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As part of the recent focus on decommissioning and financial assurance requirements, I looked at borehole data for platforms A, B, and C on Lease OCS-P 0241 in the Santa Barbara Channel. Platform “A” is where a well blew out in 1969, permanently scarring the US offshore program. Observations:
- There are 140 completed and unplugged wells on the 3 platforms. None of the wells on these platforms have been permanently plugged and only one is temporarily abandoned.
- The latest available production information (2024 data) indicates ave. daily oil production of 3791 bopd for the lease, including 1901 bopd from Platform A, the highest production for any platform in the region in 2024.
- 41 of the lease’s completed (unplugged) wells are on Platform A.
- The number of these wells that are currently producing is not publicly available.
- 30 of the completed Platform A wells were drilled prior to 1985.
- The blowout well was the 5th well drilled from platform A. All 4 of the wells drilled prior to the 1/28/1969 blowout are still unplugged:
- well A-20: spudded on 11/19/1968, reached total depth on 12/2/1968
- well A-41: spudded on 11/27/1968, TD on 12/19/1968
- well A-25: spudded on 12/18/1968, TD on 12/28/1969
- well A-38: spudded on 1/12/1969, TD on 1/24/1969
- Note how quickly the wells were drilled. The wells were shallow (2299-4051′ true vertical depth), and the operator (Union Oil) saved time by omitting a casing string. (This decision was a root cause of the blowout and thus changed history 😡)
Lease documents and regulations at 30 CFR § 250.1710 require that all wells be permanently plugged within one year of lease termination. For leases like 0241 that are still active, 30 CFR § 250.1711 stipulates that BSEE will order a well to be permanently plugged if the well poses a hazard to safety or the environment, or is not useful for lease operations and is not capable of oil, gas, or sulphur production in paying quantities. In the Gulf of America Region, the policy is to require wells that have not been used in the past 5 years to be permanently plugged. Allowing old wells to remain unplugged is neither prudent nor consistent with the regulations.
Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Regulation, well control incidents | Tagged decommissioning, Dos Cuadras field, Lease OCS-P 0241, Platform A, Santa Barbara blowout, well plugging and abandonment | Leave a Comment »
Sable Offshore (SOC) surged 12% on Thursday. Here’s why:
Judge Stephen V. Wilson, US District Court for the Central District of California ruled that Sable’s pipeline doesn’t imminently harm Gaviota Park. Judge Wilson said the state “is grasping at straws,” for evidence of real environmental harm, and the federal consent decree governing the terms of the system’s restart is controlled by the California Office of the State Fire Marshall, not the parks department.
The judge didn’t rule on the larger question of whether the Defense Production Act order to restart the Las Flores pipeline system was lawful.
Posted in California, Offshore Energy - General, pipelines, Regulation | Tagged California, Gaviota State Park, Judge Stephen Wilson, no imminent harm, Sable Offshore | Leave a Comment »
John Smith’s update on California OCS Decommissioning Obligations is attached. His comments:
Chevron and FMC hold joint and several liability responsibilities for many platforms and all of those operated by DCOR. This reflects Chevron’s long history in developing CA onshore and offshore oil and gas resources. A 2020 report issued by BSEE estimated the nine platforms operated by DCOR had a combined decommissioning cost of $397 million. The actual cost could be 2-3-fold higher based on estimates for decommissioning California state water platforms prepared by experienced decommissioning consultants.
Chevron may be checking out of California by moving its corporate offices to Houston, but as someone once said about decommissioning – referring to the popular Eagles Hotel California song “You can check out but you can never leave.”
Official decommissioning anthem 😉: Hotel California
Excerpt from the lyrics – Hotel California, Eagles, 1976
Last thing I remember
I was running for the door
I had to find the passage back
To the place I was before
“Relax, ” said the night man
“We are programmed to receive
You can check out any time you like
But you can never leave”
Posted in California, decommissioning, energy policy, Offshore Energy - General, Regulation | Tagged California, Chevron, cost, DCOR, decommissioning obligations, Eagles, Freeport-McMoRan, John B Smith | Leave a Comment »
Per yesterday’s discussion comparing recent onshore and offshore lease sales, the investments are really quite different. When you acquire Permian and Delaware Basin shale tracts you are essentially buying oil in place that should be producible with current technology.
At offshore sales, you are typically acquiring the opportunity to learn more, either through site surveys or drilling. Your lease exploration and development strategy will also be influenced by drilling outcomes for similar targets on other leases. A return on your investment is far from certain.
I looked back at the top ten leases (by high bid) issued at Central Gulf Sale 235. That sale was chosen because it was 11 years ago, giving time to explore and initiate development, and the bidding was strong. The top ten leases received bids ranging from $12.8 million to $52.2 million. See the screenshot below.
