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
Sea Change: How Policies, Laws, and Regulations Shape America's Offshore Energy Future
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.
Laws, rules and contracts provide the foundation for all offshore energy leasing and development in the United States and they provide accountability, transparency, predictability and certainty needed to enable the coordination and, dare I say, partnership that's required between the government, the private sector and the public to make offshore energy successful. But laws and rules aren't stagnant. They constantly evolve to meet society's expectations, the desire for increased efficiencies and, of course, shorter timelines and, of course, the changing political winds. To discuss this moment and the evolution of those laws, rules and contracts guiding offshore energy, jim and I are happy to have not one but two special guests join us right now for this episode of the Offshore Energy Podcast.
Speaker 1:I'm Jim Bennett and I have over 40 years of experience developing energy in the ocean. I'm Ian Vopero and I've spent the last 20 years developing offshore energy projects around the world, and this is the Offshore Energy Podcast. Hey, jim, good afternoon.
Speaker 2:Good afternoon, ian. How are you sir?
Speaker 1:I'm okay, I'm pretty good. Spring is in the air, finally up here in New England, and that means lacrosse, and my beloved BU Terriers have had great seasons. The women's team has had a 500 season against really formidable opponents, and the men's team continues on into the Patriot League tournament. Next game on Friday at West Point. So let's go. Scholar athletes, bu Terriers.
Speaker 2:Well, that's all well and good, but I have to tell you that the next generation's superstar in lacrosse had his first practice for four-year-olds down here in Virginia and he's my grandson, so watch out. What's that, bu, is that?
Speaker 1:the BU Terriers. That's where I played. Everything else good. I know you've been having exciting times.
Speaker 2:Well, absolutely. We're down in Virginia Beach where the International Partnering Forum is being conducted 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 to talk about, from kind of the legal aspects of things, with regard to all the changes that we're facing and how we're going to be moving forward.
Speaker 1:It sounds great. What a topic, how timely. And we've got two special guests joining us today Laura Smith-Morton from Perkins Coie is joining us. Hi, laura. And Tyler Johnson from Bracewell. Hi, ty, great to see you guys and Tyler Johnson from Bracewell.
Speaker 3:Hi, ty, great to see you guys, ian. Hey, thanks so much for having me here. So a bit of background. I am a partner at Perkins Cooey, which is a national law firm. My focus is energy infrastructure development and I've been around the space. I've done offshore and onshore energy and transmission. I am a regulatory attorney, so focus primarily on permitting and environmental review of projects from start to completion. And then just a second note I spent really more than two decades in the energy space and that included a number of years at Department of Energy, noaa and a tour through the White House. So I have sort of the inside and outside view of how energy is developed. It's great to be here.
Speaker 4:Great Thanks for inviting me and I really appreciate being here, looking forward to a fun discussion today. I'm a partner with Bracewell. I've been with Bracewell my entire legal career working on energy regulatory work, always with the energy industry and since really the founding of the modern offshore wind regulatory regime, always with the energy industry and since really the founding of the modern offshore wind regulatory regime, working with developers of offshore wind projects. So really excited to talk about offshore wind energy. And then I've always been in the energy industry, not even as a lawyer, but I was a nuclear engineer on a submarine in a former life. So happy to continue the tradition here with the energy podcast.
Speaker 1:It's really a pleasure to have you guys. You guys are both very experienced in law and frameworks around offshore energy. You know our first question is looking for your perspective from your careers, what are the key guardrails that have historically framed this interplay between the public and private sector? We particularly see it getting pulled really hard in different directions lately. What have you guys experienced? Laura, would you like to go first?
Speaker 3:Sure, I think where I would start is and this is thinking about offshore energy as a huge infrastructure construction project, right? So let's just start with a larger frame. These type of infrastructures projects are governed by multiple federal, state and local laws. So I mean, as folks may know, of course, to build on any landscape, it doesn't matter if you're onshore or offshore you have to have close coordination with all the agencies that are regulating these projects and the private sector, right? So the folks who are actually building the projects, and we also, by the way, can't forget about the public. So anybody whose lands you're building on, you have to think about them. So I think that's just one of my general frame.
Speaker 3:But in terms of the guardrails, you know, again, we're speaking as lawyers, right? So that's our framework for the last 30 years, horrifyingly enough, but you know, here, offshore energy, it's the Outer Continental Shelf Lands Act, energy Policy Act of 2005 gives Interior, who is our, you know, our prime agency managing the OCS, the jurisdiction over these offshore projects. And you know Ty will talk about this more, but it's broadly, you know, the private sector. So, again, offshore wind, oil and gas developers any of the infrastructure development of the ocean has to compete for the lands that the government has designated for leasing. And then, when they're in, you know the leasing process itself. The guardrails again coordination with the federal government along the way, collection of data, analysis of all potential impacts, looking at it under the guardrails We'll talk about this a little bit later. The National Environmental Policy Act I'll start with that and from now on we can just say here and after, called NEPA. But all of that means private-public collaboration.
Speaker 4:It's a good question, ian. Before I jump to the interesting substance there, I want to say that I'm a longtime listener to your podcast, first-time participant. I've been very much looking forward to this and I hope it's as exciting as my favorite analog podcast, that is, the long-running car talk on NPR we click back the Tablet Brothers so that is the model the standard that I'm holding you guys to.
Speaker 4:So I hope it'll be as entertaining, though, sadly, I think Laura and I have to follow the standard that I'm holding you guys to, so I hope it'll be as entertaining, though, sadly, I think Laura and I need to start with a disclaimer that we're both lawyers, we have clients in the industry and we're here participating on our own behalf and not on behalf of anyone else.
Speaker 3:Thank, you so with that.
Speaker 4:I do expect a lot of humor and jokes from you as we get through this, but onto guardrails and the development of energy infrastructure.
