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Archive for the ‘climate’ Category

BOEM’s five year plan presented one of the few recent opportunities to “vote” solely on the issue of offshore oil and gas leasing. Advocates facilitated the voting process by providing form letters for and against leasing. Both opponents and supporters are quite good at these campaigns, so neither side had a significant organizational advantage.

BOEM summarized (Table A-11 of the plan) the public comments, and I tabulated the 748,719 letters on the attached spreadsheet. The number of letters supporting oil and gas lease sales exceeded those opposed by 72,383 or 21.4%. The supporters campaign also had more breadth in that there were 49 separate campaigns vs. 45 for leasing opponents.

The NRDC demonstrated their organizational clout with the largest single campaign (107,355 letters). Denise Neal, a name that is unfamiliar to me, impressively organized the largest proponent campaign (61,122 letters).

Summary:

  • letters supporting offshore oil and gas leasing: 410,551
  • letters opposing offshore oil and gas leasing: 338,168
  • letter campaigns supporting leasing: 49
  • letter campaigns opposing leasing: 45
  • largest campaign: NRDC – 107,355 letters in opposition (32% of all such letters)
  • largest pro-leasing campaign: Denise Neal – 61,122 letters in support (15% of all letters in support)

Reasons for and against leasing per BOEM Table A-11:

Reasons for supporting lease salesReasons for opposing lease sales
reduce energy costs, farming costs, prices of gasoline and other goodsclimate
jobsenvironmental justice, local communities
energy independencefisheries
intl competitivenessmarine environment
national securitymarine mammals
GoM production is lower in carbon intensity, higher US environmental stds.fossil fuel dependency, unnecessary to meet energy needs, oppose new fossil fuel investments, leasing “would not reduce gas prices”
domestic oil and gas preferable during transitionoil spill risks
help improve supply chainair pollution
help address inflationstockpiling ocean space, energy price gouging

Interesting contradiction: Opponents of Sale 257 argued in Federal Court that BOEM failed to consider the positive GHG effect that higher prices (the logical result of lower production) would have as a result of reduced demand. The judge agreed with that argument and vacated the sale. Some of the same groups have now commented (per the BOEM summary) that additional leasing “would not reduce gas prices.”

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The January 2022 post about a 5 year leasing plan with no lease sales would have been reality were it not for the congressional mandate in Section 50265(b)(2) of the IRA. That provision requires BOEM to offer at least 60 million OCS acres for oil and gas leasing within the 12 months prior to issuing an offshore wind lease. While I initially thought that requirement was petty, it is now apparent that without it we would have had a leasing plan with no lease sales.

The current leasing policy as articulated in both the draft and final proposed program is to phase out oil and gas production:

The long-term nature of OCS oil and gas development, such that production on a lease may not begin for a decade or more after lease issuance and can continue for decades, makes consideration of
net-zero pathways relevant to the Secretary’s determinations on how the National OCS Program best meets the Nation’s energy needs.

p. 6, Five Year Leasing Plan

Basing leasing decisions on highly uncertain “net-zero pathways” would seem to be a considerable stretch of the Secretary’s authority under the OCS Lands Act. A strategic shutdown of the offshore oil and gas program, which would dramatically increase energy supply and security risks going forward, should be authorized by Congress. Even the threat of such a shutdown could have major economic implications.

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Not only have no official findings been released, but there has been little new speculation since our June 2023 update. Given the political stakes, it is increasingly unlikely that the responsible parties will be identified.

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As has been previously discussed on this blog, the renewable energy source that shows the greatest promise for generating the power needed to support economic growth is ultradeep geothermal.

This JPT article nicely describes the opportunities and challenges

Microwave drilling test. Source JPT/Quaise Energy

Good comparison of drilling into hard basement rock with conventional and millimeter wave (microwave) technologies:

The technical readiness level (TRL) for microwave drilling reflects that it has yet to be field tested. The drilling rate includes an estimated amount of flat time. The levelized cost of energy (LCOE) is an all-in estimate of the cost per megawatt-hour (MWh). Source: JPT/Quaise Energy.

