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Archive for June, 2023

Pangea, Paul Post, West Africa, and the Atlantic oil and gas puzzle

Posted in energy policy, Guyana, Offshore Energy - General, tagged , , , , , on June 20, 2023| Leave a Comment »

Pangea
Quartz

Until the late Triassic period, Virginia, the Carolinas, and Georgia were cojoined with Mauritania and Senegal as part of the Pangea super-continent. These Pangea neighbors share a common ancient geology.

Paul Post believed the untested West African analogs in the US Atlantic were highly prospective, and could contain >20 billion BOE. Paul was not alone in his thinking about Atlantic resource potential. Sadly, Paul is no longer with us 😥, so I’m sharing a few of his slides as a reminder of his important work. I have also attached his 2016 report and am linking the 2021 update.

atlantic_2016_finalDownload

Given the current Atlantic moratoriums and the steep legal, social, and political barriers that would have to be cleared, evaluating the US Atlantic is not imminent. However, nearly all Atlantic nations and their Caribbean and North Sea cousins have exploration programs and some have been wildly successful. Oil and gas consumption will be stable or growing for the foreseeable future, and it’s important to better understand the petroleum potential of our Atlantic continental margin.

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BOEM accepts all 69 of the Sale 259 CCS bids

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on June 19, 2023| Leave a Comment »

Last week, BOEM announced the acceptance of all 69 of Exxon’s Sale 259 carbon sequestration bids. This is despite these facts: (1) Exxon’s intentions were known, (2) there were no provisions for CCS bidding in the Notice of Sale, (3) no environmental review of CCS leasing was conducted, and (4) there are no procedures for evaluating CCS bids.

Absent some type of legislative maneuver, carbon sequestration is not authorized under these leases. If Exxon is just acquiring the leases for evaluation purposes in preparation for a possible CCS sale in the future, their lease acquisitions may be okay. If they are planning on retaining these leases for actual sequestration operations, that is not okay, at least not until a competitive process has been established for awarding or reclassifying such leases.

It’s also noteworthy that there was a second bidder for th blocks (in red above). Presumably that company, Focus Exploration, was interested in acquiring the tract for oil and gas exploration purposes. However, the Focus bid was a bit lower, so Exxon got the tract.

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DOE announces SPR purchases; drop in the bucket?

Posted in energy policy, tagged , , , on June 16, 2023| Leave a Comment »

WASHINGTON, D.C. — Today, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 3 million barrels of U.S. produced crude oil for the Strategic Petroleum Reserve (SPR).  These contracts follow the Request for Proposal that was announced on May 15, 2023. Furthering the Biden-Harris Administration’s three-part replenishment plan, DOE also announced a new Notice of Solicitation to purchase approximately 3.1 million additional barrels of crude oil to the Big Hill SPR site this September.

DOE (6/9/2023)

The Strategic Petroleum Reserve is now down to 351.7 million bbls, the lowest since 8/26/1983. The 6 million bbls in contracted and proposed purchases will replace only 30% of the oil withdrawn just in 2023 YTD, 2.0% of the amount withdrawn since 1/1/2021, and 1.6% of the volume needed to refill the SPR to capacity.

Given that 2024 is an election year, the prospects for substantial purchases next year would seem to be poor.

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Ultradeep geothermal is the most exciting renewable energy alternative

Posted in drilling, energy, tagged , , on June 15, 2023| Leave a Comment »

Linking an excellent article on a renewable energy alternative that BOE has been following closely.

Good assessment:

I’m confident because the externalities that come with wind, solar and batteries, which are the other top candidates, are too large to bear at multi-terawatt scale: too much land, too many minerals, too much labour per unit of energy. Geothermal is very different: it is more like fossil fuels without the carbon. It’s more like nuclear – except fusion doesn’t work yet and fission is controversial.

Carlos Araque

Challenges:

A lot of the challenges are the same as for oil and gas. The subsurface is an uncertain environment. The deeper you go, the more extremes you have, but we’ve come a long way with the oil and gas industry to develop a whole suite of technologies, techniques and measurement systems to minimise that risk. The main challenge is maintaining wellbores from closing in on themselves as you go deeper. There’s a lot of pressure in the rock and these holes eventually will collapse. The way we answer that is by creating a glass wall in the rock as we burn it. When our technology vaporises the rock, it creates a glass wall and that remains on the walls and prevents the hole from collapsing.

