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Archive for the ‘California’ Category

Small win for Interior and Sable Offshore

Posted in California, Offshore Energy - General, Regulation, tagged , , , , , , , , on May 19, 2026| Leave a Comment »

On 5/14/2026, the U.S. District Court for the Central District of California dismissed the complaint filed by the Center for Biological Diversity (CBD) against the Dept. of the Interior. This was one of the less prominent cases challenging Sable Offshore’s oil and gas operations in the Santa Ynez Unit. 

The CBD had challenged an April 2025 BOEM decision concluding that Sable was not required to revise its development and production plan for the SYU. They sought a court order requiring a revised plan. This suit seemed to be a stretch, so its dismissal is not a surprise.

Per the Dept. of Justice, the court dismissed the lawsuit because the plaintiffs’ asserted procedural injury had no basis in the statute, was not traceable to any action by BOEM, and could not be redressed by an order of the court. (Other than that, it was just fine. 😉)

Among other problems the court identified with the plaintiffs’ case, they invoked a provision of the statute that governs “approval of a development and production plan,” not revision of an already-existing plan. It will be interesting to see the full decision so that we can better understand the context for that statement. Distinguishing revised plans in that manner could have significant policy implications.

For a full update on Sable litigation, see the section of their Quarterly Report beginning on p. 12.

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Platforms Hogan and Houchin – the saga continues

Posted in California, decommissioning, Offshore Energy - General, Regulation, tagged , , , , , , , , , , on May 15, 2026| Leave a Comment »

Platform Houchin, Lease OCS-P 0166, Santa Barbara Channel

In light of the decommissioning fire at Platform Habitat, I checked on the status of well plugging operations at Platforms Hogan and Houchin.

BSEE (2020) estimates the cost of decommissioning these facilities to be $85 million (too low), and there is no collateral or third party guarantee.

The responsibility for decommissioning these platforms has yet to be settled. ConocoPhillips, Oxy, and Devon have appealed decommissioning orders from BSEE. The Interior Board of Land Appeals (IBLA) has yet to rule on those appeals. The appellants are funding some plugging operations and facility upgrades pending the IBLA decision.

Per BSEE’s borehole file, this is the current status of the Hogan and Houchin wells:

  • 33 completed and not yet plugged; these wells were drilled between 1968 and 2010
  • 43 temporarily abandoned (TA) wells plugged in accordance with 30 CFR § 250.1721
  • 10 wells have been updated to TA status in the past 6 months (latest 3/22/2026), so some progress is being made
  • 0 permanently abandoned wells (30 CFR § 250.1715)

Therefore, by my count, 33 wells have yet to be TA’d, and all 76 wells remain to be PA’d. Note that the lease was relinquished nearly 6 years ago (10/14/2020).

If you are interested in the Hogan/Houchin mess or decommissioning liability in general, I highly recommend that you look at Devon’s informative and rather compelling appeal to IBLA. Similar appeals were submitted by Oxy and ConocoPhillips.

Lease history (excerpted from the Devon appeal):

  • Lease OCS-P 0166 was issued effective January 1, 1967.
  • Phillips Petroleum Company (“Phillips”) (predecessor to ConocoPhillips), Cities Service Oil Company (predecessor to Oxy), and Continental Oil Company (predecessor to ConocoPhillips) were the initial lessees
  • Phillips was designated operator on January 25, 1967
  • February 28, 1983: Petro-Lewis Funds, Inc., obtained the 37.5% interest of the Continental Oil Company (which in 1979 had changed its name to Conoco Inc., now Conoco Phillips Company (“ConocoPhilips”)).
  • November 1983: Cities Service Oil Company assigned its 37.5% interest to Cities Service Oil and Gas Corporation (now OXY U.S.A. Inc).
  • July 2, 1987: the Minerals Management Service (“MMS”) approved two more assignments of the Lease. One, from PetroLewis Funds, Inc. to American Royalty Producing Company (“American Royalty”), was approved retroactively to December 31, 1984. The other, from American Royalty to Santa Fe Energy Company(“Santa Fe”), was approved retroactively to April 30, 1987.
  • April 1, 1988: Santa Fe transferred a 3.75% interest to Maersk Energy Incorporated, reducing Santa Fe’s share to 33.75%.

1991 Assignment to Signal Hill: MMS approved assignment of the lease to Signal Hill effective February 5, 1991. The assignment was approved without any provision under which the assignors agreed to be liable for decommissioning operations on the lease. MMS’s approval actually had the opposite effect, leaving such obligations to the assignee. The assignment was approved despite concerns within the MMS about the financial strength of Signal Hill and the technical competence of Pacific Operators Offshore Inc (POOI), the affiliate that would operate the facilities.

