The SPR is down to 480.1 million barrels as of 7/15/2022. For prior years, the figures are year-end. See previous SPR post.
Archive for July, 2022
Strategic Petroleum Reserve update
Posted in energy policy, tagged oil reserves, SPR on July 19, 2022| Leave a Comment »
Chevron helicopters
Posted in accidents, Gulf of Mexico, Offshore Energy - General, tagged Chevron, helicopters, HSAC, safety on July 19, 2022| 2 Comments »
Chevron may be the only GoM operator to own its helicopter fleet. Data on their safety performance relative to GoM helicopter contractors do not appear to be available online.
Their news release focuses on hurricane preparedness and the benefits of owning their fleet. I’m not sure how significant these advantages are given that other companies can ensure similar availability through their contracts. A comparative analysis would be of interest.
“Other companies that depend on contracted helicopters to evacuate can’t create their own schedule and might have to start departing the platform days in advance,” said Jose Jaramillo, manager of Chevron’s aircraft operations in the Gulf of Mexico. “With our own helicopters on standby, we have more flexibility in determining when to safely shut down the platform, and after the storm passes, we can quickly remobilize, assess our facilities and bring production back online days faster.”
Chevron.com
The Helicopter Safety Advisory Conference (HSAC) does a very good job of identifying and addressing Gulf of Mexico helicopter safety issues. Per HSAC (report attached):
The leading causes, not all inclusive, of the accidents since 1999 are listed below, and secondary causes of these events include 13 related to helideck size or design related issues.
• 21 engine related,
• 25 loss of control or improper procedures,
• 18 helideck obstacle strikes,
• 13 controlled flight into terrain, and
• 12 other technical failures
Some perspective on offshore California oil spills
Posted in California, Offshore Energy - General, pipelines, seeps, tagged Huntington Beach, NASEM, natural seeps, Oil in the Sea III, pipeline spill, platforms and pipelines on July 18, 2022| Leave a Comment »
Although we are still waiting for the report on the 2021 Huntington Beach pipeline spill, all evidence indicates that the spill was caused by a container ship anchor. Available information to date also suggests that the pipeline was well maintained and properly operated. The volume spilled and resulting damage was less than predicted. Nonetheless, some vocal opportunists took full advantage of the spill to further demonize offshore production.
One of our very savvy BOE readers shared data (attached) from Oil in the Sea III, a National Academies report that is the best source of information on oil inputs into US waters. The data for Southern California are presented below in 3 charts. The first chart shows that natural seeps are overwhelmingly the leading offshore source of oil entering SoCal waters, with offshore platforms and pipelines accounting for <0.5% of the oil.
The second and third charts exclude natural seepage and compare the coastal and offshore oil inputs from the other sources. When land based transportation inputs are included (chart 2), platforms and pipelines (combined) account for 5.3% of the oil.
Excluding natural seepage and land based transportation inputs (chart 3), recreation vessels are by far the leading source of oil (47.5%), with platforms and pipelines (combined) accounting for less than half that volume (22.2%).
These data add important perspective, but are not intended to discount platform and pipeline spills. These spills can have significant localized impacts, and every effort must be made to prevent their occurrence.
Former Minerals Management Service (MMS) Director Randall Luthi comments on Federal lease sale in Wyoming
Posted in energy policy, Uncategorized, tagged Gov. Gordon, Luthi, Wyoming on July 15, 2022| Leave a Comment »
This blog does not normally cover onshore leasing; pontificating about offshore issues is challenging enough😉. However, Randall Luthi – the former head of the MMS (and thus the US offshore program) – is now dealing with similar issues to those being experienced in the offshore sector.
“The bad news is the sale was 18 months late, was approximately 75% smaller than originally planned, had a huge number of state director deferrals, and offered many less-than-desirable leases,” testified Randall Luthi, who serves as chief energy advisor to Gov. Mark Gordon. “In summary, it was a long-awaited, but paltry sale.”
According to Luthi, the federal government controls approximately 67% of Wyoming’s mineral estate, and nearly 50% of its surface.
Wyoming News
In light of the overwhelming federal control, Wyoming has much in common with the Outer Continental Shelf!
Good video
Posted in Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged music video, offshore workers on July 15, 2022| Leave a Comment »
Interesting, but not surprising
Posted in energy policy, Offshore Energy - General, Uncategorized, tagged energy transition, market evalutations, oil and gas companies, Wood Mackenzie on July 14, 2022| Leave a Comment »
Per Wood Mackenzie, companies with low transition scores (i.e. the purer oil and gas plays) command higher valuations. I’d like to see the scores for other US independents.
