking for different areas,
we're now moving towards a worldin which BALM looks a bit more
holistically at a particulararea and evaluates the most
appropriate locations to citeoffshore energy within those
areas.
(19:01):
I'm thinking of the New YorkBight, for example, or offshore
California or offshore Oregon,where there's a Gulf of America,
or Mexico where there's kind ofa holistic look at a very large
body of water and then anarrowing of where offshore
energy can be cited, based onthe various limitations or the
(19:23):
other uses of those areas.
So that's kind of the trendthat I've seen, but, laura, you
have more to add there.
Speaker 3 (19:31):
So let me start with oil and gas.
Okay, so, if you know, ty hadtalked about the way that
developers would identifylocations right for offshore
wind projects.
But I just want to return,rewind, to oil and gas.
And you know, ian, you saidWorld War II and it's been a
long, long time.
(19:51):
But the way that this isdeveloped for oil and gas
projects is it starts as a verylong process.
So it starts with a proposedfive-year plan that outlines
areas, considerations of theenvironment.
It's a very long process.
They come up with a proposedplan, five-year, prepare it,
(20:12):
multiple different commonperiods, at least as it stands
now, but draft proposals,approval by the Secretary of
Interior, preparation by thefinal EIS and then it has to be
approved by the president andCongress and that could take up
to two years, and so that's justto get to the point of to
actually issue a notice of acompetitive sale.
(20:35):
So if you think about that,that is a really long time for
preparation, ready for a verylarge area of the OCS and
thinking about it, planning in afive-year horizon.
Very different when we get tooffshore wind and you know,
before we even get to theoffshore wind process, I'm going
to rewind even more.
(20:55):
You know the big differencehere between oil and gas and
offshore wind if we just talkabout the leases themselves that
are issued.
An oil and gas lease actuallyconveys the right to explore for
, develop and produce the oiland gas developed in that lease
area.
So just remember that one pointbefore I turn into the offshore
(21:20):
wind process.
Speaker 1 (21:21):
But offshore oil and gas, after the lease sale, still
has to submit a number ofdifferent plans and permits to
get their activities.
It's just been going on muchlonger.
It's a much more practicedsystem.
In fact.
Some of the permits even areprogrammatic permits.
So as long as you're operatingwithin this certain window of
allowable activities, you getyour permit.
(21:43):
It's not that it's easy to door that it hasn't been well
regulated, it's just it's somature right now that it can be
very prescriptive around what'srequired to continue to develop
your operation and ultimatelyget to production.
But forgive me for interrupting.
I know you wanted to speakabout offshore wind.
Speaker 3 (22:02):
I promise that I'll try to make a very long story
shorter, but the bottom line is,as Ty said, we have, you know,
the developers identifying thelease areas, originally for
offshore wind.
Bom has become much moreinvolved.
Already talked about theinteragency task forces federal,
state, local governments andtribes Look for the areas, send
(22:26):
out a call for information.
Then they have an environmentalassessment.
They do not have these lengthyplans.
If they don't have thesefive-year plans, they're not
going to have the litigationthat inevitably has resulted
from those five-year plans,which makes the process for oil
and gas even longer plans, whichmakes the process for oil and
gas even longer, but perhapsmore durable.
Speaker 1 (22:46):
That litigation occurs before a developer has
rights to a lease and it'sagainst the government.
You know, from a developer'sperspective I'd rather society
decides what areas it wants tooffer for different types of
energy development and then havea smoother process as a
developer once you have therights and opportunity to
(23:09):
develop that land.
So it's not hitting yourproject timeline and your
capital expenditures.
It's already decided beforehand, right?
Speaker 3 (23:18):
So the one thing we can't fail to mention is that
even if the wind leasing processdoesn't have a five-year
program and that you know the upand down wind undergoes an
extensive environmental reviewprocess following the lease sale
.
So there's a lot of stages thatI'm not going to go into, but
the bottom line is that it has along environmental review
(23:41):
process.
Ultimately that actually hasmoved to a more programmatic
regional approach before theagency approves the project.
So that has been, you know, hasbeen up to seven to 10 years.
So it is comprehensive andintensive.
Ultimately, where I'm gettingto which is really not anything
to do with the identification,but it is important distinction
(24:02):
for talking oil and gas andoffshore wind.
Remember that parking lot.
Let's pull that back out.
Offshore wind lessees do nothave the right to explore,
afford, develop, produce orgenerate the electricity in the
lease area for which they havepaid To date.
(24:23):
I believe the top is $1.1billion for a lease area where
they don't have the right toproduce.
They have the right to submit aplan for approval.
Speaker 2 (24:35):
Right yeah, kind of astounding to think about it
$1.1 billion so that you cansubmit a plan.
Speaker 3 (24:40):
Correct.
Speaker 1 (24:41):
Yeah, the lack of certainty right right is very
dramatic between the two verydramatic um, also the difference
in aerial extent.
Right, an offshore only gaslease, a single lease, three by
three nautical miles.
An offshore wind lease can bequite a bit bigger.
Uh and jim, I noticed you, youknow, kind of I don't know if
you were having flashbacks whilelaura was going through the
(25:03):
process of getting five-yearplans approved.
No doubt Did you want tocomment there.
I think you have a little bitof experience.
Speaker 2 (25:11):
Well, I think there's something very interesting here
and, of course, it revolvesaround the maturity of the
industry and the fact that thelegislation is a little bit
different.
I think the idea is ultimatelythe same, but the legislation is
different.
And because the oil and gasindustry is much further along
and they've decided we need afive-year plan, comrade, in
(25:34):
order to move forward with ourexecution and get the oil out of
the ground I mean, this comesout of the history of the Arab
oil embargo from the 70s we needto move forward with the
development of offshore oil andgas.
It's a little different in thatthe wind is another opportunity
(25:56):
to move forward, but itobviously is not moving forward
with the kind of maturity thatthe oil and gas industry had and
, as a result, you've got verydifferent situations in terms of
the process and the amount ofangst, if you will, on the part
(26:18):
of the public and, as a resultand I'm not talking about the
very current situation, which isa whole other discussion with
the recent events since January20th but you've just got a
different situation with regardto the durability of the actions
that have been taken, and Icertainly invite comments on
(26:42):
that.
Invite comments on that.
But that's been.
I think our experience with thewind program is that the
newness of it results in a lotmore variability in terms of the
durability.
Speaker 4 (27:11):
The durability question is an important one,
and I think it reaches back andtouches on something we talked
about earlier, which is thoseguardrails, energy
infrastructure projects.
Right, because you don't knowwhat will happen in an election
in four years.
How will that newadministration maintain or
change current regulatoryenvironment policies, incentives
permitting, et cetera?
(27:32):
That have undergird yourproject.
So those durability questionsare being asked a lot these days
and again it's those guardrailsthat are going to be there for
that certainty in the future.
Speaker 2 (27:51):
You know, just to sum up on that point, the five-year
program for oil and gas, whichI worked in for many, many years
.
For oil and gas, which I workedin for many, many years, Aside
from all of the process stepsthat you talked about, Laura,
the litigation that was set upas a result of the five-year
plan was pretty substantial andkept things not moving along at
(28:18):
the rate that I think was reallyintended, and I'd like to
suggest that I don't think thatthe five-year plan added that
much in terms of durability.
It was to me, the maturity ofthe industry and knowing what we
wanted to achieve andrecognizing what the impacts
(28:38):
were and how to mitigate thoseimpacts that allowed us to move
forward and have the durability.
With the decisions that arebeing made and in a nascent
industry like offshore wind,it's much more difficult to
enjoy that durability.
Speaker 1 (28:55):
Well, I just, jim Ty, said something that really
strikes the big P of politicalrisk in the development side of
me in my career.
Right, we've I know we've kindof touched upon this a couple of
times.
This discussion of durabilityand kind of rule of law and
predictability is so important,particularly for offshore energy
(29:16):
developers.
You know, oil or gas or wind,these things take much longer to
do an appropriate assessment,technical assessment, not to
mention the environmentalassessment, to do it properly,
to deliver.
And so if you know three and ahalf years is your planning and
delivery horizon for an offshoreenergy project, you're not
(29:40):
going to be able to do it.
And so, tai, when you werespeaking, you were very well
articulating how people in thedeveloper company assess
political risk, and historicallythe US has been the place with
the lowest political risk forpotential global investments.
(30:01):
Right now we see a flux andthen we see a lot of change
occurring and we'll see how thatplays out and we'll see if that
stabilizes the system.
But that's a big difference andI don't see how you can, even
technically, deliver an offshoreenergy project safely,
responsibly but also kind ofefficiently without doing an
(30:22):
awful lot of front planning andfront end assessment of the
environment.
That takes a long time to do.
Speaker 4 (30:30):
I think it's worth emphasizing, too, that the
duration of the projects exposesthem to a number of unique
risks.
The political, regulatory riskis one, but there's also the
economic risks.
As you're planning your project, you're trying to get an
offtake agreement, you're makingcertain assumptions about the
availability and pricing ofcomponents and services and
(30:50):
vessels and things like that,but you may not be as fully
(31:13):
exposed.
Speaker 2 (31:22):
Love it.
Let's talk a little bit aboutNEPA.
Uh, a lot.
All our careers, I think, havebeen very involved in NEPA.
I know no, mine certainly has.
Uh, from small projects in thenational capital area, uh to
offshore oil and gas, tooffshore wind.
(31:43):
And that process, which took 10years worth of reg writing to
get into place, has been inplace for about 50 years now and
it's not changed a lot, butit's been tweaked.
Notwithstanding the currentchanges that have occurred, what
(32:05):
has your experience been as faras what NEPA does and what it
ought to do?
I think it's become a much,much more effective and
efficient tool for ensuringstakeholder involvement, but
there are downsides to that.
So what has your experiencebeen?
But there are downsides to that.
Speaker 3 (32:24):
So what has your experience been?
Yeah, so I'm happy to jump inhere and I will do my best not
to go into my lawyerly mode toomuch, which I have a
predilection to do, particularlywhen we talk about NEPA and Jim
was saying, like, how long he'sbeen doing this.
I mean, I was working ononshore oil and gas projects
(32:44):
again 20 years ago and on, youknow, public lands under NEPA.
Nepa challenges, litigation,and the constant refrain for all
of these projects is it takestoo long.
The other, you know constant,the saying of paralysis by
analysis.
That's always a favorite ofanybody who's at these
(33:04):
conferences talking about NEPA.
It takes a long time.
And again, you know we talkedabout guardrails at the very
beginning.
The guardrails, not only arethey the statutes, but I
mentioned NEPA and that started.
And Jim, you mentioned this,it's about public participation.
That's the whole frame of thestatute is how do you get these
projects built, ensuring theprotection of the environment
(33:30):
and taking in public comment?
Right, and this is sort of howit's evolved.
It's, you know, jim mentioned 50years ago past regulations
issued pursuant to an executiveorder and really those stayed in
place as the guardrails for anyproject that has a federal
agency action, federal fundingsince that time and the first
(33:52):
change was in 2020.
So President Trump issued anexecutive order and then saying
that we needed to revise theseregulations in 2020, the
regulations were indeed revisedand there were some significant
differences.
You know, we had a bigger focus, I would say, on, let's say,
applicant prepared EISs, whichis a very positive piece of the
(34:17):
equation and, I think, somethingthat actually delivers those
efficiencies, and then thecontroversial sort of new
definitions of cumulativeimpacts, and I could go on and
on, but I think those are sortof two of the big frames and go
ahead, jim.
Speaker 2 (34:31):
I was just going to say that you are talking about a
very significant change.
I kind of question how muchthat significant change is the
result of actual rewriting ofthe rules, of regulatory changes
.
Speaker 3 (34:46):
And.
Speaker 2 (34:47):
I think what you're observing with regard to
applicant preparation, that isone thing that has changed very
dramatically over the course ofthat time, as a federal analyst,
the federal government and theemployees of the federal
government were actually doingthe analytical work and writing
(35:09):
the EIS, and the way the EIS hasexpanded so dramatically and
covers so much more ground, somuch more technical areas and is
applied to so many more things,that applicant-prepared
environmental impact statementis kind of a critical step in
order to get the process moving,in order to move forward.