Comments:

  • The assignment to Signal Hill should have never been approved. The outcome was predictable.
  • The Devon, Oxy, and ConocoPhillips appeals are very strong and would seem to have a good chance of success. Perhaps that is why the IBLA decision is taking so long (nearly 5 years to date).
  • Given the uncertainty regarding this appeal, the absence of transparency about other potential decommissioning liabilities, and the uncertainties regarding the administration of predecessor liability, this is not the time to be relaxing financial assurance requirements and further exposing taxpayers to decommissioning risks.

This is the final day to comment on BOEM’s proposal:

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Habitat fire may further complicate California offshore decommissioning

Posted in accidents, California, decommissioning, Regulation, tagged , , , , , , , , , on May 14, 2026| 2 Comments »

At a minimum, the fire will further delay and increase the cost of well plugging operations on Platform Habitat. Per BSEE’s borehole file, 17 wells remain to be permanently abandoned, 3 of which have yet to be temporarily abandoned. These wells are 23-44 years old, and have been inactive for 11 years.

If there is significant platform damage, the remediation delays and costs would be substantial, comparable to those associated with major Gulf platforms damaged by hurricanes. Structural damage could increase the urgency of removing the platform. Given California’s decommissioning quagmire, this would be a major challenge.

Who pays, and what does the financial assurance picture look like? Per the attached BOEM spreadsheet (excerpt pasted below):

  • The 2020 cost estimate for decommissioning Habitat was $44.3 million. That number is optimistic even if platform damage is minimal.
  • $13.6 million in supplemental assurance has been provided.
  • A third party guarantee has been secured.
  • The guarantee was provided by Freeport-McMoRan Oil & Gas (FMOG)
  • Per BOEM, FMOG is the guarantor for all DCOR leases. Unless BOEM has allowed otherwise, the guarantor pays all costs not covered by the lessees. Given the number of old platforms and California decommissioning challenges, the risks for FMOG are indeed large.

Although DCOR LLC is the current Habitat operator, the company owns only a 4.18% share of the project. CHANNEL ISLANDS CAPITAL, L.L.C., a private company about which little is known, holds a 95.82% share.

Should the 2 owners default, BOEM/MMA will look to the guarantor and predecessor lessees (see the chart below). Unfortunately for FMOG, they are both the guarantor and the predecessor lessee. FMOG acquired Plains Exploration & Production (PXP), the operator prior to DCOR. Nuevo Energy was acquired by PXP and thus also tracks back to FMOC. (This may explain FMOC’s decision to be a guarantor!).

Should FMOC fail to fulfill their obligation. Chevron would likely be the next target. The original Harvest partners were Texaco (operator) and Union Oil, both of which were acquired by Chevron.

TEPI=Texaco Expl. & Production. Nuevo Energy was acquired by Plains Expl.&Production (PXP), which was acquired by Freeport McMoRan Oil & Gas (FMOG)


2024-03-27 Pacific Decom and Collateralization InformationDownload

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Platform Habitat ceased production more than a decade ago! Is the damaged structure fit for the resumption of decommissioning?

Posted in accidents, California, natural gas, Offshore Energy - General, Regulation, well control incidents, tagged , , , , , , , , on May 13, 2026| 1 Comment »

The Platform Habitat fire was extinguished at 11:40 a.m. on 5/11/2026 after burning for 5 hours.

All 26 workers were safely evacuated from DCOR’s Platform Habitat. The big question now is the fitness of the structure for continuing well plugging/abandonment and platform decommissioning.

As indicated in the attached letter, BSEE had informed DCOR that their Pitas Point Unit leases (where Platform Habitat is located) expired on 3/15/2016 owing to the cessation of well operations 6 months prior. Following the Interior Board of Land Appeals (IBLA) May 7, 2021 affirmation of BSEE’s directive, DCOR was notified that they must permanently plug all wells within one year of the lease termination (i.e. one year after the 2021 IBLA decision). I’ll include the informative IBLA decision in a future post.

Although details have not been shared, it appears that well plugging operations were still ongoing on 5/11/2026 when the fire occurred. According to BSEE’s borehole file, most of the Habitat wells have been temporarily abandoned, but few have been permanently abandoned, and several are still completed (i.e. neither temporarily nor permanently abandoned).

The risks and costs associated with delaying well plugging and abandonment have once again been demonstrated at Habitat. Fortunately, there were no casualties or pollution.

With regard to overall safety compliance, DCOR is the violations leader in the Pacific Region. In 2025 and 2026 (YTD) they were cited for 70 violations, 66 of which required component or facility shut-ins. The age of the 9 DCOR platforms (installed by others between 1968 and 1984) has likely contributed to the compliance challenges.

BSEE spreadsheets for 2020-2024 show 6 incidents at Platform Habitat. BSEE’s incident summaries are pasted in the second attachment.

Neither DCOR nor BSEE has issued a statement on the Habitat fire.

