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Archive for September, 2022

Good picture, questionable message

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged , , on September 9, 2022| Leave a Comment »

bp ad showing workers on their Na Kika floating production platform in the Gulf of Mexico (6340′ water depth)

Is bp apologizing for the pictured workers and platform? With the demand for oil and gas expected to increase through 2050, and worldwide concerns about energy supply and security, ads like this make neither good business nor good social sense.

Moving away from oil and gas and becoming a “very different” company in the 2030’s won’t make bp the “leading energy company in the world.” On the contrary, a “very different” bp will likely be less influential, less profitable, and more dependent on government mandates and subsidies.

Contrary to the ad (and to the company’s credit), bp seems committed to Gulf of Mexico production well beyond the 2030’s. They are the number 2 oil producer in the Gulf (behind Shell), continue to drill exploration and development wells, and were the most active participant at Lease Sale 257. Bp was the high bidder on 46 tracts, 12 more than no. 2 Chevron. The Department of the Interior has been legislatively directed to award Sale 257 leases by 9/15/2022, but has yet to comment publicly on the matter.

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Barbados licensing round

Posted in Offshore Energy - General, tagged , , on September 8, 2022| Leave a Comment »

Barbados is opening a licensing round for 22 offshore blocks. Interested companies may begin sending in offers on November 1 for a duration of 11 months. Blocks will be awarded to successful applicants on December 11, 2023. The BOE bid is being drafted; partners are welcome.😉

Why Barbados?

 Under-explored acreage.
 Untapped potential.
 Good prospectivity.
 Large potential structures with stacked targets and DHI support.
 Good data coverage.
 Proven onshore petroleum system.
 Stable government.
 Strong legal, fiscal and regulatory framework.
 Great place to live and work.

Barbados offshore blocks; existing BHP/Shell licenses in yellow

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Updated SPR “milestones”

Posted in energy policy, tagged , , on September 7, 2022| Leave a Comment »

The reckless depletion of an important strategic resource continues:

  • Largest-ever one year SPR decline – 179 million bbls or 28.8% (9/3/2021 to 9/2/2022)
  • 39.2% decline since 2010
  • 74 consecutive weeks of decline – 4/9/2021 to 9/2/2022
  • 58 million bbls below the strategically important 500 million barrel threshold which was first breached (on the downside) on 6/24/2022
  • Lowest inventory since 11/23/1984
Above numbers are end of year volumes except for 2022 which is as of 9/2

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Artemis vs. deepwater oil and gas development

Posted in Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged , , , , on September 6, 2022| Leave a Comment »

Here is a good article, endorsed by Elon Musk among others, about the foreseeable problems NASA is facing with the Space Launch System rockets. SLS rockets use hydrogen which, at super-chilled temperatures and high pressures, easily oozes out of any available opening. Space X Raptor engines are fueled with methane (imagine that) which Musk and his engineers think is the best combination of high efficiency and ease of operation. Methane is also easier to produce on Mars where Musk hopes to develop a self-sustaining city.

In light of their respective frontier exploration accomplishments, space exploration and deepwater production are sometimes compared. In that spirit, NASA’s inspector general estimates the Artemis campaign will cost $93 billion between 2012 and 2025, $4.1 billion for a single launch. Each Artemis launch will thus cost approximately as much as developing and producing a 100 million barrel deepwater oil field in the Gulf of Mexico. And, of course, the Artemis program is fully funded by the government, while deepwater oil and gas development is not only privately funded but is an important source of government revenue.

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OPEC+ follows mini August production increase with equivalent September decrease

Posted in energy policy, Uncategorized, tagged , on September 5, 2022| Leave a Comment »

Link to the press release.

To the extent that these numbers are honored and adhered to, attached is the OPEC+ production table (1000’s of BOPD). Note that Russia and Saudi Arabia have identical quotas – 11,004,000 BOPD.

production-table-32nd-onommDownload

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RIP Gerald Rhodes, Engineer and Regulatory Scholar

Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged , , , , on September 5, 2022| Leave a Comment »

An important figure in the history of the US offshore program passed away last week. Gerry Rhodes was a petroleum engineer with an attorney’s gift for understanding laws and regulations. Among other leadership roles in the offshore regulatory program, Gerry was Chief of the Minerals Management Service’s Branch of Rules, Orders, and Standards in the 1990’s.

