Energy Suppliers Find Fresh Lift From Offshore Wind

Source: By Erin Ailworth, Wall Street Journal • Posted: Wednesday, August 9, 2017

For more than three decades, Gulf Island Fabrication Inc. has built foundations to anchor offshore-oil platforms to the ocean floor. Now, as lower oil prices take a bite out of that business, it is trying to turn that expertise into an edge in a new business: offshore wind.

The Houston-based company—which recently built the foundations for the first U.S. offshore wind farm, near Rhode Island—is one of many oil-and-gas industry suppliers seeking to diversify into offshore wind, as 18 wind projects are proposed for the nation’s waters.

Surveyors who take samples from the sea floor to find safe places for oil and natural-gas platforms are doing the same for future wind farms. Companies that furnish vessels to transport equipment and supplies to offshore drilling sites are retrofitting them to carry wind blades and other parts.

For energy-services companies, finding new revenue streams is crucial as oil and gas from onshore shale formations continue to flood the market. Over the past three years, the number of rigs drilling for oil and gas in the U.S. Gulf of Mexico has dropped by roughly 75%, to 16 rigs on Friday from 63 in late August 2014.

The 30-megawatt Block Island wind farm in Rhode Island cost $300 million to complete. Many of the other projects proposed in the U.S. are considerably larger and would require hundreds of millions to billions in investment.

The know-how needed to build offshore-wind farms is similar enough to putting up a drilling platform that conference organizer PennWell Corp. is bringing companies from the two industries together in Houston for a two-day confab starting Wednesday.

“We are one of the largest offshore foundation companies,” said Roy Francis,  a senior vice president of business development at Gulf Island, which employs 1,000 people. “If you look at this [wind] industry, they are calling for hundreds of foundations in the territorial waters of the U.S.”

The development of a domestic supplier network is crucial to the build-out of offshore wind projects in the U.S., which are more expensive than similar projects in Europe, partly because they currently have to import crucial parts, such as turbine towers, from the other side of the Atlantic.

Offshore wind farms take years to complete, and all currently proposed in the U.S. are in the permitting and planning phases. Bay State Wind, a wind farm that developer Dong Energy A/S and New England utility Eversource Energy Co. are trying to build off the Massachusetts island of Martha’s Vineyard, received federal approval in late June to deploy equipment to measure wave and wind speeds, for example, as it aims to deliver power in the early 2020s.

It is unlikely all 18 proposed wind farms will be built. Still, suppliers to the offshore oil-and-gas industry—suffering from diminished business because of a prolonged period of lower oil and gas prices—are “all looking for new business,” said Randall Luthi, president of the National Ocean Industries Association, a trade group.

A view of the Deepwater Wind offshore-wind farm under construction off the coast of Block Island in 2015.Photo: Shiho Fukada/Bloomberg

The launch of the Block Island wind farm off Rhode Island last December, which involved several companies with long histories in oil and gas, has heightened interest.

Keystone Engineering Inc., a Louisiana-based company, designed the farm’s foundations. Montco Offshore Inc., also of Louisiana, provided vessels and crews to help install those foundations and transport turbine parts to the site. “My Gulf of Mexico crew loved the idea of leaving the oil patch to go do something different,” said  Joseph Orgeron, chief technology officer at Montco.

Chris van Beek, president of Deepwater Wind, the developer of the Block Island wind farm, worked in the offshore oil-and-gas industry for 30 years. He said he welcomes the skills its suppliers bring, adding that Deepwater Wind’s team has four or five people with offshore oil and gas backgrounds. “They love the business,” he said.