The Offshore Energy Podcast
Offshore energy and ocean innovation in the United States is transforming the way we power our nation. Join our hosts Ian Voparil and Jim Bennett as they discuss current events, innovation, technology, and the future of the offshore energy ecosystem.
With decades of combined experience, these two industry veterans bring a unique blend of expertise, humor, and captivating stories from the high seas of offshore energy innovation.
Whether you’re an industry expert or just starting to learn about offshore energy, The Offshore Energy Podcast provides a platform for meaningful conversation and exploration. Tune in to enhance your understanding and stay updated on the latest advancements in this exciting field.
Let’s embark on this journey together!
The Offshore Energy Podcast
Episode 7 - The Offshore Energy Quiz Show
In this episode, our hosts Jim Bennett and Ian Voparil try their luck in a quiz show format - testing each others' knowledge of offshore energy jargon and trivia. Along the way, we highlight misconceptions, delve into technical jargon, and talk about critical regulatory frameworks. We also get a couple of the questions wrong, so tell us where we've made a mistake and see if you'd do better! We are always learning.
• Explanation of BSEE vs. BOEM and their roles
• Breakdown of lease sale auctions and bidding processes
• Insight into wind farms and construction methods
• Financial concepts like break-even points discussed
• Overview of environmental regulations like IHAs
• Introduction and impact of technologies such as LIDAR
• Encouragement for ongoing discussion and learning in the industry
Let us know if you have any questions or topics you'd like us to cover next time!
Colleagues and friends, we wanted to recognize the seriousness of this moment. As we record this, there are wildfires in California and there's been tremendous loss of property and life. Our hearts go out to all those affected. We can all help help. Please consider donating to the Red Cross, the Los Angeles Fire Department Foundation, the YMCA, habitat for Humanity. Team Rubicon and many others are out there helping the people in need. Here at the podcast, jim and I decided to play offshore energy trivia early on inauguration morning. We'll get into a more serious discussion about the impacts of the presidential memorandum next week, so until then, come play along with us, see how well we do and tell us where you're doing better.
Speaker 2:I'm Jim Bennett and I have over 40 years of experience developing energy in the ocean.
Speaker 1:I'm Ian Valpero and I've spent the last 20 years developing offshore energy projects around the world, and this is the Offshore Energy Podcast.
Speaker 2:Hey, Ian you there.
Speaker 1:Hey Jim, good morning, good. Hey Ian you there. Hey Jim, good morning. Good morning. How are you doing? I'm doing really well. I'm a little tuckered. I've been shoveling snow this morning you know I live up north and it's gotten cold.
Speaker 2:Well, I live in the Washington area and it's cold. We've had a little snow, but they're all going indoors for the inauguration today.
Speaker 1:Well, and that's today too. Yeah, Congratulations. Happy Inauguration Day. Here's to America.
Speaker 2:Here's to America, indeed, okay, all right. Well, hey, this episode we're not going to be trying to take on some very heavy issues that are going to be addressed, probably with a bunch of day one executive orders We'll see but we'll take kind of a step back on information and offshore energy knowledge and have a little fun with some word games and some definitions and kind of ask each other some questions, and I think this would be of great benefit to people who are new to the industry, people who are new to the technology. But I also think it would be a real knowledge check for folks that are not, and also for us. Boy, I feel like it's going to be a knowledge check for us, Jim.
Speaker 1:Well, it could be.
Speaker 2:I'm sure for some of them it definitely will be. But that's all good, that's all good.
Speaker 1:Jim, when we were getting ready for this, what we described is. You asked me a couple of questions. I asked you a couple of questions we're going to go through this and I was wondering how I could get you with something really good.
Speaker 2:but we'll see if we get there you will, but that's and that's not the purpose. So maybe we're just doing this for fun right, we'll invite the listeners to keep score and let us know that's a great idea.
Speaker 1:Okay, Jim, because this was your great idea. How about I ask you the first question? Shall I start out?
Speaker 2:Yes, but it's got to be first question. This has got to be an easy one.
Speaker 1:All right, jim. My first question what's a windmill?
Speaker 2:Oh well, we are getting pretty basic. That is a very good question. It comes up pretty regularly. Windmill is the traditional harnessing of the wind through what you think of in the Netherlands, windmills for the purpose of milling either saw, milling grain, whatever. But it's not what we have and what we do in offshore wind energy. Those are wind turbines. So I think that's the main thing to keep in mind. The windmill transfers the energy to milling activities. The turbine transfers the energy into electricity.
Speaker 1:I still use the term windmill all the time, and erroneously well, you nailed it, jim, but I was trying to be a little tricky, and you may recall that I did live in the netherlands for a while, and oh, that's right kinderdijk is this really beautiful part of the netherlands where they have a whole bunch of historic windmills that are still in operation like 400 years later, and if you get the chance when you're visiting the netherlands, go see it.
Speaker 2:It's beautiful, it's actually a magnificent since actually I, I did, and it's always shocking when you're over in europe because everything is so much older and there was a couple of windmills that were still there from the 1600s yeah, yeah amazing all right, so that one was, but we're getting started.
Speaker 1:All right, jim, this one's easy too, but I expect you're going to knock this out of the park. What is Bessie?
Speaker 2:Well, bessie's a cow, you know, bessie? I'm assuming you mean BSEE, the Bureau of Safety and Environmental Enforcement, which is the sister agency to where I used to work, the Bureau of Ocean Energy Management. Basically, the difference between the two is that BOEM is the federal agency responsible for planning and leasing and planning approval, and BSEE is kind of the handoff agency, the agency that actually oversees the operations and activities of offshore wind farm construction and operation. And I should mention that they're the offshoots of the Minerals Management Service. What was the Minerals Management Service? As a result of the Macondo spill, a Deepwater Horizon spill, the two agencies were split, so we have two agencies now.