Related posts:

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More on the Cox Operating bankruptcy

Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on June 14, 2023| 1 Comment »

Along with Cox Operating, six affiliates also filed: MLCJR , M21K, EPL Oil & Gas, Cox Oil Offshore, Energy XXI Gulf Coast, and Energy XXI GOM.

The BOEM platform data base lists only Cox Operating (276 platforms), EPL (10 platforms), and Energy XXI GOM (26 platforms) as current operators of OCS platforms. However, according to the Cox Operating website, the company operates 600 producing wells on 500 structures. Presumably, ~200 of those structures are in State waters.

According to testimony at the bankruptcy hearing:

  • In 2020, the OPEC price war drove oil prices down, while stay-at-home orders and well shut-ins associated with the COVID-19 global pandemic sharply reduced production.
  • The debtors’ assets suffered significant damage from five named storms and hurricanes during 2020 and 2021, leading to further reductions in production. Comment: According to BSEE, 7 tropical systems affected GoM operations in 2021, so the number of storms is not in dispute. The extent to which maintenance or preparedness issues contributed to the damage is unknown.
  • In 2020, a foreign-flagged vessel struck a platform owned by one of the debtors resulting in major damage and substantial losses of production. Comment: Apparently, this is the incident being cited. According to the BSEE report, the operator (Cox) was not at fault. Per BSEE: (1) The navigational lights and foghorn on the platform were maintained and in operational order, (2) the allision was not due to any platform related error, and (3) the platform’s operator and safety system responded in accordance with the regulations.
  • At this time, the debtors’ production volume is half what it was in 2019. Comment: Comparing the 2019 and 2022 production data, OCS oil and gas production are down by about 30% and 40% respectively. However, the 50% reduction figure seems reasonable given the likelihood of further reductions in State water production and in 2023.

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North Rankin (WA) fatality – further evidence that lifting risks are not being effectively addressed?

Posted in accidents, Australia, NOPSEMA, Norway, Offshore Energy - General, tagged , , , , , on June 13, 2023| Leave a Comment »

NOPSEMA’s June 8 safety alert implies that the June 2nd fatality at the North Rankin complex, offshore Western Australia, was the result of a crane/lifting incident. Per NOPSEMA:

A recent fatal incident involving a person working on an offshore oil and gas facility has provided a tragic reminder of the risks of work involving the rigging, manipulation and movement of loads, including people and equipment.

Despite the international focus on lifting operations over the past 30 years, Norwegian and US data do not suggest improved performance. PSA Norway’s “Trends in risk level on the Norwegian Continental Shelf” report shows an increase in lifting incident rates for both fixed and mobile facilities over the past 10 years (first chart below).

Similarly, recent lifting data from BSEE’s incident tables (summary below) and Jason Mathew’s June 2022 presentation (pages 48-63) suggest that lifting risks are not being effectively mitigated. Why are industy/regulator messages regarding hazard identification and controls not achieving the desired results? Perhaps a fresh look and renewed dialogue are needed.

Crane or personnel/material handling incident (as used in 30 CFR 250.188(a)(8)) refers to an incident involving damage to, or a failure of, the crane itself (e.g., the boom, cables, winches, ballring), other lifting apparatuses (e.g., air tuggers, chain pulls), the rigging hardware (e.g., slings, shackles, turnbuckles), or the load (e.g., striking personnel, dropping the load, damaging the load, damaging the facility) at any time during exploration, development, or production operations on the OCS. This includes all incidents of shock loading that, upon inspection, reveals damage to any part of the crane, lifting apparatus, rigging hardware, or load. Personnel handling incidents include events involving swing ropes, personnel baskets, and any other means to move personnel. Material handling incidents include any activities involving the loading and unloading of material and moving it on, off, or around an OCS facility.

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Cox bankruptcy rocks Gulf of Mexico offshore program

Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, tagged , , , , on June 12, 2023| 2 Comments »

A Metairie-based oil company that’s one of the largest independent operators still working in the state’s shallow coastal waters has filed for bankruptcy protection, leaving dozens of south Louisiana service and supply companies facing potential bankruptcies of their own.

Bankruptcy court documents show Cox’s estimated liabilities are close to $500 million – more than $200 million of which is owed to small businesses in the Houma-Thibodeaux and Acadiana areas.

