A mile offshore during the big year-end swell (map below). Rigs-to-Rides!
Archive for December, 2023
Too good not to share – surfers at Platform Esther
Posted in California, Offshore Energy - General, rigs-to-reefs, Uncategorized, tagged big swell, California, platform Esther, rigs-to-rides, surf on December 31, 2023| Leave a Comment »
October GoM oil production held near 2 million bopd. Two consecutive years with no tropical storm impacts.
Posted in climate, Gulf of Mexico, Offshore Energy - General, tagged 2 million bopd, Gulf of Mexico oil production, no tropical storm impacts on December 29, 2023| Leave a Comment »
EIA reports October production of 1.959 million bopd. September production was revised down from 2.000 to 1.999 million bopd, a very slight but symbolically significant change. Foul play? 😉
For the past 2 years, no tropical storms have significantly impacted Gulf of Mexico production. Don’t expect this to be reported elsewhere 😉
“Erasing Santa Barbara’s Offshore Platforms” (and the associated marine habitats)
Posted in California, decommissioning, Offshore Energy - General, tagged BSEE, California, decommissioning, partial removal, PEIS, ROD on December 27, 2023| Leave a Comment »
This Santa Barbara Independent article discusses the Record of Decision (ROD) for the Programmatic Environmental Impact Statement on Pacific OCS Decommissioning. A quote from the article regarding BSEE’s support for complete removal of all infrastructure follows:
“It’s great that the federal government finally has a loose game plan for getting oil companies to clean up their rusty messes,” said Miyoko Sakashita, oceans program director at the Center for Biological Diversity.
Apparently the Center for Biological Diversity supports complete removal, the decommissioning alternative that would destroy “the most productive marine habitats per unit area in the world.” How’s that for irony?
Complete removal may be the most politically expedient alternative in California, but it is by far the most environmentally damaging and poses the greatest safety risks. Old disputes about offshore oil and gas production should not be driving decommissioning policy.
Saluting the Christmas lease sale (261)
Posted in Gulf of Mexico, Offshore Energy - General, tagged Anadarko, bp, Chevron, Christmas, Equinor, Gulf of Mexico, Hess, Lease Sale 261, Red Willow, Shell, Woodside on December 22, 2023| Leave a Comment »
- Biggest prize at the holiday party went to Anadarko: Mississippi Canyon 389 – 5 bids, $25.5 million high bid
- Biggest holiday shopping spree: Shell’s 65 high bids accounted for 24% of the sale’s high bids (excluding CCS bids).
- Big spender award: Hess – $88.3 million on only 20 high bids. Does Chevron approve? 😀
- Aussie, Aussie, Aussie, Oi, Oi, Oi: Strong performance by Woodside. 18 high bids, $24.8 million
- Heia Norge!: Equinor continues to shine in the GoM! 13 high bids, $20.6 million
- Spirit of America award to Red Willow Offshore which is owned by the Southern Ute tribe. 22 high bids!
- Deepwater independents for (energy) independence: Beacon, Murphy, LLOG, Kosmos, Talos, Houston Energy, Ridgewood, QuarterNorth, Alta Mar, CSL, CL&F, and Westlawn
- Smart shelf shoppers: Arena, Byron, Focus, Cantium
- Even pace wins the race: Another solid lease sale for bp – 24 high bids.
- So happy together 😀: Chevron and Hess combined for 48 high bids, $114 million
- Coal in their stockings? Repsol (Sale 261) and Exxon (Sales 257 and 259) made up their own rules for acquiring carbon dumping leases. Perhaps some solid carbon in their Christmas stockings would be appropriate.
- Christmas in July?: A lease sale in 2024 is needed. Sometime near the 4th of July holiday would be good. It’s up to you Congress!
Holiday greetings to our friends around the world!