Speaker 1:Jim, what's a lease sale auction?
Speaker 2:What's a lease sale auction? The term lease sale I picked that up from my years in oil and gas operations and it's basically the sale of a lease offering areas offshore to be leased not to be sold but to be leased to the private sector for development of energy resources, both oil and gas and wind.
Speaker 1:The auction is simply the mechanism that is used, no-transcript, making sure that the public receives a fair return for that privilege, and I know that you've experienced it from the government, from the regulator side and certainly from the private sector side, boy, there's a lot of science to how you engage and bid in a lease sale as well, too, lots of different specialties that I'm aware of of folks who have helped prepare bids for lease sales, both kind of when the things that jump to mind like technical assessment of the resource, trying to understand the context where we are operating, but even in the human factors of bidding, and so really, interesting, great point.
Speaker 2:A lot is involved for what is a relatively simple auction process for us, but it's very, very complicated in terms of putting bids together. All right, tell me about an offshore wind farm farm, particularly with respect to what is turbine layout.
Speaker 1:Oh my gosh. Okay, all right, here we go. Uh, offshore wind farm all right. So this is the offshore expression of of an offshore wind development. Right, you have the offshore wind farm, which includes the turbines and their foundations. You have the inter-ray cables connecting them to an offshore substation, and then that offshore substation exports power onto shore, somewhere to interconnect with the grid that everybody thinks of, onshore, the turbine layout part. That's interesting. So let's see. Well, I guess we'll start with, if you can think about space.
Speaker 1:People typically want to lay out their wind farm and their turbines, the individual points, in a regular pattern. But you also want to make sure that you optimize the turbine layout for the wind, the resource itself, and I am no expert in this, for sure. So, but I think you know, generally you want to ensure that as many of the turbines get as much of the wind as possible. You know, and I guess, the prevailing winds and the dominant winds, so you need to understand the seasonal wind pattern and then you space them in such a way that you probably stagger them I think kind of like a parallelogram is commonly used so that as many of them get the first part of the wind. You know they're cutting into the wind as possible.
Speaker 1:I think theoretically the spacing between turbines is often something like six to 10 diameters of the turbine rotor. Downstream you don't have a lot of wake effects or wake losses. But there are other reasons that you change that spacing tube. There are regulatory reasons, like I mentioned, and I think in the US in the earliest wind farms that we had offshore it was like one nautical mile between turbines was a common spacing. But there are probably other considerations that you have for that too.
Speaker 2:Yeah, I think just to add to that, based on our experience particularly with vineyard wind and the spacing that occurred up there you know these are commercial fishing concerns are a large part of that and it doesn't really have to do with the wind or optimization or anything else. It's an other consideration, like navigation. The layout is determined by a lot of different factors and they're not always clear-cut or intuitive and the technical assessment of the site.
Speaker 1:There may be things on the seafloor or in the seafloor that make it particularly hard to put a foundation right in that space. And so I think as a developer progresses their understanding of the site with site assessment activities and geophysical and geotechnical work, then they have to even microtune it, so to speak, so that they don't run into complexities with putting stuff into the seafloor that's got to support all that strength of the turbine above.
Speaker 2:Speaking of putting stuff into the seafloor, I've got another one for you. Okay, tell me about a jack-up rig, Jack-up rigs.
Speaker 1:Like in oil and gas we use jack-up rigs. It's a hull that's kind of like a ship, or sometimes it's more like a barge, and it's got these movable legs, these giant legs that you can pull up so that they're out of you know, out of the water. But you can also lower them into the seafloor and in fact drive them into the seafloor with extra weight and ballast so that they serve as, like you know, the legs of a chair. They're firmly affixed to the seafloor. Then the hull can actually ratchet its way up from that and move its way up the legs until it's above the surface of the water and, you know, eventually creates an air gap underneath you know the surface of the water and eventually creates an air gap underneath the surface of the sea and the hull of the vessel is separate and distant and that creates a really stable platform for work.
Speaker 1:Now, you said jack-up rig, and rig denotes drilling activity, but there are also jack-up platforms that might do other activities, like for offshore wind, you can use a jackup platform to do um, you know, to create this um place where you might have a big crane that's able to pick up monopiles or foundation pieces and move them onto the you know, onto the foundation. Our first uh, george hw bush president. He owned a company called zapata Offshore that worked in the Gulf of Mexico and they were one of the first early companies that used jack-up rigs to explore for oil and gas in the Gulf of Mexico. Those and the current generation are still what we would call shallower waters. They're like 300-foot water depth. Maximum you think about their depth or their limitation of working is the length of those legs that they have sticking up when they're not fixed in position yeah I know they make bigger ones around the world.
Speaker 1:Some of them probably go to twice that depth, like 600 feet, but they're generally down to about that depth. If you go to deeper waters then obviously the jackup rigs won't work, and then if you want work offshore, you start to get to things that have dynamic positioning and drill ships and semi-submersibles.
Speaker 2:The jack-up rigs are very peculiar-looking things in shore, especially if you're not in and living in the Gulf of Mexico. They're very, very large vertical structures. This is important because of bridges, Like in the Northeast, you have to have port facilities that are typically outside bridges because Jacob Riggs and other structures, the monopoles et cetera, are so, so tall and they're very odd going out and then the legs actually, which are vertical and into the sky, turn around and get driven down, as you said before, to the seafloor to support the structure.
Speaker 1:If you ever get a chance to go down to Port Fouchon and the end of Louisiana right, which is the port that services a lot of the oil and gas industry down there, depending upon, you know how busy the industry is, but there's a couple of spots where the road down there Louisiana Highway 1, is elevated and you'll get up and you'll be able to see pretty far, because it's pretty flat down there, and you can see Jacob rigs and vessels lined up, you know, preparing themselves for work and it's a really interesting sight. Like they don't, they look weird, you know they catch your eye because it's not what you would expect a ship to look like, because they have those big structures.