(35:31):
There is no way that thegovernment would be able to do
the kind of NEPA work as it'scurrently structured unless and
until or without the applicantspreparing that work.
Speaker 3 (35:47):
No, and you know, I think that that's that was
certainly recognized with thefiscal responsibility act, so
that you know, codified many ofthese pieces of nipa, part of
which was that right and settingtimelines and setting page
limits, but of course they'reall exceptions and the timelines
they were all exceptions.
But I think that the generalthing is like over time again,
everybody said how long it took.
(36:08):
Part of the efforts that I'vebeen involved with over the past
10 years it's been how do wewhich is a really long time
again, I keep saying that.
But how do we make these moreefficient?
How do we have the agencieswork more closely together?
How do we have a lead agencycollaborating agencies, the one
federal decision trying to makethe process more efficient?
(36:29):
So that has been underway foryears, I mean since I was in the
Obama administration.
We're talking 2010.
Moving through, we had largetransmission lines.
We're not just talking aboutoffshore energy, we're talking
about all infrastructure.
How do we make that moreefficient?
So the one thing and I, youknow, ty and I've chatted about
this and this is the big thingthat's happening right now is
(36:51):
what does it look like today?
And there has been anearthquake, a tsunami, a
landscape shifting.
We can say whatever we want, butthere's been a dramatic change
over the last year and a half,two years and, remembering back
that CQ was directed to havebinding regulations that
(37:12):
governed right, all agency NEPAcoordinator, the literal, you
know, the governing body whowould help agencies coordinate
those procedures.
And an unusual turn of eventsand a strange turn of events, we
already, you know this is notthe Bachelor, by the way, I
can't remember you know, themost unique circumstance ever,
(37:36):
but at any rate, the DC Circuitdetermined the CEQ had no
authority to issue itsregulations.
The circuit determined the CEQhad no authority to issue its
regulations, right?
So that was, you know, sort oftook everybody by surprise, not
the judge who said it, but thefact that that actually was
reached in a case that didn'teven raise that issue.
So folks were, you know, tryingto work through that Subsequent
(37:59):
court District of Iowa echoedthat.
And then the question is whatgoverned right?
So it's like the 2024regulations.
So before 2020, we had severalrevisions in 2022, back and
forth, and then we have the 2024ones in Biden, and then you
have these decisions.
(38:19):
And you know, ian, you talkedabout certainty, predictability.
Folks don't know what sides arethe last piece of this, and I'm
Ty I know I was going to talkabout this a little bit but then
you have an executive order oneof the 160, I think, that have
been issued that says CEQ isdirected to rescind its
regulations right, so the roleit's the executive order that
(38:42):
established that got.
Ceq is instructed to do thatand it's instructed to help
coordinate the other agencies asthey update their own NEPA
regulations.
So that's where we were January20th and things have continued
to involve.
Ceq issued something called aninterim final rule With some
(39:04):
instructions, goes direct to.
Basically they said publiccomment, but really it was final
and effective within the lasttwo weeks.
And then you have the next stepand there's a guidance, and
then I'm going to turn it to Tyfor the most recent iteration of
where are we right now and howhas it changed over the last two
weeks, because we could have 14podcasts on Nipah.
Speaker 4 (39:31):
I've only gone to the highest level.
Ah Nipah, it's a real lightningrod.
Speaker 1 (39:35):
Next episode Nipah deep dive.
Speaker 3 (39:39):
In a shocking turn of events.
Now I'm using the correctphrasing Go ahead.
Speaker 4 (39:45):
I will belabor it.
But the only thing I think tonote, or the kind of latest
before we jumped on, was theissue, in spite of a template
regulations or guidance documentthat agencies could adopt to
make their own to help informhow those agencies are going to
comply with NEPA and give someinsight as to how the project
applicants can understand howthe agency is looking to
(40:08):
implement those.
The only thing I'd add to thatis it kind of leaves the
developers and their attorneysin kind of this little bit of a
quandary is what aspects of NEPAare derived directly from the
(40:32):
statute and which are kind offlowing from policy guidance or
legacies from the CEQregulations.
For example, there aredifferent topics and concepts
that have been in bedrock in CEQregulations since 1978, 79 when
they were first passed, buthave been kind of watered down
and distilled into the latestCEQ actions and the guidance
templates that have come outrecently.
So when you're looking at aproject now, what does a
connected action analysis looklike when all the connected
(40:54):
action language and definitionsthat were in the CEQ regulations
are no longer there?
So it goes to the uncertaintyquestion a little bit.
Now what is the appropriateNEPA framework?
But I actually had a questionfor Jim.
I wanted to talk aboutpermitting certainty and I've
(41:16):
noticed in dealing with allsorts of energy projects that
offshore wind projects inparticular take advantage of
FAST-41.
That offshore wind projects inparticular take advantage of
FAST-41.
And they're coordinated by theoversight by FIPC, the council,
and are covered projects beinglisted on the permit dashboard.
But I don't see many othertypes of projects there.
Notwithstanding, they mayqualify as covered projects.
(41:42):
Your thoughts on why theoffshore wind industry is so
prone to utilize fast wind?
Speaker 2 (41:50):
That is a great question and it points to when
that process was put in placeand why that process was put in
place, which was not offshorewind.
It was actually quite theopposite it was to move things
along for oil and gas.
But the requirements that wereidentified for that process
(42:12):
basically applied to offshorewind and we had as an agency an
obligation to identify thosethings that could be moved along
quicker and FAST-41 has beenapplied to that.
So I can't answer your questioncompletely.
But certainly that process ofmoving things along that was
(42:34):
intended for oil and gas.
It is a question.
I put the question out there aswhether it's moved things along
for wind.
I think they would have beenmoved along for wind probably
more expeditiously anyway, butthat is.
I don't know where that's goingto stand now under all the
(42:56):
changes that have occurred andthe whole issue that you're
raising about uncertainty.
Let's take that to the nextlevel.
I mean there's a ton ofuncertainty associated with the
whole process in theconventional way as of January
19th.
Now there's a ton more ofuncertainty.
(43:17):
What does all this uncertaintydo to the ability of the private
sector to move forwardexpeditiously?
But for the government tofulfill its role of allowing the
private sector to be movingforward expeditiously.
I'd like to hear your thoughtson that.
Speaker 3 (43:40):
Yeah.
So if you don't mind, I'm goingto just snap back to your the
comment about FAST 41.
So you know FAST 41 and thispermitting dashboard.
I remember talking about that2013, 14, and really it was.
I mean, we keep having thisthread throughout, right,
predictability, certainty, likeyou just said, jim, transparency
(44:03):
, accountability, somewherewhere the public again remember
we're talking public can lookand understand where projects
are, understand the process thatthe agency is undertaking,
everybody being able to havethat, you know, that visibility.
So if we go back, this isanother question.
So if we go back, this isanother question I it is a
(44:27):
little bit fuzzy to me is wehave all of the uncertainty and
not sure what's happening withthe NEPA process and the
timelines and where we reallyare right, what are our
obligations?
Where do these project?
Like, if you have an x timewhere you're supposed to
complete a project, where doesthat start, which is a constant
debate, right, when do weactually initiate an action?
But if you go back, thePermanent Council is also
(44:53):
something that it, you know, theadministration seems to be very
supportive of, seems to besupportive of that transparency.
Like you said, the oil and gas,when there are transmission
projects on there.
There's one mining project onthere.
You know, however many multiplemost of the offshore wind
projects but the permittingdashboard is still there and
they just named criticalminerals.
I think they just put 10critical mineral projects on
(45:13):
there.
So it's, you know, it lives,the extent to which it'll be
followed.
They also said they're going toput they're calling these
transparency projects.
Now I would be interested to seeagain if we're talking just
wind what it looks like on thedashboard for these projects and
I haven't looked in the lastweek but I'm sure that
(45:33):
everything just says pause.
But I mean I would recommend toanybody who is listening to this
or otherwise it is aninteresting track to see what
projects under Fast 41 orotherwise are actually on this
dashboard.
It'll give you a better frameon how long these projects take.
So I was, I sort of broughtuncertainty back, and now I'm
(45:53):
bringing it back in terms ofwhat does it look like.
I think there is broaddiscomfort across all the
industry sectors.
So I think this is, onshore andoffshore, about just
uncertainty of and we startedwith guardrails, rule of law and
guardrails.
Nobody really is certain whatthe guardrails are.
(46:13):
What are they going to beapplying under?
Where did their permits standwith different executive actions
that have taken place, thechanges in NEPA, recent, you
know, secretarial orders thatare saying for certain types of
fossil fuel projects, it wouldtake as little as 28 days for an
(46:35):
EIS with minimal public comment.
Speaker 2 (46:39):
Say that again.
I can't.
Speaker 3 (46:41):
It's too hard.
Speaker 1 (46:47):
28 days for an environmental impact statement
Review Review.
Speaker 3 (46:49):
Yes, review and, mind you, because, right, we are
talking about where you startApplicant-prepared EISs, right?
So if you have everythingthat's like handed to you, it is
possible, and this is underemergency authorities.
They followed the steps becauseof an energy emergency, but I
think we have to think aboutagain what frame.
Now we're not talking renewableprojects, we are talking the
(47:13):
conventional and geothermalcritical minerals, but that's
just another step in the process, and so I think there's a bit
of whiplash of we really wantthis certainty across the
infrastructure projects.
So we're not just talking aboutoffshore wind, we're talking
literally across the board.
Ty.
Speaker 2 (47:31):
Well, we want it, but you got a question whether
we're actually moving towards itor moving away from it.
Speaker 4 (47:37):
Indeed.
Yeah, the uncertainty ispalpable and it has a material
effect on capital investment forsure.
Right so our offshore energydevelopers, I think, are
certainly reading the landscapeand I think it's important to
(47:57):
recognize that Capitalinvestment in US offshore energy
is not the only game in town.
There are many other countriesthat are developing offshore
energy projects and it's likelycapital will flow to where it
can be most productivelyemployed and the US may not at
the moment seem like the mosthighest, best use of capital
(48:19):
dollars looking at the otheropportunities out there, and I
think that uncertainty kind ofrolls downhill as well.
Right, so it's not just theoffshore wind projects or
offshore energy projects, but itwill metastasize to supply
chain, the marine industry,vessels, port upgrade projects
(48:40):
and everything that kind of theoffshore wind industry relies on
, grade projects and everythingthat kind of the offshore wind
industry relies on.
There has been a huge effort bythe US, by many states in
particular, and tradeorganizations developed a supply
chain infrastructure to lowerthe cost of offshore wind.
It's a timescale that probablytakes a decade to accomplish,
maybe longer in some states likeCalifornia, but developing that
(49:05):
infrastructure so that offshorewind projects could be
conducted on a moreprice-competitive basis has long
been a goal of that, and soinjecting that uncertainty
further retards the developmentof that supply chain and
infrastructure to hopefullyrealize that those costs
decrease.
Speaker 3 (49:24):
Yeah, and just to throw in a story from IPF, where
we were sitting, there was ameeting yesterday and, jim, I
believe you were there too amember meeting.
But, speaking of uncertainty,there have been folks who have
invested a lot of money intraining their employees right
to do certain types of workneeded for offshore wind
(49:44):
projects, and a member stood upand basically said look, we've
invested a lot in these people.
Where are their skills going tobe used?
Where are we going to employthem?
How are we going to ensure thatthey do have jobs in the future
?
And one of the answers was cometalk to us, because there could
(50:04):
be opportunities overseas nowif they are not here right now
in the US.
But I think that that goes againto this uncertainty People.
This is not just the bigdevelopers, the projects
themselves.
These are the other people, asTy mentioned, who have jobs that
have derived from these sectors.
I mean, there's been such hugeinvestments in maritime
(50:27):
academies and workforce and STEMin high schools and really
getting to people andcommunities to show them this
importance of a diversifiedenergy sector and something that
their children can look towardsor that they can look towards,
and so this has rattled folks alittle bit.
