After the U.S. House of Representatives passed the Inflation Reduction Act, National Ocean Industries Association (NOIA) President Erik Milito said the bill secures some key priorities for long-term American energy security.
“As we said when the Inflation Reduction Act of 2022 passed the Senate, no piece of legislation is perfect,” Milito said. “However, we welcome passage by Congress of a bill which undoubtedly secures an all-of-the-above energy framework to boosts offshore oil and gas, offshore wind, and carbon capture and storage — all key priorities for long-term American energy security. We are confident that the president will swiftly sign this into law, and that America’s offshore industry will keep doing what it does best: producing American energy. We once again thank Senator Manchin and his team for brokering this legislation.”
The Inflation Reduction Act includes several NOIA priorities that would strengthen the outlook for the American offshore energy industry, including:
Offshore Oil & Gas
- Lease Sale 257 is reinstated and high bidders must get their lease;
- A new royalty minimum offshore of 16.66%, with a maximum of 18.75%; and
- Lease sales 258, 259, and 261 must be held. Lease Sale 258 would occur no later than December 31, 2022, Lease Sale 259 would occur by March 31, 2023, and Lease Sale 261 by September 30, 2023.
- The offshore wind leasing moratorium in the Southeastern US and Eastern Gulf of Mexico is lifted;
- There is an increase in staffing money for BOEM and NOAA;
- Extension of Production Tax Credits (PTC) for offshore wind;
- New tax credits for offshore wind vessels; and
- OSCLA is amended to allow for wind lease sales offshore US territories.
Carbon Capture & Storage
- Increases the federal 45Q tax credit to $85/ton if wage/apprenticeship requirements are met and construction commences before January 1, 2033; and
- Direct pay is available for the first five years after the project is placed in service. There is no direct pay for final seven years except for nonprofits and co-ops, which can receive all 12 years.
- Offshore Lease Sales: Offshore Wind & Offshore Oil & Gas
- In order to issue an offshore wind lease, an oil and gas sale of 60 million acres (roughly an area-wide Gulf of Mexico lease sale) must have been held in the prior year. This tie-in runs for 10 years.