Speaker 2:This is so interesting. We're getting into a lot of, probably a lot more detail than time is going to allow, but that's all right, I just want to note. I can't help but note. You mentioned Port Fouchon and the elevated highway and everything In terms of the program that I was involved in for so many years, both the environmental, the oil and gas and the wind. Port Fouchon was a study about the road and the road capacity and the oil industry, what it needed and what the community and what the highway system needed in order to support that industry. And on the basis of the study work that the government did, funding was created in order to make sure that that roadway had the capacity to deal with the many, many trips of very, very large vehicles and equipment. Let's jump from the technical and the physical to break-even point. What does that mean?
Speaker 1:Break-even point Are you talking about, like in project finance and economic return calculations, is that?
Speaker 2:where you're headed. That's what I'm thinking.
Speaker 1:We're jumping from physical to economic.
Speaker 1:Jeez, okay, yeah, otherwise I think maybe surfers have another idea of what a break-even is yeah it's probably true, and so that's when the revenue generated from the project exactly equals the total costs incurred.
Speaker 1:Up to that point, you have to spend a lot of money and effort, including capitalization, building things, before there's ever the beginning of a return of revenue generated from that asset, right? So you have all of this front-end work that gets done that you have to pay for, like planning, site assessments, resource assessments, surveys. Eventually you get to design and engineering and eventually you get to construction and you get a financial investment decision and you build the project. And then you have to go build it and construct it offshore and then you have to commission it and then finally, somewhere down the line, you start to make a return. Now that when you first start to make a return like first oil we would call it in the oil and gas industry, maybe in offshore wind, we're calling it first electron now that's not even breakeven. You still got to produce revenue for a long time before you pay back all of that upfront capitalization revenue for a long time before you pay back all of that upfront capitalization.
Speaker 2:And what are we looking?
Speaker 1:at at that point the big P word profit. That's often years down from that first revenue return. It's critical for understanding how much and how long you're going to tie up your investment funds in a development. Obviously you'd want to do them as soon as possible. You'd wish your breakeven point was, you know, was that day two after it starts. But in many cases with these, like for offshore wind, it's well into the future. And so breakeven is affected by stuff like how complex the project is. You know both the type of technology to be deployed as well as the environment that it's got to operate in. Obviously the resource right. If you didn't do a really good assessment of the resource, you're not going to have a great understanding of where your breakeven cost is. And stuff like your capitalization and capital costs and ultimately operating costs. Those all affect breakeeven.
Speaker 2:Yep, well, that's pretty good. I think we're doing all right here. I think we've gone six for six.
Speaker 1:So All right, jim, my turn right. I get to ask you a couple, jim. Who or what is FDR and FIR?
Speaker 2:Okay, Obviously FDR is Franklin Delano.
Speaker 2:Roosevelt, you can't get away from that. Fdr and FIR refer to activities well into the process. Remember, the process is multiple years of identifying possible offshore locations for wind farm, doing environmental studies, environmental analysis leading up to an auction, a lease sale and an auction and after that, site assessment, many, multiple years of site assessment, all of which feeds into the development of a construction and operations plan, which is a big event, and approval of that plan by the Bureau of Ocean Energy Management is a real watershed event need to be generated the FDR, which is the Facility Design Report, which is much more detailed engineering information about what's going to be done than what is contained in the Construction and Operations Plan. Construction and Operations Plan provides the overall umbrella and then the Facility Design Report provides a lot of the engineering details.
Speaker 2:The FIR and let's talk about the FDR and the FIR in the context of oil and gas. They mean something a little bit different or can be used as different acronyms in oil and gas, but for wind, as I just said, it's the Facility Design Report. And then the FIR is the Fabrication and Installation Report. Exactly how are you going to put all the pieces together, get them on site, take them offshore and what kind of activities, which is a pretty extensive undertaking to put all that information together has approval authority for construction and operations plans. Like I said, which is a key event, they do not approve technically the FDR and FIR. Yeah, they basically do not object and that means without getting too much into it, it means that it's not an action and it doesn't require environmental review or approvals that it otherwise would. So that's getting into a little of the bureaucracy.
Speaker 1:That's where we got you here, Jim.
Speaker 2:But it's important.
Speaker 1:But it's important. This one is a little broader, so let's see how you do, jim, what's landfall, landfall.
Speaker 2:Well, in's landfall, landfall.
Speaker 1:Well, in the context of… Very wide open.
Speaker 2:Yeah, that's pretty wide open. That could mean a lot of things, everything from Christopher Columbus to…. Landfall is essentially where the cabling system that carries the little electrons that are traveling very, very quickly through a cable to shore and the landfall is where that cable or, in oil and gas parlance, that pipeline, where it hits shore. And there's a lot of considerations that go into that. But I think the important thing in terms of the wind program or the oil and gas program is that the jurisdiction for activities offshore rests with the federal government and the Bureau of Ocean Energy Management or BOEM. But that jurisdiction ends at three miles offshore where you move into state waters. So landfall becomes much more of a state approval process and that is a demand on the developer, because they have to move into a whole different arena of reviewers, a whole different set of issues and a whole different set of constituencies.
Speaker 1:Next one. This is easy for you, come on.
Speaker 2:What's a high bid? In the auction process that BOEM conducts conventionally or traditionally, you think of it as the winning bid, as the winner of the process with the highest numerical value. They win the product, just like at an auction where you auction off art or anything else or model trains for your grandkids. I think it's important to note that there has been a change in the auction process with BOM and that what's actually paid now is the second highest bid, not the highest bid. The highest bid identifies the winner of the auction, but they actually don't pay the high bid. They pay the same amount that whoever else would have been willing to pay. It's evidently fairer and more reasonable from an auction and an economic standpoint Not saying I fully understand it.