It's not to say that there isan opportunity out there, but I
(50:47):
think the uncertainty is really.
There's a rippling effect.
Speaker 2 (50:52):
Yeah, I think on the training front, that's a good
point and I think it points tonot being so focused on a
particular skill to theexclusion of others.
The transferability of skills,I think, is pretty critical, so
that somebody who may be focusedon wind or may be focused on
(51:14):
oil and gas still has skillsthat are transferable to other
industries outside of energy.
Outside of energy.
Speaker 3 (51:25):
And I think the last thing that I would point out is
that this is not somethingthat's unique to blue states,
right, not just a talking point.
This is something that also isred states.
Right, this is bipartisan.
There are the states which havereally benefited from
investments in offshore wind Ican call Louisiana out for, and
Texas, you know, is building thebig Domin, are not
(51:48):
transitioning to, but they'rediversifying their skill set to
be able to deploy in therenewable sector, and that's a
(52:11):
really important point too.
Right, you've got the range of.
I might go back to jobs, butyou know the plumbers, the
electricians, you know I spoketo somebody I mean, this is
actually far off the point, butsince this is our podcast, I
managed to procure some gumbotoday at the show floor.
Right, jim, I'm looking at Jimlaughing, but I was very happy
about this from somebody who wasin the food service industry.
(52:33):
Right, and they serve offshoreenergy projects.
Writ large.
Speaker 2 (52:39):
That's a great example, um, and it was good
gumbo really good gumbo I hopeit came from louisiana at least
it was it okay.
Speaker 3 (52:48):
Okay, good it was.
Speaker 1 (52:50):
It was delicious that helps calm my my cajun side a
little bit, not to get off on atangent, but it also points to
uh, some of the training that we, we do with the oceanic network
.
Speaker 2 (53:02):
uh, a lot of people that show up for that training.
They're not just nuts and bolts, maritime or engineers or steel
workers, they're the supportindustries, they're the catering
industries.
They want to understand betterabout the industry and want to
seize some of that certainty,identify where the uncertainty
(53:25):
is, so that they can invest andmove their business in the
direction that would be mosteffective.
Speaker 4 (53:32):
As a former Navy guy, I love to talk about boats, and
Laura mentioned the Louisiana,texas and I think it's worth
noting just the impact thatthese offshore wind projects
have had on the shipbuildingindustry.
Right, this is a priority ofthe Trump administration.
It's identified as a nationalsecurity weakness the lack of
shipbuilding capacity in the US,and here's an industry that's
(53:54):
looking to kind of jumpstart,provide business and experience
to that industry.
So I see a lot of good thingsthere.
Speaker 1 (54:04):
We're all sitting here in energy and I doubt any
of us, or many of our listeners,would disagree with the fact
that we want energy to thrivebecause also of the economic
opportunity it creates for ourcountry.
Ty, I share salty blood.
I wasn't in the military but Iwas an oceanographer at an early
(54:25):
point in my career, so I spenta lot of time on ships.
But you know, I want to seethat continue to thrive.
And I would say too, if youlook at history, our maritime
sector, particularly thecommercial maritime sector, but
even the defense sector, is whatit was a hundred or 75 years
(54:45):
ago.
You know, after World War II.
You know our energy industryhas the opportunity to keep
growing because we're so goshdarn good at it and, frankly,
it's helped me, you know, in myown personal career.
I joined the energy industryand it helped unlock all kinds
of wonderful cultural andeconomic rewards of having a
(55:06):
career in this.
I want more americans toparticipate in this, not fewer,
and so I, I think so many people, no matter the political
persuasion.
We're all on the side of theangels.
We want what's good for ourcountry.
We we get stuck here in thesedetails, and I think you guys,
I'm just reflecting on what youwere all talking about before.
(55:30):
I don't know if a lot of peoplewho don't work in this space
recognize just how much ourframeworks, our laws and our
regulations around offshoreenergy have adapted with time to
the times and also to becomemore efficient.
You know, I want to just saythat really clearly because I
(55:51):
think listeners need torecognize this and hopefully
others.
You know wider than ouraudience.
Thank you, listeners.
You know we have been trying todo our best to develop energy
responsibly, economically,profitably and with the
recognition of the opportunitiesthat creates in our country for
(56:12):
the history of our country.
There are good people workingin it, always, you know, trying
to make it better day by day byday.
Let's not lose sight of thatfact.
It's not like you know, we'rereally broken in this country.
We have gotten more and morecomplicated.
There may be some efficienciesto find, but everybody was
(56:32):
certainly trying to pull in theright direction.
Speaker 3 (56:36):
Yeah, and I, I mean I know we I don't know where we
were going to talk about this,but this just makes me think,
and I think this is constantconversation we're having at IPF
.
But just talking about thepeople aspect of it and offshore
energy, I think we have torecognize the incredible folks
that we have in these governmentagencies trying to make all of
(56:58):
this real right.
They are working so hard andhave worked over time and, jim,
you were one of those.
Just you know actually shakingagain shaking his head.
I know he's like, but I mean,really I have never worked with
so many wonderful, committedpeople in the energy industry as
(57:20):
I did when I was in thegovernment and since that time,
well, frankly, before and then,you know it's not just you know,
we're not just talking policypeople, but it's the technical
people, like you said, theoceanographers, the
environmental, the scientists,the engineers and all of that.
I mean I just think the wholeindustry is so exceptional and I
I think it just it has to besaid how incredible our federal
(57:43):
government is and the employeesare.
And you know, workforce isgoing to be a big thing.
We're talking about governmentworkforce.
That's a really big piece here,because if we want to continue,
we have to make sure that wehave that workforce to actually
advance the energy industry.
And I think that's where we'resitting, at an inflection point
for that, to a great risk ofhaving the people to move these
(58:05):
industries forward.
Speaker 1 (58:10):
I wanted to just ask a slightly different question,
but we're certainly.
We're certainly there.
How do you both see the currentrisk profiles between the
sectors of oil and gas andoffshore wind?
We've certainly touched on it acouple of times in our
conversation and my risk managerrole is very happy.
(58:31):
Do you see any other bigdifferences between the sectors
and with how they're changingcurrently?
Speaker 3 (58:50):
so I, you know, I think that you know something.
We've had conversations broadlyabout um and interested to some
, you know, and in ty's thoughtson this too, if he's willing.
But you know, I think, what onething we've had a conversation
about the products are totallydifferent.
You know, oil and gas,transportation fuel, the demand
is different.
We've got electrons on theoffshore wind side.
The demand for fuel isdifferent than the demand for
(59:10):
electricity.
I think there are just inherentrisks in that right.
We've got a mature industry.
It's been around for a longtime and we have I don't want to
say nascent anymore, because Ithink it's further than nascent
but it's just not as mature forrenewable energy and I think
that is just inherently risky asa profile.
We've talked about that theentire time.
(59:30):
Harkening back to something Isaid earlier again, the rights
that you get with an oil and gaslease versus the rights that
you get with an offshore windlease.
They're just fundamentallydifferent.
They're different types ofcontracts and I think that
anybody looking at that is goingto say that that's a risk, that
that's a calculation they'regoing to have to make when they
are putting billions of dollarsinto a project.
Speaker 4 (59:54):
Yeah, I want to emphasize one point you made,
laura, and that's a good one.
It's the fundamental productthat oil and gas delivers and
how it differs from whatoffshore wind, for example, will
produce.
Right Electrons are fungible.
Your house, your factory, yourbusiness can be powered from
electrons from anywhere.
It's a choice by the states topursue offshore wind as part of
(01:00:19):
their generation mix, and somaybe there's a view that if
offshore wind were not to bedeveloped, those electrons would
just come from somewhere else,whereas it's harder to make that
gamble with oil and gas, forexample.
(01:00:39):
Right when it's so foundationalto the transportation economy,
you have to import that energy,that oil and gas, from other
countries that may not be asfriendly with the US or advance
or have our goals and ambitions.
So I see that kind of differentproduct nature as affecting the
(01:01:00):
risk profile of each industryas well.
Speaker 1 (01:01:07):
And certainly major consideration for governments
and policy makers and hopefullythe public too, right?
Those are really keen issues tothink about as we continue on
our energy transition.
That needs lots of differentsources and uses of energy.
Speaker 2 (01:01:24):
So I think we're about ready to sum up and, uh,
uh, provide key takeaways.
And why don't we, uh, why don'twe start with you, laura?
Speaker 3 (01:01:35):
oh my goodness, I think my key takeaway um is
always certainty, certainty,certainty.
That's what we need.
We need predictability, account, maybe the uncertainty, and
that's something that I thinkthe industry, lawyers and when I
say industry, I don't mean justoffshore wind industry, I think
anybody in the energy industryis struggling with right now,
(01:01:58):
and so my key takeaways are wereally, really need to have that
transparency from the federalgovernment, and I think we also
have to have a little bit of alonger term view for offshore
wind and try to settle a bit and, you know, think strategically
about next steps.
So I think that's really whereI am.
Speaker 4 (01:02:19):
I think it's similar.
It's, you know, are theguardrails.
How are the guardrails holdingup in the public private
partnerships that have beencreated to develop the offshore
industry?
It's not just, you know, theregulatory regimes of certain
agencies, but it's thefoundational architecture of how
agencies review projects right,projects right, nepa.
(01:02:44):
How is that all changing?
How is that adding to theturbulence and uncertainty that
perhaps is undermining orperhaps accelerating the
development of different typesof projects?
So those are a couple of areaswe'll be watching closely, for
sure.
Speaker 1 (01:02:56):
You guys.
I found this a reallyfascinating discussion as a
participant and host, but alsoas a listener.
I'm loving it.
I mean, you guys talked aboutour evolution of policy and
regulations.
You talked about the changingexpectations of society.
You talked about the requiredpartnerships between public,
(01:03:18):
private you know governmententities to do big things and I
think it was a fascinatingdiscussion.
I really appreciate you guysjoining us.
Speaker 2 (01:03:29):
Jim, those were my takeaways too from the from
today's chat my takeaway I agreeand and um, my takeaway from
this, from this discussion, isthat uh discussion is that we
(01:03:49):
have a huge, huge set ofchallenges that are associated
with offshore wind, and they'vemaybe become even greater in the
last few months and I thinkit's in order to be moving
forward constructively.
I do think we have to make surethat we focus not so much on
the problems and the negativesthat are associated with the
changes, that we can identifyconstructive areas to move
forward.
(01:04:10):
Maybe the pace will be a littlebit slower, but we can continue
(01:04:35):
to move in the right directionfor America's energy situation.
Speaker 1 (01:04:48):
America's energy situation.
Laura and Ty, this is the timewhen we do the last drops in the
ocean for the week, right, andyou guys are listeners, so you
know this is a chance to mentionsomething that's topical,
that's thematic to this, butmaybe that we haven't covered.
But really, just a couple ofseconds on anything else that
you'd love for our listeners tobe aware of that's going on in
offshore energy.
Laura you are our guest.
Would you like to go first?
Speaker 3 (01:05:10):
More than happy to, and I will try to keep it brief.
Even as I'm sitting here, I'mthinking this was not my drop.
So I'm going to take two drops,but or maybe three, but or
maybe three.
One of them is, you know, thetwo words that have not been
mentioned during thisconversation, that are on the
street and everybody's lipsthese days are data centers,
(01:05:31):
right.
Who's going to, what's going topower these data centers?
And a lot of conversation, thinkabout here in Virginia is
offshore wind.
So that's my one, right, and Iknow I'm looking really closely
at it.
My whole firm is lookingclosely at it.
So that's one Second drop,which we've already heard in a
past conversation with a guest,and this is because I'm talking
about it tomorrow but othertypes of marine energy I don't
(01:05:52):
think we can forget that.
We have wind I mean sorry, wave, tidal, right.
Current other types of energy.
Those are still out there,they're still pilot projects,
they're still R&d being done.
So that's second and the lastone, which is offshore energy,
is carbon capture.
So ccs, boehm and bessie aresupposed to be in the process of
(01:06:13):
developing regulations.
