The Gulf rig count is up to 20, the highest since 2019, as the total US rig count falls by 7 to 748.
Archive for May, 2023
Gulf of Mexico bucks declining US rig count trend
Posted in drilling, Gulf of Mexico, Offshore Energy - General, tagged Baker Hughes rig count, drilling, Gulf of Mexico on May 8, 2023| Leave a Comment »
A 2013 Supreme Court houseboat decision applies to massive floating production units
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged Coast Guard, floating production units, OOC, SCOTUS, vessel definition on May 8, 2023| Leave a Comment »
Dr. Malcolm Sharples, a leading marine engineer and offshore safety advocate, brought this Supreme Court’s decision and the resulting regulatory confusion to my attention.
It turns out that the SOCTUS decision about this houseboat…..
has created regulatory uncertainty for floating production facilities like this:
In a 7-2 decision, the court ruled that a gray, two-story home that its owner said was permanently moored to a Riviera Beach, Florida, marina was not a vessel, depriving the city of power under U.S. maritime law to seize and destroy it.
Reuters
The floating production facilities are still subject to Coast Guard regulation and inspection pursuant to separate authority under the OCS Lands Act. The extent to which Coast Guard approval and inspection practices will change is not entirely clear. The Coast Guard will issue new certificates of inspection for these floating facilities, and new policy guidance is being developed.
Attached are answers that the Coast Guard provided to questions from the Offshore Operators Committee.
This may be a good warmup for an upcoming post on regulatory fragmentation.
Lease sale 257 challenges finally over?
Posted in Alaska, Gulf of Mexico, Offshore Energy - General, tagged Cook Inlet, Gulf of Mexico, Lease Sale 257, Lease Sale 258, Lease Sale 259, litigation on May 5, 2023| Leave a Comment »
That would appear to be the case now that the US Court of Appeals for DC dismissed litigation challenging the sale.
Meanwhile, challenges to Cook Inlet Sale 258 (humble as it was with only one bid) and GoM Sale 259 continue. It’s a great country (if you like endless litigation)!
In addition to Lease Sale 257, the IRA also required Interior to offer three other lease sales in Alaska and the Gulf that it previously declined to hold. Lease Sale 258, in Alaska’s Cook Inlet, was held in December but received only one bid. Earthjustice is challenging that sale. Earthjustice is also challenging Lease Sale 259, in the Gulf of Mexico, which was held in March. Lease Sale 261, also in the Gulf, will be held by September of this year.
EarthJustice
Supreme Court will review the “Chevron doctrine”
Posted in energy, energy policy, Offshore Energy - General, Regulation, Uncategorized, tagged Chevron Doctrine, offshore energy, Regulation, Supreme Court on May 4, 2023| Leave a Comment »
The Supreme Court will hear a case that could significantly scale back federal agencies’ authority, with implications for regulations affecting the US offshore program. The court could overturn a precedent known as the “Chevron doctrine” that instructs judges to defer to federal agencies when interpreting ambiguous federal laws.
Few Supreme Court doctrines have been stretched more by regulators and lower-court judges than Chevron deference, which says judges should defer to regulators’ interpretations when laws are supposedly ambiguous. The High Court agreed Monday to give Chevron a much-needed legal review.
WSJ
One of the most important principles in administrative law, the “Chevron deference” was coined after a landmark case, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984). The Chevron deference is referring to the doctrine of judicial deference given to administrative actions. In Chevron, the Supreme Court set forth a legal test as to when the court should defer to the agency’s answer or interpretation, holding that such judicial deference is appropriate where the agency’s answer was not unreasonable, so long as Congress had not spoken directly to the precise issue at question.
Cornell Law
More flaring discussion
Posted in climate, flaring and venting, Gulf of Mexico, Offshore Energy - General, tagged EIA, flaring, gas-well gas, Gulf of Mexico, oil-well gas, ONRR, venting on May 3, 2023| Leave a Comment »
According to EIA data for 2001-2021, Gulf of Mexico flaring and venting volumes peaked in 2001 at 21.6 bcf, 2.25 times the volume flared or vented in 2022 (ONRR data for 2022). However, gas production in 2001 was 5.05 tcf, 6.4 times higher than in 2022. The % of the produced gas that was flared or vented in 2001 was thus 0.4%, less than 1/3 the 2022 rate of 1.22%.