Surprisingly, only four of the leases were ever drilled and nine of the ten leases have expired. The only lease remaining is the highest bid block (OCS-G 35724, Walker Ridge Block 107, $52.2 million) now owned by Talos (27% and operator), Red Willow (22.5%), Shell (22.5%), CSL (9%), and two investment partnerships. This lease is being held by operations given that a well was drilled within the past year. However, Talos has announced a discovery, and the well has been temporarily abandoned to preserve future utility:
The discovery well was drilled to a total vertical depth of 33,228 feet utilizing the West Vela deepwater drillship and encountered oil pay in multiple high-quality, sub-salt Miocene sands. A comprehensive wireline program was conducted, acquiring core, fluid, and log data to evaluate the reservoir.
So the bottom line is $308.3 million in bonuses for 10 leases, 9 of which have now expired, and one discovery which could prove to be commercial down the road.
Posted in energy policy, Gulf of Mexico, Offshore Energy - General | Tagged Delaware Basin, high bids, OCS Sale 235, onshore vs. offshore, Permian Basin, Talos, Top Ten, West Vela | Leave a Comment »
The Federal onshore oil and gas program was always secondary to the offshore program, at least in the opinion of those of us who worked in the offshore program 😉. That was before the shale era revolutionized US energy production.
The onshore program is now free to flex 💪 following recent sale results, most notably last week’s impressive BLM New Mexico sale that featured the Delaware Basin. See the attachment for details.
The table below compares the last two Big Beautiful Gulf sales and the record 2008 Gulf of Mexico sale with the BLM NM sale. Most astonishing is the record $357,129 per acre bid for a single NM tract. Devon Energy, which exited the Gulf in 2010, was the mega-bidder acquiring 24 tracts for $2.6 billion! (Devon is still bogged down in the Hogan/Houchin decommissioning dispute in the Pacific, a case which should temper enthusiasm for relaxed lease assignment and financial assurance policies.)
The attractiveness of the Permian, Delaware, and similar onshore basins has been greatly enhanced by vastly improved drilling and well completion technology. The short lead times to first production are a big advantage relative to offshore development.
The total high bids for Gulf Sale 206, which dwarfed the BBG1 and 2 sales, are still a Federal oil and gas leasing record when converted to 2026 dollars, but the sale area was much larger than for the NM sale.
| Sale | date | tracts bid on | acres bid on | total high bids | highest bid/acre |
| BLM NM | 5/20/2026 | 74 | 33,529 | $4,007,609,288 | $357,129 |
| BBG2 | 3/11/2026 | 25 | 140,753 | $46,976,423 | $3,647.57 |
| BBG1 | 12/10/2025 | 181 | 1,023,526 | $300,425,222 | $3,227.79 |
| 206 | 7/21/2008 | 615 | 3,323,047 | $3,677,688,245 ($5.7 million in 2026 dollars) | $18,333.47 ($28,300 in 2026 dollars) |
Posted in energy policy, Gulf of Mexico | Tagged Delaware Basin, Devon, Gulf of America, New Mexico, onshore leasing, record lease sale, sale 206 | Leave a Comment »
Thinking of those who gave their lives to protect our freedoms, including workers who died providing the energy needed to power our economy.
abundant, reliable, affordable energy 🡆 economic strength, security, & independence
Posted in energy, energy policy, Uncategorized | Tagged energy independence, energy workers, gratitude, Memorial Day, security | Leave a Comment »
Steve Milloy, National Center for Public Policy Research: GE Vernova is losing money on wind turbines and will continue to lose money for the foreseeable future. Wind losses are real and guided to persist at ~$400 million in 2026.
On the other hand, GE Vernova’s gas turbine business is booming. The gas turbine backlog and slot reservations surged from 83 GW to 100 GW in Q1, with a target of at least 110 GW by year-end. There is strong demand for reliable, dispatchable power to support data centers and grid stability. This segment is a major profit driver.
Milloy is asking GE Vernova shareholders to support the following resolution:
RESOLVED: Shareholders request that the Board of Directors of GE Vernova Inc. publish a report within the next year—prepared at reasonable cost and omitting proprietary or competitively sensitive information—assessing the extent to which the Corporation’s sustainability goals have been authorized and maintained on the basis of net-present-value and return-on-investment calculations.
The company’s Board of Directors has unanimously recommended that shareholders vote “AGAINST” this proposal, arguing that the Company already provides comprehensive, transparent disclosures on sustainability‑related risks, opportunities, goals, and progress.
Meanwhile, GE Vernova remains locked up in an ugly dispute with Vineyard Wind and is still prevented by court order from exiting that project.