It's going to take a long time.
Jim is probably looking at meand saying, wait, that was
mandated several years ago, butit was, and that is another
opportunity.
Speaker 4 (01:06:22):
So those are the three points, my three drops I
have a couple and maybe they canbe split into multiple drops,
but it's really abouttransmission.
There's been a lot of interestand effort by states, namely New
Jersey, for example, trying tofigure out smart ways to
interconnect lots of offshorewind to its grid in a way that's
(01:06:45):
economic and efficient Backbonetransmission along the East
Coast to integrate all this wind.
What does that look like now?
How are states, how are grids,grappling with the
unpredictability?
and uncertainty currentlyaffecting the offshore wind
industry and how is thataffecting their plans, some of
which are quite expensive, plansin the billions of dollars, to
(01:07:08):
upgrade their grids to integrateall of this new and helpful
energy?
And the related point isinterconnection issues.
It's been a long big issue foroffshore wind projects very
sizable amounts of energy andcapacity to a grid and requiring
(01:07:29):
significant network upgrades.
How does that process getrendered more efficient and
practical as the country movesforward to integrate all the new
resources necessary to servethese data centers?
Speaker 1 (01:07:45):
Jim, any last drops from you, yeah.
Speaker 2 (01:07:48):
I have one because I want to go back to Gumbo, and
the reason I want to go back toGumbo is because it represents
what this is all about.
It's very easy for us to keepthinking in terms of a huge
industry and gigawatts andelectrons and everything, but in
(01:08:09):
fact, this is us as a societymoving forward, and there's so
many different facets to it, andgumbo is one of them, and I
think we need to keep that inmind.
It's just not a question of usor them oil and gas versus
(01:08:30):
renewable or stopping renewableor moving forward with this.
It's the whole picture for allthe members of society and we
need to be keeping that in mindin all of our discussions.
Speaker 1 (01:08:44):
Oh, jim, so nice, I love it.
The Creole mixing pot of gumbo,I love it.
That was so well said.
And you're making me reallyhungry and also miss the food of
New Orleans Gulf Coast friends,send me some gumbo.
You guys are so thoughtful andthinking big picture.
I have just a couple of smallpicture last drops.
You guys mentioned, laura andJim, that you're at IPF right
(01:09:09):
now and for dual time, for dualoffshore energy.
Next week is the OffshoreTechnology Conference in Houston
, another really big eventfilled with innovation and
groundbreaking technology andmarket development opportunities
(01:09:30):
related to everything aboutoffshore energy.
It used to strongly focus onoil and gas, but as offshore
wind has come on, you know wealso see plenty of great
opportunities for offshore wind.
So hope to see lots of folks atOTC next week in Houston.
And I think I saw this inrelation to the IPF announcement
.
But you know that building inAmerica thing was happening.
Ls Cable broke ground on amanufacturing facility right To
(01:09:52):
make sub-CHVDC cables inVirginia.
Speaker 3 (01:09:55):
It did.
Speaker 1 (01:09:55):
And that's great.
It takes a long time to spend acouple hundred million dollars
to build a facility, and sothey've broken ground and here
here, I hope the marketcontinues to support them.
I hope domestically, butcertainly internationally
they'll be supported.
So let's bring some of thatback home.
Those are my two last drops.
Jim, a call to action.
(01:10:17):
You know what do you want tosay to inspire our listeners to
continue to participate.
Speaker 2 (01:10:23):
Look, if Gumbo doesn't inspire you, I don't
know what would.
But I just want to reiterate Ithink there's a big picture here
and we need to keep it in mind.
We need to not just think aboutthe big items and what's on the
(01:10:44):
six o'clock news, but howthings will shake out for
society in general.
Speaker 1 (01:10:52):
And listeners.
Our next podcast is still alsoto be determined, but, boy, I
heard some discussion around anepisode dedicated to NEPA.
Jim, that's right up your alley.
I don't know.
Do we really want to do that?
I've also heard a couple oftimes mentioned and we keep
(01:11:13):
dancing around it, but taxpolicy and the differences in
tax policy for different kindsof offshore energy development
sure is an interesting one.
I don't know if you guys knowany tax policy counsel, but I
have a feeling you do.
There are some really specifictopics we might get to Listeners
.
If there's something else you'dlove to hear, Jim, and I would
love to hear it, Send us anemail, drop us a line on
(01:11:35):
LinkedIn, because this is foryou.
We have an awful lot of fun,but we hope you do, too
listening.
Laura Ty, thank you for joiningus.
(01:11:58):
It's been a pleasure to haveyou and to participate in this
conversation.
Speaker 2 (01:12:02):
Thank you Ty.
Thank you Laura.
Thank you Laura.
We sure appreciate it.
Speaker 3 (01:12:05):
Really appreciate your having us.
Speaker 1 (01:12:09):
My pleasure Great seeing you guys, until we meet
again On the next, on the nextOffshore Energy Podcast.
Come on, say it with me, youguys, you.
Laws, rules and contracts provide the foundation
for all offshore energy leasingand development in the United
States and they provideaccountability, transparency,
predictability and certaintyneeded to enable the
coordination and, dare I say,partnership that's required
between the government, theprivate sector and the public to
make offshore energy successful.
(00:31):
But laws and rules aren'tstagnant.
They constantly evolve to meetsociety's expectations, the
desire for increasedefficiencies and, of course,
shorter timelines and, of course, the changing political winds.
To discuss this moment and theevolution of those laws, rules
and contracts guiding offshoreenergy, jim and I are happy to
(00:57):
have not one but two specialguests join us right now for
this episode of the OffshoreEnergy Podcast.
I'm Jim Bennett and I have over40 years of experience
developing energy in the ocean.
I'm Ian Vopero and I've spentthe last 20 years developing
offshore energy projects aroundthe world, and this is the
(01:21):
Offshore Energy Podcast.
Hey, jim, good afternoon.
Speaker 2 (01:27):
Good afternoon, ian.
How are you sir?
Speaker 1 (01:30):
I'm okay, I'm pretty good.
Spring is in the air, finallyup here in New England, and that
means lacrosse, and my belovedBU Terriers have had great
seasons.
The women's team has had a 500season against really formidable
opponents, and the men's teamcontinues on into the Patriot
(01:54):
League tournament.
Next game on Friday at WestPoint.
So let's go.
Scholar athletes, bu Terriers.
Speaker 2 (01:57):
Well, that's all well and good, but I have to tell
you that the next generation'ssuperstar in lacrosse had his
first practice forfour-year-olds down here in
Virginia and he's my grandson,so watch out.
What's that, bu, is that?
Speaker 1 (02:16):
the BU Terriers.
That's where I played.
Everything else good.
I know you've been havingexciting times.
Speaker 2 (02:22):
Well, absolutely.
We're down in Virginia Beachwhere the International
Partnering Forum is beingconducted this year, and it's
interesting, to say the least,because we are living in
interesting times, as they say.
And that's what we're going totalk about, from kind of the
legal aspects of things, withregard to all the changes that
(02:44):
we're facing and how we're goingto be moving forward.
Speaker 1 (02:49):
It sounds great.
What a topic, how timely.
And we've got two specialguests joining us today Laura
Smith-Morton from Perkins Coieis joining us.
Hi, laura.
And Tyler Johnson fromBracewell.
Hi, ty, great to see you guysand Tyler Johnson from Bracewell
.
Speaker 3 (03:07):
Hi, ty, great to see you guys, ian.
Hey, thanks so much for havingme here.
So a bit of background.
I am a partner at Perkins Cooey, which is a national law firm.
My focus is energyinfrastructure development and
I've been around the space.
I've done offshore and onshoreenergy and transmission.
I am a regulatory attorney, sofocus primarily on permitting
(03:27):
and environmental review ofprojects from start to
completion.
And then just a second note Ispent really more than two
decades in the energy space andthat included a number of years
at Department of Energy, noaaand a tour through the White
House.
So I have sort of the insideand outside view of how energy
is developed.
It's great to be here.
Speaker 4 (03:48):
Great Thanks for inviting me and I really
appreciate being here, lookingforward to a fun discussion
today.
I'm a partner with Bracewell.
I've been with Bracewell myentire legal career working on
energy regulatory work, alwayswith the energy industry and
since really the founding of themodern offshore wind regulatory
regime, always with the energyindustry and since really the
founding of the modern offshorewind regulatory regime, working
(04:09):
with developers of offshore windprojects.
So really excited to talk aboutoffshore wind energy.
And then I've always been inthe energy industry, not even as
a lawyer, but I was a nuclearengineer on a submarine in a
former life.
So happy to continue thetradition here with the energy
podcast.
Speaker 1 (04:29):
It's really a pleasure to have you guys.
You guys are both veryexperienced in law and
frameworks around offshoreenergy.
You know our first question islooking for your perspective
from your careers, what are thekey guardrails that have
historically framed thisinterplay between the public and
private sector?
We particularly see it gettingpulled really hard in different
(04:50):
directions lately.
What have you guys experienced?
Laura, would you like to gofirst?
Speaker 3 (04:56):
Sure, I think where I would start is and this is
thinking about offshore energyas a huge infrastructure
construction project, right?
So let's just start with alarger frame.
These type of infrastructuresprojects are governed by
multiple federal, state andlocal laws.
(05:18):
So I mean, as folks may know,of course, to build on any
landscape, it doesn't matter ifyou're onshore or offshore you
have to have close coordinationwith all the agencies that are
regulating these projects andthe private sector, right?
So the folks who are actuallybuilding the projects, and we
also, by the way, can't forgetabout the public.
(05:38):
So anybody whose lands you'rebuilding on, you have to think
about them.
So I think that's just one ofmy general frame.
But in terms of the guardrails,you know, again, we're speaking
as lawyers, right?
So that's our framework for thelast 30 years, horrifyingly
enough, but you know, here,offshore energy, it's the Outer
Continental Shelf Lands Act,energy Policy Act of 2005 gives
(06:03):
Interior, who is our, you know,our prime agency managing the
OCS, the jurisdiction over theseoffshore projects.
And you know Ty will talk aboutthis more, but it's broadly,
you know, the private sector.
So, again, offshore wind, oiland gas developers any of the
infrastructure development ofthe ocean has to compete for the
(06:24):
lands that the government hasdesignated for leasing.
And then, when they're in, youknow the leasing process itself.
The guardrails againcoordination with the federal
government along the way,collection of data, analysis of
all potential impacts, lookingat it under the guardrails We'll
talk about this a little bitlater.
The National EnvironmentalPolicy Act I'll start with that
(06:46):
and from now on we can just sayhere and after, called NEPA.
But all of that meansprivate-public collaboration.
Speaker 4 (06:57):
It's a good question, ian.
Before I jump to theinteresting substance there, I
want to say that I'm a longtimelistener to your podcast,
first-time participant.
I've been very much lookingforward to this and I hope it's
as exciting as my favoriteanalog podcast, that is, the
long-running car talk on NPR weclick back the Tablet Brothers
(07:20):
so that is the model thestandard that I'm holding you
guys to.
So I hope it'll be asentertaining, though, sadly, I
think Laura and I have to followthe standard that I'm holding
you guys to, so I hope it'll beas entertaining, though, sadly,
I think Laura and I need tostart with a disclaimer that
we're both lawyers, we haveclients in the industry and
we're here participating on ourown behalf and not on behalf of
anyone else.
Speaker 3 (07:36):
Thank, you so with that.
Speaker 4 (07:39):
I do expect a lot of humor and jokes from you as we
get through this, but ontoguardrails and the development
of energy infrastructure.
There are, I think, a number ofvectors by which the public and
by the public I mean thegovernment at its various levels
(07:59):
works with private industry todevelop energy infrastructure.
And the first I think of isincentives right, how is the
public incentivizing industry todevelop the different types of
energy that is prioritizing?
And so one example that comesto mind is the Inflation
Reduction Act, right, what arekind of the tax incentives that
(08:21):
the government is using to helpdevelop that energy
infrastructure?
So that's kind of one kind ofexample of partnership coming
together.