Speaker 4:There are, I think, a number of vectors by which the public and by the public I mean the government at its various levels works with private industry to develop energy infrastructure. And the first I think of is incentives right, how is the public incentivizing industry to develop the different types of energy that is prioritizing? And so one example that comes to mind is the Inflation Reduction Act, right, what are kind of the tax incentives that the government is using to help develop that energy infrastructure? So that's kind of one kind of example of partnership coming together. The second is offtakes right, where you've got energy projects, you need to have some type of a bankable offtake agreement to enable the project to be constructed. And that's where the states have come in for offshore wind in particular, focusing just on the generation of electrons, not on the oil and gas side of the energy house, but those state offtakes where states and private industry are coming together, usually through contract, to enter into a partnership to develop offshore energy. The third kind of vector, partnerships or nature of partnerships I think of, is in a permanent context, right. So private industry comes in with a proposal and the agencies review those proposals pursuant to a regulatory statutory framework to get approvals, with public input, to develop the energy infrastructure. So what are the guardrails around those different types of partnerships? Well, one, it's a mature statutory and regulatory foundation that's kind of bringing in private industry to make those long-term commitments and partnerships with the different state and federal and public entities.
Speaker 4:The second kind of guardrail I see is a contractual one. Right, so these offtake agreements are contracts, right, private industry is entering into a contract or relationship with a public entity, offshore lessees are entering into a lease with the federal government that defines certain rights and obligations by both parties. Right, so those are guardrails. And then, of course, all of this is kind of overseen by the rule of law and the courts to ensure that everybody abides by and honors their commitments.
Speaker 4:But going back to the first one, kind of the mature statutory regulatory environment that has kind of the first guardrail. Here too, I think it's important to note that you know this framework. The stability of the immaturity of that framework is important, but it can be changed, of course. Right, congress passes statutes, agencies change regulations, but there's always due process or opportunity for input into those kind of foundational elements so that the private industry has an opportunity to weigh in and let the public entities know about potential impacts, adverse or positive, that would result from changes to that statutory regulatory regime. So those are kind of what I see as guardrails kind of at a high level.
Speaker 2:Yeah, I'd like to note that those, indeed, are the guardrails, but over time the program has developed a bit and the actual players in this process are not necessarily the same today as they were when the process began. And from my experience my background is in, like Laura says, the OCS Lands Act, which is the basis for the Energy Policy Act of 2005. And there's similarities between oil and gas and renewables. But when the program was getting started back 2009, 2010, you were talking about a much smaller group of people that were involved in the process, and what's been your experience as that has developed over time from those initial efforts to what is now a very, very large, robust and very expansive process?
Speaker 4:You know, the first offshore wind project, cape Wind, you know kind of started in the early aughts and met with an inglorious end after BOEM's kind of modern regulatory regime came into effect in 2009. So they were seeking permits from the US Army Corps of Engineers and they were kind of a lone kind of lead, you know, point in the spear, trying to develop a regulatory regime or adapt to a changing regulatory regime. And this goes to the first kind of guardrail that I mentioned. Right, they were already in development permits pending with the Army Corps of Engineers when EPAC-05 was passed, which changed the other kind of self-plans act and kind of led to the permits that it ultimately needed. Those were challenged with some success in courts thereafter.
Speaker 4:But now we've got a much more mature industry. There's a lot more players. It's not a single entity out there. So, jim, I think your question is kind of how does the sophistication or breadth or number of participants in the industry, how has it changed the industry in that time? Well, we're getting a lot more practice with it, right, I think that's one point. I mean 20-something cops pending, with about half as many approved since the regulatory regime started. So having that kind of familiarity, cadence and practice with the process usually improves it, and I think we're seeing that with BOEM kind of notwithstanding, kind of the current changes under this administration.
Speaker 3: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 was back there in the day uh department of energy and with Jim at uh at BOEM. So, good God, this has been more than 15 years at least. Oh yeah, if we're talking about public participation and more stakeholders, there's a lot more has been to date much more engagement with the public, many meetings, opportunities for you know, and again, not just the scoping meetings, the public comments, but more guidance being issued by BOEM about how to do this process, working with the industry. To come up again, talking about guardrails, there's also been, you know, mitigation guidance. There's been work with the fishing community for fisheries mitigation, which has been a huge, huge aspect.
Speaker 3:For instance, it's the last four years Public community engagement in terms of they have you know, community engagement with in the leases. They've got requirements for public notice, they've got more tribal engagement. So I think I think that's a really important piece over the time. To see the broader when I say public, again, ty had mentioned sort of the public as being the agencies and we're talking about the public as being the and we have to have stakeholders plus tribes, and I'm talking about the public as being big and we have to have stakeholders plus tribes, but just the general who provides input and how the agency is responding to that and refining it and taking that into account. So I think that's an important piece that's developed over time.
Speaker 2:Yeah, that's a great point. It has changed quite a bit over time. I know early on there was a lot more that was heavily focused on the federal and state interaction and since then, just as you're saying, stakeholder involvement, federal agencies, tribal entities and the private sector, of course, have become much, much more involved. It's a much more complex, difficult process but, I think, a better process From a developer perspective.
Speaker 1:We talked about societal expectations changing. Even over the course of my career, you know we went from particular for offshore projects. We went for kind of do it to tell me expectations, to consult with me and finally to and I think this is where we are now is involve me with the design and implementation of offshore energy projects, not just here in the US but really internationally. We've seen that same progression too. Here in the US we have two industries that are really at very different stages of maturity Offshore energy and oil and gas in the Gulf of America slash. Mexico is quite mature. It's been around since just after World War II and we've improved and continued to develop the frameworks around it and also the expectations of the public, private and government partnerships required to deliver it, while offshore wind, for example, is much newer on the scene.