Points to consider:
- In 2001, gas production was mostly from gas wells, which have lower flaring/venting rates. As gas production declined because of lower gas-well gas (GWG) production, flaring/venting rates increased (see the chart below). This would account for some of the difference in flaring/venting rates (2001 vs. 2022). However, in recent years, the % of gas-well gas flared or vented has been between 0.3 and 0.5% which is comparable to the rate for all gas production (0.4%) in 2001. So the reduction in GWG production is not the entire reason for the higher flaring/venting rates in recent years. Hence the need for more transparency on flaring/venting performance.
- Oil-well gas (OWG) production alone in 2001 (923 bcf) was higher than total gas production (784 bcf) in 2022. If the oil-well gas (OWG) flaring/venting rate was the same as the recent rate for OWG (1.2-1.5%), the volume of gas flared or vented from OWG alone (only 18% of total gas production in 2001) would have accounted for 11.1 – 13.8 bcf or 51-64% of the total volume flared/vented in 2001.
- Better measurement and reporting in recent years may, of course, be an important consideration. The PNAS paper suggests reporting issues for shelf facilities in recent years, and given the much higher shelf production 20+ years ago, accurate reporting may have been an even more significant issue then. Also, MMS updated the regulations in 2010 to require metering of flared and vented gas at facilities processing >2000 bopd. This has no doubt improved flaring/venting measurement. However, better measurement and reporting does not explain the trend toward higher flaring/venting rates in recent years.
- The differences between EIA and ONRR flaring data need to be resolved.
GoM flaring and venting increased in 2022. Cause for concern?
Posted in climate, flaring and venting, Gulf of Mexico, natural gas, Offshore Energy - General, tagged flaring, gas-well gas, Gulf of Mexico, oil-well gas, ONRR, venting on May 2, 2023| Leave a Comment »
From ONRR OGOR B data:
| 2021 | 2022 | |
| OWG flared | 5919 | 6987 |
| OWG vented | 1405 | 1638 |
| GWG flared | 311 | 213 |
| GWG vented | 548 | 722 |
| total flared and vented | 8183 | 9559 |
| total gas prodution | 791,983 | 784,238 |
| % flared or vented | 1.03 | 1.22 |
Observations:
- Of the 784 bcf produced, 9.6 bcf (1.2%) were either vented or flared (vs. 1.03% in 2021). With the exception of 2020 (1.3%), this is the highest % of gas flared/vented from 2015-2022.
- The % of gas produced that is flared or vented is trending upward (first chart below).
- Both the gas flaring and venting volumes were higher in 2022 (vs. 2021) despite lower gas production.
- Assuming oil-well gas (OWG) production of 600 bcf (final 2022 volume not yet available), approximately 1.4% (8.6/600) of the OWG was flared or vented.
- 2022 OWG flaring volume increased by 18% vs. 2022 despite nearly identical total oil production
- A very large increase in OWG flaring in December skewed the 2022 data (921 million cu ft vs 522 million in November, see 2nd chart below). OWG vented and gas-well gas (GWG) vented also spiked in December (third chart). Were these spikes associated with production startups, major compressor issues, administrative/accounting corrections, or other issues?
- Although total venting increased by 407 million cu ft (21%) in 2023 vs. 2022, the overall venting trend is still favorable (last chart).
- The previously noted inconsistencies in flaring data sets remain a concern.
- Kudos to ONRR for posting the flaring/venting data.
- More regulator/industry transparency on flaring episodes is needed, particularly in light of the PNAS paper and the June 2022 Inspector General Report.
related:
Strategic Petroleum Reserve: the beat(down) goes on
Posted in energy policy, tagged SPR depletion, Strategic Petroleum Reserve on May 1, 2023| Leave a Comment »
Small dip (4.1%) in Feb. 2023 GoM oil production
Posted in Gulf of Mexico, Offshore Energy - General, tagged 2023 oil production, Gulf of Mexico oil production on May 1, 2023| Leave a Comment »
Bud's Offshore Energy (BOE) 