Speaker 1:Yeah, but you got it. I can't trick you with any of these. You got all the details, jim.
Speaker 2:Nice job Well let me ask you a couple yeah yeah, let's see where I go. How about non-recourse?
Speaker 1:finance. Okay, and non-recourse Interesting, non-recourse finance All right, where do I start with this? All right, so building projects offshore costs a lot. We talked a little bit about the cost curve, right, and that. So we would say those are commonly very capital and upfront capital intensive Costs a lot. We talked a little bit about the cost curve and that we would say those are commonly very capital and upfront capital intensive Finance is the I'm going to kind of break this down this way finance is the opportunity to finance or create capital for your project, often from loans from different lending institutions, and those are usually paid for from the project itself.
Speaker 1:Right, project finance usually requires a development to have a sponsor, a developer often lenders and a special purpose vehicle set up as the project itself which limits the liability of the developers and the project to just the assets and activities of the project. That helps set up a legal structure. Lenders want to lend money into a special purpose vehicle to build a project because they find a good opportunity for economic return Sometimes. But non-recourse finance means non-recourse you don't have recourse, if something goes wrong, you don't get your money back. And so you could see the tension.
Speaker 1:Right, developers would love to get all non-recourse finance. Lenders wouldn't necessarily want to give all recourse finance because they want to make sure that they get their money back no matter what. I should add that non-recourse finance usually costs more than finance that has recourse to right. A lender is going to charge you a higher interest rate because they can't get their money back, so there's a transfer of risk there that's going on. Finance itself is the key to unlocking enough capital to go build these giant projects offshore, like oil and gas, like offshore wind farms.
Speaker 2:I'm going to revert to acronyms, because you did that to me with FDR and FIR. So tell me about EPC.
Speaker 1:EPC stands for Engineering, procurement and Construction.
Speaker 1:Oftentimes in renewables projects, the project developer may be looking for an EPC contractor as someone who is able to do all of the engineering and design, the procurement of materials and ultimately the construction of the facility in one entity.
Speaker 1:They can be inexpensive, they can manage a lot of the risk because they've done it lots of times before, and the developer finds this kind of single-point solution to go develop their project. For offshore energy and particularly oil and gas, it's a little bit different because oftentimes what you're going after, especially in the company I used to work for is really challenging maybe world's first kind of situation and so you don't necessarily find external EPCs. You do a lot of the at least the E and the P inside the company, the engineering and the procurement right. You want to make sure that you are the best in the world at that sort of offshore structure engineering and the procurement of big materials. The construction might still fall to another organization or another external party, another company, and so finding the right balance of in-house versus epc for all of that activity really depends upon the maturity of the sector, what you know other companies are available in the sector and the risk tolerance of the developer and let's switch from the processes and the economics and everything.
Speaker 1:Yeah, I feel like you're asking me.
Speaker 2:Let's get back to technology. Can you tell me about a compliant tower?
Speaker 1:Oh, compliant towers. I love compliant towers. I feel like, why am I so excited to talk about this? Compliant towers are a technology that's been used in offshore production of oil and gas and it was used, I think, like the first structure was in the early 1980s in the Gulf of Mexico Actually I think it was Exxon's LENA platform and a compliant tower is fixed all the way down, you know, through from the sea surface all the way to the sea floor. But it's a little bit different. It's compliant in that it deflects, you know, horizontally to deal with the forces of water, you know, and waves and stuff on it, rather than being so rigid and fixed that it just overcomes them. The reason why compliant towers were attempted is because by doing that, if you have drilling equipment and particularly risers that can flex along with the tower, it's much smaller, there's less steel involved in building something that can bend and move with the waves and currents than with something that has to be rigidly fixed like you think of normal four post-jacketed structures. And so they started to try compliant towers for deeper and deeper water when they had flexible risers that were able to also move with the tower. You know like bamboo is a really resilient plant that bamboo, when it's growing naturally can really flex and move with the wind. It grows really high but it keeps moving and bamboo is kind of a good analogy for this compliant tower design that people were using.
Speaker 1:I haven't heard of anybody using compliant towers for offshore wind. Folks. Write in if you do know, because there may be in Europe. I'm just unaware of them, but they're a really interesting solution. For oil and gas the challenges were largely around the risers. You can't have a pipe carrying hydrocarbons up through the water column that moves so much it breaks Tension. Leg platforms, for example in even deeper water, have anchors and mooring systems that literally pull the platform down so that it doesn't deflect as much and the risers survive the motions of the TLP at the surface. Like the need between finding flexible cables versus finding flexible risers, I think is a really interesting challenge to solve. But I bet the potential is there for them to be able to survive larger deformations than steel pipe would.
Speaker 1:So compliant towers these are really fun, I'm glad you asked me that.
Speaker 2:I would think that would be a real technical challenge of compliant towers for the wind and energy because there's so much more motion and stuff going on and I think it's kind of the challenge and I'm no engineer, but I think it's kind of the challenge that floating uh uh faces because of all the all the motion and the movement that has to occur yeah, I think you're right.
Speaker 1:I think that's that compliant towers may be an option to consider for floating opportunities, not for, like monopile fixed, but somewhere where you got to find that right balance of of performance and deflection versus the amount of steel that you'd have to build to fix something on the seafloor rigidly. My term All right, jim R-O-D.
Speaker 2:Record of Decision. It's not an oil and gas term, it's not really a wind energy term. It is a NEPA term. It is a National Environmental Policy Act term associated with the issuance of an environmental impact statement, which many of the actions associated both with oil and gas and with wind require, and geez, so many other things as well require. It is a step at the end of the process of analysis, after the evaluation of alternatives, that creates a record of the decision that was made based on all of that analysis.
