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Archive for the ‘energy policy’ Category

Regulatory reform is not just about rescinding rules

Posted in energy policy, Offshore Energy - General, Regulation, tagged , , , , on July 18, 2025| Leave a Comment »

IMG0009
Drilling Safety Leaders Pilot Program to be proposed.

 Comments on the Dept. of the Interior’s regulatory reform initiative are due by July 21.

DOI’s “Deregulation Suggestions” form implies that their review may be limited in scope. The form focuses solely on rescinding regulations. True regulatory reform requires a broader assessment of regulatory methods and strategies.

Offshore safety regulations address known or perceived operational risks. Deleting individual provisions without considering the effect on the regulatory objective could introduce new risks without reducing the burden on operators and regulators.

More meaningful regulatory reform, and the associated improvements in operator and regulator efficiency, can be achieved by addressing regulatory fragmentation and providing regulatory incentives for companies with outstanding safety and environmental performance records.

My comments to DOI will address fragmentation and the challenges associated with updating regulations and standards. A Drilling Safety Leaders Pilot Program will be proposed. This pilot program would offer a more flexible regulatory regime for operators with outstanding safety records.

The regulatory system can constrain leading operators and delay innovation. The top performers should be encouraged to stay ahead of the technology and management curves. Most of the requirements that were added after Macondo had been adopted by leading operators well before the blowout.

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Another twist in the Sable SYU saga as Supervisor Hartmann joins the fray

Posted in California, energy policy, Offshore Energy - General, tagged , , , on July 17, 2025| Leave a Comment »

Supervisor Joan Hartmann, Credit: Ingrid Bostrom

Per the Independent, the alleged conflict of interest that prevented County Supervisor Joan Hartmann from voting on Sable oil matters has been reevaluated. She is now legally permitted full voting rights.

With Hartmann recusing herself, the supervisors had been deadlocked in a perpetual 2-2 tie when voting on issues concerning Sable. Supervisor Hartmann’s participation is not good for Sable given her public comments in opposition to the Santa Ynez Unit restart.

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Cow emissions: Nebraska vs. Denmark

Posted in climate, energy policy, tagged , , , on July 17, 2025| Leave a Comment »

Danish Tax Minister Jeppe Bruus boasted that other countries will be inspired by the world’s first tax on livestock emissions.

Not so fast says the University of Nebraska; perhaps the cows deserve a tax credit! 😉

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So much for the Strategic Petroleum Reserve refill

Posted in energy policy, tagged , , , on July 15, 2025| 2 Comments »

During the 2024 presidential campaign and early in his second term, President Trump repeatedly pledged to “immediately refill” the Strategic Petroleum Reserve (SPR) to its maximum capacity, emphasizing its role in ensuring energy security and stabilizing oil markets during global supply disruptions.

The Big Beautiful Bill (BBB) sends a much different message, providing only $171 million for petroleum acquisition and $218 million for maintenance of SPR facilities through 2029. This is an 87% reduction in the acquisition funding from the House version that proposed $1.3 billion for crude oil purchases.

The Administration has offered no comment on the BBB’s surprise SPR language. Meanwhile, the SPR will likely remain at or near the current level, which is 324 million bbls below the 2010 high and only 56 million bbls above the 2023 low. (See the above chart.)

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Is Nantucket’s settlement agreement with GE Vernova weak? What ever happened to operator responsibility?

Posted in accidents, energy policy, Offshore Wind, tagged , , , , , , on July 14, 2025| Leave a Comment »

Debris from the failed Vineyard Wind blade littering the south shore of Nantucket in July 2024. Nantucket Current photo.

Nantucket reached a settlement agreement (attached) with turbine manufacturer GE Vernova (GEV), praising that company while criticizing Vineyard Wind (VW), the lessee and operator:

“The Town of Nantucket commends GE Vernova for its leadership in reaching this agreement. By contrast, the Town has found Vineyard Wind wanting in terms of its leadership, accountability, transparency, and stewardship in the aftermath of the blade failure and determined that it would not accept Vineyard Wind as a signatory to the settlement,” the town stated Friday morning.

Comments:

  • For a relatively modest sum ($10.5 million) paid by the contractor (GEV), the agreement further limits the Town’s ability to hold Vineyard Wind, the lessee and operating company, accountable. See sections 4, 5(a), and 9 of the agreement.
  • The Town’s ability to challenge the project was already compromised by their unpopular “Good Neighbor Agreement.”
  • What ever happened to operator responsibility? This fundamental tenet of the OCS oil and gas program also applies to offshore wind. Vineyard Wind should be the party that is fully accountable for the damages associated with their project. VW can seek compensation from GEV, but VW is the accountable party.
  • Can you imagine if BP had attempted to stay on the sidelines while Transocean and other contractors settled claims associated with the Macondo blowout? Unthinkable!
  • Nantucket should have insisted on VW’s participation, rather than excluding them.
  • Do we need an Offshore Wind Liability Trust Fund, ala the Oil Spill Liability Trust Fund?
  • What does the lessor, the Federal govt, have to say about damage compensation? Are civil penalties forthcoming? When will we finally see the BSEE investigation report!
20250710 Blade Settlement Agreement FINAL w EXS (1)Download

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WSJ/Rystad on tariffs

Posted in drilling, energy policy, Offshore Energy - General, tagged , , , on July 10, 2025| Leave a Comment »

WSJ opinion piece

Tariffs and their uncertainty “will certainly decrease expected investment activity in the energy sector,” says the new report. More than $50 billion of offshore investment this year has been deferred “with operators looking to wait out current market uncertainty before making significant final investment decisions,” Rystad notes.