Stocking stuffer for that special person! 😉
Looking at the “top 10” Sale 261 bids
Posted in Gulf of Mexico, Offshore Energy - General, tagged Chevron, Hess, high bids, Lease Sale 261, top 10, tract evaluation on December 21, 2023| 1 Comment »
It’s always interesting to compare the high bids with the “runner-up” bids on the same tracts. Usually the gap is large and, as indicated in the table below, that is the case with the Sale 261 “top 10.” This tells us that bidding is independent, that tract evaluation is far from an exact science, that information and expert opinions differ, and that companies have different business and bidding strategies.
Particularly interesting in this sale were the tracts that both Hess and Chevron, its future parent, sought to acquire. Chevron and Hess bid against each other on two of the “top 10” tracts, and Hess outbid Chevron by wide margins. Will this affect post-merger relationships? 😉
In a future post, we’ll look at the 14 rejected Sale 259 high bids and the bidding on these tracts in Sale 261.
| block | high bid (million $) | company | 2nd highest bid (million $) | company |
| MC 389 | 25.5 | Anadarko | 1.9 | LLOG |
| GC 188 | 21.0 | Hess | 4.8 | Chevron |
| GC 151 | 18.0 | Hess | 3.0 | Anadarko |
| GC 723 | 17.2 | Anadarko (55%) Chevron (45%) | 2.0 | Equinor |
| GC 116 | 14.0 | Hess | 7.5 | Anadarko |
| GC 722 | 12.0 | Equinor | 1.4 | Chevron (55%) Anadarko (45%) |
| GC 72 | 7.5 | Hess | single bidder | |
| GC 232 | 7.0 | Hess | 1.1 | Chevron |
| GB 701 | 6.7 | Shell | single bidder | |
| KC 210 | 5.3 | Shell | single bidder |
Lease Sale 261 observations
Posted in Gulf of Mexico, Offshore Energy - General, tagged BOEM, Gulf of Mexico, Lease Sale 261 on December 20, 2023| Leave a Comment »
- Good prep by the BOEM leasing staff. On time. Quality live stream. Smooth bid reading by Jim Kendall and Bernadette Thomas.
- Strong sale: $382.2 million in high bids vs. $263.8 for Sale 259. Anything over $300 million would have been considered a good sale.
- 26 companies participated (updated from pre-sale stats)
- Strong participation by the GoM stalwarts: Shell, Chevron, Oxy/Anadarko, BP, Woodside (BHP), Equinor, Talos, LLOG, Walter, Kosmos, Beacon
- Kudos to Arena, Byron, Cantium, Focus for keeping the shelf alive
- Contrary to the regulations, it looks like we once again have a company seeking to acquire oil and gas leases for carbon disposal purposes. This time it’s Repsol which was the sole bidder for 36 low-value nearshore tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). At least Repsol also bid legitimately on 5 deepwater tracts.
- Exxon was a complete no show, as was ConocoPhillips.
Complete sale statistics will soon be available at BOEM.gov.
Carol Hartgen and the 5 Year OCS Leasing Program
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged 5 year leasing plan, Carol Hartgen, Carolita Kallaur on December 20, 2023| Leave a Comment »
As we await Lease Sale 261, Carol Hartgen, my long-time colleague and founder of the 5 year OCS leasing program, voiced astonishment that the new 5 year plan was only for the purpose of scheduling 3 lease sales required by Congress as prerequisites to offshore wind lease auctions. Carol provides some historical context:
I couldn’t believe the release of the final Five Year Program as just a necessity to hold offshore wind sales. Back in 1969, Carolita Kallaur, Joan Davenport and I worked on a 5-year schedule based on the supply and demand needs of the nation. That approach, which developed into the elaborate process in the OCS Lands Act and the passage of the National Environmental Policy Act, is a thing of the past. Over.those 50 plus years, politics from both sides of the aisle always drove the changes
Presale (261) statistics vs. Sale 259
Posted in Gulf of Mexico, Offshore Energy - General, tagged presale statistics, sale 259 comparison, sale 261 on December 19, 2023| Leave a Comment »
| 261 (presale) | 259 | |
| tracts receiving bids | 311 | 313 |
| no. of bids | 352 | 353 |
| companies bidding | 20 | 32 |
| <400 m water depth | 52 | 107 |
| >400 m water depth | 259 | 206 |
Comments on the preliminary stats:
- total tracts receiving bids and total no. of bids nearly identical to the previous sale (259 in March 2023)
- disappointing drop in the no. of companies bidding
- 83.8% of the Sale 261 tracts receiving bids are in >400m vs. 66.8% for Sale 259 (this may in part explain the drop in participation)
California platform decommissioning takes a step backward
Posted in California, decommissioning, Offshore Energy - General, tagged California, Decommissioning EIS, Hogan and Houchin, Milton Love, partial removal, platform habitat, reef legislation on December 19, 2023| Leave a Comment »
“These platforms are habitat for millions of animals. My opinion is that it’s immoral to kill huge numbers of animals in any kind of habitat.”