Speaker 2:In the case of wind energy, you've got kind of a duplication process going on. You've got kind of a duplication process going on. It's not exactly the same, but the construction operations plan is subject to the approval of the Bureau of Ocean Energy Management, bureau of Ocean Energy Management Construction and operations plan approval. That action requires the preparation of an EIS and so has a record of decision. So there's kind of they're both the same the record of decision and the approval of the plan, but the record of decision is the action that is consistent with the National Environmental Policy Act process.
Speaker 1:And Jim, you're helping clarify it for me too, so I appreciate it, and that record of decision is specifically to address the environmental compliance that NEPA requires. Like that, that means it's part of it.
Speaker 2:It's part of it in so far as is mitigation that has to occur, that is identified in the NEPA process. It's it's incorporated into the record of decision and is reflected in the action that is going to be pursued.
Speaker 1:Thank you, Jim. All right, now here's a broad one for you. All right, I want to see where you head with this, Jim. What's deep water?
Speaker 2:Deep water is anything over your head In many cases yeah.
Speaker 2:Yeah, real quickly. Deep water has a couple of different meanings. It's different in the oil and gas arena than it is in the wind arena. But deep water in the Gulf of Mexico connotes a lot of different things because the oil and gas program in the Gulf of Mexico, which produces like 25% of domestic energy production, was basically restricted to shallow waters up until the technology got to the point where they could go into deep waters I believe it was the mid-late 80s could go into deep waters. I believe this was mid-late 80s and it changed things dramatically because we were able to access in deep water for oil and gas. We were able to access huge reserves. Unfortunately, it didn't come without cost. Deepwater Horizon in Macondo was one of the activities that was operating in deep water, but it also the deep water in the Gulf of Mexico at about 1,000 feet or 300 meters is what really turned around the oil industry in a very, very big way and in many ways is responsible for the change from dependency on foreign oil from the 70s and 80s to the dominance that we're experiencing today. We're a net exporter, which is huge.
Speaker 2:For wind it has a completely different meaning and for wind at about 60 meters of depth. That's kind of the extent of conventional fixed-bottom platforms. Beyond 60 meters or so you have to go to floating platforms. You have to go to a different technology, same as in the Gulf of Mexico. It's a different technology. But it's a totally different technology for wind. So deep water for wind is from about 60 meters onward. I'm not sure what the mileage figure is for that. I knew I should have that as well, but that is why we're talking about deep water in California, because the shelf drops off so quickly.
Speaker 2:That's why we're talking about deep water in the Gulf of Maine, because it's deeper water with regard to wind energy development and will require floating technology as opposed to conventional fixed bottom technology.
Speaker 1:And, jim, I love your. You know you kind of nailed it too. I appreciate it. As an oceanographer, I used to think of it as you know, this is the continental shelf. Then there's the continental shelf and the place right where it occurs, the continental break. That's where deep water starts. So there's this kind of geological definition, but you're really focusing on the, the, the difference in the technology that needs to be deployed.
Speaker 2:And in the program the application of the program activities. The term has a different meaning.
Speaker 1:Absolutely, and it's. You know. People have built jacketed fixed structures to the seafloor far deeper than 60 meters, right, but it's. But there's a lot of steel, steel involved and I think the general assessment is that it doesn't become commercially economic if you're building a lot of offshore wind farms With so much steel in the water. They just price themselves out of the market, right? I remember Shell's Bullwinkle and for those of you online, you know Google Bullwinkle and take a look at Bullwinkle 1,800 feet and it was an all steel lattice structure and it's amazing to see there's like these really famous pictures of the tow out from that passing through Texas and you get a sense of the size of what goes on offshore Wind energy area Jim.
Speaker 2:Wind energy area. Jim Wind energy area In the process of moving forward with offshore wind call areas, where the government goes out and calls for information about very large areas and the process is basically winnowing down, just like it is in the oil and gas program, winnowing down from a large area, given the constraints and conflicts that might exist, to smaller and smaller areas, and sometimes these terms fall over each other and are essentially the same. But the government, through BOEM, after a call and identification of information, needs examination of that information will identify a wind energy area which is something less than the call area I'm oversimplifying here a little bit Something less than the call area but typically is larger than what ends up being offered for lease.
Speaker 1:The specific box for lease.
Speaker 2:yeah, yeah, because the wind energy area then goes back out for additional information. What are we going to, you know? Are there additional areas that we need to eliminate? Yeah, because the wind energy area then goes back out for additional information. What are we going to, you know? Are there additional areas that we need to eliminate? What are the concerns? And the wind energy area ultimately becomes a proposed lease area. The proposed lease area also goes out for public review and you end up with a final lease area that goes to auction. So the wind energy area is one step in between, winnowing down to the point where you have a lease area that actually goes out to auction, is leased and eventually has a wind farm constructed on it.
Speaker 1:Jim, you are nailing these. I'm really impressed, let's keep going.
Speaker 2:Well, let me, let me, let me, let's get back to you then, because you're nailing them just as well, and let's, but, but you're also nailing the ones that I'm a little less confident of, and one of the things that things that I learned when I came into the program from a soft side as opposed to a scientific side, was geophysical and geotechnical data, and it took me the longest time to figure out what are they talking about, and the acronym of G&G came along and that solved everything for me.
Speaker 2:But what is that geophysical and geotechnical?
Speaker 1:So let's see. So where do we start with this one? So geophysical work are ways that you survey the environment using sound. It's common in oil and gas, like we've been talking about. It's common in offshore wind and like when you're building something offshore too, if you were building a new port or installing a large break wall or something, you have to understand what's going on and what the seafloor looks like.
