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Archive for the ‘decommissioning’ Category

Stunning Hunterbrook report suggests the end is near for Sable Offshore

Posted in California, decommissioning, Offshore Energy - General, tagged , , , , , , on November 19, 2025| Leave a Comment »

Excerpts from a stunning Sable update issued by Hunterbrook Media LLC (“Hunterbrook“) on November 14, 2025:

  • SEC filing reveals Sable entered October about a month from potential bankruptcy. The company had $41.6 million as of September 30, with $39.7 million in average monthly burn in 3Q25.  
  • When Sable announced its $250 million financing on November 10 at $5.50 per share, the company likely had single digit millions in the bank based on its reported burn, against over $163 million in accounts payable and accrued liabilities. Sable does not generate any revenue.
  • Sable needs to raise significantly more money: According to leaked audio of Sable’s CEO briefing for select investors, the company will require $2.3 billion to achieve commercial production of oil and gas from its three platforms off the coast of Santa Barbara.
  • That includes at least $900 million to buy out Exxon, to which Sable must pay 15% interest on debt due by March 31, 2027. By then, the loan would be about $1.1 billion, accruing $200 million in added debt.
  • One of Sable’s only known assets other than the oil and gas project is a private plane the company purchased from its CEO, Jim Flores. The plane recently flew round-trip from Houston, where Flores lives, to Louisiana, in time for a football game at the CEO’s alma mater.

Comments from Santa Barbara County Supervisor Steve Lavagnino, an oil industry supporter, that explain his opposition to the transfer of Exxon’s pipeline permit to Sable:

“The final straw for me was a Hunterbrook article, which was as disturbing as anything I’ve read. I have many friends in the oil industry and I will continue to support efforts to access our natural resources, but it has to be done responsibly by operators who put safety above profits.”

Sable’s limited response to the Hunterbrook report includes information on decommissioning financial assurance:

  • Sable’s original SYU Purchase and Sales Agreement (PSA) with Exxon required Sable to post a $350 million decommissioning bond “150 days following the resumption of production from the wells.”
  • According to Sable, production resumed on May 15, 2025. The bond would have thus been required in October. (SYU production was halted by court order on June 6, so that “resumption date” may be irrelevant. Regardless, the Oct. financial assurance deadline is immaterial given the recent update to the PSA.)
  • The PSA update extended the date for posting the decommissioning bond to three business days following the new Exxon Loan Maturity Date of March 31, 2027 or 90 days after first sales of hydrocarbons, whichever comes first. (Note the change in language from “resumption of production” to “first sales.” Brief well test production does not trigger posting of the decommissioning bond.)
  • Under certain circumstances after the bonding is in place Exxon may seek an increase in the bonding amount to $500 million.

The decommissioning obligations are moot if Sable runs out of funds or is unable to resume SYU production prior to the 3/31/2027 PSA deadline. Exxon would remain fully responsible for SYU decommissioning.

Is it time for a public statement from Exxon on the SYU and Sable?

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Interesting case: Delaware litigation on approval of the Coastal Construction Permit for the Maryland Offshore Wind Project

Posted in decommissioning, energy policy, Offshore Wind, Regulation, tagged , , , , , , on October 29, 2025| Leave a Comment »

The Dept. of the Interior is currently reconsidering approval of the Construction and Operations Plan for the Maryland Offshore Wind Project (US Wind).

Attached is a court filing challenging Delaware’s approval of the Coastal Construction Plan for that project. Some interesting points from the filing:

  • Maryland local governments declined to allow the transmission lines from the Maryland Offshore Wind Project to come ashore in their jurisdictions.
  • The Governor of Delaware agreed to allow the transmission lines to make landfall at the Delaware Seashore State Park.
  • The transmission pipelines would then traverse the adjacent Delaware Bays, to an inland substation, from which the power would be sent to Maryland.
  • US Wind applied for a number of permits from the Delaware Department of Natural Resources (DNREC) specific to horizontal directional drilling, laying cable pipelines, and other coastal construction activity.
  • The approval process, including provisions for public input, was not consistent with State regulations.
  • The Secretary’s decision to issue the beach construction permit is supported virtually exclusively by documents which were submitted by US Wind after the close of public comment.
  • Decommissioning and financial assurance information, a favorite BOE topic for both wind and oil/gas, was submitted after the close of the public record.
CRI US Wind Superior Ct Opening Brief Final version 5Download

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Offshore wind energy, which is 82% foreign-owned, is the UK subsidy leader. Decommissioning risks rise with industry finances in peril.