This serious incident further demonstrates the concerns expressed by John Smith and me about the relaxed decommissioning financial assurance regulations proposed by BOEM.

DCOR-Platform-Habitat-Decommissioning-ApplicationsDownload
Untitled documentDownload

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Fire on Platform Habitat during decommissioning; no injuries

Posted in accidents, California, well control incidents, tagged , , , , , , , , on May 11, 2026| Leave a Comment »

  • Crew safely evacuated
  • Prompt response by the USCG and local fire agencies
  • Gas leak during decommissioning operations
  • Fire began at 0700 PT; controlled by 1100 PT
  • 45 year old platform; no longer producing
  • Operated by DCOR LLC
  • No environmental threat
  • Habitat was the only California OCS platform that produced dry natural gas (minimal oil or condensate)
Habitat is SSE of Santa Barbara

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Business as usual for Sable as AG Bonta sues Energy Secretary Chris Wright

Posted in California, energy policy, Offshore Energy - General, pipelines, Regulation, tagged , , , , , on May 8, 2026| 1 Comment »

Rob Bonta
Chris Wright

California Attorney General Bonta asks the Court to stay Energy Secretary Wright’s Order directing Sable, under the Defense Production Act to restart production and preliminarily enjoin Defendants, and all those acting in concert with Defendants (i.e. Sable), from enforcing or relying on it. See the attached Federal Court filing.

The AG’s irreparable harm and public interest arguments seem particularly weak, and this may not be the best time to attempt to halt a 20+% increase in California oil production.

Sable PIDownload

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My comments on BOEM’s proposed revisions to decommissioning financial assurance requirements

Posted in California, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , on May 6, 2026| 1 Comment »

Attached are my comments on BOEM’s proposed revisions to the decommissioning financial assurance regulations. These comments were submitted to Regulations.gov yesterday (3 days early 😀). Bud

Concluding Remarks

  1. MMA’s highest priority must be assuring that facilities are safely decommissioned without public funding. Supplemental financial assurance determinations and lease assignment approvals must be consistent with that priority.  
  2. Predecessor liability is an important financial assurance principle, but legal boundaries and administrative procedures must be clearly established. 
  3. Safety and compliance are inextricably related to financial performance, and must be considered in determining supplemental assurance requirements. 
  4. Using reserve estimates to reduce supplemental assurance exposes taxpayers to geologic and accounting risks. 
  5. Unacceptable public risks have resulted from financial assurance decisions intended to advance offshore wind development.
Comments – BOEM financial assurance ruleDownload

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John Smith’s comments on BOEM’s proposed revisions to decommissioning financial assurance requirements

Posted in California, energy policy, Gulf of Mexico, Offshore Energy - General, Offshore Wind, Regulation, tagged , , , , , , on May 5, 2026| Leave a Comment »

The comment period for BOEM’s proposed revisions to decommissioning financial assurance requirements closes on Friday, May 8th.

John Smith’s comments have been officially submitted to Regulations.gov, and are attached for your convenience. Nice work by John.

My comments are being finalized and will be submitted and posted soon.

042926 JB Smith Comments on Proposed Changes to Bonding RulesDownload

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Coastal Commission Apologizes! (to SpaceX, not Sable 😉)

Posted in California, Regulation, tagged , , , , , on May 4, 2026| Leave a Comment »

An apology letter from the California Coastal Commission (CCC) to SpaceX was part of a lawsuit settlement. SpaceX alleged political bias in the commission’s 2024 decision to deny increased Falcon 9 launches at Vandenberg Space Force Base, based on comments about Elon Musk’s political views and SpaceX’s labor practices.

Excerpt:

“In 2024, the Commission reviewed consistency determinations by the U.S. Space Force for SpaceX’s Falcon 9 launch program at Vandenberg Space Force Base. During that review, some Commissioners made negative comments about SpaceX’s labor practices and its Chief Executive Officer’s political views. The Commission acknowledges that these political comments were irrelevant to the Commission’s consistency review and were improper, and the Commissioners apologize for those comments.”

AI confirms my suspicions that formal CCC apologies are highly unusual 😉

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Upon further review, 2019 retains the Gulf oil production record. Jump in California OCS production upcoming.

Posted in California, Gulf of Mexico, Offshore Energy - General, tagged , , , , on May 4, 2026| Leave a Comment »

Update: Another EIA revision to Gulf of America oil production for Dec. 2025 (1.994 to 1.985 million bopd) means that 2019 retains the production record by the narrowest of margins – 1.898 to 1.897 million bopd. Stay tuned because this may not be the final word 😉.

Per EIA, Feb. 2026 production dipped a bit to 1.931 million bopd (chart below).

Meanwhile, California OCS oil production for FEB continued at about 10,000 bopd. This number may increase a bit for March, and more for April data when the first Sable sales are included. A big increase, by as much as 500%, should be apparent in the June report barring a court ordered shutdown.

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