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Archive for the ‘climate’ Category

Wind vs. oil and gas: Is this necessary?

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, Wind Energy, tagged , , , on August 1, 2022| Leave a Comment »

When we (MMS) drafted the OCSLA amendments (incorporated into the Energy Policy Act of 2005) that authorized offshore wind operations, we envisioned complementary and synergistic programs. Offshore wind and oil/gas development have many similarities and a common purpose – energy production. There is considerable overlap among the operating companies and contractors.

Unfortunately, politicians are better at dividing than uniting, and a provision in the Schumer-Manchin legislation pits the offshore wind and oil/gas programs against each other. The text (pasted below) from p. 646 of the bill restricts wind leasing when no oil and gas lease sale has been held in the prior year.

I share the concerns about the OCS program evolving into a wind-only program, as has already happened in the Atlantic (more on this at a later date). However, oil and gas sales should be held because they make economic and environmental sense, not because they are a condition for holding wind sales. Oil and gas sales are not punishment and wind sales are not rewards, and holding a single GoM lease sale each year does not balance the offshore program.

(b) LIMITATION ON ISSUANCE OF CERTAIN LEASES OR RIGHTS-OF-WAY.—During the 10-year period beginning on the date of enactment of this Act—

(2) the Secretary may not issue a lease for offshore wind development under section 8(p)(1)(C) of the Outer Continental Shelf Lands Act (43 U.S.C.1337(p)(1)(C)) unless—
(A) an offshore lease sale has been held during the 1-year period ending on the date of the issuance of the lease for offshore wind development; and (B) the sum total of acres offered for lease in offshore lease sales during the 1-year period ending on the date of the issuance of the lease for offshore wind development is not less than 60,000,000 acres.

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More on the Manchin-Schumer bill

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, Offshore Wind, Regulation, tagged , , , , , on July 29, 2022| Leave a Comment »

Here is a link to the entire bill. Good weekend reading for energy policy nerds. 😀

The energy sections begin on page 232 and continue until the end (page 725!). Some highlights from an offshore energy perspective (more important items in bold):

  • p. 429 – Tax credit eligibility for offshore wind energy components including blades, nacelles, foundations, and towers.
  • p. 447 – Credits for CCS equipment
  • p. 460 – For offshore wind facilities, this section specifies the % of the total costs that must be expended in the US for the facility to qualify as being manufactured in the US. That % rises gradually to 55% after 12/31/2027.
  • p. 518 – Eligibility of CCS for credits
  • p. 615 – $100 million for offshore wind electricity transmission planning, modelling, and analysis. (Seems like a lot for planning and analysis.)
  • p. 621 – $10 million for oversight by DOE Inspector General. (Those folks will have their hands full!)
  • p. 628 – Authorizes wind leasing in the EGOM and South Atlantic areas withdrawn from all leasing at the end of the Trump administration.
  • p. 631 – Authorizes offshore wind leasing adjacent to US territories. (Should be interesting!)
  • p. 632 – Codifies increase in offshore royalty rates: range of 16 2/3% – 18 3/4% for 10 years; not less than 16 2/3 % thereafter
  • p. 640 – The provision requiring that royalty be paid on flared/vented gas could be problematic. The exceptions are not consistent with those currently in the regulations, and would be difficult for BSEE/ONRR to manage. The proposed legislation (exception 1) exempts “gas vented or flared for not longer than 48 hours in an emergency situation that poses a danger to human health, safety, or the environment.” However, current BSEE regulations allow limited (48 hours cumulative) flaring for certain operations (e.g. during the unloading or cleaning of a well, drill-stem testing, production testing, and other well-evaluation testing). This flaring is essential but not normally an emergency situation. Requiring royalty payments for such essential, but not emergency, flaring would be unreasonable and inconsistent with the intent of this provision (minimize unnecessary flaring and venting).
  • p. 641 – Per our previous post, this section reinstates Lease Sale 257 (GoM) and requires that the scheduled 2022 lease sales 258 (GoM) and 259 (Cook Inlet) be held by 12/31/2022. Lease Sale 261 (GoM) must be held by 9/30/2023. Saddle up!

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“Manchin-Schumer” energy legislation reinstates lease sale 257 and requires additional lease sales in accordance with the 2017-2022 program

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , on July 28, 2022| Leave a Comment »

p. 643

(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.

As predicted by BOE (with no inside information) on 5/27/2022. 😀

What about the CCS bids? More to follow.

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Re. the Strategic Petroleum Reserve sales, who knew…?

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , on July 25, 2022| Leave a Comment »

  1. …that the SPR legislation authorized the sale of large volumes of oil for the purpose of easing worldwide prices. Per section 151 of the statute, which was passed following the oil embargoes in the 1970’s, the SPR was intended to diminish the vulnerability of the United States to the effects of a severe energy supply interruption.
  2. …that SPR oil could be sold to all entities including Chinese companies that are also buying oil from Russia, the country being boycotted. How absurd is that? (The confirmation of one such transaction is pasted below.)
  3. …that increased worldwide emissions from the consumption of SPR oil are okay, but emissions from the consumption of our offshore oil and gas are not. Remember that Lease Sale 257 was vacated because BOEM did not analyze the effect that lower prices (from increased US production) would have on GHG emissions. Why are EarthJustice et al silent on the SPR sales? Where is DOE’s environmental assessment of these sales?

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April GoM production, BOEM’s production forecast, and the proposed OCS leasing program

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on July 7, 2022| Leave a Comment »

April production increased from March by 72,000 BOPD to 1.763 million BOPD. The increase is associated, at least in part, with Murphy’s King’s Quay field which began producing in early April. 2022 GoM production remains below the levels reached in the first 7 months (pre-Hurricane Ida) of 2021, and is well below BOEM’s forecasted 2022 production rate of 1892 MBOPD. Perhaps BOEM was assuming earlier startup dates for other projects that will begin production later this year or next year. The 2022 YTD dip in production points to the importance of sustained exploration and development.