Posted in decommissioning, Offshore Wind, UK, tagged , , , , , on October 21, 2025| 1 Comment »

JL Daeschler informs that UK offshore wind energy is 82% foreign-owned. Foreign companies are thus the primary beneficiaries of the UK’s generous renewable energy subsidies (chart below).

David Turner comments as follows in his informative piece on UK wind energy:

“We have been warning for some time that it is crazy for a developed economy to try and run its electricity generation system using technologies that are dependent on the weather. Even though there has been only a relatively modest decline in wind output this year, the operators and owners of wind farms are learning the hard way that it is very difficult to run a business that is at the mercy of the vagaries of the weather. Many of these companies are up to their eyeballs in debt. They better hope the wind blows hard this Autumn and Winter so they can collect higher subsidies, or they will be in real trouble.“

We have consistently raised concerns about decommissioning financial assurance for offshore wind facilities. Turner echoes those concerns noting that the wind industry’s “perilous finances are an even bigger reason to insist that proper funds are set aside to fund decommissioning or the long-suffering taxpayer will be on the hook for another hidden cost of renewables.“

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NOAA EIS’s assess Gulf and Pacific aquaculture, but don’t consider the potential for synergy with existing platforms.

Posted in decommissioning, energy policy, Gulf of Mexico, rigs-to-reefs, tagged , , , , , , , , on September 30, 2025| Leave a Comment »

NOAA is touting marine aquaculture and has published Programmatic Environmental Impact Statements for Aquaculture Opportunity Areas (AOAs) in the Gulf of America and offshore Southern California. This is a positive step.

While the focus of these EIS documents is on distinct AOAs separated from oil and gas facilities, NOAA might also have discussed the potential for synergy with existing platforms. The reef effect of platforms can be sustained and new fishery ventures supported by converting older platforms to aquaculture facilities (Rigs-to-Roe/Redfish/Rockfish) rather than decommissioning them.

The ecological importance of offshore platforms has been well documented in both the Gulf and Santa Barbara Channel Channel area.

According to a paper published in 2014 by marine ecologist Dr. Jeremy Claisse of Cal Poly Pomona, the oil and gas platforms off the coast of California are the most productive marine habitats per unit area in the world. “Even the least productive platform was more productive than Chesapeake Bay or a coral reef in Moorea,” said Dr. Love. (Milt Love, UCSB biologist)

beneath Platform Gilda, Santa Barbara Channel

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Revised decommissioning regulations are in the pipeline. Cause for concern?

Posted in decommissioning, energy policy, Offshore Energy - General, Regulation, tagged , , , , , , , on September 24, 2025| 3 Comments »

Attached is the Dept. of the Interior’s Semiannual Regulatory Agenda (9/22/2025). BSEE and BOEM decommissioning rules are excerpted below.

Of particular concern is the revised BOEM regulation (107) that “would reduce the amount of supplemental financial assurance required from oil gas, and sulfur lessees operating on the OCS.” See our previous post on this regulatory action. Note that a proposed rule is expected to be published by year end.

  1. REVISIONS TO DECOMMISSIONING REQUIREMENTS ON THE OCS [1014–AA53]
    Legal Authority: Outer Continental Shelf Lands Act, 43 U.S.C. 1331 to 1356a
    Abstract: This proposed rule would address issues relating to (1) idle iron by adding a definition of this term to clarify that it applies to idle wells and structures on active leases; (2) abandonment in place of subsea infrastructure by adding regulations addressing when BSEE may approve decommissioning-in-place instead of removal of certain subsea equipment; and (3) other operational considerations.
    Timetable:
    NPRM ……………… 07/00/26
    NPRM Comment Period End: 10/00/26
  1. RISK MANAGEMENT AND FINANCIAL ASSURANCE FOR OUTER CONTINENTAL SHELF LEASE AND
    GRANT OBLIGATIONS [1010–AE26]
    Legal Authority: 43 U.S.C. 1331, OCS Lands Act; E.O. 14154, Unleashing American Energy
    Abstract: This proposed rule would rescind BOEM’s final rule ‘‘Risk Management and Financial Assurance for OCS Lease and Grant Obligations.’’ The proposed rule would revise the criteria for determining whether oil, gas, and sulfur lessees, right-of-use and easement grant holders, and pipeline right-of-way grant holders are required to provide financial assurance above the current minimum bonding levels to ensure compliance with their Outer Continental Shelf (OCS) Lands Act obligations. This rule, if finalized, would reduce the amount of supplemental financial assurance required from oil gas, and sulfur lessees operating on the OCS and would support the goals of E.O. 14154; Timetable: NPRM ……………… 01/00/26
2025-18330Download