Speaker 1:You know, ty, you mentioned Cape Wind and that's. You know I was an adult when Cape Wind started. That seems really odd to me. What other differences have we seen in the progression of leasing between these two different sectors and their two different levels of maturity? You guys have seen a lot in your careers. I'm interested in what stands out to you.
Speaker 4:One point and I think Laura will have more to add on this is the way areas for leasing are identified.
Speaker 4:In the early days it was a bit developer-led, and by developer.
Speaker 4:It wasn't just the developers that we are familiar with now who are pioneering projects on the intercom shelf, but some of it was state agencies like the New York Public Power Authority. Right was one of the first proponents of a first request, an offshore lease off of New York, and then ultimately those go through a competitive solicitation process and the winners of auctions prevail with those leases. But where we kind of I think originally started with proponents or developers kind of looking for different areas, we're now moving towards a world in which BALM looks a bit more holistically at a particular area and evaluates the most appropriate locations to cite offshore energy within those areas. I'm thinking of the New York Bight, for example, or offshore California or offshore Oregon, where there's a Gulf of America, or Mexico where there's kind of a holistic look at a very large body of water and then a narrowing of where offshore energy can be cited, based on the various limitations or the other uses of those areas. So that's kind of the trend that I've seen, but, laura, you have more to add there.
Speaker 3:So let me start with oil and gas. Okay, so, if you know, ty had talked about the way that developers would identify locations right for offshore wind projects. But I just want to return, rewind, to oil and gas. And you know, ian, you said World War II and it's been a long, long time.
Speaker 3:But the way that this is developed for oil and gas projects is it starts as a very long process. So it starts with a proposed five-year plan that outlines areas, considerations of the environment. It's a very long process. They come up with a proposed plan, five-year, prepare it, multiple different common periods, at least as it stands now, but draft proposals, approval by the Secretary of Interior, preparation by the final EIS and then it has to be approved by the president and Congress and that could take up to two years, and so that's just to get to the point of to actually issue a notice of a competitive sale. So if you think about that, that is a really long time for preparation, ready for a very large area of the OCS and thinking about it, planning in a five-year horizon.
Speaker 3:Very different when we get to offshore wind and you know, before we even get to the offshore wind process, I'm going to rewind even more. You know the big difference here between oil and gas and offshore wind if we just talk about the leases themselves that are issued. An oil and gas lease actually conveys the right to explore for, develop and produce the oil and gas developed in that lease area. So just remember that one point before I turn into the offshore wind process.
Speaker 1:But offshore oil and gas, after the lease sale, still has to submit a number of different plans and permits to get their activities. It's just been going on much longer. It's a much more practiced system. In fact. Some of the permits even are programmatic permits. So as long as you're operating within this certain window of allowable activities, you get your permit. It's not that it's easy to do or that it hasn't been well regulated, it's just it's so mature right now that it can be very prescriptive around what's required to continue to develop your operation and ultimately get to production. But forgive me for interrupting. I know you wanted to speak about offshore wind.
Speaker 3: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 the lease areas, originally for offshore wind. Bom has become much more involved. Already talked about the interagency task forces federal, state, local governments and tribes Look for the areas, send out a call for information. Then they have an environmental assessment. They do not have these lengthy plans. If they don't have these five-year plans, they're not going to have the litigation that inevitably has resulted from those five-year plans, which makes the process for oil and gas even longer plans, which makes the process for oil and gas even longer, but perhaps more durable.
Speaker 1:That litigation occurs before a developer has rights to a lease and it's against the government. You know, from a developer's perspective I'd rather society decides what areas it wants to offer for different types of energy development and then have a smoother process as a developer once you have the rights and opportunity to develop that land. So it's not hitting your project timeline and your capital expenditures. It's already decided beforehand, right?
Speaker 3:So the one thing we can't fail to mention is that even if the wind leasing process doesn't have a five-year program and that you know the up and down wind undergoes an extensive environmental review process following the lease sale. So there's a lot of stages that I'm not going to go into, but the bottom line is that it has a long environmental review process. Ultimately that actually has moved to a more programmatic regional approach before the agency approves the project. So that has been, you know, has been up to seven to 10 years. So it is comprehensive and intensive. Ultimately, where I'm getting to which is really not anything to do with the identification, but it is important distinction for talking oil and gas and offshore wind. Remember that parking lot. Let's pull that back out. Offshore wind lessees do not have the right to explore, afford, develop, produce or generate the electricity in the lease area for which they have paid To date. I believe the top is $1.1 billion for a lease area where they don't have the right to produce. They have the right to submit a plan for approval.
Speaker 2:Right yeah, kind of astounding to think about it $1.1 billion so that you can submit a plan.
Speaker 3:Correct.
Speaker 1:Yeah, the lack of certainty right right is very dramatic between the two very dramatic um, also the difference in aerial extent. Right, an offshore only gas lease, a single lease, three by three nautical miles. An offshore wind lease can be quite a bit bigger. Uh and jim, I noticed you, you know, kind of I don't know if you were having flashbacks while laura was going through the process of getting five-year plans approved. No doubt Did you want to comment there. I think you have a little bit of experience.
Speaker 2:Well, I think there's something very interesting here and, of course, it revolves around the maturity of the industry and the fact that the legislation is a little bit different.
Speaker 2:I think the idea is ultimately the same, but the legislation is different.
Speaker 2:And because the oil and gas industry is much further along and they've decided we need a five-year plan, comrade, in order to move forward with our execution and get the oil out of the ground I mean, this comes out of the history of the Arab oil embargo from the 70s we need to move forward with the development of offshore oil and gas.