Gerry was among the first in the Federal government to fully understand the financial responsibility risks associated with the decommissioning of offshore facilities and the urgent need to update requirements for the plugging of wells and removal of platforms. The enormity of this challenge is described in the 1991 Forbes article pasted below. Despite sharp divisions within the offshore industry and the resulting political pressure, Gerry succeeded in finalizing regulations (including this 1995 rule) that are the basis for the current financial responsibility programs in BOEM and BSEE. Without Gerry’s resolve, subsequent financial assurance challenges and government outlays would have been far greater.

RIP Gerry. You were a true gentleman, a dedicated father and grandfather, and a diligent and highly accomplished colleague.

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Mixed DC Appeals Court decision on Lease Sales 250 and 251

Posted in Offshore Energy - General, Regulation, tagged , , , on September 2, 2022| Leave a Comment »

The U.S. Court of Appeals for the D.C. Circuit ruled that BOEM “unreasonably refused to consider possible deficiencies in environmental enforcement” in their Supplemental EIS for Sales 250 and 251. The court found that BOEM did not adequately consider a 2016 Government Accountability Office (GAO) report that was critical of BSEE’s oversight of offshore activities.

More positively, the court chose not to vacate the sales or the EIS:

Moreover, vacatur would be highly disruptive for the lessees. They have paid millions of dollars to obtain their leases and have acted for some four years in reliance on them—including by investing substantial additional sums and by executing contracts with third parties. Moreover, any redo of the lease sales “would be tainted by prior publication of [the] lessees’ proprietary valuation of the leases” following the original sales.

Comments:

  1. How many GAO reports on BSEE or MMS have not been critical of some processes or procedures? None that I can recall.
  2. It’s unreasonable to expect BOEM to consider every GAO or other external criticism of the regulatory program in their EIS’s.
  3. All of the GAO recommendations in the subject report were process related and were closed (implemented) several years ago.
  4. The court exercised good judgement in declining to vacate the sale. Per the decision, the case will be remanded to BOEM for further consideration of the GAO report.

 

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Much respect for the Coast Guard but I disagree with this decision

Posted in Health, Uncategorized, tagged , , on September 1, 2022| Leave a Comment »

7 cadets ordered off Coast Guard Academy campus over vaccine status. “They were escorted to the gate like they were criminals or something,” the lawyer, Michael Rose, told the newspaper.

Even those of us who are fully vaxed acknowledge the vaccines’ uncertain efficacy and risks, and the many issues with the CDC guidance and Covid protocols. Military personnel must comply with orders, but questionable orders should be revised as new information becomes available.

Regulators know that regulations, policies, and practices cannot be static. As we learn, we update and improve. Enforcing outdated guidance is just a power play, and demonstrates rigidity not competence. The Coast Guard understands all of this, so their decision to evict the cadets is especially disappointing.

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Leasing policy and BOEM’s unrealistic Gulf of Mexico production forecast

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

GoM oil production for June increased (see chart below) with King’s Quay and Spruance contributing to the uptick. Other anticipated 2022 startups are not yet producing.

The EIA production forecast for 2022 is proving to be pretty accurate. Kudos to them. However, BOEM’s 2022 forecast of 1.9 million bopd is not achievable and concerns about the intermediate and longer term persist. Unfortunately, BOEM’s highly optimistic forecast for 2022 and beyond, along with unrealistic expectations regarding the energy transition, have significant policy implications. This stunning quote from the 5 year leasing plan explains why so few lease sales were proposed:

“BOEM’s short-term (20-year) production forecast for existing leases shows steady growth from 2022 through 2024 and declining thereafter (see Section 5.2.1). The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs.“

5 Year Leasing Program, p.3

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