Louisiana Oil Hub Pivoting to Wind, Decarbonization

May 22, 2023

Financial Post:

Every morning, more than 600 workers clock in at the Louisiana shipyard where the Eco Edison, the first US-built vessel to service offshore wind farms, is under construction. At quitting time, a parade of pickups and dusty sedans forms a traffic jam on the road back into town, past buildings that serve the long-dominant oil and gas industry. 

This is just one slice of the energy transition reshaping the Gulf of Mexico region, which is increasingly dotted with offshore wind projects. In February, the Biden administration announced the first-ever sale of offshore wind leases in the Gulf, off the coasts of Texas and Louisiana. Dominion Energy Inc. is spending $500 million on the first US-built installation vessel, the 472-foot Charybdis, in Brownsville, Texas; and hundreds of people are working on the first US-built substation near Corpus Christi. In Louisiana, where the National Football League team wears black because that’s the color of oil, new companies and jobs are sprouting up to support the nascent $100 billion industry.

The number of active projects show that the Gulf’s offshore expertise, earned through decades of oil and gas operations, translates well to supporting wind farms currently under construction. Out of about 1,200 contracts signed by US companies for offshore needs like survey work, electric substations and cables, companies in the Gulf and the South have scored 23% of the total, according to a tally kept by the industry group Business Network for Offshore Wind. A sign near the Edison Chouest Offshore shipyard, where another big wind boat besides the Eco Edison is also under construction, reads, “Taking applications for all crafts!”

Gary Chouest, chief executive officer of the company his shrimp-fisherman father started in 1960, hopes the wind industry keeps growing. “It keeps Cajuns working,” he said.

There’s little reason to keep building oil and gas vessels right now, said Eco Edison project manager Whit Carter: Many of them are already idle thanks to the oil and gas downturn that began in 2014, when prices underwent one of the biggest drops since World War II. Carter, who has helped build around 30 oil and gas boats in his career, isn’t picky about working in wind. “I care that there’s work,” he said, standing near the C-Pioneer and the C-Fighter, two massive boats that used to supply drilling operations but are being refitted to build wind farms.

Houston Chronicle:

Speaking to a room full of carbon storage developers here earlier this month, Louisiana Gov. John Bel Edwards couldn’t help but compare the climate politics in his state to neighboring Texas.

While the Texas Legislature is considering a raft of bills designed to reduce the state’s reliance on wind and solar power, Edwards, a Democrat, happily described his work with Louisiana Republicans to turn that state into a hub for clean energy along the Gulf Coast.

“When I’m talking to companies about (carbon storage) or wind or EV manufacturing, the fact we have a commitment to net zero is at least a tie-breaker and I think a bit more than that,” Edwards said. “We talk about it anywhere we go.”

The 262 foot Eco Edison, a vessel for servicing offshore wind turbines, takes shape in a Louisiana Ship yard. Photographer: Bryan Tarnowski/Bloomberg

Climate change and clean energy have long been touchy subjects in Texas, where the state’s status as a wind and solar powerhouse — it has more wind turbines and solar panels than any state in the country — must coexist with a century-old oil and gas industry that generates hundreds of billions of dollars a year in corporate revenue and last year delivered more than $24 billion in taxes and royalty payments to state coffers.

Now, with energy companies gearing up to develop carbon capture and clean hydrogen projects, that tension has surfaced again over Texas Republicans’ longstanding criticisms of clean energy and recent efforts to offer power companies $10 billion in low-interest loans for the construction of natural gas power plants in an effort to protect the power grid from blackouts like those seen during the winter storm in February 2021.

Lt. Gov. Dan Patrick has led that effort as a means to address “market uncertainty and level the playing field between renewables (windmills and solar) and dispatchable energy,” such as gas and coal-fired power plants, he said earlier this year. At the same time the Texas Public Policy Foundation, an influential conservative think tank in Austin whose board includes billionaire Tim Dunn, owner of oil company CrownQuest Operating, is advocating for the Legislature to “counteract federal renewable energy subsidies” and boycott financial institutions that divest from oil companies and “other industries similarly targeted by climate activists,” the group says on its website.