Speaker 2:It's a little different in that the wind is another opportunity to move forward, but it obviously is not moving forward with the kind of maturity that the oil and gas industry had and, as a result, you've got very different situations in terms of the process and the amount of angst, if you will, on the part of the public and, as a result and I'm not talking about the very current situation, which is a whole other discussion with the recent events since January 20th but you've just got a different situation with regard to the durability of the actions that have been taken, and I certainly invite comments on that. Invite comments on that. But that's been. I think our experience with the wind program is that the newness of it results in a lot more variability in terms of the durability.
Speaker 4:The durability question is an important one, and I think it reaches back and touches on something we talked about earlier, which is those guardrails, energy infrastructure projects. Right, because you don't know what will happen in an election in four years. How will that new administration maintain or change current regulatory environment policies, incentives permitting, et cetera? That have undergird your project. So those durability questions are being asked a lot these days and again it's those guardrails that are going to be there for that certainty in the future.
Speaker 2:You know, just to sum up on that point, the five-year program for oil and gas, which I worked in for many, many years. For oil and gas, which I worked in for many, many years, Aside from all of the process steps that you talked about, Laura, the litigation that was set up as a result of the five-year plan was pretty substantial and kept things not moving along at the rate that I think was really intended, and I'd like to suggest that I don't think that the five-year plan added that much in terms of durability. It was to me, the maturity of the industry and knowing what we wanted to achieve and recognizing what the impacts were and how to mitigate those impacts that allowed us to move forward and have the durability. With the decisions that are being made and in a nascent industry like offshore wind, it's much more difficult to enjoy that durability.
Speaker 1:Well, I just, jim Ty, said something that really strikes the big P of political risk in the development side of me in my career.
Speaker 1:Right, we've I know we've kind of touched upon this a couple of times.
Speaker 1:This discussion of durability and kind of rule of law and predictability is so important, particularly for offshore energy developers. You know, oil or gas or wind, these things take much longer to do an appropriate assessment, technical assessment, not to mention the environmental assessment, to do it properly, to deliver. And so if you know three and a half years is your planning and delivery horizon for an offshore energy project, you're not going to be able to do it. And so, tai, when you were speaking, you were very well articulating how people in the developer company assess political risk, and historically the US has been the place with the lowest political risk for potential global investments. Right now we see a flux and then we see a lot of change occurring and we'll see how that plays out and we'll see if that stabilizes the system. But that's a big difference and I don't see how you can, even technically, deliver an offshore energy project safely, responsibly but also kind of efficiently without doing an awful lot of front planning and front end assessment of the environment. That takes a long time to do.
Speaker 4:I think it's worth emphasizing, too, that the duration of the projects exposes them to a number of unique risks. The political, regulatory risk is one, but there's also the economic risks. As you're planning your project, you're trying to get an offtake agreement, you're making certain assumptions about the availability and pricing of components and services and vessels and things like that, but you may not be as fully exposed.
Speaker 2:Love it. Let's talk a little bit about NEPA. Uh, a lot. All our careers, I think, have been very involved in NEPA. I know no, mine certainly has. Uh, from small projects in the national capital area, uh to offshore oil and gas, to offshore wind. And that process, which took 10 years worth of reg writing to get into place, has been in place for about 50 years now and it's not changed a lot, but it's been tweaked. Notwithstanding the current changes that have occurred, what has your experience been as far as what NEPA does and what it ought to do? I think it's become a much, much more effective and efficient tool for ensuring stakeholder involvement, but there are downsides to that. So what has your experience been? But there are downsides to that.
Speaker 3:So what has your experience been? Yeah, so I'm happy to jump in here and I will do my best not to go into my lawyerly mode too much, which I have a predilection to do, particularly when we talk about NEPA and Jim was saying, like, how long he's been doing this. I mean, I was working on onshore oil and gas projects again 20 years ago and on, you know, public lands under NEPA. Nepa challenges, litigation, and the constant refrain for all of these projects is it takes too long. The other, you know constant, the saying of paralysis by analysis. That's always a favorite of anybody who's at these conferences talking about NEPA. It takes a long time.
Speaker 3:And again, you know we talked about guardrails at the very beginning. The guardrails, not only are they 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 the statute is how do you get these projects built, ensuring the protection of the environment and taking in public comment? Right, and this is sort of how it's evolved.
Speaker 3:It's, you know, jim mentioned 50 years ago past regulations issued pursuant to an executive order and really those stayed in place as the guardrails for any project that has a federal agency action, federal funding since that time and the first change was in 2020. So President Trump issued an executive order and then saying that we needed to revise these regulations in 2020, the regulations were indeed revised and there were some significant differences. You know, we had a bigger focus, I would say, on, let's say, applicant prepared EISs, which is a very positive piece of the equation and, I think, something that actually delivers those efficiencies, and then the controversial sort of new definitions of cumulative impacts, and I could go on and on, but I think those are sort of two of the big frames and go ahead, jim.
Speaker 2:I was just going to say that you are talking about a very significant change. I kind of question how much that significant change is the result of actual rewriting of the rules, of regulatory changes.
Speaker 3:And.
Speaker 2:I think what you're observing with regard to applicant preparation, that is one thing that has changed very dramatically over the course of that time, as a federal analyst, the federal government and the employees of the federal government were actually doing the analytical work and writing the EIS, and the way the EIS has expanded so dramatically and covers so much more ground, so much more technical areas and is applied to so many more things, that applicant-prepared environmental impact statement is kind of a critical step in order to get the process moving, in order to move forward. There is no way that the government would be able to do the kind of NEPA work as it's currently structured unless and until or without the applicants preparing that work.