BOEM’s short-term production forecast is considerably more optimistic than EIA’s. This optimistic forecast, along with unrealistic expectations regarding the “energy transition” are reasons for proposing so few lease sales in the new 5 year leasing program. The logic for this minimalist leasing program seems to be that future production is neither necessary nor desirable. Indeed the program implies that the long-term nature of offshore production is a liability and is justification for limiting OCS oil and gas leasing:

“BOEM’s short-term (20-year) production forecast for existing leases shows steady growth from 2022 through 2024 and declining thereafter (see Section 5.2.1). The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs.“

5 Year Leasing Program, p.3

Basing leasing decisions on “future climate pathways” would seem to be a considerable stretch of the Secretary’s authority under the OCS Lands Act and may be inconsistent with the recent SCOTUS decision in West Virginia vs. EPA. A strategic shutdown of the offshore oil and gas program would dramatically increase energy supply and security risks going forward, and should be authorized by Congress.

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EIA: Fossil fuel sources accounted for 79% of U.S. consumption of primary energy in 2021

Posted in climate, energy policy, Offshore Energy - General, tagged , , , , , on July 5, 2022| Leave a Comment »

EIA

Yet the proposed 5 Year OCS leasing program (p. 3) tells us that long term offshore production is not needed because the IEA’s “roadmap to net-zero emissions by 2050 for the global energy sector would require no new investment in fossil fuel supply projects (IEA 2021).”

Does the IEA dictate US energy policy? Dan Yergin has a far better grasp on the realities of energy consumption and transitions.

“Oil, discovered in 1859, did not surpass coal as the world’s primary energy source until the 1960s, yet today the world uses almost three times as much coal as it did in the ’60s.“

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SCOTUS: West Virginia 6, EPA 3. These statements should resonate with regulators and industry.

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on June 30, 2022| Leave a Comment »

When Congress seems slow to solve problems, it may be only natural that those in the Executive Branch might seek to take matters into their own hands. But the Constitution does not authorize agencies to use pen-and-phone regulations as substitutes for laws passed by the people’s representatives.

Justice Gorsuch in concurrence

Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible “solution to the crisis of the day.” New York v. United States, 505 U. S. 144, 187 (1992). But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d). A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.

Justice Roberts for the majority

At first glance, the SCOTUS decision would seem to affect the regulation of GHG emissions on the OCS and possibly the Lease Sale 257 decision (now being appeal), which was based on BOEM’s failure to estimate the effect of reduced OCS production on GHG emissions outside the US.

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Ultradeep geothermal update

Posted in climate, drilling, energy, Uncategorized, tagged , , on June 29, 2022| Leave a Comment »

MIT Press

For others who are fascinated by ultradeep geothermal energy, MIT News has posted an update on Quaise Energy. Quaise wants to use x-rays to drill ultradeep geothermal wells at old coal and gas power plants.

“The company plans to vaporize enough rock to create the world’s deepest holes and harvest geothermal energy at a scale that could satisfy human energy consumption for millions of years. They haven’t yet solved all the related engineering challenges, but Quaise’s founders have set an ambitious timeline to begin harvesting energy from a pilot well by 2026.”

Quaise will use conventional rotary drilling technology to reach basement formations before switching to high-power millimeter waves that vaporize boreholes through rock and provide access to deep geothermal heat. See our previous post on this exciting concept.

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Brief filed by 14 states in support of the Sale 257 appeal

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on June 27, 2022| Leave a Comment »

Per their court filing, Montana, Alabama, Alaska, Arizona, Arkansas, Georgia, Kentucky, Mississippi, Missouri, Nebraska, Oklahoma, Texas, Utah, and West Virginia seek to protect oil and gas production in the Gulf of Mexico and throughout the United States. The States’ brief is rather political, which is not surprising given their support for offshore leasing and the apparent alignment of the Federal defendants and the plaintiffs in support of the decision by Judge Contreras to vacate the sale.

As was expected at the time of the ruling, the court decision on Sale 257 shut down offshore leasing for the remainder of the 2017-22 Five Year Plan. Secretary of the Interior Haaland has promised that a new proposed leasing plan will be released by 6/30/2022, but that is just the start of the lengthy planning process.

Interesting NEPA data from the States’ brief:

  • In 2018 CEQ found that, across the federal government, the average EIS completion time and issuance of a Record of Decision was over 4.5 years and the median was 3.6 years.
  • On average, Interior takes five years and the Department of Transportation 6.5 years to complete an EIS—and that’s not including the usual years of resulting litigation.
  • CEQ found that “across all Federal agencies, draft EISs averaged 586 pages in total, with a median document length of 403 pages.” As a result, “[t]he entire original purpose of doing NEPA analysis has been lost along the way to creating mountains of data and information in the hopes of successfully defending against inevitable litigation.”

Many thanks to the Texas AG for making the States’ brief readily available online. Unfortunately, that is not the case for the other briefs filed in support of the sale.

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Update on the Sale 257 appeal

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on June 24, 2022| Leave a Comment »

Per a very good OGJ update, API, Louisiana, Chevron, bp, Shell, NOIA, the EnerGeo trade group of geophysical contractors, 14 states filing jointly, and the US Chamber of Commerce have submitted briefs to the US Court of Appeals for the District of Columbia Circuit.

Don’t expect a decision soon. The environmental advocacy groups are not scheduled to file their responses until Aug. 26, after which replies can be filed. No decision is expected before November at the earliest.

Previous posts and background information on Lease Sale 257.

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