Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged accidents, bid acceptances, carbon disposal, Exxon, Lease Sale 261, Repsol on January 31, 2024| Leave a Comment »
As previously posted here and here, carbon disposal bidding at the last 3 oil and gas lease sales has made a mockery of the leasing process and the regulations that guide it.
Hopefully, the carbon sequestration regulations that are under development will preclude conversion of leases acquired at Sales 257, 259, and 261. At a minimum, these regulations should require a competitive process for converting any oil and gas leases.
Posted in energy policy, Gulf of Mexico, natural gas, tagged Marcellus Shale, OCS oil and gas, Pennsylvania, private land, shale gas, Texas Permian on January 31, 2024| Leave a Comment »
A friend owns land in the Texas Permian. His family gets a nice royalty check every month that has helped them get through some difficult times. Texas Permian production is almost entirely from private land, which is a big part of the success story. Payments to private land owners by responsible producers engender public support, access to resources, and growth in production. Add to that the continuous improvements in horizontal drilling, well stimulation and completion practices, and you have the success story that is the Texas Permian.
Similarly, private and state land plus technology launched the natural gas boom in my native state of Pennsylvania. When I was a student, we looked back at the Titusville/Colonel Drake glory days, and no one dreamed that the state would become a major natural gas exporter. Today, pipeline constraints, particularly in NJ and NY (which has managed to prevent access to the state’s substantial Marcellus and Utica shale resources) are preventing PA from further increasing gas sales.
The offshore lands on the US Outer Continental Shelf are a different story. Unfriendly, bordering on hostile, leasing policy (and not just during the current administration) has been partially overcome by advances in deepwater well and facility design that have lowered costs and increased productivity. However, OCS oil production is a fraction of what it could be.
OCS gas production has fallen dramatically since the turn of the century. Ultradeep (subsurface) gas production was not economically viable and production was fading even before onshore shale gas began to dominate US gas markets. Most of the current OCS gas production is associated with deepwater oil production.
The charts below tell the story.
Posted in climate, energy policy, natural gas, Offshore Energy - General, tagged GHG emissions, LNG export pause, natural gas, offshore gas on January 30, 2024| Leave a Comment »
In the wake of the decision to “pause” LNG export approvals, it’s important for us to also pause and reflect on the natural gas revolution.
Gas now accounts for 40% of our power generation.
The gas boom’s economic and environmental benefits are compelling. Greenhouse gas emissions currently get most of the attention. In that regard, methane (CH4) is a hydrogen transporter that emits far less CO2 than other fossil fuels when burned.
Less attention has been given to natural gas’s other important air quality advantages – low NOx. SO2, and particulate emissions. These emissions have greater local significance from a human health standpoint. Those who have ridden a bike behind a natural gas powered bus have no doubt experienced the natural gas advantage firsthand.
Other environmental considerations particularly favor offshore natural gas when compared to energy alternatives. These include low well and facility density, no groundwater pollution risk, and minimal risk to wildlife.
Compiled below are links to BOE posts on natural gas issues and advantages.
Posted in energy policy, Offshore Wind, tagged BOEM, NASEM, NOAA, Offshore Wind, Rice's whale, RIght Whale, strategy on January 29, 2024| 2 Comments »
Key takeaways after reviewing the BOEM/NOAA strategy document:
NARW status (pages 7-14):
BOEM/NOAA strategy:
Questions:
Pictured below: density of NARWs near wind leases and hydrodynamic effects of turbines
Posted in energy policy, tagged SPR refill, Strategic Petroleum Reserve on January 25, 2024| Leave a Comment »
Posted in decommissioning, energy policy, Offshore Energy - General, Offshore Wind, tagged BOEM, decommissioning, financial assurance, Vineyard Wind, waiver on January 18, 2024| 10 Comments »
BOEM is charged with protecting the public from financial risks associated with the decommissioning of offshore facilities. Previous posts have addressed oil and gas facility decommissioning issues and proposed revisions to BOEM’s financial assurance regulations for those operations.
Recent disclosures indicate that BOEM, which very publicly promotes the offshore wind projects that it regulates, has waived a fundamental financial assurance requirement at the request of Vineyard Wind (approval letter attached). Given its broad applicability, this precedential waiver could have the effect of revising a significant provision of the offshore wind decommissioning regulations without public review and comment.
The issue is the “pay as you build” financial assurance requirement at 30 CFR § 585.516, which was waived by BOEM. This requirement, which is intended to project the public from decommissioning liability, is fair and reasonable given that wind developers must only provide financial assurance “in accordance with the number of facilities installed or being installed.” Companies that don’t have sufficient financial strength to comply with this requirement should not be installing and operating offshore wind turbines.
Vineyard Wind was either unable or unwilling to comply with the requirement. They instead requested to defer providing the full amount of the required financial assurance until year 15 of actual operations. The waiver changes “provide assurance when you install” to provide assurance 15 years after installation if everything goes as planned (hoped?).
After their waiver request was denied in 2017, Vineyard Wind resubmitted the request in 2021 seeking a favorable decision from an administration concerned that project cancellation or delay might tarnish the program that they were enthusiastically promoting.
BOEM (as directed from above?) granted the waiver, citing the general departure authority at 30 CFR § 585.103. However, that authority is intended for special situations, not for broadly applicable waivers that have the effect of revising the regulations without the public review required by the Administrative Procedures Act and Executive Orders 12866 and 13563.