“First, investors piled into the pure play oil and gas producers that are most leveraged to oil prices, much as they would in any upcycle. US independents led the sector rise through early June before the oil price and shares fell back over the last month.“
“Euro Majors are also reaping the earnings and cash flow boom. Share price performance has been strong relative to the wider stock market, but most have lagged their US peers. US Majors have long commanded a premium rating to their European counterparts, partly a function of the relatively high rating of the US stock market. The gap though has widened.”
Wood Mackenzie
Washington Post on the 5 Year leasing plan
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged 5 year leasing plan, nonproducing leases, Washington Post on July 14, 2022| Leave a Comment »
Given the differences in our views on energy policy, particularly with regard to oil and gas, this WP opinion piece is pretty reasonable. The Post acknowledges the continued need for oil and gas, and the importance of domestic production. That said, two statements in the paragraph pasted below warrant immediate comment.
“In reality, neither argument is convincing. The Biden administration’s proposal — which opens the door to up to 11 potential lease sales, 10 in the Gulf of Mexico and one off the coast of Alaska — would have little impact on current energy prices. It would take between five and 10 years to produce oil after a new offshore lease issuance, according to the Interior Department, while more than three-quarters of already-leased offshore federal waters are not in production.”
WP Opinion
Comments:
- The purpose of the 5 year leasing plan is to minimize future energy supply and security risks, not to reduce current prices. However, acknowledgement of the importance of offshore production and support for regular lease sales could influence market psychology.
- The old and tired arguments about non-producing leases have been frequently addressed on this blog. When you purchase leases, you are not buying oil and gas. You are buying only the opportunity, for a limited period of time, to explore for these commodities. The current percentage of producing leases is actually rather high by historical standards. For more on this topic, see this and this.
Has the President, VP, or any member of the cabinet ever visited an offshore platform?
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged deepwater platform, DOE, DOI, offshore visit, President's Cabinet on July 14, 2022| Leave a Comment »
In particular, the Energy and Interior Secretaries would benefit from a visit to a deepwater production facility. They would no doubt be impressed and would be better able to make informed decisions affecting US offshore leasing, exploration, and development.
The offshore workers would be respectful and would welcome the opportunity to discuss the technology, safety precautions, and environmental protection measures.
Kudos to BSEE on the refurbishment of the Ohmsett spill response research facility
Posted in energy policy, Offshore Energy - General, oil spill response, tagged BSEE, Costner, Lautenberg, MMS, ohmsett, Tennyson on July 13, 2022| Leave a Comment »
My involvement with Ohmsett dates back to the 1970s when EPA operated the facility and I was on the Ohmsett Interagency Technical Committee. The facility fell into disrepair in the late 1980s. Thanks largely to the vision and initiative of my Minerals Management Service (MMS) colleague Ed Tennyson and the enactment of the Oil Pollution Act of 1990, the MMS began restoring the facility in 1990 and resumed testing activities in 1992. Senator Frank Lautenberg (NJ) and a host of dignitaries participated in the grand reopening event.
The facility has lived up to the hype and the current BSEE leadership team seems committed to continuing the testing and innovation. For more information about testing at Ohmsett, including renewable energy concepts, check their website. For an excellent summary of Ohmsett activities from 1992-97, see this paper.
Among the many companies to test equipment at Ohmsett is one that was partially owned by actor Kevin Costner. See the article and photo below. If you build it (and maintain it), they will come!
US offshore sector “leads” worldwide decline in oil reserves
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged exploratory drilling, oil reserves, Rystad, US offshore on July 12, 2022| Leave a Comment »
Per Rystad’s independent and highly regarded global energy assessment:
“The (worldwide) drop in reserves is driven by the 30 billion barrels of oil produced last year, plus a significant reduction in undiscovered resources, to the tune of 120 billion barrels. The US offshore sector has contributed the largest total to that drop, where 20 billion barrels of oil will remain in the ground, largely thanks to leasing bans on federal land.“
The decline in reserves should come as no surprise to those who follow the US offshore sector. Note the sharp decline in exploratory drilling in the (updated chart below) and the calls for action on this blog a year ago and more recently.
The OCS oil and gas program requires a sustained, consistent commitment by government and industry. Such a consistent commitment, even though required by legislation, is difficult to achieve in our political system, .
The proposed 5-year leasing plan portends further declines in the OCS program. Those who are celebating the progam’s downfall may not be so smug 5-10 years from now.
The commitment by the oil and gas industry has also been uneven and in some cases disappointing. BOE continues to be troubled by the reduction in exploration by some companies and the decision by others, including leading US companies with a long history of Gulf of Mexico operations, to exit the US offshore sector completely (see the chart below). The exploration decline began before the leasing shutdown (now 600 days in duration). Inconsistent signals from the Federal government and corporate directors, market considerations, and competing investment opportunities are major factors, but there are no doubt other considerations. Constructive dialogue to address these issues is badly needed.
Bud's Offshore Energy (BOE) 