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Judge Lamberth’s bench ruling on Revolution Wind is likely to stand

Posted in decommissioning, energy policy, Offshore Wind, tagged , , , , , , on September 23, 2025| Leave a Comment »

A long-time colleague is very familiar with Judge Lamberth, a Reagan appointee, and thinks highly of him. Orsted has a lease contract, and no matter where you stand on offshore wind, you have to have a compelling case to halt a project that is in the advanced stages of development. Judge Lamberth ruled that the govt doesn’t have such a case. Per the judge:

  • The govt presented insufficient evidence to support alleged permit noncompliance and national security concerns.
  • The govt acted in an “arbitrary and capricious” manner.
  • “If Revolution Wind cannot meet benchmark deadlines, the entire project could collapse.”
  • “There is no doubt in my mind of irreparable harm to the plaintiffs.”

Projects under development will be difficult to pause or stop. The Administration should focus on requiring sufficient decommissioning financial assurance, monitoring and mitigating project impacts, making incident data publicly available, issuing the report on the Vineyard Wind blade failure (finally!), and improving the availability of dispatchable power (i.e. natural gas and nuclear).

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S&P downgrades Orsted’s credit rating. Will BOEM require supplemental financial assurance?

Posted in decommissioning, Offshore Wind, tagged , , , , on August 15, 2025| Leave a Comment »

Following the announced $9 billion rights offering to shore up its finances, Orsted’s long-term issuer credit rating has been downgraded to BBB- by S&P, just one step above junk.

Will BOEM now require decommissioning financial assurance pursuant to 30 CFR § 585.517(b)?

§ 585.517 How will BOEM determine the supplemental financial assurance associated with commercial leases?

(b) If your cumulative potential obligations and liabilities increase or decrease, we may adjust the amount of the supplemental financial assurance.

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Ørsted’s troubles and Atlantic wind decommissioning

Posted in decommissioning, Offshore Wind, tagged , , , , , , , , on August 14, 2025| 1 Comment »

Ørsted’s stock price plummeted on Monday following the announcement of a $9.4 billion rights issue to fund the Sunrise Wind project. The share price has remained depressed (chart below).

Also, although Ørsted attributes its financial woes to the change in US policies, it’s apparent in the second chart (5 year trend) that the decline in Ørsted’s valuation has been ongoing since 2021.

In March, Fitch downgraded Ørsted’s rating to BBB from BBB+, and its subordinated rating to BB+ from BBB-. Further downgrades would seem to be a distinct possibility.

Meanwhile, decommissioning financing for the 3 Ørsted projects under construction in the US Atlantic is far from assured:

  • Revolution Wind: As they did for Vineyard Wind, BOEM approved Ørsted’s request to defer full decommissioning financial assurance until 15 years after the beginning of construction (see attached letter). This approval was prior to the Renewable Energy Modernization Rule (effective June 29, 2024), which eliminated the need for such waivers.
  • Sunrise Wind: Ørsted is now solely responsible for funding and constructing this project given the company’s failure to find investment partners. Presumably, decommissioning financial assurance was not required given BOEM’s latitude under the so-called “Modernization Rule.”
  • South Fork Wind: As is the case with Sunrise Wind, BOEM presumably allowed Ørsted to defer financial assurance for decommissioning as permitted by the “Modernization Rule.”

According to Ørsted, almost 70% of the turbines are installed at Revolution Wind and the first foundations have been installed at Sunrise Wind. South Fork Wind, 12 turbines and an offshore substation, is complete.

Given Ørsted’s strained finances, will BOEM now opt to require decommissioning assurance as provided for in 30 CFR § 585.517?

Ørsted’s situation is atypical in that the Danish government owns a majority (50.1%) stake in the company and Equinor, which is 2/3 Norwegian govt owned, holds a 9.8% stake. How will government ownership factor into BOEM decisions regarding decommissioning assurance? Note that Norwegian govt lobbying may have been one of the factors influencing the decision to allow the resumption of construction on Equinor’s Empire Wind project.

Meanwhile, two Danish opposition parties are calling for the state to relinquish its ownership stake in Ørsted.