There are no criteria in the Vineyard Wind waiver approval that could not apply to other wind developers. Vineyard Wind has simply committed to the same “risk-reduction factors” that apply to all offshore wind projects: damage insurance, the “use of proven turbine technology,” and long-term power purchase agreements. How could BOEM deny the same request from other companies?
It’s noteworthy that the regulations specific to financial assurance at 30 CFR § 585.516 provide no criteria for waiving the assurance requirements; nor do the regulations provide for the 15-year payment plan approved by BOEM. Given the precedential nature of the BOEM action and its enormous financial implications, a revision to the decommissioning regulations that provides criteria for such payment schemes should be promulgating before any similar departures are approved.
In light of the waiver, the public will likely incur substantial costs if Vineyard Wind fails, walks away, doesn’t fully fund their decommissioning account in a timely manner, or seeks new concessions after some or all of the 62 turbines have been installed.
Given the decommissioning obligations, what company would want to step in and assume responsibility for a failing project 10-15 years from now? What happens if Vineyard Wind’s project revenues don’t meet expectations and contributions to their decommissioning account are insufficient or used improperly? More concessions? We’ve seen this dance before.
Whether the project is for oil, gas, or wind energy, protecting the public from decommissioning liabilities should always be prioritized over facilitating development.
Posted in deep sea mining, energy policy, Offshore Energy - General, tagged deep sea mining, Lisa Murkowski, NDAA, NORI, Norway, Norwegian Offshore Directorate, polymetallic nodules, TMC on January 16, 2024| Leave a Comment »
“the committee directs the Assistant Secretary of Defense for Industrial Base Policy shall, by March 1, 2024, submit a report to the House Armed Services Committee assessing the processing of seabed resources of polymetallic nodules domestically. The report shall include, at a minimum, the following:
NDAA, p. 230
(1) a review of current resources and controlling parties in securing seabed resources of polymetallic nodules;
(2) an assessment of current domestic deep-sea mining and material processing capabilities; and
(3) a roadmap recommending how the United States can have the ability to source and/or process critical minerals in innovative arenas, such as deep-sea mining, to decrease reliance on sources from foreign adversaries and bolster domestic competencies.
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged Atwater Valley, bid rejections, Green Canyon, Keathley Canyon, Lease Sale 259, Lease Sale 261, net gains, net losses, Walker Ridge on January 2, 2024| Leave a Comment »
Based solely on a comparison of the bids (Sale 261 vs. Sale 259), the Sale 259 rejections were, on balance, to the benefit of the public (table below). On the plus side:
On the other hand:
| area and block | Sale 259 high bid – company | Sale 261 high bid | govt gain (loss) |
| DC 622 | 2,101,836 – Shell | 615,628* – Shell | (1,486,208) |
| GC 173 | 307,107 – Woodside | no bid | (307,107) |
| GC 547 | 1,783,498 – Chevron | no bid | (1,783,498) |
| GC 591 | 1,291,993 – Chevron | no bid | (1,291,993) |
| GC 642 | 605,505 – Anadarko | no bid | (605,505) |
| GC 777 | 583,103 – bp | no bid | (583,103) |
| AT 5 | 1,551,130 – Anadarko | 5,215,628* – Shell | 3,664,498 |
| AT 133 | 607,107 – Woodside | no bid | (607,107) |
| KC 745 | 707,777 – Beacon | 2,422,222 – Beacon | 1,714,445 |
| KC 789 | 707,777 – Beacon | 2,143,299 – Beacon | 1,435,522 |
| WR 794 | 724,744 – Beacon | 1,487,624 – Beacon | 762,880 |
| WR 795 | 774,242 – Beacon | 5,301,107 – Woodside | 4,526,865 |
| WR 796 | 774,242 – Beacon | 3,310,107 – Woodside | 2,535,865 |
| WR 750 | 724,744 – Beacon | 1,498,555 – Beacon | 773,811 |
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged 5 year leasing plan, Carol Hartgen, Carolita Kallaur on December 20, 2023| Leave a Comment »
As we await Lease Sale 261, Carol Hartgen, my long-time colleague and founder of the 5 year OCS leasing program, voiced astonishment that the new 5 year plan was only for the purpose of scheduling 3 lease sales required by Congress as prerequisites to offshore wind lease auctions. Carol provides some historical context:
I couldn’t believe the release of the final Five Year Program as just a necessity to hold offshore wind sales. Back in 1969, Carolita Kallaur, Joan Davenport and I worked on a 5-year schedule based on the supply and demand needs of the nation. That approach, which developed into the elaborate process in the OCS Lands Act and the passage of the National Environmental Policy Act, is a thing of the past. Over.those 50 plus years, politics from both sides of the aisle always drove the changes
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Offshore Wind, tagged 5 year leasing plan, DOI, fewest lease sales on December 18, 2023| Leave a Comment »
The announcement boasts about “the fewest oil and gas lease sales in history” while seemingly apologizing for holding any sales at all.
Consistent with the requirements of the Inflation Reduction Act (IRA) concerning offshore conventional and renewable energy leasing, the Department of the Interior today published the final 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program (Program) with the fewest oil and gas lease sales in history.
These three lease sales are the minimum number that will enable the Interior Department’s offshore wind energy program to continue issuing leases in a way that will ensure continued progress towards the Administration’s goal of 30 gigawatts of offshore wind by 2030.
Bud's Offshore Energy (BOE) 