Quaise Energy’s first full-scale testing of a hybrid drilling rig combining conventional rotary drilling and millimeter wave drilling capabilities is scheduled for 2024.

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A BOE post from last December commented on the seemingly irrational bidding for Atlantic and Pacific wind leases. More recent posts have reported on the woes of Atlantic leaseholders.

Two Atlantic lessees, Commonwealth Wind and SouthCoast Wind, which paid $135 million for each of their North Atlantic leases, have now agreed to pay $48 million and $60 million respectively to cancel their power purchase agreements with electric utilities. Perhaps the effective date of these leases (see below) reflects on the wisdom of their purchase.🍋

Both Commonwealth Wind and SouthCoast Wind are hoping to rebid their projects in a Massachusetts offshore wind procurement scheduled for next year. 

Commonwealth Magazine

Some northeast states and their public utilities may be in a bit of a bind. Either they accept higher electric rates and the likely public backlash, or they deviate from their staunch anti-gas, anti-nuclear orthodoxy. Similarly, oil companies that have invested heavily in offshore wind may find that they are not just less profitable, but (even) less popular.

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New York’s looming, self-imposed electric power crisis:

Something here does not remotely add up.  If New York state succeeds by 2030 in closing its natural gas plants — the plants that account for 60% of the State’s generation capacity — that would bring our total installed capacity down from 37.5 GW to as little as 15 GW. But we need almost 60 GW to meet projected demand.  And that’s 60 GW that can be called on any time as needed to meet peak usage.  The 9 GW of projected offshore wind turbines wouldn’t make much of a dent even if they operated all the time and could be dispatched to meet peak demand, which they can’t.  Instead, they will operate only about a third of the time, and at their own whim.  At best they will provide about 3 GW on average, when what we need for this full electrification project is more like 45 GW of dispatchable power to add to our existing hydro and nuclear.   

Manhattan Contrarian

Power generation realities:

  • Assuming sufficient capacity, gas power plants respond to variable demand.
  • Wind and solar power are intermittent, such that demand must respond to variable supply (not a prescription for economic growth).
  • Power grids can function effectively with only natural gas, but not with only wind/solar.
  • Integrated wind, solar, and gas systems can reduce, but not eliminate, demand for gas-generated power.
Siemens gas turbine for the offshore industry

Offshore platforms: In some regions, there is a push to power platforms with renewable energy transported by electric cable. Currently, most platforms are efficiently powered by gas turbines which satisfy energy needs even when demand spikes during well operations like tripping out of the hole. The extent to which renewables can reliably support platform operations during these and other operations, when power interruptions are unacceptable from a safety standpoint, is a risk that must be assessed prior to committing to alternative energy sources.

The environmental benefits of powering platforms with renewable energy also have not been clearly documented. In most cases, offshore platforms produce sufficient gas to support their power demands. Should platforms be powered by imported electricity, gas that is not used for platform operations would presumably be marketed for consumption elsewhere or reinjected.

If the gas is marketed and consumed elsewhere, there is essentially no net (global) CO2 emissions reduction benefit. Gas that is reinjected is wasted unless there is an enhanced oil recovery benefit. So, the net environmental benefit from importing electric power seems questionable, and the operational risks could be significant.

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In the wake of the disappointing Gulf of Mexico wind sale and Orsted’s recent financial announcement, Equinor and bp have requested a massive increase in the price of electricity to be generated at Empire Wind 1, Empire Wind 2, and Beacon Wind (see map above).

According to the New York State Energy Research and Development Authority, this would result in an average 54% price hike across their portfolio. The strike prices would rise from $118.38 to $159.64/MWh for Empire Wind 1, from $107.50 to $177.84/MWh for Empire Wind 2, and from $118.00 to $190.82/MWh for Beacon Wind.

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Record low exploratory drilling: 2023 will be the third consecutive year with fewer than 50 deepwater exploratory well starts. The only other year this century with <50 deepwater exploratory well starts was 2010 when there was a post-Macondo drilling moratorium.

Low participation: Only 8 companies have started deepwater exploratory wells in 2023 YTD. Anadarko, Chevron, and Shell drilled 78% of the wells, with Shell alone accounting for 48%. Compare these numbers with 2001, when 24 companies drilled 149 deepwater exploratory wells.

Absence of new field discoveries: Per BOEM’s database, no deepwater fields have been discovered since March 2021 and there were only 3 discoveries in the past 5 years (see chart below)

Leasing and regulatory uncertainty: When will the 5 year leasing plan be finalized and how much will leasing be restricted? What will be the effect of the expanded Rice’s whale area on deepwater operations? To what extent is this expansion justified? What other legal and regulatory threats are on the horizon?

Unrealistic expectations regarding the “energy transition:” In a stunning introductory statement, the Proposed 5 Year Leasing Plan expressed concerns that new leases would produce too much oil and gas for too long. OPEC+ must love the way the US sanctions its own energy production, most notably the oil and gas resources of the OCS. More than 96% of the OCS is off-limits to oil and gas leasing, and the 5 year plan proposed to constrain leasing in the only areas that remain. The favored offshore wind program was intended to be a complement to, not a replacement for, the oil and gas program. Wind energy is limited by intermittency, space preemption, navigation, and wildlife protection concerns.

Some companies have visions of the GoM as a carbon dumping hub: The largest US oil company, which hasn’t drilled a well in the GoM in nearly 4 years and operates just one production platform, seeks praise and profit by sequestering CO2 beneath the Gulf while maximizing oil production elsewhere. How will this sustain economically and strategically important GoM oil and gas production?

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Savvy marketing? Looking for mandates and incentives? Taxation opportunity?

Burps are the top source of methane emissions from cattle. Semex, the genetics company that sold Loewith the semen, said adoption of the low-methane trait could reduce methane emissions from Canada’s dairy herd by 1.5% annually, and up to 20%-30% by 2050.

The Canadian government currently offers no incentives for low-methane cattle breeding, but the agriculture department said in an email that Ottawa is working to introduce offset credits for reducing methane through better manure management.

New Zealand will begin taxing farmers for methane from cattle in 2025.

Reuters

Common sense reservations:

Juha Nousiainen, senior vice-president at Valio, a Finnish dairy, warned that breeding cattle to burp less methane could create digestive problems. Methane is produced by microbes in the cow’s gut as it digests fibre, not by the animal itself, he said.

We have our own genetically engineered livestock offshore. 😀

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I thought the abstract below might be satire, but alas that is not the case. Here is a link to the full paper.

The paper is short on facts and long on dogma and political rhetoric, but is not entirely without merit. The author acknowledges, albeit in a backhanded manner, the massive social benefits that fossil fuels have provided (quote below). Would our economy have been strong enough to support academic pursuits such as hers were it not for fossil fuels and “petro-masculine” ingenuity and labor?

Fossil fuels built the modern world. There remains an appreciation for fossil fuels – or, at least, for the high energy consumption they provided – as a catalyst of mass liberal democracy. This is evident in ecomodernist calls for a good Anthropocene that would decouple the benefits of fossil fuels from the fuels themselves. After all, while industrialisation wreaks planetary destruction, its spread was coterminous with humanist victories like the abolition of slavery, increased literacy rates, gender equality and poverty reduction. Dipesh Chakrabarty notes that this cannot be a coincidence, and that ‘the mansion of modern freedoms stands on an ever-expanding base of fossil-fuel use. Most of our freedoms so far have been energy-intensive.

In the interest of balance, the author might have also acknowledged the impressive technical advances that have made fossil fuel production cleaner and more efficient. See also: simpler, safer, greener and the beauty of deepwater production.

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