REV_0486_Fin Assur Decom Departure Appr LtrDownload

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Offshore wind: End of the decommissioning free ride?

Posted in decommissioning, Offshore Wind, Regulation, tagged , , , , on August 11, 2025| Leave a Comment »

The Dept. of the Interior is reviewing offshore wind regulations including “the Renewable Energy Modernization Rule, as well as financial assurance requirements and decommissioning cost estimates for offshore wind projects…”

Concerns about offshore wind financial assurance were first raised on this blog in response to a precedent setting waiver of the “pay as you build” requirement. Vineyard Wind was authorized to defer providing the full amount of required decommissioning financial assurance until year 15 of actual operations.  The waiver request, which had been denied in 2017, was resubmitted in 2021 and approved. This questionable decision was consistent with the administration’s enthusiastic promotion of accelerated offshore wind development.

BOEM’s streamlining rule codified the deferred financial assurance option. The rule authorizes the transfer of decommissioning risks from developers to taxpayers and consumers by (1) not requiring any additional supplemental financial assurance at the Construction and Operations Plan (COP) approval stage, (2) not requiring supplemental assurance at the installation stage, and (3) providing for incremental supplemental assurance post-installation (e.g. for Vineyard Wind, the full amount is not due until 15 years after installation). See the rule’s previous and current language in the table below (emphasis added).

30 CFR 585.516 – What are the financial assurance requirements for each stage of my commercial lease?

financial assurance required before BOEM will: language prior to 4/24/2024 “modernization” rulecurrent language
Approve your COPA supplemental bond or other financial assurance, in an amount determined by BOEM based on the complexity, number, and location of all facilities involved in your planned activities and commercial operation. The supplemental financial assurance requirement is in addition to your lease-specific bond and, if applicable, the previous supplement associated with SAP approval.There is no supplemental bond requirement at the COP approval stage.
Allow you to install facilities approved in your COPA decommissioning bond or other financial assurance, in an amount determined by BOEM based on anticipated decommissioning costs. BOEM will allow you to provide your financial assurance for decommissioning in accordance with the number of facilities installed or being installed. BOEM must approve the schedule for providing the appropriate financial assurance coverage.A supplemental bond or other authorized financial assurance in an amount determined by BOEM based on anticipated decommissioning costs of the proposed facilities. If you propose to incrementally fund your financial assurance instrument, BOEM must approve the schedule for providing the appropriate financial assurance.

The current financial assurance language is fuzzy enough that BOEM could deny deferred funding requests and require full financial assurance at the time facilities are installed. However, revising the language to clearly require that assurance be fully demonstrated prior to installation would provide clarity and eliminate the deferral option going forward.

The more difficult challenge may be adjusting financial assurance requirements for the projects already under construction. It’s also important to ensure that parent corporations are not shielded from decommissioning and other liability risks.

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MV Times raises more Vineyard Wind transparency questions

Posted in decommissioning, energy policy, Offshore Wind, Regulation, tagged , , , , , on August 4, 2025| Leave a Comment »

MV Times -blade replacement continues

MV Times: “The recent site visit raised questions on the production of the wind farm. The Times has been able to neither verify the report independently nor confirm disparities between visuals on the ground and the Iberdrola report.”

  • Avangrid, an Iberdrola subsidiary and one of Vineyard Wind’s developers, reported that 17 out of 62 turbines were currently sending power to the Massachusetts grid.
  • The MV Times counted between five and nine turbines spinning at different points, and for different intervals, in their two hour visit.
  • BOE comment: Although there are many possible reasons for this discrepancy, it’s reasonable to question the absence of turbine output data. Developers assert that generator specific data are sensitive and could have market implications. However, these turbines are operating on public lands and were in part publicly funded. Output data and other performance metrics clearly have policy implications.
  • Note that Iberdrola “expect[s] no impact from new federal budget legislation, as it doesn’t impact 1,000 megawatts under construction.”

An MV Times photo of a Vineyard Wind substation is pasted below. These substations are large structures. Per the Construction and Operations Plan (COP) for Vineyard Wind, the topsides for a conventional electrical service platform (ESP) (also known as an offshore substation or OSS) are 45 x 70 x 38 m, which is larger in surface area than a typical 6-pile oil and gas platform (~30 x 30 m), and is comparable in size to a large jackup drilling rig.

Decommissioning financial assurance requirements were relaxed to reduce development costs, thus increasing taxpayer liability risks. This policy decision should be reviewed.

Vineyard Wind substation

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