Court documents indicate that Cox followed a path that led to financial trouble for other companies in recent years: using debt to acquire large fields of aging wells in shallow Gulf waters.

Nola.com

This blog is primarily concerned with the potential impacts of the bankruptcy on safety performance, the plugging of wells, and the decommissioning of old facilities. Per BOEM’s data base, Cox currently operates 276 Gulf of Mexico platforms, all in shallow shelf waters. The company is reported (Nola.com) to owe $8 million in bond premiums needed to support well plugging operations.

Cox has not been an active driller of late with only 2 well starts since 1/1/2022 (BSEE borehole file).

Cox has been a major generator of INCs (incidents of noncompliance) with 437 INCs YTD. Cox has been responsible for 47% of all GoM INCs in 2023. Cox’s INC to inspection ratio was 2.46 vs. a combined ratio of 0.50 (490/972) for all other GoM operators.

Cox is currently ranked 11th and 18th respectively in GoM gas and oil production with 7.2 billion cu ft and 1.8 million barrels produced YTD.

BOE previously commented on Cox’s pursuit of Dept. of Energy funds to develop a carbon sequestration hub in the Gulf.

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Lease Sale 259 update (as of June 7)

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , on June 12, 2023| Leave a Comment »

Per BOEM’s latest update, 137 of the 313 Sale 259 tracts receiving bids have now been accepted. No decision has been made on the other 176 high bids, including the 69 bids for carbon sequestration purposes. For the reasons previously expressed, I continue to believe those sequestration bids were invalid.

Also, no decision has been made on Green Canyon 777, another block of particular interest.

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RIP James Watt

Posted in energy policy, Uncategorized, tagged , , , , on June 9, 2023| 1 Comment »

Per an announcement by his family, former Secretary of the Interior James Watt passed away on May 27. The Washington Post provides a good overview of his tenure at DOI during the Reagan administration.

Watt was an outspoken and controversial figure. His aggressive mineral leasing policies proved not to be in the best long-term interest of the OCS program. As their principal target, Watt became an unintended fundraiser for opponents of energy development.

Watt’s indirect Beach Boys ban, which didn’t sit well with Ronald and Nancy Reagan, was perhaps his best remembered faux pas. Per the WP:

He did not explicitly mention the Beach Boys, but they had performed at previous July 4 events, and the group became the focus of outrage over Mr. Watt’s pronouncement. President Reagan called the interior secretary to the Oval Office and presented him with a plaster foot bearing a bullet hole to humorously — but unambiguously — convey the message that he had shot himself in the foot.

Watt’s hideous and insensitive comment about the composition of the Linowes Commission seemed to be the final straw, and he resigned shortly after he made those comments. The “cripple” in that remark happened to be someone I knew, a highly regarded mineral economist named Richard Gordon who was one of my favorite graduate school professors.

Lots of James Watt jokes circulated during his tenure. One that I found amusing went something like this: James loved baseball and dreamed of someday standing in center field at Yankee Stadium ….. drilling for oil 😀.

RIP Secretary Watt.

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Congratulations to the Offshore Operators Committee on their 75th anniversary

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , on June 8, 2023| Leave a Comment »

I believe the OOC is the world’s oldest trade association for the offshore oil and gas industry. The OOC was formed in 1948, five years before the enactment of the OCS Lands Act and just one year after the first Gulf of Mexico well was completed out of sight of land.

For much of their history, OOC had just a single, part-time employee. The organization has matured, but still operates in the same efficient manner, relying on subject matter experts from their member companies. Since the days of the OCS Orders, the OOC has consistently provided informed comments on operating regulations. As a regulator, I had issues with some of their comments over the years, but the dialogue was (almost😉) always polite and professional.

Congratulations to the OOC for the support they have provided for US offshore energy! Although many have had important roles, these former OOC representatives come immediately to mind for their contributions to offshore safety: John Rullman, Steve Brooks, Mark Witten, Sandi Fury, Dave Wisch, Ken Arnold, Charlie Williams, Phil Smith, Peter Velez, Allen Verret, Wanda Parker, Cort Cooper, Charlie Duhon, Jodie Connor, Craig Castille, Susan Hathcock, and Pat O’Connor. Many of these retired safety leaders, and current OOC Executive Director Evan Zimmerman, were recipients of MMS Offshore Leadership Awards.

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