Speaker 1:Types of geophysical activity Well, think about, like bathymetry, right, understanding the topography of the seafloor, understanding what might be on the seafloor. You might do something like side scan, sonar to understand are the big rocks, are there smaller rocks? Some things you can tell and some things you can't. You might also be interested in what's going on under the sea floor, and there are other types of geophysical work that you do to identify shallow hazards. For example, in oil and gas, a shallow hazard might be something like a pocket of trapped gas, and you want to understand if that's there because you don't want to drill into it. Geophysical also includes the stuff for exploring for deep into the earth, right, and so you think about geophysical surveys using large air guns, they're called that create a loud, impulsive sound, that basically, you create that sound and you have streamers running out behind the vessel and you listen for its reflections and that's literally telling you something about what occurs deep inside, under the seafloor surface, for oil and gas. You can be looking miles down. You know it's really amazing, the technologies that exist For offshore wind.
Speaker 1:You don't need to look that far down with geophysical work. You need to understand the seafloor, what it's made of, what its topography is, its potential for moving around and probably looking for shallow hazards too. Now, geotechnical then, is that sampling? So you understand the mechanical properties of the seafloor and some distance below that surface into the seafloor, and you would be doing geotechnical work in offshore wind, for example, to understand what you're going to put that foundation into.
Speaker 1:Is there granite under there or is it soft, unconsolidated sediments? You need to know the difference of what lies beneath the surface and you need to understand it really well so you can engineer a structure right that can be very heavy and have very different moments of momentum, that can survive all of the forces that nature will put upon it. So G and G. G and G are things that we do in the offshore industry generally that help us understand safety hazards, help us understand the engineering characteristics of what needs to be designed and built in place. You use that also to help understand if there are sensitive habitats or some other things on the seafloor, and really they're foundations of knowledge that you need to build offshore projects, offshore.
Speaker 2:I'm not sure it's that much less complicated than I remember it, but yeah, thank you, I appreciate it.
Speaker 1:You know, the best way to understand what's going on in the ocean is using the same way that marine mammals and marine animals use, which is sound. So geophysical is all about different kinds of sounds and how it interacts with you.
Speaker 2:All right, well, let's switch over to biology. Then Tell me about IHAs.
Speaker 1:IHA Incidental Harassment Authorization. Is that where you're headed, jim?
Speaker 2:I don't know of any other acronym for that. I don't either. I other rep acronym for that I don't.
Speaker 1:I don't either. I'm just stalling for time, all right, all right, uh, ihas, yeah, so incidental harassment authorization? Um well, okay, so let's start where I left off the other one. If you're doing something offshore that has the potential to disturb marine animals, and particularly marine mammals, you need to understand the potential for that to occur, you need to understand whether or not you can avoid that and you need to understand whether you potentially incidentally harass marine mammals during your activities. Now, incidental is a really important point of this. I think it's not intentional harassment. You're not making noise to scare away marine mammals, whales or seals or something. It's incidental in the activities that you need to perform, to do your offshore activities and build something safely offshore.
Speaker 2:So that's part of it who says, who says something is who makes that determination yeah, yeah, which agency jim?
Speaker 1:I think that's where you're headed dang it.
Speaker 1:Uh, all right. So for mammals there are two separate agencies. One is NOAA, the National Oceanic and Atmospheric Administration, and they authorize IHAs or other incidental takes of marine mammals according to the Marine Mammal Protection Act, the MMPA. There are a couple of marine mammals that are also managed by the Us department of fish and wildlife, and I'm thinking very specifically of the pinnipeds right, like walrus and a couple of others, and I'm I'm saying that because I used to do work in alaska and there are those other kinds of pinnipeds there, and so those are the agencies and they're responsible to ensure that the activities that occur don't cause more harm than necessary and don't cause actual take of marine mammals.
Speaker 1:Right, this harassment term gets really complicated. I'll just start with it. It's meant to be a disturbance to the marine mammal, like, do you affect some of its natural behavior? You might cause it to move right and swim away, literally, or maybe you cause it to change its behavior, like feeding, because you're doing something that's annoying offshore to them. I think ultimately, I know I'm anthropomorphizing it, but you're doing something that causes them to change their behavior. That's annoying offshore to them. I think ultimately, I know I'm anthropomorphizing it, but you're doing something that causes them to change the behavior.
Speaker 1:The process of going and getting an incidental harassment authorization ensures that those activities don't harm too many. There's like a small numbers assessment in that to make sure you're not harming too many of the population, that you have no more than a negligible impact on a marine mammal species or stock and that you don't have any unmitigatable adverse impacts. Right, so you can't cause, you know, population change by the activities that occur offshore. And again, this is not intentional and it's certainly not. Take is used in other ways too. Right, in hunting. The take means something else, but it ensures that you can't have any of those kinds of activities as well.
Speaker 2:Yeah, the reason I ask about the who provides that authorization is it's a great example. We talk all the time about how important the Bureau of Ocean Energy Management is with regard to offshore wind, but this is a process that is a different federal agency on endangered species or whatever the resource might be, and that expertise is brought to bear with the authorization that they provide, as opposed to the authorization that the agency, the action agency, in this case BOEM would provide and that sometimes causes problems.
Speaker 1:Also, in some cases, congressional legislation requires a certain agency to be responsible for that natural resource, and so, in this case, in fact, the MMPA does require NOAA to be responsible for managing that resource, and in many instances, most, if not all, the mitigation that's identified by that agency's expertise is what gets incorporated into the decision that's made by the action agency, by Bureau of Ocean Energy Management.
Speaker 2:How about another one, for you See, if there's a deer in the headlights? Response here Grid enhancing technologies.
Speaker 1:Okay, we've jumped out of the water, I think, generally in the US at least. Okay, grid enhancing technologies. Grid enhancing technologies All right, where do I want to start? Grid enhancing technologies are ways that we can increase the ability of our power grid to carry energy between places. Maybe that's good. Somebody clear that up.
