NOIA’s Erik Milito Talks Offshore Energy, Climate Change

As an advocate for offshore energy, including oil and wind, there is likely no shortage of tasks at hand for the National Ocean Industries Association (NOIA) amid heightened focus on climate change and a transition to lower-carbon fuels.

The Washington D.C.-based trade association recently adopted climate change position and principles, making known its stance that U.S. climate policy should support the development and availability of all forms of energy while lowering emissions, back R&D efforts and balance environmental, social, economic and energy needs among other objectives.

“The companies I’ve worked with across the board have all been committed to taking action in those areas and have demonstrated it,” NOIA President Erik Milito told Hart Energy. “There was really no need for the industry to not be out in front on this.”

The principles build on steps already taken to tackle ESG concerns facing the energy industry. NOIA launched its ESG Network in 2020 as a platform for members to collaborate and learn from each other. Workshops have centered on emissions measurement and reporting, ways to reduce carbon footprints of offshore oil and gas operations, and technology.

The dialogue puts everyone on notice that the business remains competitive and performance at the highest level is required. “If we want to get hired. If we want to get investment from private equity or Wall Street or shareholders, it’s becoming more and more clear that we need to perform well in this area,” Milito said.

Like some traditional oil and gas players, NOIA’s focus has evolved through the years. It now also includes advocating for offshore wind energy developments as many companies add lower-carbon energy sources to their portfolios and aim to reach net-zero emissions by 2050.

Milito recently spoke with Hart Energy about the association’s work and shared insight, which have been edited for clarity and length, on opportunities and challenges ahead for offshore energy.

How well do you think the Gulf of Mexico (GoM) is positioned to capture some of those offshore wind opportunities?

Milito: The supply chain in the Gulf of Mexico is actually already established to play a role in the buildout of the U.S. offshore wind sector. In our membership, we have vessel supply companies, marine construction companies, subsea engineering companies, and they have the expertise. Aviation companies, the helicopter companies, manufacturers, suppliers, tool rental companies, safety consultants—all these companies are part of the fabric of the Gulf of Mexico and they’re excited about getting additional business and being part of the offshore wind sector.

Many of them have already done that in the buildout of the Block Island Wind Farm offshore Rhode Island. … Offshore oil and gas is a marine construction activity; offshore wind is a marine construction activity. So those commonalities will transfer from oil and gas to wind, and we’re seeing that.

What are your thoughts on a potential buildout of an offshore wind industry in the GoM?

Milito: We have seen Gov. [John Bel] Edwards from Louisiana come out with an announcement and efforts to push that. In many respects, the Gulf of Mexico has advantages because of the infrastructure that’s in place, the established supply chain, and the oil and gas industry that’s already there. The challenge is you don’t have, necessarily, the demand coming from the power grid in the Gulf Coast like you have in the Atlantic states.

However, we do envision there could be several different scenarios to play out for the Gulf of Mexico. One could be the power grid in states like Louisiana, Mississippi, Alabama, even Texas, find ways to bring more of that power into their states through offshore wind. Another area that could be very promising could be small wind farms, or even larger wind farms that are able to be divided up, to feed into industrial centers.

Can you speak to some of the other opportunities you see for the Gulf of Mexico or elsewhere offshore the U.S.?

Milito: We’re going to continue to promote the Gulf of Mexico from an oil production standpoint. It may sound a little bit counterintuitive, but it’s an important part of addressing climate change. There’s going to be demand for petroleum and hydrocarbon products for decades to come, whether it’s 100 million barrels (MMbbl) or 70 MMbbl or 30 MMbbl. The best place to get that is the Gulf of Mexico … so we’re not substituting low-carbon Gulf of Mexico barrels for barrels that are coming from places like Russia, Iran, Venezuela or even some of the other OPEC countries [that are] producing with a much higher carbon intensity.

It’s an area where hydrogen could become an important emerging technology. The U.S. could use a lot of these facilities that are already out there [in the GoM] that could be decommissioned and they could play a role in the development of hydrogen technologies. Commercial aquaculture is an area that you could see additional business opportunities in the Gulf of Mexico.

What about carbon capture and storage?

Milito: I was saving the best for last. With the announcement from Exxon Mobil—hopefully that will come to fruition—you would be looking at a tremendous business opportunity for that oil supply chain once again. You’ll need seismic companies to determine the best places to sequester the carbon dioxide. You’ll need drilling contractors to drill the wells to place that carbon dioxide. You’re going to need the vessel companies. It’s a huge opportunity. You’re looking at potentially 100 wells or more, and you need a lot of work all around to make that happen.

Carbon capture and storage is well suited for the Gulf of Mexico from a storage standpoint. It’s got very favorable geologic conditions for that. That’s an area where the government has to step up because that has been identified as a critical part of moving forward and addressing the climate challenge. We have that specified in our climate position when we talk about support for continued funding for federal RD&D for innovation and the advancement of emissions mitigation technologies such as CCS. The announcement by Exxon Mobil is extremely important. For it to become reality, Congress and the administration need to work hard to make sure the regulatory framework does not stand in the way.

What do you see are major challenges ahead for the offshore oil and gas sector?

Milito: We must see positive signals from policymakers on the future of leasing for oil and gas in the Gulf of Mexico. They have been issuing permits, which is very positive. The work has continued; production has gotten back up to almost the record levels we saw prior to the pandemic. But the long term will require leasing. There’s a lot of misinformation being put out about companies already having enough leases and the companies being good and not needing more.

But in order to produce energy, you need acreage; in order to get acreage, you need leases and leases expire. Companies determine that they don’t have commercial quantities of oil or gas. They give the lease back. You need to have that pipeline of lease sales continuing. And having that sends a signal to the investment community that it’s going to be a good place to continue to invest. Otherwise, we lose that business.

For offshore wind?

Milito: It’s going to be the government continuing to process permits, getting through the environmental reviews, working with the states to make sure that the power grids are going to be able to accommodate that power. A lot of that will have to play out over time. The administration’s goals are ambitious, but I think they can be achieved if the government gets out of the way and allows the industry to work forward on that.

How do you see NOIA evolving over the next five to 10 years?

Milito: We started the evolution prior to my arrival, with the introduction of offshore wind as an important part of what we do. … For 50 years, we’d been primarily an oil and gas organization. We are taking that next step with the climate position by showing that our industry is here to be a part of the movement to future energy sources.… Beyond that, we’ll continue to promote the technologies and emerging energy sources that will likely continue to mature and become a reality. That includes hydrogen and potentially synthetic fuels offshore.… We are looking at wind turbines, we’re looking at solar panels, we’re looking at battery technology. There’s a tremendous need for critical minerals like cobalt, manganese and others critical for batteries.

On the climate change position, all this comes back to a strong business case. The steps that our companies continue to take to reduce emissions ultimately lead to cost savings and providing lower-cost services and products and technologies. So, we see a strong business case as well for moving forward with a stronger climate position.