March 10, 2008

Energy- Galveston Offshore Wind

Galveston Offshore Wind

“The Texas Wind Rush is on, and the pioneers are staking their claims, and wherever there are pioneers, the settlers soon follow.”- Jerry Patterson, Commissioner of the Texas General Land Office

October 2, 2007- Announcement that GOW has leased 4 additional tracts of offshore space for wind tests, totaling 5 all together. This is the only offshore land lease for wind power in the US.
In May of 2007 an instrument tower was erected in 280 feet waters off the coast of Galveston Texas, to measure wind speeds, consistency, etc. This tower is expected to stay till the end of May 2008.

GOW- part of the larger company Wind Energy Systems Technology (WEST) Has leased the 4 additional tracts at competitive prices, as part of the regular oil and gas lease sale. The first tract was offered at non-competitive prices. But by leasing the tracts with oil and gas, it is bringing wind into the competitive field.

Monetary Details
The deal it that once the wind farms are operational, WEST will pay the State’s Permanent School Fund a minimum of $132 Million present day dollars (or $258 adjusted). The Permanent School fund will also receive a gross revenue from the wind farms production and with that the total rises to more than $231 Million present day dollars- or $433 Million over the 30 year lease.The research phase is expected to last 4 years, and during this time WEST is paying the PSF $91,000 per year per tract on the 4 newest acquisitions.

Following the research phase of the leases, W.E.S.T. will begin to develop wind farms on each of the four tracts. If winds are favorable, W.E.S.T. plans to build wind farms that will produce a minimum of 250 MW to 300 MW per lease.

W.E.S.T. will then begin paying the state’s Permane
nt School Fund a percentage of the electricity produced on the leases. For the first eight years of each lease, W.E.S.T. will pay the Permanent School Fund from 3.5 to 6.5 percent of all electricity produced from the four tracts of land.
Generally, that royalty will start at 3.5 percent of all e
lectricity produced for the first eight years of the lease. That percentage will grow to 4.5 to 4.75 percent of total production for years nine through 16, and 5.5 to 6.5 percent of total production for years 17 through 30 of the 30-year lease.

Construction Costs

As material and construction prices have been going up-particularly in wind turbine cases due to demand (the opposite as to what we had all hoped) many offshore projects are being put on hold. However in this case yes, the price of the turbines are going up, but the price of the oil rigs are going down, so they aren’t seeing a huge increase in the budget of the project.


No comments: