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Archive for the ‘CCS’ Category

Gulf of Mexico incidents and violations leader wants to develop a carbon sequestration hub

Posted in accidents, CCS, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , , on December 28, 2022| Leave a Comment »

Carbon-Zero US LLC of Dallas (a Cox Oil affiliate) has applied for up to $12 million in U.S. Department of Energy funds to develop a pilot sequestration hub in offshore storage fields about 20 miles from Grand Isle, according to officials from Cox Operating LLC, the Dallas operator that owns some of the storage fields.

Cox Operating LLC will “repurpose facilities and equipment” for the carbon storage project, according to a news release.

The Advocate

Should this company be authorized to repurpose Gulf of Mexico facilities for carbon sequestration?

  • Per BSEE Incident of Non-Compliance (INC) data for 2022, Cox had more component shut-in INCs (132) than any other company. Cox was second to the Fieldwood companies in the number of warning and facility shut-in INCs, and in the total number of INCs. 48% of the Cox INCs required either a component or facility shut-in.
  • Cox had an INC/facility-inspection ratio of 0.77, nearly 50% higher than the GoM average of 0.53.
  • Per the posted BSEE district investigation reports for 2022, Cox was responsible for 9 of the 30 incidents that were significant enough to require investigation. That is more than twice as many as any other company (next highest was 4).
  • The incidents included 3 serious injuries, 2 fires, a large gas leak, and oil spills of 114, 129, and 660 gallons. Per the posted reports, only one other company had an oil spill of >1 bbl. (Note: Only spills of > 1 bbl are routinely investigated by BSEE. One bbl = 42 gallons.)
  • While INCs were issued for only 3 of the 9 Cox incidents, a review of the reports suggests that INCs should have been issued for at least 4 of the other incidents.
  • Cox operates 375 platforms with installation dates as early as 1949. 134 of their platforms are > 50 years old. Only 66 were installed in the last 20 years and only 6 in the last 10 years (most recent December 2014). How will the carbon sequestration plans affect their massive decommissioning obligations?
  • Many of the Cox platforms were assigned by predecessor lessees. Those predecessors can only be held responsible for the decommissioning of facilities they installed, not for more recent wells or platforms and not for facilities that are repurposed for carbon sequestration.

Other more generic issues should be addressed before DOE awards funds for offshore sequestration projects.

Also, as noted in the discussion of Exxon’s 94 Sale 257 oil and gas leases, a competitively issued alternate use RUE is required (30 CFR § 585.1007) before sequestration operations may be conducted on an oil and gas lease.

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Which Sale 257 bid was rejected?

Posted in CCS, Gulf of Mexico, Offshore Energy - General, tagged , , , , on November 21, 2022| Leave a Comment »

On September 14, 2022, BOEM announced that 307 high bids from Lease Sale 257 in the Gulf of Mexico were accepted. BOEM also announced that one high bid was rejected for not providing the public with fair market value. BOEM has not identified the rejected bid.

Per BOEM’s Lease Area Block Online Query file, 306 Sale 257 leases were effective on Oct. 1, 2022. A comparison of these data with the sale results identified 2 Sale 257 leases that have not been awarded:

leaseblockhigh bidder(s)bidcomments
G37261GC 70BHP$3.6 millionlone bid; 7th highest
bid in sale
G37294GC 777BP (75%),
Talos (25%)		$1.8 million2 bids; next highest
$1.185 million

So one of these 2 bids was rejected and the other has lease not yet been awarded for some reason (or perhaps there has been a clerical/IT issue).

Which bid was rejected? I would guess it was the BHP bid even though that bid was the 7th highest bid in the entire sale. The fact that this bid was $2.5 to $3 million higher than the other 7 BHP bids (all of which were accepted) tells us that the company valued this tract highly. Perhaps BOEM, which has all of the geologic data, thought the value was even higher, which is why the bid may have been rejected.

There was another bidder (Chevron) for the BP/Talos tract, so the competition makes it less likely that the bid would have been rejected.

Ironically, the 94 carbon sequestration bids, which made something of a mockery of the lease sale, could not be rejected on fair market grounds. The bids exceeded the minimum required, and the tracts have little or no value from an oil and gas production standpoint. A competitive process would be require to repurpose these leases for carbon sequestration.

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“Deep Geothermal Is Closer Than You Think”

Posted in CCS, climate, energy, tagged , , , on November 17, 2022| Leave a Comment »

Update on the most promising renewable energy alternative:

Quaise has received a grant from the Department of Energy to scale up Woskov’s experiments using a larger gyrotron. With the larger machine, the team hopes to vaporize a hole 10 times the depth of Woskov’s lab experiments by the end of this year. After that, the team will vaporize a hole 10 times the depth of the previous one — what co-founder Matt Houde calls a 100-to-1 hole.

“That’s something [the DOE] is particularly interested in, because they want to address the challenges posed by material removal over those greater lengths — in other words, can we show we’re fully flushing out the rock vapors?” Houde explains. “We believe the 100-to-1 test also gives us the confidence to go out and mobilize a prototype gyrotron drilling rig in the field for the first field demonstrations.”

Rather than getting deep in the weeds of carbon capture, imagine powering those existing facilities with steam generated without carbon emissions at all.

The key is that ultradeep geothermal has the power density and scalability of fossil fuels.

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What’s next for Exxon’s sequestration leases?

Posted in CCS, Gulf of Mexico, tagged , , , on October 25, 2022| Leave a Comment »

Offshore

Per BOEM’s leasing data base, all 94 of the Sale 257 “carbon sequestration leases” (blue) were issued with an effective date of 10/1/2022. However, Sale 257 was an oil and gas sale, and the leases do not convey carbon sequestration rights. Each lease will expire in 5 years absent oil and gas production or ongoing drilling operations.

These oil and gas leases may not be repurposed for sequestration or other purposes unless an alternate use RUE is issued competitively in accordance with 30 CFR § 585.1007.

So what’s next for these 94 leases, 31% of the entire sale?

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Action by DOI on Lease Sale 257 required in 15 days

Posted in CCS, climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on August 31, 2022| Leave a Comment »

Per legislation signed by the President on Aug. 16, 2022:

(b) LEASE SALE 257 REINSTATEMENT.—
(1) ACCEPTANCE OF BIDS.—Not later 30 days after the date of enactment of this Act, the Secretary shall, without modification or delay—
(A) accept the highest valid bid for each tract or bidding unit of Lease Sale 257 for which a valid bid was received on November 17, 2021; and
(B) provide the appropriate lease form to the winning bidder to execute and return.

The Department of the Interior has been silent on their implementation of this provision. We are particularly interested in:

  1. how the 94 carbon sequestration bids will be handled
  2. whether any bids will be rejected on fair market value grounds

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Is the Sale 257 victory dance premature?

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , on August 22, 2022| 1 Comment »

Contrary to some media reports and industry comments, the Inflation Reduction Act does NOT require the Department of the Interior (DOI) to award leases to the high bidder on each Sale 257 tract. The legislation requires DOI to accept the highest valid bid for each tract.

As BOE has previously explained, the 94 carbon sequestration bids were clearly not valid, and leases should not be awarded. These bids accounted for 30.5% of the entire sale in terms of the number of tracts receiving bids. (More on the CCS bids.)

There is also the matter of fair market value. Only 9 of the 214 (non-CCS) tracts received more than one bid and none received more than 2 bids. DOI/BOEM may determine that some of the bids did not pass the fair market value test. Are such bids “valid” under the terms of the IRA legislation? Note that 7 of the 93 high bids submitted at the previous sale (Lease Sale 256, November 2020) were rejected on fair market value grounds. All 7 were single bid tracts.

Lastly, there is the unresolved matter of the decision by Judge Contreras to vacate Sale 257. While the legislation seems to clearly supersede that decision, who knows what might happen next on the litigation front.

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Still waiting for…

Posted in accidents, CCS, decommissioning, Offshore Energy - General, pipelines, Regulation, tagged , , , , , , , , , , on August 11, 2022| Leave a Comment »

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Alarmist leasing rhetoric resurfaces as Sale 257 nears reinstatement

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , on August 7, 2022| 1 Comment »

Tucked into the end of the nearly $370 billion deal struck last week by Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) is a requirement for the Interior Department to reinstate a massive 80 million-acre Gulf of Mexico lease sale that a federal judge blocked earlier this year for violating NEPA.

E&E News

Tracts covering 1.7 million acres received bids at Lease Sale 257. 30.5% of those tracts received bids for CCS purposes, leaving about 1.2 million acres receiving bids for oil and gas exploration. Nonetheless, some continue to distort the magnitude of this rather ordinary lease sale. It’s also important to note that the number of active US offshore leases has declined by 72% since 2011, and is now under 2000 for the first time in decades.

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If the Schumer-Manchin bill is enacted, what happens to the Sale 257 CCS bids?

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , on August 2, 2022| Leave a Comment »

The subject legislation requires the Secretary of the Interior to accept the highest valid bid that was received for each tract offered in OCS Lease Sale 257. Exxon was the sole bidder on 94 tracts on the nearshore Texas shelf. The leases were to be acquired for carbon sequestration purposes.

The CCS bids should not be considered valid given that:

  1. Sale 257 was an oil and gas lease sale. The Notice of Sale said nothing about carbon sequestration and did not offer the opportunity to acquire leases for that purpose. Therefore, the public notice requirements for CCS leasing (30 CFR § 556.308) were not fulfilled.
  2. Because there was no draft or final Notice of Sale, interested parties and the public did not have the opportunity to consider and comment on CCS leasing, tract exclusions, bidding parameters, and other factors.
  3. 30 CFR § 556.308 requires publication of a lease form. No CCS lease form was posted or published for comment.
  4. CCS operations were not considered in the environmental assessments conducted prior to the sale.
  5. No evaluation criteria for CCS bids have been published.

Unexpectedly, the Infrastructure Bill, signed on 11/15/2021 (just 2 days before Sale 257) included a provision for OCS carbon sequestration. However, that legislation did not require CCS leasing or authorize DOI to sell CCS leases as part of an oil and gas lease sale; nor did it exempt DOI from complying with its leasing regulations. Instead, It gave the Secretary a year (until 11/15/2022) to promulgate necessary implementing regulations. If carbon sequestration in the Gulf of Mexico is deemed to be desirable, a separate CCS sale should be held when the regulatory framework has been established.

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PTTEP joins the CCS parade

Posted in Australia, CCS, well control incidents, tagged , , , , on June 8, 2022| Leave a Comment »

“Our knowledge and expertise in geoscience and petroleum engineering represent advantageous foundation for CCS development, leading us towards our carbon emissions reduction target.” 

PTTEP

Those who closely followed Australia’s Montara Inquiry in 2010 may be less convinced about PTTEP’s expertise. The Montara well suspension program was completely irresponsible. Even though the production casing cement was clearly compromised, PTTEP suspended the well without a single barrier in the well bore. The company was extremely lucky to have avoided a major safety, environmental, and economic disaster. Perhaps they are a very different company now; I certainly hope so.

Montara blowout, Timor Sea

The PTTEP announcement adds to our skepticism about the motives of some CCS proponents. Is CCS prudent public policy? That question is by no means settled and there has been very little opportunity for comment and debate. BOE has raised concerns and there are no doubt many more that have yet to be addressed.

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