Posted in California, decommissioning, Offshore Energy - General, tagged California, Chevron, Exxon, Santa Ynez Unit, write down on January 5, 2024| Leave a Comment »
Exxon has joined Chevron in announcing Q4 write downs associated with California operations. In Exxon’s case, the estimated $2.4 billion to $2.6 billion impairment is the result of their troubled Santa Ynez unit facilities in the Santa Barbara Channel where the unit’s 500+ million barrels of reserves are unlikely to ever be produced.
The Santa Ynez saga is really quite remarkable. More here and here.
Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Uncategorized, tagged California, Chevron, decommissioning, losses on January 5, 2024| Leave a Comment »
On January 2, 2024, Chevron Corporation announced that for fourth quarter 2023, the Company will be impairing a portion of its U.S. upstream assets, primarily in California, due to continuing regulatory challenges in the state that have resulted in lower anticipated future investment levels in its business plans. The Company expects to continue operating the impacted assets for many years to come. In addition, the Company will be recognizing a loss related to abandonment and decommissioning obligations from previously sold oil and gas production assets in the U.S. Gulf of Mexico, as companies that purchased these assets have filed for protection under Chapter 11 of the U.S. Bankruptcy Code, and we believe it is now probable and estimable that a portion of these obligations will revert to the Company. We expect to undertake the decommissioning activities on these assets over the next decade.
SEC filing
On Monday, we will be posting comments on the proposed bankruptcy sale of Cox’s GoM assets and the related safety and decommissioning concerns.
Posted in California, decommissioning, Offshore Energy - General, tagged BSEE, California, decommissioning, partial removal, PEIS, ROD on December 27, 2023| Leave a Comment »
This Santa Barbara Independent article discusses the Record of Decision (ROD) for the Programmatic Environmental Impact Statement on Pacific OCS Decommissioning. A quote from the article regarding BSEE’s support for complete removal of all infrastructure follows:
“It’s great that the federal government finally has a loose game plan for getting oil companies to clean up their rusty messes,” said Miyoko Sakashita, oceans program director at the Center for Biological Diversity.
Apparently the Center for Biological Diversity supports complete removal, the decommissioning alternative that would destroy “the most productive marine habitats per unit area in the world.” How’s that for irony?
Complete removal may be the most politically expedient alternative in California, but it is by far the most environmentally damaging and poses the greatest safety risks. Old disputes about offshore oil and gas production should not be driving decommissioning policy.
Posted in California, decommissioning, Offshore Energy - General, tagged California, Decommissioning EIS, Hogan and Houchin, Milton Love, partial removal, platform habitat, reef legislation on December 19, 2023| Leave a Comment »
“These platforms are habitat for millions of animals. My opinion is that it’s immoral to kill huge numbers of animals in any kind of habitat.”
Dr. Milton Love, UCSB marine biologist
Inexplicably, BSEE’s Record of Decision (ROD) for the Programmatic Environmental Impact Statement on Pacific OCS Decommissioning (EIS cost: $1,604,056) endorses such habitat destruction by designating the most environmentally harmful, unsafe, punitive, and costly alternative as the “preferred alternative.”
Alternative 1 (the preferred alternative) calls for “the complete removal of platforms, topside, conductors, the platform jackets to at least 4.6 m (15 ft) below the mud line, and the complete removal of pipelines, power cables, and other subsea infrastructure (i.e., wells, obstructions, and facilities).”
Ironically, the ROD correctly acknowledges that alternative 2 (partial removal) is environmentally preferable. So what drove the decision to select the alternative that destroys “the most productive marine habitats per unit area in the world?” Was there pressure to choose the alternative that is most punitive to an industry that is despised by California activists? If so, their schadenfreude is certain to be delayed by administrative and legal challenges that draw further attention to the social costs and environmental damage associated with “complete removal.”
In 2020, BOEM estimated the total cost of decommissioning the 23 Federal offshore platforms at $1.7 billion, and today’s real costs are likely to be much higher. Also, keep in mind that some thorny decommissioning liability issues remain to be resolved, particularly with regard to Platforms Hogan and Houchin.