Dr. Milton Love, UCSB marine biologist
Inexplicably, BSEE’s Record of Decision (ROD) for the Programmatic Environmental Impact Statement on Pacific OCS Decommissioning (EIS cost: $1,604,056) endorses such habitat destruction by designating the most environmentally harmful, unsafe, punitive, and costly alternative as the “preferred alternative.”
Alternative 1 (the preferred alternative) calls for “the complete removal of platforms, topside, conductors, the platform jackets to at least 4.6 m (15 ft) below the mud line, and the complete removal of pipelines, power cables, and other subsea infrastructure (i.e., wells, obstructions, and facilities).”
Ironically, the ROD correctly acknowledges that alternative 2 (partial removal) is environmentally preferable. So what drove the decision to select the alternative that destroys “the most productive marine habitats per unit area in the world?” Was there pressure to choose the alternative that is most punitive to an industry that is despised by California activists? If so, their schadenfreude is certain to be delayed by administrative and legal challenges that draw further attention to the social costs and environmental damage associated with “complete removal.”
In 2020, BOEM estimated the total cost of decommissioning the 23 Federal offshore platforms at $1.7 billion, and today’s real costs are likely to be much higher. Also, keep in mind that some thorny decommissioning liability issues remain to be resolved, particularly with regard to Platforms Hogan and Houchin.
The decommissioning costs for Hogan and Houchin are estimated by BOEM at $85.6 million, even though the cost of completing removing Platform Holly (single platform in similar water depth in CA State waters) may reach $475 million. Per the BOEM data, there is no collateral, supplemental financial assurance, or third party guarantee that could defray the Hogan and Houchin costs. The extent to which prior lessees could be held accountable is questionable given that the lease was assigned to (now bankrupt) Signal Hill in 1991, well before the predecessor liability language was added to the MMS bonding rule. Irregularities in the management of Signal Hill’s Abandonment Escrow Account for Hogan and Houchin further complicate the liability issues.
The path for timely facility decommissioning with the least environmental damage and safety risk has two essential elements:
- As proposed by Smith and Byrd, a comparative assessment process similar to that used for UK decommissioning.
- Realistic state legislation that addresses fundamental ownership and liability issues for the remaining structures.
Absent those steps, the noise will continue, the platforms will remain in place, and the best outcome for all parties will not be achieved.
DOI publishes backhanded 5 year leasing plan
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Offshore Wind, tagged 5 year leasing plan, DOI, fewest lease sales on December 18, 2023| Leave a Comment »
The announcement boasts about “the fewest oil and gas lease sales in history” while seemingly apologizing for holding any sales at all.
Consistent with the requirements of the Inflation Reduction Act (IRA) concerning offshore conventional and renewable energy leasing, the Department of the Interior today published the final 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program (Program) with the fewest oil and gas lease sales in history.
These three lease sales are the minimum number that will enable the Interior Department’s offshore wind energy program to continue issuing leases in a way that will ensure continued progress towards the Administration’s goal of 30 gigawatts of offshore wind by 2030.
Bud's Offshore Energy (BOE) 