The second is offtakes right,where you've got energy projects
, you need to have some type ofa bankable offtake agreement to
enable the project to beconstructed.
(08:42):
And that's where the stateshave come in for offshore wind
in particular, focusing just onthe generation of electrons, not
on the oil and gas side of theenergy house, but those state
offtakes where states andprivate industry are coming
together, usually throughcontract, to enter into a
partnership to develop offshoreenergy.
(09:04):
The third kind of vector,partnerships or nature of
partnerships I think of, is in apermanent context, right.
So private industry comes inwith a proposal and the agencies
review those proposals pursuantto a regulatory statutory
framework to get approvals, withpublic input, to develop the
energy infrastructure.
(09:25):
So what are the guardrailsaround those different types of
partnerships?
Well, one, it's a maturestatutory and regulatory
foundation that's kind ofbringing in private industry to
make those long-term commitmentsand partnerships with the
different state and federal andpublic entities.
(09:48):
The second kind of guardrail Isee is a contractual one.
Right, so these offtakeagreements are contracts, right,
private industry is enteringinto a contract or relationship
with a public entity, offshorelessees are entering into a
lease with the federalgovernment that defines certain
rights and obligations by bothparties.
Right, so those are guardrails.
And then, of course, all ofthis is kind of overseen by the
(10:12):
rule of law and the courts toensure that everybody abides by
and honors their commitments.
But going back to the first one,kind of the mature statutory
regulatory environment that haskind of the first guardrail.
Here too, I think it'simportant to note that you know
this framework.
The stability of the immaturityof that framework is important,
(10:33):
but it can be changed, ofcourse.
Right, congress passes statutes, agencies change regulations,
but there's always due processor opportunity for input into
those kind of foundationalelements so that the private
industry has an opportunity toweigh in and let the public
entities know about potentialimpacts, adverse or positive,
(10:57):
that would result from changesto that statutory regulatory
regime.
So those are kind of what I seeas guardrails kind of at a high
level.
Speaker 2 (11:06):
Yeah, I'd like to note that those, indeed, are the
guardrails, but over time theprogram has developed a bit and
the actual players in thisprocess are not necessarily the
same today as they were when theprocess began.
(11:26):
And from my experience mybackground is in, like Laura
says, the OCS Lands Act, whichis the basis for the Energy
Policy Act of 2005.
And there's similaritiesbetween oil and gas and
renewables.
But when the program wasgetting started back 2009, 2010,
(11:50):
you were talking about a muchsmaller group of people that
were involved in the process,and what's been your experience
as that has developed over timefrom those initial efforts to
what is now a very, very large,robust and very expansive
process?
Speaker 4 (12:11):
You know, the first offshore wind project, cape Wind
, you know kind of started inthe early aughts and met with an
inglorious end after BOEM'skind of modern regulatory regime
came into effect in 2009.
So they were seeking permitsfrom the US Army Corps of
Engineers and they were kind ofa lone kind of lead, you know,
(12:33):
point in the spear, trying todevelop a regulatory regime or
adapt to a changing regulatoryregime.
And this goes to the first kindof guardrail that I mentioned.
Right, they were already indevelopment permits pending with
the Army Corps of Engineerswhen EPAC-05 was passed, which
changed the other kind ofself-plans act and kind of led
to the permits that itultimately needed.
(12:53):
Those were challenged with somesuccess in courts thereafter.
But now we've got a much moremature industry.
(13:14):
There's a lot more players.
It's not a single entity outthere.
So, jim, I think your questionis kind of how does the
sophistication or breadth ornumber of participants in the
industry, how has it changed theindustry in that time?
Well, we're getting a lot morepractice with it, right, I think
that's one point.
I mean 20-something copspending, with about half as many
(13:42):
approved since the regulatoryregime started.
So having that kind offamiliarity, cadence and
practice with the processusually improves it, and I think
we're seeing that with BOEMkind of notwithstanding, kind of
the current changes under thisadministration.
Speaker 3 (14:02):
Yeah, and to follow up on that, this is a little bit
of a different point, which is,you know, the the initially
smart from the start, and I wasback there in the day uh
department of energy and withJim at uh at BOEM.
So, good God, this has beenmore than 15 years at least.
(14:39):
Oh yeah, if we're talking aboutpublic participation and more
stakeholders, there's a lot morehas been to date much more
engagement with the public, manymeetings, opportunities for you
know, and again, not just thescoping meetings, the public
comments, but more guidancebeing issued by BOEM about how
(14:59):
to do this process, working withthe industry.
To come up again, talking aboutguardrails, there's also been,
you know, mitigation guidance.
There's been work with thefishing community for fisheries
mitigation, which has been ahuge, huge aspect.
For instance, it's the last fouryears Public community
(15:20):
engagement in terms of they haveyou know, community engagement
with in the leases.
They've got requirements forpublic notice, they've got more
tribal engagement.
So I think I think that's areally important piece over the
time.
To see the broader when I saypublic, again, ty had mentioned
sort of the public as being theagencies and we're talking about
(15:41):
the public as being the and wehave to have stakeholders plus
tribes, and I'm talking aboutthe public as being big and we
have to have stakeholders plustribes, but just the general who
provides input and how theagency is responding to that and
refining it and taking thatinto account.
So I think that's an importantpiece that's developed over time
.
Speaker 2 (15:58):
Yeah, that's a great point.
It has changed quite a bit overtime.
I know early on there was a lotmore that was heavily focused
on the federal and stateinteraction and since then, just
as you're saying, stakeholderinvolvement, federal agencies,
tribal entities and the privatesector, of course, have become
(16:21):
much, much more involved.
It's a much more complex,difficult process but, I think,
a better process From adeveloper perspective.
Speaker 1 (16:30):
We talked about societal expectations changing.
Even over the course of mycareer, you know we went from
particular for offshore projects.
We went for kind of do it totell me expectations, to consult
with me and finally to and Ithink this is where we are now
is involve me with the designand implementation of offshore
(16:53):
energy projects, not just herein the US but really
internationally.
We've seen that sameprogression too.
Here in the US we have twoindustries that are really at
very different stages ofmaturity Offshore energy and oil
and gas in the Gulf of Americaslash.
Mexico is quite mature.
(17:14):
It's been around since justafter World War II and we've
improved and continued todevelop the frameworks around it
and also the expectations ofthe public, private and
government partnerships requiredto deliver it, while offshore
wind, for example, is much neweron the scene.
You know, ty, you mentioned CapeWind and that's.
(17:35):
You know I was an adult whenCape Wind started.
That seems really odd to me.
What other differences have weseen in the progression of
leasing between these twodifferent sectors and their two
different levels of maturity?
You guys have seen a lot inyour careers.
I'm interested in what standsout to you.
Speaker 4 (17:57):
One point and I think Laura will have more to add on
this is the way areas forleasing are identified.
In the early days it was a bitdeveloper-led, and by developer.
It wasn't just the developersthat we are familiar with now
who are pioneering projects onthe intercom shelf, but some of
(18:19):
it was state agencies like theNew York Public Power Authority.
Right was one of the firstproponents of a first request,
an offshore lease off of NewYork, and then ultimately those
go through a competitivesolicitation process and the
winners of auctions prevail withthose leases.
But where we kind of I thinkoriginally started with
(18:41):
proponents or developers kind oflooking for different areas,
we're now moving towards a worldin which BALM looks a bit more
holistically at a particulararea and evaluates the most
appropriate locations to citeoffshore energy within those
areas.
(19:01):
I'm thinking of the New YorkBight, for example, or offshore
California or offshore Oregon,where there's a Gulf of America,
or Mexico where there's kind ofa holistic look at a very large
body of water and then anarrowing of where offshore
energy can be cited, based onthe various limitations or the
(19:23):
other uses of those areas.
So that's kind of the trendthat I've seen, but, laura, you
have more to add there.
Speaker 3 (19:31):
So let me start with oil and gas.
Okay, so, if you know, ty hadtalked about the way that
developers would identifylocations right for offshore
wind projects.
But I just want to return,rewind, to oil and gas.
And you know, ian, you saidWorld War II and it's been a
long, long time.
(19:51):
But the way that this isdeveloped for oil and gas
projects is it starts as a verylong process.
So it starts with a proposedfive-year plan that outlines
areas, considerations of theenvironment.
It's a very long process.
They come up with a proposedplan, five-year, prepare it,
(20:12):
multiple different commonperiods, at least as it stands
now, but draft proposals,approval by the Secretary of
Interior, preparation by thefinal EIS and then it has to be
approved by the president andCongress and that could take up
to two years, and so that's justto get to the point of to
actually issue a notice of acompetitive sale.
(20:35):
So if you think about that,that is a really long time for
preparation, ready for a verylarge area of the OCS and
thinking about it, planning in afive-year horizon.
Very different when we get tooffshore wind and you know,
before we even get to theoffshore wind process, I'm going
to rewind even more.
(20:55):
You know the big differencehere between oil and gas and
offshore wind if we just talkabout the leases themselves that
are issued.
An oil and gas lease actuallyconveys the right to explore for
, develop and produce the oiland gas developed in that lease
area.
So just remember that one pointbefore I turn into the offshore
(21:20):
wind process.
Speaker 1 (21:21):
But offshore oil and gas, after the lease sale, still
has to submit a number ofdifferent plans and permits to
get their activities.
It's just been going on muchlonger.
It's a much more practicedsystem.
In fact.
Some of the permits even areprogrammatic permits.
So as long as you're operatingwithin this certain window of
allowable activities, you getyour permit.
(21:43):
It's not that it's easy to door that it hasn't been well
regulated, it's just it's somature right now that it can be
very prescriptive around what'srequired to continue to develop
your operation and ultimatelyget to production.
But forgive me for interrupting.
I know you wanted to speakabout offshore wind.
Speaker 3 (22:02):
I promise that I'll try to make a very long story
shorter, but the bottom line is,as Ty said, we have, you know,
the developers identifying thelease areas, originally for
offshore wind.
Bom has become much moreinvolved.
Already talked about theinteragency task forces federal,
state, local governments andtribes Look for the areas, send
(22:26):
out a call for information.
Then they have an environmentalassessment.
They do not have these lengthyplans.
If they don't have thesefive-year plans, they're not
going to have the litigationthat inevitably has resulted
from those five-year plans,which makes the process for oil
and gas even longer plans, whichmakes the process for oil and
gas even longer, but perhapsmore durable.
Speaker 1 (22:46):
That litigation occurs before a developer has
rights to a lease and it'sagainst the government.
You know, from a developer'sperspective I'd rather society
decides what areas it wants tooffer for different types of
energy development and then havea smoother process as a
developer once you have therights and opportunity to
(23:09):
develop that land.
So it's not hitting yourproject timeline and your
capital expenditures.
It's already decided beforehand, right?
Speaker 3 (23:18):
So the one thing we can't fail to mention is that
even if the wind leasing processdoesn't have a five-year
program and that you know the upand down wind undergoes an
extensive environmental reviewprocess following the lease sale
.
So there's a lot of stages thatI'm not going to go into, but
the bottom line is that it has along environmental review
(23:41):
process.
Ultimately that actually hasmoved to a more programmatic
regional approach before theagency approves the project.
So that has been, you know, hasbeen up to seven to 10 years.
So it is comprehensive andintensive.
Ultimately, where I'm gettingto which is really not anything
to do with the identification,but it is important distinction
(24:02):
for talking oil and gas andoffshore wind.
Remember that parking lot.
Let's pull that back out.
Offshore wind lessees do nothave the right to explore,
afford, develop, produce orgenerate the electricity in the
lease area for which they havepaid To date.
(24:23):
I believe the top is $1.1billion for a lease area where
they don't have the right toproduce.
They have the right to submit aplan for approval.
Speaker 2 (24:35):
Right yeah, kind of astounding to think about it
$1.1 billion so that you cansubmit a plan.
Speaker 3 (24:40):
Correct.
Speaker 1 (24:41):
Yeah, the lack of certainty right right is very
dramatic between the two verydramatic um, also the difference
in aerial extent.
Right, an offshore only gaslease, a single lease, three by
three nautical miles.