Speaker 1:I'm sure an electrical engineer will do much better with addressing that.
Speaker 1:But they tend to be the technologies that we can employ with existing infrastructure rather than just building additional new, for example, transmission systems, right?
Speaker 1:So grid enhancing technologies are things like where you can monitor the weather to understand, you know, the potential heat loss of the transmission cables carrying power for different areas and you can actually adjust the amount of power that it can carry to be maximized in real time based upon the weather.
Speaker 1:I've even seen some pretty cool systems that actively visually monitor cables, like stretched between transmission towers, and they monitor the amount of deflection in the cable, which is an indication of how hot the cable is. Right, as it gets hot, as it heats up, it deflects more and it hangs lower, so to speak. And you can use those tools to help monitor and make the grid the most efficient it can be while still being safe in real time, and so this is kind of a whole portfolio of technologies that are being deployed by different utilities to help the transmission system meet the challenges and the I guess the key challenge of new power coming on in new places. All right, jim, I feel like man, this is easy for you. But, jim, permitting, tell me about permitting and maybe why sometimes we don't always use that specifically and correctly.
Speaker 2:Well, permitting, as you know, is the term that's applied to oh geez we've got to get so many permits In some cases.
Speaker 2:Some of the projects are typically projects that run up to 20 separate quote-unquote permits up to 20 separate quote-unquote permits and the term permitting is applied generally to that activity of getting all of the authorizations that are necessary in order to be moving forward to construct a facility offshore and, like I said, for an offshore wind farm, that could be 20 different permits.
Speaker 2:Oddly enough and I use the term in the sense of the whole process of getting all of those permits, even though my background is with the Bureau of Ocean Energy Management and, oddly enough, the Bureau of Ocean Energy Management doesn't actually issue any permits the Bureau of Ocean Energy Management issues leases, which is the result of a long process that collects a lot of the information that would be associated with permitting, and then the Bureau of Ocean Energy Management also issues a plan approval, which is not quite the same as a permit, and that's only two actions out of 20 or so where other agencies have much more specific permitting requirements. So, to make a long story short, the point is that permitting is a very large process that involves a lot of both federal and state and, in many cases, local agencies in order to put the authorization in place for a lessee someone who holds a lease to go offshore and actually construct a wind farm.
Speaker 1:Jim, jump right back in. What's a cod? And I don't mean, I don't mean gadeus, I don't mean the fish, the fish.
Speaker 2:That refers to the commercial operations date. I think it's very important from an economic standpoint from when revenue starts to get generated. Conceptually it's very simple you just throw in 100 wind turbines offshore and then you flip the switch and they all start generating electricity into the grid. Of course it's not as simple as that, but in theory that's the commercial operations date when that starts. A couple of examples the Seaval project off of Virginia.
Speaker 2:There are a lot of requirements and there was only two turbines but certain requirements had to be fulfilled after the turbines were actually spinning and generating electricity. After the turbines were actually spinning and generating electricity, well, you can't really fulfill those requirements and shut down the turbines and start them up again. So the commercial operations date gets moved up and the requirements are filled afterwards. I think you've got a similar situation for Vineyard and a number of other projects, including the other Seavow project, the two gig project offshore. That it's not just a single project that gets built and you flip the switch. It's multiple projects that are phased and even the individual projects may be coming online in an incremental fashion. So it's an idea that's critical for financing and the economics but it's not as simple as it sounds.
Speaker 1:Yeah, and you went there at the end too. And commercial operations data is one of those milestones that a lot of contractual terms are based off of and yeah, I'm thinking of a particular example in LNG on the Gulf Coast and commercial operations date and when that is can be surprisingly more difficult to determine. And if anybody wants to chat about that, hit me offline. But anyway, all right, jim, I got another question for you and this one's more technical. All right, jim what's LIDAR?
Speaker 2:Oh, LIDAR, LIDAR. Again, I'm not the technical guy, I'm not the engineering guy, but from a program standpoint, LIDAR is very, very interesting. Lidar is indeed a technology. I think it stands for light detection and ranging. It's the use of, I believe, infrared in order to assess wind movement or mid-ocean data through a deployed buoy. Why does this matter? Well, it only came into common use in the late 20-teens and the regulations for the offshore program were written on the basis of an assumption that a MET tower would need to be built, a meteorological tower to collect information offshore. That's what was done for Cape Wind. They spent a lot of money putting a meteorological tower to collect information offshore. That's what was done for Cape Wind. They spent a lot of money putting a Met Tower in. Met Towers have been constructed and never used, because LIDAR buoy technology came along and they were able to do it at a tiny fraction of the cost.
Speaker 2:And it made for a couple of things. One it wasn't foreseen we had to make changes to the regulatory structure in order to accommodate it. It changed the permitting requirements. Are we really interested in permitting buoys offshore? Is that really what we're after? Obviously, you put a structure, a bottom-founded structure offshore on the out-of-continental shelf. That's something that you have a responsibility. But do you really need to go through a huge permitting process to issue a permit for a buoy? That is only temporary anyways. So, anyways, it's a good example of the development of technology and how it changes both the economics, it changes the regulatory environment and it's heavily used now. It's a good example Light detection and ranging LIDAR.
Speaker 1:That was three for me, all right, and I think we're getting towards the. Okay, let me, let me give you three more oh, now you're gonna stump me.
Speaker 2:I shouldn't have said that, okay no, I think these are more likely going to stump me, but uh, we'll, we'll have our uh. Uh, the last one will be interesting, because I think we view it very differently. But let's start with an acronym TRCF, and I'm not going to tell you what the word is, because I forget.
