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Archive for August, 2022

An example of why it is important for the Lease Sale 257 decision to be reversed, either by appeal or legislation

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , on August 5, 2022| Leave a Comment »

Westwood has highlighted 13 wells planned for the remainder of 2022 as ‘key wells to watch’. These include a number of frontier play tests, for example Raia offshore Mozambique, and Pensacola, offshore UK; extensions of proven plays, including Zanderij offshore Suriname and Hoodoo, US Gulf of Mexico; and large prospects in proven plays, such as Wei, offshore Guyana.

Westwood

The Hoodoo prospect cited by Westwood is operated by BHP and is in East Breaks Blocks 699 and 700. At Sale 257 (11/17/2021), BHP was the sole bidder on 4 blocks just to the north of this prospect. The lease sale was vacated by a Federal judge in January. If the vacature of Sale 257 is not reversed, either by appeal or legislation, one or both of the following outcomes could easily occur:

  1. BHP loses the opportunity to potentially develop those blocks as part of or in conjunction with the Hoodoo project.
  2. Based on their knowledge of the BHP bids, which are public information, other companies could submit bids for these blocks in a future sale. BHP would have to defensively raise their bids or lose the blocks to another company.

Either outcome would be unfair to BHP and would discourage investment in OCS exploration and development.

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Funding studies to support a pre-determined narrative

Posted in climate, energy policy, tagged , , , on August 4, 2022| Leave a Comment »

WASHINGTON, D.C. — The Biden-Harris Administration, through the U.S. Department of Energy (DOE), today announced $26 million to fund projects that will demonstrate that America’s electricity grid can reliably run with a mix of solar, wind, energy storage, and other clean distributed energy resources.

DOE

Shouldn’t the research precede DOE’s declaration of victory?

Rest assured that none of the studies will question the reliability of a grid dependent on DOE’s preferred energy mix; nor will they raise concerns about the associated economic, national security, or environmental risks. These are the types of projects that the WSJ calls “Green Pork.”

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75 years of GoM OCS operations by the numbers

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , , on August 3, 2022| Leave a Comment »

Per our post on the first Gulf of Mexico OCS production, here is what has happened since:

  • 54,948 wells drilled
  • 7159 platforms installed; 1743 remain in place
  • 40,000 miles of pipeline installed (per GAO)
  • Deepest water depth well: 10141 feet, Murphy (2008)
  • Deepest water depth platform: 9560 feet, Stones (Turritella) FPSO, Shell
  • Total oil production: 1947-2022 YTD = 23.6 billion bbls
  • Total gas production: 1947-2022 YD = 190.1 trillion cubic feet
  • Max. annual oil production: 693 million bbls (2019)
  • Max. annual gas production: 5.15 trillion cu ft (1997)
  • 131 lease sales
  • 28,482 tracts leased

Except for the GAO pipeline estimate, all numbers are from BSEE and BOEM online data centers.

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DOE production (not satire)

Posted in climate, energy policy, Uncategorized, tagged , , on August 2, 2022| Leave a Comment »

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If the Schumer-Manchin bill is enacted, what happens to the Sale 257 CCS bids?

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , on August 2, 2022| Leave a Comment »

The subject legislation requires the Secretary of the Interior to accept the highest valid bid that was received for each tract offered in OCS Lease Sale 257. Exxon was the sole bidder on 94 tracts on the nearshore Texas shelf. The leases were to be acquired for carbon sequestration purposes.

The CCS bids should not be considered valid given that:

  1. Sale 257 was an oil and gas lease sale. The Notice of Sale said nothing about carbon sequestration and did not offer the opportunity to acquire leases for that purpose. Therefore, the public notice requirements for CCS leasing (30 CFR § 556.308) were not fulfilled.
  2. Because there was no draft or final Notice of Sale, interested parties and the public did not have the opportunity to consider and comment on CCS leasing, tract exclusions, bidding parameters, and other factors.
  3. 30 CFR § 556.308 requires publication of a lease form. No CCS lease form was posted or published for comment.
  4. CCS operations were not considered in the environmental assessments conducted prior to the sale.
  5. No evaluation criteria for CCS bids have been published.

Unexpectedly, the Infrastructure Bill, signed on 11/15/2021 (just 2 days before Sale 257) included a provision for OCS carbon sequestration. However, that legislation did not require CCS leasing or authorize DOI to sell CCS leases as part of an oil and gas lease sale; nor did it exempt DOI from complying with its leasing regulations. Instead, It gave the Secretary a year (until 11/15/2022) to promulgate necessary implementing regulations. If carbon sequestration in the Gulf of Mexico is deemed to be desirable, a separate CCS sale should be held when the regulatory framework has been established.

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RIP John Fitzgerald

Posted in Canada, Offshore Energy - General, Regulation, tagged , , , , , on August 1, 2022| Leave a Comment »

The offshore world lost an important figure over the weekend with the passing of John Gregory Fitzgerald. As Chairman and CEO of the Canada Newfoundland Offshore Petroleum Board in the late 1990’s, John presided over the first production from the massive Hibernia field. He also approved the pioneering Terra Nova project, the first FPSO development in a harsh, iceberg laden environment.

John worked closely with his international counterparts and hosted an important offshore safety meeting in St. John’s in 1996. It was an honor to be associated with such an outstanding individual and dedicated safety leader.

RIP John, your contributions will not be forgotten.

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Wind vs. oil and gas: Is this necessary?

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, Wind Energy, tagged , , , on August 1, 2022| Leave a Comment »

When we (MMS) drafted the OCSLA amendments (incorporated into the Energy Policy Act of 2005) that authorized offshore wind operations, we envisioned complementary and synergistic programs. Offshore wind and oil/gas development have many similarities and a common purpose – energy production. There is considerable overlap among the operating companies and contractors.

Unfortunately, politicians are better at dividing than uniting, and a provision in the Schumer-Manchin legislation pits the offshore wind and oil/gas programs against each other. The text (pasted below) from p. 646 of the bill restricts wind leasing when no oil and gas lease sale has been held in the prior year.

I share the concerns about the OCS program evolving into a wind-only program, as has already happened in the Atlantic (more on this at a later date). However, oil and gas sales should be held because they make economic and environmental sense, not because they are a condition for holding wind sales. Oil and gas sales are not punishment and wind sales are not rewards, and holding a single GoM lease sale each year does not balance the offshore program.

(b) LIMITATION ON ISSUANCE OF CERTAIN LEASES OR RIGHTS-OF-WAY.—During the 10-year period beginning on the date of enactment of this Act—

(2) the Secretary may not issue a lease for offshore wind development under section 8(p)(1)(C) of the Outer Continental Shelf Lands Act (43 U.S.C.1337(p)(1)(C)) unless—
(A) an offshore lease sale has been held during the 1-year period ending on the date of the issuance of the lease for offshore wind development; and (B) the sum total of acres offered for lease in offshore lease sales during the 1-year period ending on the date of the issuance of the lease for offshore wind development is not less than 60,000,000 acres.

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