There’s been a lot of head scratching since AP ran a story about Canadian Hydro’s purchase of a massive “offshore wind prospect” from Utah-based Wasatch Wind Inc.

According to the story, the Ontario government said Wasatch doesn’t have any water rights related to the reported Lake Erie site. It said Wasatch has filed an application, and that application is still under review. “They’re in the queu but there’s no guarantee,” Donna Cansfield, Ontario’s minister of natural resources told me today. “Because of that, it’s too early to say whether there’s been any transfer of rights with this application or any application, for that matter.”

Canadian Hydro’s press release was pretty clear. “Canadian Hydro Developers Inc. has entered into a definitive agreement to acquire the rights to a 4,400 MW offshore wind prospect in Ontario from Wasatch Wind Inc.” So what’s going on? Darryl Warren, a spokesman for Canadian Hydro, put it this way: “Canadian Hydro acquired from Wasatch Wind Inc. a subsidiary called Wasatch Wind Ltd., and that subsidiary has been involved in development of offshore wind projects in Lake Erie for almost two years.” Warren added: “It’s an ongoing process that will eventually lead to a site release. Where it’s at at this point is the ministry has confirmed it received valid applications.”

Saying it will “eventually lead” to a site release isn’t like the minister saying “there’s no guarantee.” And acquiring a subsidiary of a company that’s pursuing offshore wind in Lake Erie isn’t the same as buying the rights to a 4,400 MW offshore wind prospect. Needless to say, I’m sure Canadian Hydro is a bit embarrassed by this sloppy episode, which you wouldn’t expect from a publicly traded company currently the subject of a billion-dollar hostile takeover bid.

Or would you?

Ontario, so it seems, is leading the charge for offshore wind development in North America. Never mind that we’re not a coastal jurisdiction. This isn’t about the ocean, this is about the lakes. On Monday, Canada’s largest independent wind developer, Canadian Hydro Developers, announced that it was purchasing the rights to an “Offshore Wind Prospect” that has the potential to be a massive 4,400 megawatt, multi-phase wind project. That would  make it the largest offshore wind project in the world. Located along an 80-kilometre stretch in the middle of Lake Erie (on the Ontario side), the first phase of the planned developed — between 400 and 500 megawatts in size — is expected to be operational by the end of 2014.

Canadian Hydro purchased the rights from Wasatch Wind Inc. of Utah, and said it decided to get into offshore wind because of the feed-in tariff program in Ontario that pays 19 cents for every kilowatt-hour of power that comes from an offshore turbine. Kent Brown, CEO of Canadian Hydro — which is the subject of a hostile takeover bid from Calgary-based utility TransAlta Corp. — said his company’s offshore plans, on their own, should be enough to convince a foreign manufacturer to set up shop in Ontario. While it’s unlikely Canadian Hydro will be able to develop the full 4,400 megawatts, its entry into the field certainly brings momentum to the Great Lakes offshore wind energy rush.

Toronto-based developer Trillium Power is leading the pack. Its first project would be a 710 MW offshore wind farm in Lake Ontario, called the Trillium Power Wind 1, followed by three more projects that add nearly 2,900 MW to its pipeline. Trillium Power Wind 1 is likely to be the first major offshore wind project in the Great Lakes, and possibly North America. In fact, New Energy Finance says there’s nearer-term potential for development in the Great Lakes than on the coasts, and that Ontario is clearly shaping up to be a leader in offshore wind.

Just a few days ago, I reported that the Ontario government is in serious talks with Samsung C&T about bringing wind and solar manufacturing to Ontario. Samsung is also on record saying it’s interested in entering the offshore market, so perhaps there’s an opportunity there. And who knows, GE, since its purchase of offshore turbine maker ScanWind, may be tempted to chase this market as well. The Great Lakes are an interesting place to develop. It’s shallower, less turbulent, and there’s no salt water to play havoc with turbine machinery. All of this reduces wear and tear on gear, and allows for quicker construction because, unlike ocean-based projects, you don’t have to contend with often violent weather that causes costly delays. Now, one potential problem is ice flow, and that’s something developers will have to deal with. But certainly the opportunity is there for developers of offshore wind in the Great Lakes to put up projects at lower cost than the big ocean-based projects we’re seeing in Europe. They now have to prove it.