An offshore wind lease can bequite a bit bigger.
Uh and jim, I noticed you, youknow, kind of I don't know if
you were having flashbacks whilelaura was going through the
(25:03):
process of getting five-yearplans approved.
No doubt Did you want tocomment there.
I think you have a little bitof experience.
Speaker 2 (25:11):
Well, I think there's something very interesting here
and, of course, it revolvesaround the maturity of the
industry and the fact that thelegislation is a little bit
different.
I think the idea is ultimatelythe same, but the legislation is
different.
And because the oil and gasindustry is much further along
and they've decided we need afive-year plan, comrade, in
(25:34):
order to move forward with ourexecution and get the oil out of
the ground I mean, this comesout of the history of the Arab
oil embargo from the 70s we needto move forward with the
development of offshore oil andgas.
It's a little different in thatthe wind is another opportunity
(25:56):
to move forward, but itobviously is not moving forward
with the kind of maturity thatthe oil and gas industry had and
, as a result, you've got verydifferent situations in terms of
the process and the amount ofangst, if you will, on the part
(26:18):
of the public and, as a resultand I'm not talking about the
very current situation, which isa whole other discussion with
the recent events since January20th but you've just got a
different situation with regardto the durability of the actions
that have been taken, and Icertainly invite comments on
(26:42):
that.
Invite comments on that.
But that's been.
I think our experience with thewind program is that the
newness of it results in a lotmore variability in terms of the
durability.
Speaker 4 (27:11):
The durability question is an important one,
and I think it reaches back andtouches on something we talked
about earlier, which is thoseguardrails, energy
infrastructure projects.
Right, because you don't knowwhat will happen in an election
in four years.
How will that newadministration maintain or
change current regulatoryenvironment policies, incentives
permitting, et cetera?
(27:32):
That have undergird yourproject.
So those durability questionsare being asked a lot these days
and again it's those guardrailsthat are going to be there for
that certainty in the future.
Speaker 2 (27:51):
You know, just to sum up on that point, the five-year
program for oil and gas, whichI worked in for many, many years
.
For oil and gas, which I workedin for many, many years, Aside
from all of the process stepsthat you talked about, Laura,
the litigation that was set upas a result of the five-year
plan was pretty substantial andkept things not moving along at
(28:18):
the rate that I think was reallyintended, and I'd like to
suggest that I don't think thatthe five-year plan added that
much in terms of durability.
It was to me, the maturity ofthe industry and knowing what we
wanted to achieve andrecognizing what the impacts
(28:38):
were and how to mitigate thoseimpacts that allowed us to move
forward and have the durability.
With the decisions that arebeing made and in a nascent
industry like offshore wind,it's much more difficult to
enjoy that durability.
Speaker 1 (28:55):
Well, I just, jim Ty, said something that really
strikes the big P of politicalrisk in the development side of
me in my career.
Right, we've I know we've kindof touched upon this a couple of
times.
This discussion of durabilityand kind of rule of law and
predictability is so important,particularly for offshore energy
(29:16):
developers.
You know, oil or gas or wind,these things take much longer to
do an appropriate assessment,technical assessment, not to
mention the environmentalassessment, to do it properly,
to deliver.
And so if you know three and ahalf years is your planning and
delivery horizon for an offshoreenergy project, you're not
(29:40):
going to be able to do it.
And so, tai, when you werespeaking, you were very well
articulating how people in thedeveloper company assess
political risk, and historicallythe US has been the place with
the lowest political risk forpotential global investments.
(30:01):
Right now we see a flux andthen we see a lot of change
occurring and we'll see how thatplays out and we'll see if that
stabilizes the system.
But that's a big difference andI don't see how you can, even
technically, deliver an offshoreenergy project safely,
responsibly but also kind ofefficiently without doing an
(30:22):
awful lot of front planning andfront end assessment of the
environment.
That takes a long time to do.
Speaker 4 (30:30):
I think it's worth emphasizing, too, that the
duration of the projects exposesthem to a number of unique
risks.
The political, regulatory riskis one, but there's also the
economic risks.
As you're planning your project, you're trying to get an
offtake agreement, you're makingcertain assumptions about the
availability and pricing ofcomponents and services and
(30:50):
vessels and things like that,but you may not be as fully
(31:13):
exposed.
Speaker 2 (31:22):
Love it.
Let's talk a little bit aboutNEPA.
Uh, a lot.
All our careers, I think, havebeen very involved in NEPA.
I know no, mine certainly has.
Uh, from small projects in thenational capital area, uh to
offshore oil and gas, tooffshore wind.
(31:43):
And that process, which took 10years worth of reg writing to
get into place, has been inplace for about 50 years now and
it's not changed a lot, butit's been tweaked.
Notwithstanding the currentchanges that have occurred, what
(32:05):
has your experience been as faras what NEPA does and what it
ought to do?
I think it's become a much,much more effective and
efficient tool for ensuringstakeholder involvement, but
there are downsides to that.
So what has your experiencebeen?
But there are downsides to that.
Speaker 3 (32:24):
So what has your experience been?
Yeah, so I'm happy to jump inhere and I will do my best not
to go into my lawyerly mode toomuch, which I have a
predilection to do, particularlywhen we talk about NEPA and Jim
was saying, like, how long he'sbeen doing this.
I mean, I was working ononshore oil and gas projects
(32:44):
again 20 years ago and on, youknow, public lands under NEPA.
Nepa challenges, litigation,and the constant refrain for all
of these projects is it takestoo long.
The other, you know constant,the saying of paralysis by
analysis.
That's always a favorite ofanybody who's at these
(33:04):
conferences talking about NEPA.
It takes a long time.
And again, you know we talkedabout guardrails at the very
beginning.
The guardrails, not only arethey the statutes, but I
mentioned NEPA and that started.
And Jim, you mentioned this,it's about public participation.
That's the whole frame of thestatute is how do you get these
projects built, ensuring theprotection of the environment
(33:30):
and taking in public comment?
Right, and this is sort of howit's evolved.
It's, you know, jim mentioned 50years ago past regulations
issued pursuant to an executiveorder and really those stayed in
place as the guardrails for anyproject that has a federal
agency action, federal fundingsince that time and the first
(33:52):
change was in 2020.
So President Trump issued anexecutive order and then saying
that we needed to revise theseregulations in 2020, the
regulations were indeed revisedand there were some significant
differences.
You know, we had a bigger focus, I would say, on, let's say,
applicant prepared EISs, whichis a very positive piece of the
(34:17):
equation and, I think, somethingthat actually delivers those
efficiencies, and then thecontroversial sort of new
definitions of cumulativeimpacts, and I could go on and
on, but I think those are sortof two of the big frames and go
ahead, jim.
Speaker 2 (34:31):
I was just going to say that you are talking about a
very significant change.
I kind of question how muchthat significant change is the
result of actual rewriting ofthe rules, of regulatory changes
.
Speaker 3 (34:46):
And.
Speaker 2 (34:47):
I think what you're observing with regard to
applicant preparation, that isone thing that has changed very
dramatically over the course ofthat time, as a federal analyst,
the federal government and theemployees of the federal
government were actually doingthe analytical work and writing
(35:09):
the EIS, and the way the EIS hasexpanded so dramatically and
covers so much more ground, somuch more technical areas and is
applied to so many more things,that applicant-prepared
environmental impact statementis kind of a critical step in
order to get the process moving,in order to move forward.
(35:31):
There is no way that thegovernment would be able to do
the kind of NEPA work as it'scurrently structured unless and
until or without the applicantspreparing that work.
Speaker 3 (35:47):
No, and you know, I think that that's that was
certainly recognized with thefiscal responsibility act, so
that you know, codified many ofthese pieces of nipa, part of
which was that right and settingtimelines and setting page
limits, but of course they'reall exceptions and the timelines
they were all exceptions.
But I think that the generalthing is like over time again,
everybody said how long it took.
(36:08):
Part of the efforts that I'vebeen involved with over the past
10 years it's been how do wewhich is a really long time
again, I keep saying that.
But how do we make these moreefficient?
How do we have the agencieswork more closely together?
How do we have a lead agencycollaborating agencies, the one
federal decision trying to makethe process more efficient?
(36:29):
So that has been underway foryears, I mean since I was in the
Obama administration.
We're talking 2010.
Moving through, we had largetransmission lines.
We're not just talking aboutoffshore energy, we're talking
about all infrastructure.
How do we make that moreefficient?
So the one thing and I, youknow, ty and I've chatted about
this and this is the big thingthat's happening right now is
(36:51):
what does it look like today?
And there has been anearthquake, a tsunami, a
landscape shifting.
We can say whatever we want, butthere's been a dramatic change
over the last year and a half,two years and, remembering back
that CQ was directed to havebinding regulations that
(37:12):
governed right, all agency NEPAcoordinator, the literal, you
know, the governing body whowould help agencies coordinate
those procedures.
And an unusual turn of eventsand a strange turn of events, we
already, you know this is notthe Bachelor, by the way, I
can't remember you know, themost unique circumstance ever,
(37:36):
but at any rate, the DC Circuitdetermined the CEQ had no
authority to issue itsregulations.
The circuit determined the CEQhad no authority to issue its
regulations, right?
So that was, you know, sort oftook everybody by surprise, not
the judge who said it, but thefact that that actually was
reached in a case that didn'teven raise that issue.
So folks were, you know, tryingto work through that Subsequent
(37:59):
court District of Iowa echoedthat.
And then the question is whatgoverned right?
So it's like the 2024regulations.
So before 2020, we had severalrevisions in 2022, back and
forth, and then we have the 2024ones in Biden, and then you
have these decisions.
(38:19):
And you know, ian, you talkedabout certainty, predictability.
Folks don't know what sides arethe last piece of this, and I'm
Ty I know I was going to talkabout this a little bit but then
you have an executive order oneof the 160, I think, that have
been issued that says CEQ isdirected to rescind its
regulations right, so the roleit's the executive order that
(38:42):
established that got.
Ceq is instructed to do thatand it's instructed to help
coordinate the other agencies asthey update their own NEPA
regulations.
So that's where we were January20th and things have continued
to involve.
Ceq issued something called aninterim final rule With some
(39:04):
instructions, goes direct to.
Basically they said publiccomment, but really it was final
and effective within the lasttwo weeks.
And then you have the next stepand there's a guidance, and
then I'm going to turn it to Tyfor the most recent iteration of
where are we right now and howhas it changed over the last two
weeks, because we could have 14podcasts on Nipah.
Speaker 4 (39:31):
I've only gone to the highest level.
Ah Nipah, it's a real lightningrod.
Speaker 1 (39:35):
Next episode Nipah deep dive.
Speaker 3 (39:39):
In a shocking turn of events.
Now I'm using the correctphrasing Go ahead.
Speaker 4 (39:45):
I will belabor it.
But the only thing I think tonote, or the kind of latest
before we jumped on, was theissue, in spite of a template
regulations or guidance documentthat agencies could adopt to
make their own to help informhow those agencies are going to
comply with NEPA and give someinsight as to how the project
applicants can understand howthe agency is looking to
(40:08):
implement those.
The only thing I'd add to thatis it kind of leaves the
developers and their attorneysin kind of this little bit of a
quandary is what aspects of NEPAare derived directly from the
(40:32):
statute and which are kind offlowing from policy guidance or
legacies from the CEQregulations.
For example, there aredifferent topics and concepts
that have been in bedrock in CEQregulations since 1978, 79 when
they were first passed, buthave been kind of watered down
and distilled into the latestCEQ actions and the guidance
templates that have come outrecently.
So when you're looking at aproject now, what does a
connected action analysis looklike when all the connected
(40:54):
action language and definitionsthat were in the CEQ regulations
are no longer there?
So it goes to the uncertaintyquestion a little bit.
Now what is the appropriateNEPA framework?
But I actually had a questionfor Jim.
I wanted to talk aboutpermitting certainty and I've
(41:16):
noticed in dealing with allsorts of energy projects that
offshore wind projects inparticular take advantage of
FAST-41.
That offshore wind projects inparticular take advantage of
FAST-41.
