Levelized cost of repurposing oil and gas infrastructure for clean energy in the Gulf of Mexico

Abstract

The Gulf of Mexico is home to around 1500 oil and gas platforms as of September 2024 that will require decommissioning in the coming decades. The ROICE (Repurposing Offshore Infrastructure for Clean Energy) program assesses the techno-economic feasibility of repurposing the platform jacket and topsides to support hydrogen or wind power generation. This study reports on the development of and results from the ROICE levelized cost (LC) Model. ROICE LC integrates equipment such as turbines, substations, electrolyzers and other variables such as wind speed, water depth, and distance to shore. Using 2023 costs and without federal incentives, LC for electricity varies from 10 cents per kWh for a large project with repurposing at a shallow water, high wind speed location to 24 cents per kWh for a new build small project at a deepwater, lower wind speed location. In comparison, onshore wind projects generate power at 4 to 11 cents per $kWh$, and onshore solar PV cost ranges from 2 to 10 cents per $kWh$. The levelized cost of hydrogen for identical sites varies from $5.50 to $14.50 per kg. In comparison, the cost of onshore hydrogen generation using clean energy ranges from $2.50 to $6.80 per kg. This reflects the need to reduce offshore costs and/or provide incentives to aid in developing offshore wind and clean hydrogen. Incentives offered by the US Federal government (tax credits up to 50 % of cost, $3/kg of hydrogen) could make these projects profitable and will be studied in future phases of the project.