Rystad estimates that tariffs will increase costs for offshore oil and gas projects by 8% year-over-year and 12% for onshore. “Most steel and raw material exposed cost categories are feeling the majority of the impact from tariffs and thus will take the biggest hit.”

The Tax Foundation and Wood Mackenzie have offered similar opinions.

Comment: At a glance, the number of 2025 well starts in the GOA appears to be down (more on this at a later date). While there are many factors affecting drilling decisions, lower oil prices and higher costs associated with tariffs are not compatible with a “drill baby drill” philosophy.

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Interesting AEI survey of US voters views on energy

Posted in climate, energy policy, tagged , , , , on July 9, 2025| Leave a Comment »

The full report is attached.

Not at all shocking:

The public is most interested in the cost and reliability of the energy they use and the convenience and comfort of their energy-using products. They are unwilling to sacrifice much at all financially to address climate change or significantly change their consumer behavior.

The-Science-vs.-the-Narrative-vs.-the-Voters-Clarifying-the-Public-Debate-Around-Energy-and-ClimateDownload

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NOAA proposes revisions to deepsea mining regulations

Posted in deep sea mining, energy policy, tagged , , , , on July 8, 2025| Leave a Comment »

Remotely operated vehicle traverses over an extensive field of ferromanganese nodules that form the bulk of the hard seafloor substrate. Credit: NOAA.

The proposed rule is attached. Important points:

How can the US issue mining licenses in international waters (controversial)?

“The International Seabed Authority (ISA) regulates deep seabed mining in areas beyond national jurisdiction for countries that are parties to the United Nations Convention on the Law of the Sea (UNCLOS). The United States is a non-party to UNCLOS. Under U.S. law, NOAA may issue licenses and permits to U.S. citizens in areas beyond national jurisdiction under the Deep Seabed Hard Mineral Resources Act (DSHMRA).“

Main objective of the proposed rule (paraphrased):

The deepsea mining industry has gained experience from site specific exploration activities. As a result, later entrants may be able to capitalize on the information gained by previous explorers and lessen the need for further exploration of previously explored areas. In such cases there may be a need for a consolidated licensing process in which permit applicants could meet exploration license requirements to establish priority of right, and permit requirements, simultaneously.

Comment: The proposed rule seems reasonable in that qualified companies that gather the necessary site information would have the right (after NOAA review and approval) to collect the minerals. This would align deepsea mining more closely with offshore oil and gas in that companies acquiring licenses would be able to proceed to production after regulatory approvals.

2025-12513Download

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Senate version of the Big Beautiful Bill was enacted

Posted in energy policy, Offshore Energy - General, Regulation, tagged , , , on July 7, 2025| Leave a Comment »

See the differences in the OCS oil and gas provisions in the House and Senate versions.

We preferred the House version, but the Senate Parliamentarian killed the provisions that reduced the risk of litigation and processing delays.

Whether justified or not, the royalty rate is now capped at 1/6 and a 10-year deepwater lease term is locked in.

The favorable terms and assurance of regular GOA lease sales put the ball squarely in industry’s court. We are looking for a good showing at Sale 262, including some new bidders and the return of some prominent companies.

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Interesting bits in the Proposed Notice for OCS Oil and Gas Lease Sale 262

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , on July 1, 2025| Leave a Comment »

Eye catching sentences in the news release and Proposed Notice of Sale:

“Leases awarded through Lease Sale 262 will be for oil and gas exploration and development only.” (News Release)

“Leases issued as a result of GOA Lease Sale 262 are expressly limited to oil and gas exploration and development.” (p. 16 of the Sale Notice)

Comment: Why would BOEM stipulate, for the first time ever, that an Oil and Gas Lease Sale is only for oil and gas exploration and development? Perhaps because, at the last 3 sales, 2 companies wrongfully acquired oil and leases for carbon disposal purposes. Those leases will likely expire at the end of their primary term, and the lessees will have nothing to show for their investment.

Other items of interest:

“Congress may enact legislation through reconciliation efforts sometime after publication of this Proposed NOS“

Comment: The Offshore Oil and Gas Leasing provisions in the “Big Beautiful Bill” make OCS leases more attractive in that they minimize sale uncertainty and return royalty rates to pre-IRA levels.

Proposed Primary Terms

Comment: Time for an update. The drilling requirements for a primary term extension should be the same for leases in 0-400 m as for those in 400-800 m. The requirement for an ultra-deep subsurface well is selectively punitive to shelf operations. These operations, although typically less lucrative, are important to the Gulf’s infrastructure.

Restricted Joint Bidders
On April 29, 2025, BOEM published the most recent List of Restricted Joint Bidders in the Federal Register (90 FR 17832). Potential bidders are advised to refer to the Federal Register prior to bidding for the most current list at the time of the lease sale. Please refer to the joint bidding provisions at 30 CFR 556.511-556.515

Comment: It’s past time for Congress to do away with the joint bidding restriction.

Comment: No surprises in the Lease Stipulations. Can BOEM finally drop the Law of the Seas stipulation (No. 6)?

Conclusion: There are no excuses for not participating in this sale!

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