And they're coordinated by theoversight by FIPC, the council,
and are covered projects beinglisted on the permit dashboard.
But I don't see many othertypes of projects there.
Notwithstanding, they mayqualify as covered projects.
(41:42):
Your thoughts on why theoffshore wind industry is so
prone to utilize fast wind?
Speaker 2 (41:50):
That is a great question and it points to when
that process was put in placeand why that process was put in
place, which was not offshorewind.
It was actually quite theopposite it was to move things
along for oil and gas.
But the requirements that wereidentified for that process
(42:12):
basically applied to offshorewind and we had as an agency an
obligation to identify thosethings that could be moved along
quicker and FAST-41 has beenapplied to that.
So I can't answer your questioncompletely.
But certainly that process ofmoving things along that was
(42:34):
intended for oil and gas.
It is a question.
I put the question out there aswhether it's moved things along
for wind.
I think they would have beenmoved along for wind probably
more expeditiously anyway, butthat is.
I don't know where that's goingto stand now under all the
(42:56):
changes that have occurred andthe whole issue that you're
raising about uncertainty.
Let's take that to the nextlevel.
I mean there's a ton ofuncertainty associated with the
whole process in theconventional way as of January
19th.
Now there's a ton more ofuncertainty.
(43:17):
What does all this uncertaintydo to the ability of the private
sector to move forwardexpeditiously?
But for the government tofulfill its role of allowing the
private sector to be movingforward expeditiously.
I'd like to hear your thoughtson that.
Speaker 3 (43:40):
Yeah.
So if you don't mind, I'm goingto just snap back to your the
comment about FAST 41.
So you know FAST 41 and thispermitting dashboard.
I remember talking about that2013, 14, and really it was.
I mean, we keep having thisthread throughout, right,
predictability, certainty, likeyou just said, jim, transparency
(44:03):
, accountability, somewherewhere the public again remember
we're talking public can lookand understand where projects
are, understand the process thatthe agency is undertaking,
everybody being able to havethat, you know, that visibility.
So if we go back, this isanother question.
So if we go back, this isanother question I it is a
(44:27):
little bit fuzzy to me is wehave all of the uncertainty and
not sure what's happening withthe NEPA process and the
timelines and where we reallyare right, what are our
obligations?
Where do these project?
Like, if you have an x timewhere you're supposed to
complete a project, where doesthat start, which is a constant
debate, right, when do weactually initiate an action?
But if you go back, thePermanent Council is also
(44:53):
something that it, you know, theadministration seems to be very
supportive of, seems to besupportive of that transparency.
Like you said, the oil and gas,when there are transmission
projects on there.
There's one mining project onthere.
You know, however many multiplemost of the offshore wind
projects but the permittingdashboard is still there and
they just named criticalminerals.
I think they just put 10critical mineral projects on
(45:13):
there.
So it's, you know, it lives,the extent to which it'll be
followed.
They also said they're going toput they're calling these
transparency projects.
Now I would be interested to seeagain if we're talking just
wind what it looks like on thedashboard for these projects and
I haven't looked in the lastweek but I'm sure that
(45:33):
everything just says pause.
But I mean I would recommend toanybody who is listening to this
or otherwise it is aninteresting track to see what
projects under Fast 41 orotherwise are actually on this
dashboard.
It'll give you a better frameon how long these projects take.
So I was, I sort of broughtuncertainty back, and now I'm
(45:53):
bringing it back in terms ofwhat does it look like.
I think there is broaddiscomfort across all the
industry sectors.
So I think this is, onshore andoffshore, about just
uncertainty of and we startedwith guardrails, rule of law and
guardrails.
Nobody really is certain whatthe guardrails are.
(46:13):
What are they going to beapplying under?
Where did their permits standwith different executive actions
that have taken place, thechanges in NEPA, recent, you
know, secretarial orders thatare saying for certain types of
fossil fuel projects, it wouldtake as little as 28 days for an
(46:35):
EIS with minimal public comment.
Speaker 2 (46:39):
Say that again.
I can't.
Speaker 3 (46:41):
It's too hard.
Speaker 1 (46:47):
28 days for an environmental impact statement
Review Review.
Speaker 3 (46:49):
Yes, review and, mind you, because, right, we are
talking about where you startApplicant-prepared EISs, right?
So if you have everythingthat's like handed to you, it is
possible, and this is underemergency authorities.
They followed the steps becauseof an energy emergency, but I
think we have to think aboutagain what frame.
Now we're not talking renewableprojects, we are talking the
(47:13):
conventional and geothermalcritical minerals, but that's
just another step in the process, and so I think there's a bit
of whiplash of we really wantthis certainty across the
infrastructure projects.
So we're not just talking aboutoffshore wind, we're talking
literally across the board.
Ty.
Speaker 2 (47:31):
Well, we want it, but you got a question whether
we're actually moving towards itor moving away from it.
Speaker 4 (47:37):
Indeed.
Yeah, the uncertainty ispalpable and it has a material
effect on capital investment forsure.
Right so our offshore energydevelopers, I think, are
certainly reading the landscapeand I think it's important to
(47:57):
recognize that Capitalinvestment in US offshore energy
is not the only game in town.
There are many other countriesthat are developing offshore
energy projects and it's likelycapital will flow to where it
can be most productivelyemployed and the US may not at
the moment seem like the mosthighest, best use of capital
(48:19):
dollars looking at the otheropportunities out there, and I
think that uncertainty kind ofrolls downhill as well.
Right, so it's not just theoffshore wind projects or
offshore energy projects, but itwill metastasize to supply
chain, the marine industry,vessels, port upgrade projects
(48:40):
and everything that kind of theoffshore wind industry relies on
, grade projects and everythingthat kind of the offshore wind
industry relies on.
There has been a huge effort bythe US, by many states in
particular, and tradeorganizations developed a supply
chain infrastructure to lowerthe cost of offshore wind.
It's a timescale that probablytakes a decade to accomplish,
maybe longer in some states likeCalifornia, but developing that
(49:05):
infrastructure so that offshorewind projects could be
conducted on a moreprice-competitive basis has long
been a goal of that, and soinjecting that uncertainty
further retards the developmentof that supply chain and
infrastructure to hopefullyrealize that those costs
decrease.
Speaker 3 (49:24):
Yeah, and just to throw in a story from IPF, where
we were sitting, there was ameeting yesterday and, jim, I
believe you were there too amember meeting.
But, speaking of uncertainty,there have been folks who have
invested a lot of money intraining their employees right
to do certain types of workneeded for offshore wind
(49:44):
projects, and a member stood upand basically said look, we've
invested a lot in these people.
Where are their skills going tobe used?
Where are we going to employthem?
How are we going to ensure thatthey do have jobs in the future
?
And one of the answers was cometalk to us, because there could
(50:04):
be opportunities overseas nowif they are not here right now
in the US.
But I think that that goes againto this uncertainty People.
This is not just the bigdevelopers, the projects
themselves.
These are the other people, asTy mentioned, who have jobs that
have derived from these sectors.
I mean, there's been such hugeinvestments in maritime
(50:27):
academies and workforce and STEMin high schools and really
getting to people andcommunities to show them this
importance of a diversifiedenergy sector and something that
their children can look towardsor that they can look towards,
and so this has rattled folks alittle bit.
It's not to say that there isan opportunity out there, but I
(50:47):
think the uncertainty is really.
There's a rippling effect.
Speaker 2 (50:52):
Yeah, I think on the training front, that's a good
point and I think it points tonot being so focused on a
particular skill to theexclusion of others.
The transferability of skills,I think, is pretty critical, so
that somebody who may be focusedon wind or may be focused on
(51:14):
oil and gas still has skillsthat are transferable to other
industries outside of energy.
Outside of energy.
Speaker 3 (51:25):
And I think the last thing that I would point out is
that this is not somethingthat's unique to blue states,
right, not just a talking point.
This is something that also isred states.
Right, this is bipartisan.
There are the states which havereally benefited from
investments in offshore wind Ican call Louisiana out for, and
Texas, you know, is building thebig Domin, are not
(51:48):
transitioning to, but they'rediversifying their skill set to
be able to deploy in therenewable sector, and that's a
(52:11):
really important point too.
Right, you've got the range of.
I might go back to jobs, butyou know the plumbers, the
electricians, you know I spoketo somebody I mean, this is
actually far off the point, butsince this is our podcast, I
managed to procure some gumbotoday at the show floor.
Right, jim, I'm looking at Jimlaughing, but I was very happy
about this from somebody who wasin the food service industry.
(52:33):
Right, and they serve offshoreenergy projects.
Writ large.
Speaker 2 (52:39):
That's a great example, um, and it was good
gumbo really good gumbo I hopeit came from louisiana at least
it was it okay.
Speaker 3 (52:48):
Okay, good it was.
Speaker 1 (52:50):
It was delicious that helps calm my my cajun side a
little bit, not to get off on atangent, but it also points to
uh, some of the training that we, we do with the oceanic network
.
Speaker 2 (53:02):
uh, a lot of people that show up for that training.
They're not just nuts and bolts, maritime or engineers or steel
workers, they're the supportindustries, they're the catering
industries.
They want to understand betterabout the industry and want to
seize some of that certainty,identify where the uncertainty
(53:25):
is, so that they can invest andmove their business in the
direction that would be mosteffective.
Speaker 4 (53:32):
As a former Navy guy, I love to talk about boats, and
Laura mentioned the Louisiana,texas and I think it's worth
noting just the impact thatthese offshore wind projects
have had on the shipbuildingindustry.
Right, this is a priority ofthe Trump administration.
It's identified as a nationalsecurity weakness the lack of
shipbuilding capacity in the US,and here's an industry that's
(53:54):
looking to kind of jumpstart,provide business and experience
to that industry.
So I see a lot of good thingsthere.
Speaker 1 (54:04):
We're all sitting here in energy and I doubt any
of us, or many of our listeners,would disagree with the fact
that we want energy to thrivebecause also of the economic
opportunity it creates for ourcountry.
Ty, I share salty blood.
I wasn't in the military but Iwas an oceanographer at an early
(54:25):
point in my career, so I spenta lot of time on ships.
But you know, I want to seethat continue to thrive.
And I would say too, if youlook at history, our maritime
sector, particularly thecommercial maritime sector, but
even the defense sector, is whatit was a hundred or 75 years
(54:45):
ago.
You know, after World War II.
You know our energy industryhas the opportunity to keep
growing because we're so goshdarn good at it and, frankly,
it's helped me, you know, in myown personal career.
I joined the energy industryand it helped unlock all kinds
of wonderful cultural andeconomic rewards of having a
(55:06):
career in this.
I want more americans toparticipate in this, not fewer,
and so I, I think so many people, no matter the political
persuasion.
We're all on the side of theangels.
We want what's good for ourcountry.
We we get stuck here in thesedetails, and I think you guys,
I'm just reflecting on what youwere all talking about before.
(55:30):
I don't know if a lot of peoplewho don't work in this space
recognize just how much ourframeworks, our laws and our
regulations around offshoreenergy have adapted with time to
the times and also to becomemore efficient.
You know, I want to just saythat really clearly because I
(55:51):
think listeners need torecognize this and hopefully
others.
You know wider than ouraudience.
Thank you, listeners.
You know we have been trying todo our best to develop energy
responsibly, economically,profitably and with the
recognition of the opportunitiesthat creates in our country for
(56:12):
the history of our country.
There are good people workingin it, always, you know, trying
to make it better day by day byday.
Let's not lose sight of thatfact.
It's not like you know, we'rereally broken in this country.
We have gotten more and morecomplicated.
There may be some efficienciesto find, but everybody was
(56:32):
certainly trying to pull in theright direction.
Speaker 3 (56:36):
Yeah, and I, I mean I know we I don't know where we
were going to talk about this,but this just makes me think,
and I think this is constantconversation we're having at IPF
.
But just talking about thepeople aspect of it and offshore
energy, I think we have torecognize the incredible folks
that we have in these governmentagencies trying to make all of
(56:58):
this real right.
