By Erik Milito
President
National Ocean Industries Association (NOIA)

 

Amid sensational headlines, election hyperbole and some questionable policy decisions from Washington D.C., the U.S. offshore energy sector remains resilient. This vital industry not only powers our nation with reliable energy but also supports hundreds of thousands of jobs across all 50 states and strengthens national security. From the Gulf of Mexico to the burgeoning offshore wind farms along the East Coast to the potential of carbon sequestration, hydrogen, critical minerals, and other emerging energy segments, the resilience and innovation of this sector are crucial for driving economic growth and ensuring our nation’s energy security.

The Gulf of Mexico has long been a cornerstone of U.S. offshore oil and gas production, producing nearly 2 million barrels of oil per day with a small footprint. Last year’s decisions from Washington may have cast a shadow over the region, but 2025 offers a bright outlook.

This past year marked the first since 1958 without an offshore oil and gas lease sale in the Gulf of Mexico. Only three lease sales are scheduled over the next five years. These policy decisions are inconceivable given the Gulf’s role as a wellspring of stable, affordable, and lower-carbon energy that drives economic growth and generates billions in government revenues.

Moreover, litigation has clouded the Gulf of Mexico. The recent ruling by the U.S. District Court for the District of Maryland, siding with environmental activists against the National Marine Fisheries Service Gulf of Mexico Biological Opinion (BiOp), demonstrates the uncertainty of the regulatory and permitting process. Without an active BiOp, nearly every permit or plan could be adversely impacted. While the court has granted a reprieve, it has become clear that changes are needed in our laws and regulations to shield against continued arbitrary disruptions to energy projects in the Gulf of Mexico and elsewhere.

Originally, the judge set a vacatur of the BiOp for December 20, 2024—a time frame that both industry and the federal government agreed was infeasible and would potentially lead to a bottleneck of almost every oil and gas permit in the Gulf of Mexico. Such a decision could open the door to an unpredictable regulatory environment, deterring investment and jeopardizing economic growth, tax revenues, and jobs.

After dozens of companies and several federal agencies provided declarations to the court, explicitly expressing how a December vacatur would severely impact their operations, the court granted a remedy and delayed the vacatur until May 2025.

Thankfully, the Gulf of Mexico will not be starting the new year with a permitting logjam.

Industry is also closely watching the anticipated December 2024 release of the expanded Rice’s whale critical habitat. At the time of writing, based upon the government’s proposal, the new habitat designation is expected to be significantly expanded through an effort that leaned heavily on incomplete science. Fixing this issue should be a major priority for Congress and the incoming administration.

Without a solution, the designation could reintroduce mitigation measures that harm energy, industrial, commercial and every marine activity in the Gulf of Mexico without providing effective protection for the whales. Potential restrictions could impact ships bringing fuel to Florida’s Gulf Coast, cargo ships from Houston, and food exports from the Mississippi, disrupting vital supply chains and economic activities.

Despite these challenges, the Gulf of Mexico continues to innovate and produce the energy that fuels society. New projects in the deepwater Gulf are advancing with groundbreaking techniques. Chevron’s Anchor project, which achieved its first oil in August 2024, exemplifies the industry’s commitment to innovation, safety and efficiency. As the first deepwater high-pressure development to begin production, Anchor uses 20,000-psi subsea technology to tap into reservoirs at depths of 34,000 ft.

This achievement required the collaboration of numerous companies. For instance, Chevron contracted Transocean’s newly built Deepwater Titan, an eighth-generation drillship, to drill and complete the project’s subsea high-pressure production wells. The Deepwater Titan and its sister ship are the first rigs in the world equipped with a 1,700-ton hoisting system, a 20,000-psi well control system and a 10,000-psi mud system.

Other frontier high-pressure, high-temperature projects, including Beacon Offshore Energy’s Shenandoah project and bp’s Kaskida project, are poised to follow and build upon the Gulf region’s impressive resilience and status as a premier global energy basin.

There has also been progress in developing new offshore wind projects in the U.S. The South Fork Wind project, a joint venture between Ørsted and Skyborn Renewables, is New York’s first offshore wind farm and the first commercial-scale offshore wind farm in federal waters. With 12 turbines generating 132 MW of renewable energy, South Fork Wind will power approximately 70,000 homes.

Other offshore wind projects are not far behind, which is great news for local onshore residents and workers throughout the nation. While the power generated from offshore wind projects may be local, the economic significance, including the supply chain, has a national footprint. States such as Louisiana, Texas, North Carolina, and Florida have already realized jobs and investments from supporting offshore wind projects.

Consider the ECO Edison, the first-ever American-built, owned and crewed offshore wind service operations vessel, constructed by Edison Chouest. This vessel will play a pivotal role in the operation and maintenance of wind farms, serving as a base for technicians and equipment.

Built by more than 600 workers across shipyards in Louisiana, Mississippi and Florida, and sourcing components from 34 states, the ECO Edison exemplifies the significant financial investments and collaborative efforts driving the U.S. offshore wind industry forward.

Furthermore, there is a pipeline from the offshore wind industry of more than $4 billion in proposed investments to ports, manufacturing, vessels, workforce development and research.

As the U.S. moves past the elections, it is crucial for Congress and the White House to quickly align on advancing an all-of-the-above offshore energy policy if the U.S. wants to continue to be an energy leader. One example of such alignment could be the pursuit of policies to mandate offshore oil and gas lease sales. This would create certainty for investment and pave the way for new American energy projects, thereby reducing reliance upon antagonistic energy suppliers, such as Russia and Iran, in the global marketplace.

Ensuring a stable and predictable regulatory environment and regular access to new energy opportunities through lease sales are essential for attracting the investments needed to maintain and expand our offshore energy capabilities.

Offshore oil and gas and renewable energy projects offer significant benefits, including job creation, energy security, and environmental stewardship and conservation. By seizing this moment, policymakers can drive forward the innovation and investment required to keep the U.S. at the forefront of global energy leadership.

Learn more here.