Speaker 1:No, I know that one. I know TRCF. Trcf is one of. Trcf stands for total recordable case frequency and it's one of the important safety metrics that's used offshore. Right, Having a lower TRCF is better. Right, you want to have as few cases of injury or harm to people or safety issues as possible. Maybe I'll take this in a more general direction, though. That's what a TRCF is specifically, but I think the really important thing is that working offshore and putting people offshore requires all of us to be as safe as possible.
Speaker 1:You know a culture of safety and continuous improvement is critical for big organizations. Understanding the risks of the activities that you're performing offshore, I think are really important. Back in the oil and gas industry, you know safety was job one. We always said it. There was a safety moment at the beginning of every meeting because we wanted to make sure that everybody was always thinking how to do their job as efficiently and safely as possible. The other parts of a safety portfolio are obviously understanding the risks, job hazard analyses, making sure people are trained and competent in any activities that they occur there's cool technology now that can be used to help protect people and a culture of improvement, and what we would call the stop, work is always required. Right, Then that means anybody can say stop, hold on, because they think something might be risky. And I think it's a really important part in oil and gas of how we make sure that everyone's perspective comes to bear on keeping people safe offshore.
Speaker 2:There's a term that you hear all the time, called dispatchable. Can you tell us what that means?
Speaker 1:Yeah, dispatchable is a generation that you can dispatch. You can turn it on or off on demand, at the request of either a market opportunity or, I guess, in power. It's often the grid operator to make sure that the power generation and load delivery matches, and I think of things like gas turbines. You can start those up really quickly. Other things take a little bit longer, obviously. Some things take a really long time to start up and some things you can't turn on and off, like many renewables are intermittent, and so there's a base load of stuff that you don't necessarily spin up and spin down. And then you kind of cream the top by deploying dispatchable generation during times of increased demand. And I think the idea is that you are trying to dispatch generation kind of according to what is the most cost effective, you know, and let's meet the needs of the grid by using the lowest cost sources as much as possible.
Speaker 2:One last one for you, which relates to that, and it's something that I use all the time, and it's an acronym and a phrase that refers to the levelized cost of energy, the LCOE. You want to tell me what that is and why does it matter?
Speaker 1:so levelized cost of energy is, or electricity is the total cost of building the plant and operating it or the facility divided by the amount of energy it produces, and so a really efficient um facility would have a low lcoe facility would have a low LCOE. And, of course, lcoes usually used both to compare different technologies to see which ones you'd want to turn on and use. Again, we talked about how grid operators want to find the most effective way to fill the demand currently, and so they have a good understanding of the cost of those. It's also obviously influences policy, because we have this difference in LCOE for different types of ways to generate power and electricity. Lcoe is also this metric that you hear a lot about with when we talk about how technologies are maturing. A brand new technology might have quite a high LCOE, but then as that technology is deployed repeatedly, grows to scale, grows to understood risk. Then the LCOE comes down, and if you look at the charts of particularly renewable energies over time, you see that most of them follow this really great trajectory right.
Speaker 1:That they all continue to decrease LCOE as they continue to be deployed at scale.
Speaker 1:There's a couple of things that make that tricky right Things that we deploy once and done, which is a lot like we do nuclear. Over the last 20 years in the United States, there's only been a couple of projects, and so the LCOE doesn't necessarily get brought down. And also LCOE doesn't just decrease on its own after we started talking about something and this is something particularly that I think about for offshore wind and floating offshore wind in specific that just because we've been talking about them doesn't mean LCOE is going to come down. You know there's this time relationship, but it's actually you know it's the actual activities on the ground to build projects, to understand their complexities, and you know their challenges sometimes that make it come down once the industry gains experience for offshore wind for some time now is that the steadily and rapidly decreasing costs associated with development, the lcoe, and we can only hope and continue to work on making sure that it stays that way and continues to continues to, indeed, yep, feel the same way.
Speaker 1:Jim. Yep, so there, so I think jim am I off. Am I off the clock here? Is that it Off the?
Speaker 2:clock. Yeah Well, I think we've gotten a lot of material out there. I'm hoping that everybody that's been viewing this or hearing this has enjoyed it and has learned from it. I know I have in a couple of instances. I think it's very important to take a step back on occasion to make sure that we're staying current with the information and the technology, and I invite whoever has been listening in those instances where we have misstepped or failed to bring out a very particular point, let us know. We'll be happy to share it with our listeners. Yeah, and so I think that's a very important point. That's my last drop in the ocean, ian. What's yours?
Speaker 1:Oh, that's a good one. Good one, jim. I guess I think my last drop will be. I'll reflect too. This was harder than I thought it'd be, even though we've both been doing this for a while, and I think it's great that we're both continuing to learn and try to challenge ourselves and understand new ways of thinking, and that's certainly what solving the energy challenges of the future require of all of us. I know a lot of folks out there are constantly coming up with amazing ideas for how we can improve the way that we produce energy, including in its environmental efficiency and societal sustainability. And hey, let's keep going right. That's one of the things that makes this so fun is it's giant, it's important and it's ever-changing. So, yeah, I guess that's my same last job, jim.
Speaker 2:Well, absolutely, let's tell everybody about next week. We're wrapping this up on the heels of the inauguration and the executive orders and presidential memorandum that came out on quote day one, and of course, everyone I'm sure at this point is very familiar with the one that addressed wind, and a lot of people have expressed some great concern and confusion about why and what exactly all of this means. We're going to take that up next time. We're going to take it up after the dust has settled a little bit and take a look at some of the more longer term opportunities and what it means for the wind industry. So I'm looking forward to y'all joining us then and we'll we'll have a go at it.
Speaker 1:Yeah, we sure will, jim, and listeners too. Keep commenting, keep posting and keep asking us questions or offering topics. Jim, it's been great seeing you. Hope you have a great week.
Speaker 2:You too, and we'll look forward to talking with you later in the week.
Speaker 1:Okay, until we meet again on the next Offshore Energy Podcast. Bye, bye now. Thank you.