The decommissioning costs for Hogan and Houchin are estimated by BOEM at $85.6 million, even though the cost of completing removing Platform Holly (single platform in similar water depth in CA State waters) may reach $475 million. Per the BOEM data, there is no collateral, supplemental financial assurance, or third party guarantee that could defray the Hogan and Houchin costs. The extent to which prior lessees could be held accountable is questionable given that the lease was assigned to (now bankrupt) Signal Hill in 1991, well before the predecessor liability language was added to the MMS bonding rule. Irregularities in the management of Signal Hill’s Abandonment Escrow Account for Hogan and Houchin further complicate the liability issues.
The path for timely facility decommissioning with the least environmental damage and safety risk has two essential elements:
Absent those steps, the noise will continue, the platforms will remain in place, and the best outcome for all parties will not be achieved.
Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, rigs-to-reefs, tagged decommissioning, Gulf of Mexico, OCS facility dashboard, rigs to reefs on November 22, 2023| Leave a Comment »
BSEE’s Facility Infrastructure Dashboard is a useful tool for tracking decommissioning activity in the Gulf of Mexico. A few numbers from the dashboard:
Planned disposition of the 291 pending removals (25% of the structures to be reefed):
Posted in California, decommissioning, Offshore Energy - General, UK, tagged assessment, California, decommissioning, John B. Smith, Robert Byrd on October 30, 2023| Leave a Comment »
An excellent paper by John Smith and Bob Byrd is attached.
The authors recommend the operators of large OCS platforms offshore California and in the Gulf of Mexico who propose to partially remove platform jackets prepare Comparative Assessments to support their decommissioning applications. The Comparative Assessments can also be prepared to support the case for allowing partial removal of smaller platform jackets and allowing pipelines and drill muds and cuttings to remain in-situ.
Posted in accidents, conferences, decommissioning, NOPSEMA, Offshore Energy - General, tagged Bryan Domangue, capping stack, decommissioning, idle iron, incident investigation, IRF conference, NOPSEMA on October 24, 2023| Leave a Comment »
NOPSEMA has kindly provided links for the slides presented at the 3-4 October International Regulators’ Forum Offshore Safety Conference in Perth, Australia. They will be uploading the video recordings at a later date.
On day 2 (stream 2) Bryan Domangue (BSEE) presented updated data on the progress that is being made in plugging inactive wells and decommissioning idle platforms (see the charts pasted below). In the following session, Bryan made an interesting presentation on the capping stack deployment exercises in the GoM (picture below).
For excellent slides on investigation and sharing the lessons learned, see session 9 (day 2, stream 1).
Posted in California, decommissioning, rigs-to-reefs, tagged Ann Bull, California, decommissioning, marine oases, Milton Love, offshore platforms, Platform Holly, rigs to reefs, UCSB on October 16, 2023| Leave a Comment »
Excellent Guardian article featuring my former colleague Dr. Ann Bull and Dr. Milton Love from the University of California at Santa Barbara.
According to a 2014 study they (Bull and Love) co-authored, the rigs were some of the most “productive” ocean habitats in the world, a term that refers to biomass – or number of fish and how much space they take up – per unit area. The research showed the rigs to be about 27 times more productive than the natural rocky reefs in California.
Guardian
Posted in decommissioning, Offshore Energy - General, Regulation, tagged decommissioning, financial assurance on August 25, 2023| Leave a Comment »
The Bureau of Ocean Energy Management (BOEM) is extending the public comment period on our notice of proposed rulemaking (NPRM), “Risk Management and Financial Assurance for Outer Continental Shelf Lease and Grant Obligations,” by 10 days.
Federal Register
These comments were submitted 7 days (now 17 days) early 😀
Federal regulations: “decades to draft, days to comment”
Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Regulation, tagged BOEM, compliance and safety, decommissioning, financial assurance, oil and gas reserves, proposed rule on August 22, 2023| Leave a Comment »
The attached comments were submitted to BOEM via Regulations.gov. The comments address specific provisions of the proposed rule and include a recommendation to hold companies fully accountable for their lease transfers, but not for subsequent transfers in which they are not a party.
Do I get a t-shirt for being one of the first 2000 entries? 😀
Bud's Offshore Energy (BOE) 