Speaker 3:No, and you know, I think that that's that was certainly recognized with the fiscal responsibility act, so that you know, codified many of these pieces of nipa, part of which was that right and setting timelines and setting page limits, but of course they're all exceptions and the timelines they were all exceptions. But I think that the general thing is like over time again, everybody said how long it took. Part of the efforts that I've been involved with over the past 10 years it's been how do we which is a really long time again, I keep saying that. But how do we make these more efficient? How do we have the agencies work more closely together? How do we have a lead agency collaborating agencies, the one federal decision trying to make the process more efficient? So that has been underway for years, I mean since I was in the Obama administration. We're talking 2010. Moving through, we had large transmission lines. We're not just talking about offshore energy, we're talking about all infrastructure. How do we make that more efficient? So the one thing and I, you know, ty and I've chatted about this and this is the big thing that's happening right now is what does it look like today? And there has been an earthquake, a tsunami, a landscape shifting.
Speaker 3:We can say whatever we want, but there's been a dramatic change over the last year and a half, two years and, remembering back that CQ was directed to have binding regulations that governed right, all agency NEPA coordinator, the literal, you know, the governing body who would help agencies coordinate those procedures. And an unusual turn of events and a strange turn of events, we already, you know this is not the Bachelor, by the way, I can't remember you know, the most unique circumstance ever, but at any rate, the DC Circuit determined the CEQ had no authority to issue its regulations. The circuit determined the CEQ had no authority to issue its regulations, right? So that was, you know, sort of took everybody by surprise, not the judge who said it, but the fact that that actually was reached in a case that didn't even raise that issue. So folks were, you know, trying to work through that Subsequent court District of Iowa echoed that. And then the question is what governed right? So it's like the 2024 regulations. So before 2020, we had several revisions in 2022, back and forth, and then we have the 2024 ones in Biden, and then you have these decisions.
Speaker 3:And you know, ian, you talked about certainty, predictability. Folks don't know what sides are the last piece of this, and I'm Ty I know I was going to talk about this a little bit but then you have an executive order one of the 160, I think, that have been issued that says CEQ is directed to rescind its regulations right, so the role it's the executive order that established that got. Ceq is instructed to do that and it's instructed to help coordinate the other agencies as they update their own NEPA regulations. So that's where we were January 20th and things have continued to involve. Ceq issued something called an interim final rule With some instructions, goes direct to. Basically they said public comment, but really it was final and effective within the last two weeks. And then you have the next step and there's a guidance, and then I'm going to turn it to Ty for the most recent iteration of where are we right now and how has it changed over the last two weeks, because we could have 14 podcasts on Nipah.
Speaker 4:I've only gone to the highest level. Ah Nipah, it's a real lightning rod.
Speaker 1:Next episode Nipah deep dive.
Speaker 3:In a shocking turn of events. Now I'm using the correct phrasing Go ahead.
Speaker 4:I will belabor it. But the only thing I think to note, or the kind of latest before we jumped on, was the issue, in spite of a template regulations or guidance document that agencies could adopt to make their own to help inform how those agencies are going to comply with NEPA and give some insight as to how the project applicants can understand how the agency is looking to implement those. The only thing I'd add to that is it kind of leaves the developers and their attorneys in kind of this little bit of a quandary is what aspects of NEPA are derived directly from the statute and which are kind of flowing from policy guidance or legacies from the CEQ regulations. For example, there are different topics and concepts that have been in bedrock in CEQ regulations since 1978, 79 when they were first passed, but have been kind of watered down and distilled into the latest CEQ actions and the guidance templates that have come out recently. So when you're looking at a project now, what does a connected action analysis look like when all the connected action language and definitions that were in the CEQ regulations are no longer there? So it goes to the uncertainty question a little bit. Now what is the appropriate NEPA framework?
Speaker 4:But I actually had a question for Jim. I wanted to talk about permitting certainty and I've noticed in dealing with all sorts of energy projects that offshore wind projects in particular take advantage of FAST-41. That offshore wind projects in particular take advantage of FAST-41. And they're coordinated by the oversight by FIPC, the council, and are covered projects being listed on the permit dashboard. But I don't see many other types of projects there. Notwithstanding, they may qualify as covered projects. Your thoughts on why the offshore wind industry is so prone to utilize fast wind?
Speaker 2:That is a great question and it points to when that process was put in place and why that process was put in place, which was not offshore wind. It was actually quite the opposite it was to move things along for oil and gas. But the requirements that were identified for that process basically applied to offshore wind and we had as an agency an obligation to identify those things that could be moved along quicker and FAST-41 has been applied to that. So I can't answer your question completely. But certainly that process of moving things along that was intended for oil and gas. It is a question. I put the question out there as whether it's moved things along for wind. I think they would have been moved along for wind probably more expeditiously anyway, but that is.
Speaker 2:I don't know where that's going to stand now under all the changes that have occurred and the whole issue that you're raising about uncertainty. Let's take that to the next level. I mean there's a ton of uncertainty associated with the whole process in the conventional way as of January 19th. Now there's a ton more of uncertainty. What does all this uncertainty do to the ability of the private sector to move forward expeditiously? But for the government to fulfill its role of allowing the private sector to be moving forward expeditiously. I'd like to hear your thoughts on that.
Speaker 3:Yeah. So if you don't mind, I'm going to just snap back to your the comment about FAST 41. So you know FAST 41 and this permitting dashboard. I remember talking about that 2013, 14, and really it was.