They are working so hard andhave worked over time and, jim,
you were one of those.
Just you know actually shakingagain shaking his head.
I know he's like, but I mean,really I have never worked with
so many wonderful, committedpeople in the energy industry as
(57:20):
I did when I was in thegovernment and since that time,
well, frankly, before and then,you know it's not just you know,
we're not just talking policypeople, but it's the technical
people, like you said, theoceanographers, the
environmental, the scientists,the engineers and all of that.
I mean I just think the wholeindustry is so exceptional and I
I think it just it has to besaid how incredible our federal
(57:43):
government is and the employeesare.
And you know, workforce isgoing to be a big thing.
We're talking about governmentworkforce.
That's a really big piece here,because if we want to continue,
we have to make sure that wehave that workforce to actually
advance the energy industry.
And I think that's where we'resitting, at an inflection point
for that, to a great risk ofhaving the people to move these
(58:05):
industries forward.
Speaker 1 (58:10):
I wanted to just ask a slightly different question,
but we're certainly.
We're certainly there.
How do you both see the currentrisk profiles between the
sectors of oil and gas andoffshore wind?
We've certainly touched on it acouple of times in our
conversation and my risk managerrole is very happy.
(58:31):
Do you see any other bigdifferences between the sectors
and with how they're changingcurrently?
Speaker 3 (58:50):
so I, you know, I think that you know something.
We've had conversations broadlyabout um and interested to some
, you know, and in ty's thoughtson this too, if he's willing.
But you know, I think, what onething we've had a conversation
about the products are totallydifferent.
You know, oil and gas,transportation fuel, the demand
is different.
We've got electrons on theoffshore wind side.
The demand for fuel isdifferent than the demand for
(59:10):
electricity.
I think there are just inherentrisks in that right.
We've got a mature industry.
It's been around for a longtime and we have I don't want to
say nascent anymore, because Ithink it's further than nascent
but it's just not as mature forrenewable energy and I think
that is just inherently risky asa profile.
We've talked about that theentire time.
(59:30):
Harkening back to something Isaid earlier again, the rights
that you get with an oil and gaslease versus the rights that
you get with an offshore windlease.
They're just fundamentallydifferent.
They're different types ofcontracts and I think that
anybody looking at that is goingto say that that's a risk, that
that's a calculation they'regoing to have to make when they
are putting billions of dollarsinto a project.
Speaker 4 (59:54):
Yeah, I want to emphasize one point you made,
laura, and that's a good one.
It's the fundamental productthat oil and gas delivers and
how it differs from whatoffshore wind, for example, will
produce.
Right Electrons are fungible.
Your house, your factory, yourbusiness can be powered from
electrons from anywhere.
It's a choice by the states topursue offshore wind as part of
(01:00:19):
their generation mix, and somaybe there's a view that if
offshore wind were not to bedeveloped, those electrons would
just come from somewhere else,whereas it's harder to make that
gamble with oil and gas, forexample.
(01:00:39):
Right when it's so foundationalto the transportation economy,
you have to import that energy,that oil and gas, from other
countries that may not be asfriendly with the US or advance
or have our goals and ambitions.
So I see that kind of differentproduct nature as affecting the
(01:01:00):
risk profile of each industryas well.
Speaker 1 (01:01:07):
And certainly major consideration for governments
and policy makers and hopefullythe public too, right?
Those are really keen issues tothink about as we continue on
our energy transition.
That needs lots of differentsources and uses of energy.
Speaker 2 (01:01:24):
So I think we're about ready to sum up and, uh,
uh, provide key takeaways.
And why don't we, uh, why don'twe start with you, laura?
Speaker 3 (01:01:35):
oh my goodness, I think my key takeaway um is
always certainty, certainty,certainty.
That's what we need.
We need predictability, account, maybe the uncertainty, and
that's something that I thinkthe industry, lawyers and when I
say industry, I don't mean justoffshore wind industry, I think
anybody in the energy industryis struggling with right now,
(01:01:58):
and so my key takeaways are wereally, really need to have that
transparency from the federalgovernment, and I think we also
have to have a little bit of alonger term view for offshore
wind and try to settle a bit and, you know, think strategically
about next steps.
So I think that's really whereI am.
Speaker 4 (01:02:19):
I think it's similar.
It's, you know, are theguardrails.
How are the guardrails holdingup in the public private
partnerships that have beencreated to develop the offshore
industry?
It's not just, you know, theregulatory regimes of certain
agencies, but it's thefoundational architecture of how
agencies review projects right,projects right, nepa.
(01:02:44):
How is that all changing?
How is that adding to theturbulence and uncertainty that
perhaps is undermining orperhaps accelerating the
development of different typesof projects?
So those are a couple of areaswe'll be watching closely, for
sure.
Speaker 1 (01:02:56):
You guys.
I found this a reallyfascinating discussion as a
participant and host, but alsoas a listener.
I'm loving it.
I mean, you guys talked aboutour evolution of policy and
regulations.
You talked about the changingexpectations of society.
You talked about the requiredpartnerships between public,
(01:03:18):
private you know governmententities to do big things and I
think it was a fascinatingdiscussion.
I really appreciate you guysjoining us.
Speaker 2 (01:03:29):
Jim, those were my takeaways too from the from
today's chat my takeaway I agreeand and um, my takeaway from
this, from this discussion, isthat uh discussion is that we
(01:03:49):
have a huge, huge set ofchallenges that are associated
with offshore wind, and they'vemaybe become even greater in the
last few months and I thinkit's in order to be moving
forward constructively.
I do think we have to make surethat we focus not so much on
the problems and the negativesthat are associated with the
changes, that we can identifyconstructive areas to move
forward.
(01:04:10):
Maybe the pace will be a littlebit slower, but we can continue
(01:04:35):
to move in the right directionfor America's energy situation.
Speaker 1 (01:04:48):
America's energy situation.
Laura and Ty, this is the timewhen we do the last drops in the
ocean for the week, right, andyou guys are listeners, so you
know this is a chance to mentionsomething that's topical,
that's thematic to this, butmaybe that we haven't covered.
But really, just a couple ofseconds on anything else that
you'd love for our listeners tobe aware of that's going on in
offshore energy.
Laura you are our guest.
Would you like to go first?
Speaker 3 (01:05:10):
More than happy to, and I will try to keep it brief.
Even as I'm sitting here, I'mthinking this was not my drop.
So I'm going to take two drops,but or maybe three, but or
maybe three.
One of them is, you know, thetwo words that have not been
mentioned during thisconversation, that are on the
street and everybody's lipsthese days are data centers,
(01:05:31):
right.
Who's going to, what's going topower these data centers?
And a lot of conversation, thinkabout here in Virginia is
offshore wind.
So that's my one, right, and Iknow I'm looking really closely
at it.
My whole firm is lookingclosely at it.
So that's one Second drop,which we've already heard in a
past conversation with a guest,and this is because I'm talking
about it tomorrow but othertypes of marine energy I don't
(01:05:52):
think we can forget that.
We have wind I mean sorry, wave, tidal, right.
Current other types of energy.
Those are still out there,they're still pilot projects,
they're still R&d being done.
So that's second and the lastone, which is offshore energy,
is carbon capture.
So ccs, boehm and bessie aresupposed to be in the process of
(01:06:13):
developing regulations.
It's going to take a long time.
Jim is probably looking at meand saying, wait, that was
mandated several years ago, butit was, and that is another
opportunity.
Speaker 4 (01:06:22):
So those are the three points, my three drops I
have a couple and maybe they canbe split into multiple drops,
but it's really abouttransmission.
There's been a lot of interestand effort by states, namely New
Jersey, for example, trying tofigure out smart ways to
interconnect lots of offshorewind to its grid in a way that's
(01:06:45):
economic and efficient Backbonetransmission along the East
Coast to integrate all this wind.
What does that look like now?
How are states, how are grids,grappling with the
unpredictability?
and uncertainty currentlyaffecting the offshore wind
industry and how is thataffecting their plans, some of
which are quite expensive, plansin the billions of dollars, to
(01:07:08):
upgrade their grids to integrateall of this new and helpful
energy?
And the related point isinterconnection issues.
It's been a long big issue foroffshore wind projects very
sizable amounts of energy andcapacity to a grid and requiring
(01:07:29):
significant network upgrades.
How does that process getrendered more efficient and
practical as the country movesforward to integrate all the new
resources necessary to servethese data centers?
Speaker 1 (01:07:45):
Jim, any last drops from you, yeah.
Speaker 2 (01:07:48):
I have one because I want to go back to Gumbo, and
the reason I want to go back toGumbo is because it represents
what this is all about.
It's very easy for us to keepthinking in terms of a huge
industry and gigawatts andelectrons and everything, but in
(01:08:09):
fact, this is us as a societymoving forward, and there's so
many different facets to it, andgumbo is one of them, and I
think we need to keep that inmind.
It's just not a question of usor them oil and gas versus
(01:08:30):
renewable or stopping renewableor moving forward with this.
It's the whole picture for allthe members of society and we
need to be keeping that in mindin all of our discussions.
Speaker 1 (01:08:44):
Oh, jim, so nice, I love it.
The Creole mixing pot of gumbo,I love it.
That was so well said.
And you're making me reallyhungry and also miss the food of
New Orleans Gulf Coast friends,send me some gumbo.
You guys are so thoughtful andthinking big picture.
I have just a couple of smallpicture last drops.
You guys mentioned, laura andJim, that you're at IPF right
(01:09:09):
now and for dual time, for dualoffshore energy.
Next week is the OffshoreTechnology Conference in Houston
, another really big eventfilled with innovation and
groundbreaking technology andmarket development opportunities
(01:09:30):
related to everything aboutoffshore energy.
It used to strongly focus onoil and gas, but as offshore
wind has come on, you know wealso see plenty of great
opportunities for offshore wind.
So hope to see lots of folks atOTC next week in Houston.
And I think I saw this inrelation to the IPF announcement
.
But you know that building inAmerica thing was happening.
Ls Cable broke ground on amanufacturing facility right To
(01:09:52):
make sub-CHVDC cables inVirginia.
Speaker 3 (01:09:55):
It did.
Speaker 1 (01:09:55):
And that's great.
It takes a long time to spend acouple hundred million dollars
to build a facility, and sothey've broken ground and here
here, I hope the marketcontinues to support them.
I hope domestically, butcertainly internationally
they'll be supported.
So let's bring some of thatback home.
Those are my two last drops.
Jim, a call to action.
(01:10:17):
You know what do you want tosay to inspire our listeners to
continue to participate.
Speaker 2 (01:10:23):
Look, if Gumbo doesn't inspire you, I don't
know what would.
But I just want to reiterate Ithink there's a big picture here
and we need to keep it in mind.
We need to not just think aboutthe big items and what's on the
(01:10:44):
six o'clock news, but howthings will shake out for
society in general.
Speaker 1 (01:10:52):
And listeners.
Our next podcast is still alsoto be determined, but, boy, I
heard some discussion around anepisode dedicated to NEPA.
Jim, that's right up your alley.
I don't know.
Do we really want to do that?
I've also heard a couple oftimes mentioned and we keep
(01:11:13):
dancing around it, but taxpolicy and the differences in
tax policy for different kindsof offshore energy development
sure is an interesting one.
I don't know if you guys knowany tax policy counsel, but I
have a feeling you do.
There are some really specifictopics we might get to Listeners
.
If there's something else you'dlove to hear, Jim, and I would
love to hear it, Send us anemail, drop us a line on
(01:11:35):
LinkedIn, because this is foryou.
We have an awful lot of fun,but we hope you do, too
listening.
Laura Ty, thank you for joiningus.
(01:11:58):
It's been a pleasure to haveyou and to participate in this
conversation.
Speaker 2 (01:12:02):
Thank you Ty.
Thank you Laura.
Thank you Laura.
We sure appreciate it.
Speaker 3 (01:12:05):
Really appreciate your having us.
Speaker 1 (01:12:09):
My pleasure Great seeing you guys, until we meet
again On the next, on the nextOffshore Energy Podcast.
Come on, say it with me, youguys, you.
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