At stake are billions of dollars in federal grants and tax incentives for clean energy under the Inflation Reduction Act, not to mention a foothold in new industries that most economist project will represent an increasingly large share of the energy sector in decades to come.

The anti-renewable rhetoric coming from Texas Republicans has left many in the clean energy industry uneasy, said George Hershman, CEO of SOLV Energy, a California-based solar farm builder.

“Developers want to go to friendly areas that are supportive of renewables,” he said. “Texas has an incredible opportunity here. It’s unfortunate politics and strong oil and gas lobby has to get in the way.”

The state-run Texas Economic Development Council referred questions to Gov. Greg Abbott, whose office did not respond to requests for comment. The Greater Houston Partnership, a nonprofit advocating for clean energy projects around Houston, also declined to comment.

In Louisiana meanwhile, state leaders from both parties are betting their economic future on cleaning up the state’s energy and chemical sectors, some of the largest and dirtiest in the country, through the development of carbon storage sites, offshore wind farms and clean hydrogen facilities.

Along the Mississippi River south of Baton Rouge, Singapore-based oil tanker firm Hafnia is developing a $7.5 billion clean hydrogen and ammonia plant with carbon storage — just down the road from another clean hydrogen project led by Pennsylvania-based Air Products at a cost of $4.5 billion.

The state also has nine carbon capture projects under review at the Environmental Protection Agency — compared to two in Texas — and is expected to secure permission from the federal government to permit its own carbon capture sites later this year.

Michael Hecht, president of the economic development group Greater New Orleans Inc., said while Louisiana also has a large oil and gas industry, the state had a different attitude to climate change in part due to a low-lying coastline that makes it particularly vulnerable to sea level rise.

“Climate change is an existential issue for people here, regardless of their political background,” he said. “Some of the biggest supporters of our offshore wind initiatives are old-line oil and gas companies. They realize the exact same assets and people and training used to service an offshore rig can be used to build an offshore windmill.”

Despite the political messaging against clean energy in Austin, similar efforts are underway in Texas, with Exxon Mobil and a host of Houston-area energy and chemical companies working to develop a massive carbon capture site offshore in the Texas Gulf.

And late last year Air Products and AES announced a $4 billion project to develop a clean hydrogen facility near Witchita Falls powered by wind turbines and solar panels, with Abbott praising the project as helping make Texas as, “a global powerhouse in this critical industry.”

Wind and solar energy are critical to the development of clean hydrogen, providing carbon-free electricity to convert water to hydrogen. And among clean energy advocates in Texas, there is increasing skepticism whether the state will support these new technologies in the long run, pointing to Republicans’ antagonistic relationship with Texas’s wind farms.

In the aftermath of the 2021 blackout that left millions of Texans without power, conservatives blamed frozen wind turbines despite a federal finding most of the fault lay with the natural gas system. And the Texas Public Policy Foundation is suing offshore wind developers on the East Coast, seeking to halt projects projects it says threaten endangered right whales.

Doug Lewin, an energy consultant in Austin, said it was too soon to say whether clean energy developers would start to shift their focus away from Texas but pro-renewables messaging from Louisiana, as well as by Oklahoma Gov. Kevin Stitt, was getting their attention.

“You just don’t hear much like that from Texas leaders,” Lewin said.


2 Responses to “Louisiana Oil Hub Pivoting to Wind, Decarbonization”

  1. rhymeswithgoalie Says:

    Meanwhile, Gary Chouest, CEO of Edison Chouest Offshore, has a 50 meter yacht that’s also useful at keeping the fossil fuel industries in business.

    • rhymeswithgoalie Says:

      (And yes, Peter, I know that he would have had that boat anyway, but now at least he’s working for wind, too.)

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