Speaker 3:I mean, we keep having this thread throughout, right, predictability, certainty, like you just said, jim, transparency, accountability, somewhere where the public again remember we're talking public can look and understand where projects are, understand the process that the agency is undertaking, everybody being able to have that, you know, that visibility. So if we go back, this is another question. So if we go back, this is another question I it is a little bit fuzzy to me is we have all of the uncertainty and not sure what's happening with the NEPA process and the timelines and where we really are right, what are our obligations? Where do these project? Like, if you have an x time where you're supposed to complete a project, where does that start, which is a constant debate, right, when do we actually initiate an action? But if you go back, the Permanent Council is also something that it, you know, the administration seems to be very supportive of, seems to be supportive of that transparency. Like you said, the oil and gas, when there are transmission projects on there. There's one mining project on there. You know, however many multiple most of the offshore wind projects but the permitting dashboard is still there and they just named critical minerals. I think they just put 10 critical mineral projects on there. So it's, you know, it lives, the extent to which it'll be followed. They also said they're going to put they're calling these transparency projects.
Speaker 3:Now I would be interested to see again if we're talking just wind what it looks like on the dashboard for these projects and I haven't looked in the last week but I'm sure that everything just says pause.
Speaker 3:But I mean I would recommend to anybody who is listening to this or otherwise it is an interesting track to see what projects under Fast 41 or otherwise are actually on this dashboard. It'll give you a better frame on how long these projects take. So I was, I sort of brought uncertainty back, and now I'm bringing it back in terms of what does it look like. I think there is broad discomfort across all the industry sectors. So I think this is, onshore and offshore, about just uncertainty of and we started with guardrails, rule of law and guardrails. Nobody really is certain what the guardrails are. What are they going to be applying under? Where did their permits stand with different executive actions that have taken place, the changes in NEPA, recent, you know, secretarial orders that are saying for certain types of fossil fuel projects, it would take as little as 28 days for an EIS with minimal public comment.
Speaker 2:Say that again. I can't.
Speaker 3:It's too hard.
Speaker 1:28 days for an environmental impact statement Review Review.
Speaker 3:Yes, review and, mind you, because, right, we are talking about where you start Applicant-prepared EISs, right? So if you have everything that's like handed to you, it is possible, and this is under emergency authorities. They followed the steps because of an energy emergency, but I think we have to think about again what frame. Now we're not talking renewable projects, we are talking the conventional and geothermal critical minerals, but that's just another step in the process, and so I think there's a bit of whiplash of we really want this certainty across the infrastructure projects. So we're not just talking about offshore wind, we're talking literally across the board. Ty.
Speaker 2:Well, we want it, but you got a question whether we're actually moving towards it or moving away from it.
Speaker 4:Indeed. Yeah, the uncertainty is palpable and it has a material effect on capital investment for sure. Right so our offshore energy developers, I think, are certainly reading the landscape and I think it's important to recognize that Capital investment in US offshore energy is not the only game in town. There are many other countries that are developing offshore energy projects and it's likely capital will flow to where it can be most productively employed and the US may not at the moment seem like the most highest, best use of capital dollars looking at the other opportunities out there, and I think that uncertainty kind of rolls downhill as well.
Speaker 4:Right, so it's not just the offshore wind projects or offshore energy projects, but it will metastasize to supply chain, the marine industry, vessels, port upgrade projects and everything that kind of the offshore wind industry relies on, grade projects and everything that kind of the offshore wind industry relies on. There has been a huge effort by the US, by many states in particular, and trade organizations developed a supply chain infrastructure to lower the cost of offshore wind. It's a timescale that probably takes a decade to accomplish, maybe longer in some states like California, but developing that infrastructure so that offshore wind projects could be conducted on a more price-competitive basis has long been a goal of that, and so injecting that uncertainty further retards the development of that supply chain and infrastructure to hopefully realize that those costs decrease.
Speaker 3:Yeah, and just to throw in a story from IPF, where we were sitting, there was a meeting yesterday and, jim, I believe you were there too a member meeting. But, speaking of uncertainty, there have been folks who have invested a lot of money in training their employees right to do certain types of work needed for offshore wind projects, and a member stood up and basically said look, we've invested a lot in these people. Where are their skills going to be used? Where are we going to employ them? How are we going to ensure that they do have jobs in the future? And one of the answers was come talk to us, because there could be opportunities overseas now if they are not here right now in the US.
Speaker 3:But I think that that goes again to this uncertainty People. This is not just the big developers, the projects themselves. These are the other people, as Ty mentioned, who have jobs that have derived from these sectors. I mean, there's been such huge investments in maritime academies and workforce and STEM in high schools and really getting to people and communities to show them this importance of a diversified energy sector and something that their children can look towards or that they can look towards, and so this has rattled folks a little bit. It's not to say that there is an opportunity out there, but I think the uncertainty is really. There's a rippling effect.
Speaker 2:Yeah, I think on the training front, that's a good point and I think it points to not being so focused on a particular skill to the exclusion of others. The transferability of skills, I think, is pretty critical, so that somebody who may be focused on wind or may be focused on oil and gas still has skills that are transferable to other industries outside of energy. Outside of energy.
Speaker 3:And I think the last thing that I would point out is that this is not something that's unique to blue states, right, not just a talking point. This is something that also is red states. Right, this is bipartisan. There are the states which have really benefited from investments in offshore wind I can call Louisiana out for, and Texas, you know, is building the big Domin, are not transitioning to, but they're diversifying their skill set to be able to deploy in the renewable sector, and that's a really important point too. Right, you've got the range of. I might go back to jobs, but you know the plumbers, the electricians, you know I spoke to somebody I mean, this is actually far off the point, but since this is our podcast, I managed to procure some gumbo today at the show floor. Right, jim, I'm looking at Jim laughing, but I was very happy about this from somebody who was in the food service industry. Right, and they serve offshore energy projects. Writ large.
Speaker 2:That's a great example, um, and it was good gumbo really good gumbo I hope it came from louisiana at least it was it okay.
Speaker 3:Okay, good it was.
Speaker 1:It was delicious that helps calm my my cajun side a little bit, not to get off on a tangent, but it also points to uh, some of the training that we, we do with the oceanic network.