Posted in natural gas, Offshore Wind, Wind Energy | Tagged costs, FEP, gas turbines, GE Vernova, Steve Milloy, sustainability goals, wind turbines | Leave a Comment »
Perhaps the wind industry’s problems are more fundamental than those presented by US policies. Why else would TotalEnergies, the company that jumped at the chance to annul its costly romance with US offshore wind, be looking for a way out of its German commitments?
NDR / Süddeutsche Zeitung: TotalEnergies is seeking to quit a major offshore wind energy project in Germany for which it offered to pay six billion euros in a 2023 state auction, arguing that slow grid connections and a deteriorating economic environment have triggered the decision.
According to the reports, energy company BP, which also won a successful multi-billion euro bid in 2023, could seek a similar opt-out. After transferring its offshore wind activities into a subsidiary in 2025, the new company is said to be scaling back and ultimately planning to shut down its offices in Berlin and Hamburg.
Does this sound familiar? The mood in Germany’s offshore wind industry and elsewhere in Europe has shifted markedly in recent years. While bidders in offshore auctions in 2023 were ready to pay billions of euros for the right to implement new projects, a subsequent auction round in 2025 failed to attract a single bid. According to offshore wind industry association BWO, the meager expansion of less than 1 GW annually since 2020 was mainly triggered by a spike in investment and capital costs.
Revisiting some quotes published following the 2023 German wind auction:
Environmental NGO Deutsche Umwelthilfe (DUH, not the best acronym in English 😉) called the result a “quantum leap” for offshore wind energy. “Wind power at sea is now so economically attractive that project developers are outbidding each other for access to marine areas,” said DUH executive director Sascha Müller-Kraenner. “The fairy tale of expensive green electricity is thus finally off the table.” (This quote didn’t age well!)
“The sums are obscene,” an industry source, who was part of a non-successful bid, told business daily Handelsblatt. (Irrational bidding similar to what we saw during the 2022 U.S. Atlantic Wind Sale.)
Posted in energy policy, Offshore Wind | Tagged 2022 Atlantic Wind Sale, buyers' remorse, germany, irrational bidding, Offshore Wind, poor economics, quit project, TotalEnergies | Leave a Comment »
A legal challenge to Sable’s ongoing Santa Ynez Unit production has been transferred from the Santa Barbara courtroom of Judge Donna Geck (pictued) to a Federal courtroom in northern California.
Judge Geck had refused to lift her preliminary injunction on SYU operations, and appeared to be set to find Sable in contempt at a hearing that was scheduled for this Friday (5/22).
Attorneys for a coalition of Santa Barbara environmental organizations have filed legal papers demanding that the case be returned to Judge Geck.
Posted in California, Offshore Energy - General | Tagged change of venue, injunction, Judge Geck, Santa Barbara, Santa Ynez Unit | 2 Comments »
BOEM has completed their Sale BBG2 bid evaluations, and 2 of the 25 high bids were rejected, further shrinking the sale’s already small footprint. That’s a high rejection rate when compared with Sale BBG1 (3 of 181 bids rejected).
Although BOEM’s decision matrix has not yet been posted, a comparison of the acceptances with the bids submitted tells us that the Keathley Canyon Block 828 ($1,101,202) and Atwater Valley Block 63 ($650,018) bids were rejected.
Both of the rejected bids were submitted by LLOG, partnering with 4 other companies on the Atwater Valley block. LLOG’s high bids on 3 other blocks were accepted, so their rejection rate was 40%. Interestingly, 2 of the 3 BBG1 rejected bids were also submitted by LLOG.
There is no shame in bid rejections, which are part of the legislated leasing process. Why pay more than you have to (or think a block is worth)? A bid rejection may attract future competition, but otherwise the only downside is that you don’t get a lease that you can possibly acquire at another sale if desired (an advantage of regular, predictable lease sales).
BOEM is charged with making fair market value determinations and their process and decisions are publicly available. Of course, opinions differ on the value of an unexplored lease. We will see what the bidding on the BBG1 and BBG2 rejections looks like in future sales.
BOEM did accept the the high bids for the BBG2 “sweet spot” blocks (red in map below; also see the table) in the Green Canyon Area of the Gulf. These 4 blocks accounted for 17 of the sale’s 38 bids (45%) and $32.8 milion of the sale’s $47 million in high bids (70%). BP’s $21 million bid for GC 404 was by far the sale’s highest bid.
| Green Canyon Block No. | No. of bidders | High Bidder | Bid |
| 404 | 5 | BP | $21,009,990 |
| 405 | 2 | BP | $885,990 |
| 448 | 5 | Chevron | $4,967,067 |
| 492 | 5 | Chevron | $5,887,188 |
Posted in energy policy, Gulf of Mexico, Offshore Energy - General | Tagged bid rejections, BOEM, bp, Chevron, Green Canyon, Gulf of America, Lease Sale BBG2, LLOG, sweet spot | Leave a Comment »
Bud's Offshore Energy (BOE) 