Speaker 2: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 support industries, they're the catering industries. They want to understand better about the industry and want to seize some of that certainty, identify where the uncertainty is, so that they can invest and move their business in the direction that would be most effective.
Speaker 4: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 that these offshore wind projects have had on the shipbuilding industry. Right, this is a priority of the Trump administration. It's identified as a national security weakness the lack of shipbuilding capacity in the US, and here's an industry that's looking to kind of jumpstart, provide business and experience to that industry. So I see a lot of good things there.
Speaker 1: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 thrive because also of the economic opportunity it creates for our country. Ty, I share salty blood. I wasn't in the military but I was an oceanographer at an early point in my career, so I spent a lot of time on ships. But you know, I want to see that continue to thrive. And I would say too, if you look at history, our maritime sector, particularly the commercial maritime sector, but even the defense sector, is what it was a hundred or 75 years ago. You know, after World War II. You know our energy industry has the opportunity to keep growing because we're so gosh darn good at it and, frankly, it's helped me, you know, in my own personal career. I joined the energy industry and it helped unlock all kinds of wonderful cultural and economic rewards of having a career in this.
Speaker 1:I want more americans to participate in this, not fewer, and so I, I think so many people, no matter the political persuasion. We're all on the side of the angels. We want what's good for our country. We we get stuck here in these details, and I think you guys, I'm just reflecting on what you were all talking about before.
Speaker 1:I don't know if a lot of people who don't work in this space recognize just how much our frameworks, our laws and our regulations around offshore energy have adapted with time to the times and also to become more efficient. You know, I want to just say that really clearly because I think listeners need to recognize this and hopefully others. You know wider than our audience. Thank you, listeners. You know we have been trying to do our best to develop energy responsibly, economically, profitably and with the recognition of the opportunities that creates in our country for the history of our country. There are good people working in it, always, you know, trying to make it better day by day by day. Let's not lose sight of that fact. It's not like you know, we're really broken in this country. We have gotten more and more complicated. There may be some efficiencies to find, but everybody was certainly trying to pull in the right direction.
Speaker 3: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 constant conversation we're having at IPF. But just talking about the people aspect of it and offshore energy, I think we have to recognize the incredible folks that we have in these government agencies trying to make all of this real right. They are working so hard and have worked over time and, jim, you were one of those. Just you know actually shaking again shaking his head.
Speaker 3:I know he's like, but I mean, really I have never worked with so many wonderful, committed people in the energy industry as I did when I was in the government and since that time, well, frankly, before and then, you know it's not just you know, we're not just talking policy people, but it's the technical people, like you said, the oceanographers, the environmental, the scientists, the engineers and all of that. I mean I just think the whole industry is so exceptional and I I think it just it has to be said how incredible our federal government is and the employees are. And you know, workforce is going to be a big thing. We're talking about government workforce. That's a really big piece here, because if we want to continue, we have to make sure that we have that workforce to actually advance the energy industry. And I think that's where we're sitting, at an inflection point for that, to a great risk of having the people to move these industries forward.
Speaker 1:I wanted to just ask a slightly different question, but we're certainly. We're certainly there. How do you both see the current risk profiles between the sectors of oil and gas and offshore wind? We've certainly touched on it a couple of times in our conversation and my risk manager role is very happy. Do you see any other big differences between the sectors and with how they're changing currently?
Speaker 3:so I, you know, I think that you know something. We've had conversations broadly about um and interested to some, you know, and in ty's thoughts on this too, if he's willing. But you know, I think, what one thing we've had a conversation about the products are totally different. You know, oil and gas, transportation fuel, the demand is different. We've got electrons on the offshore wind side. The demand for fuel is different than the demand for electricity.
Speaker 3:I think there are just inherent risks in that right. We've got a mature industry. It's been around for a long time and we have I don't want to say nascent anymore, because I think it's further than nascent but it's just not as mature for renewable energy and I think that is just inherently risky as a profile. We've talked about that the entire time. Harkening back to something I said earlier again, the rights that you get with an oil and gas lease versus the rights that you get with an offshore wind lease. They're just fundamentally different. They're different types of contracts and I think that anybody looking at that is going to say that that's a risk, that that's a calculation they're going to have to make when they are putting billions of dollars into a project.
Speaker 4:Yeah, I want to emphasize one point you made, laura, and that's a good one. It's the fundamental product that oil and gas delivers and how it differs from what offshore wind, for example, will produce. Right Electrons are fungible. Your house, your factory, your business can be powered from electrons from anywhere. It's a choice by the states to pursue offshore wind as part of their generation mix, and so maybe there's a view that if offshore wind were not to be developed, those electrons would just come from somewhere else, whereas it's harder to make that gamble with oil and gas, for example. Right when it's so foundational to the transportation economy, you have to import that energy, that oil and gas, from other countries that may not be as friendly with the US or advance or have our goals and ambitions. So I see that kind of different product nature as affecting the risk profile of each industry as well.
Speaker 1:And certainly major consideration for governments and policy makers and hopefully the public too, right? Those are really keen issues to think about as we continue on our energy transition. That needs lots of different sources and uses of energy.
Speaker 2:So I think we're about ready to sum up and, uh, uh, provide key takeaways. And why don't we, uh, why don't we start with you, laura?
Speaker 3: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 think the industry, lawyers and when I say industry, I don't mean just offshore wind industry, I think anybody in the energy industry is struggling with right now, and so my key takeaways are we really, really need to have that transparency from the federal government, and I think we also have to have a little bit of a longer 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 where I am.
Speaker 4:I think it's similar. It's, you know, are the guardrails. How are the guardrails holding up in the public private partnerships that have been created to develop the offshore industry? It's not just, you know, the regulatory regimes of certain agencies, but it's the foundational architecture of how agencies review projects right, projects right, nepa. How is that all changing? How is that adding to the turbulence and uncertainty that perhaps is undermining or perhaps accelerating the development of different types of projects? So those are a couple of areas we'll be watching closely, for sure.
Speaker 1:You guys. I found this a really fascinating discussion as a participant and host, but also as a listener. I'm loving it. I mean, you guys talked about our evolution of policy and regulations. You talked about the changing expectations of society. You talked about the required partnerships between public, private you know government entities to do big things and I think it was a fascinating discussion. I really appreciate you guys joining us.
Speaker 2:Jim, those were my takeaways too from the from today's chat my takeaway I agree and and um, my takeaway from this, from this discussion, is that uh discussion is that we have a huge, huge set of challenges that are associated with offshore wind, and they've maybe become even greater in the last few months and I think it's in order to be moving forward constructively. I do think we have to make sure that we focus not so much on the problems and the negatives that are associated with the changes, that we can identify constructive areas to move forward. Maybe the pace will be a little bit slower, but we can continue to move in the right direction for America's energy situation.
Speaker 1:America's energy situation. Laura and Ty, this is the time when we do the last drops in the ocean for the week, right, and you guys are listeners, so you know this is a chance to mention something that's topical, that's thematic to this, but maybe that we haven't covered. But really, just a couple of seconds on anything else that you'd love for our listeners to be aware of that's going on in offshore energy. Laura you are our guest. Would you like to go first?
Speaker 3:More than happy to, and I will try to keep it brief. Even as I'm sitting here, I'm thinking 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, the two words that have not been mentioned during this conversation, that are on the street and everybody's lips these days are data centers, right. Who's going to, what's going to power these data centers?
Speaker 3:And a lot of conversation, think about here in Virginia is offshore wind. So that's my one, right, and I know I'm looking really closely at it. My whole firm is looking closely 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 other types of marine energy I don't 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 last one, which is offshore energy, is carbon capture. So ccs, boehm and bessie are supposed to be in the process of developing regulations. It's going to take a long time. Jim is probably looking at me and saying, wait, that was mandated several years ago, but it was, and that is another opportunity.
Speaker 4:So those are the three points, my three drops I have a couple and maybe they can be split into multiple drops, but it's really about transmission. There's been a lot of interest and effort by states, namely New Jersey, for example, trying to figure out smart ways to interconnect lots of offshore wind to its grid in a way that's economic and efficient Backbone transmission 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?
Speaker 4:and uncertainty currently affecting the offshore wind industry and how is that affecting their plans, some of which are quite expensive, plans in the billions of dollars, to upgrade their grids to integrate all of this new and helpful energy? And the related point is interconnection issues. It's been a long big issue for offshore wind projects very sizable amounts of energy and capacity to a grid and requiring significant network upgrades. How does that process get rendered more efficient and practical as the country moves forward to integrate all the new resources necessary to serve these data centers?
Speaker 1:Jim, any last drops from you, yeah.
Speaker 2:I have one because I want to go back to Gumbo, and the reason I want to go back to Gumbo is because it represents what this is all about. It's very easy for us to keep thinking in terms of a huge industry and gigawatts and electrons and everything, but in fact, this is us as a society moving forward, and there's so many different facets to it, and gumbo is one of them, and I think we need to keep that in mind. It's just not a question of us or them oil and gas versus renewable or stopping renewable or moving forward with this. It's the whole picture for all the members of society and we need to be keeping that in mind in all of our discussions.
Speaker 1: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 really hungry and also miss the food of New Orleans Gulf Coast friends, send me some gumbo. You guys are so thoughtful and thinking big picture. I have just a couple of small picture last drops. You guys mentioned, laura and Jim, that you're at IPF right now and for dual time, for dual offshore energy. Next week is the Offshore Technology Conference in Houston, another really big event filled with innovation and groundbreaking technology and market development opportunities related to everything about offshore energy. It used to strongly focus on oil and gas, but as offshore wind has come on, you know we also see plenty of great opportunities for offshore wind. So hope to see lots of folks at OTC next week in Houston. And I think I saw this in relation to the IPF announcement. But you know that building in America thing was happening. Ls Cable broke ground on a manufacturing facility right To make sub-CHVDC cables in Virginia.
Speaker 3:It did.
Speaker 1:And that's great. It takes a long time to spend a couple hundred million dollars to build a facility, and so they've broken ground and here here, I hope the market continues to support them. I hope domestically, but certainly internationally they'll be supported. So let's bring some of that back home. Those are my two last drops. Jim, a call to action. You know what do you want to say to inspire our listeners to continue to participate.
Speaker 2:Look, if Gumbo doesn't inspire you, I don't know what would. But I just want to reiterate I think there's a big picture here and we need to keep it in mind. We need to not just think about the big items and what's on the six o'clock news, but how things will shake out for society in general.
Speaker 1:And listeners. Our next podcast is still also to be determined, but, boy, I heard some discussion around an episode 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 of times mentioned and we keep dancing around it, but tax policy and the differences in tax policy for different kinds of offshore energy development sure is an interesting one. I don't know if you guys know any tax policy counsel, but I have a feeling you do. There are some really specific topics we might get to Listeners. If there's something else you'd love to hear, Jim, and I would love to hear it, Send us an email, drop us a line on LinkedIn, because this is for you. We have an awful lot of fun, but we hope you do, too listening. Laura Ty, thank you for joining us. It's been a pleasure to have you and to participate in this conversation.
Speaker 2:Thank you Ty. Thank you Laura. Thank you Laura. We sure appreciate it.
Speaker 3:Really appreciate your having us.
Speaker 1:My pleasure Great seeing you guys, until we meet again On the next, on the next Offshore Energy Podcast. Come on, say it with me, you guys, you.