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Archive for the ‘energy policy’ Category

The press release and full program are linked. It looks like the most recent leaks were accurate. See the maps below with the locations and dates. This will stir the pot!

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Conceptually, this technologically advanced polymetallic nodules collection system looks great. The big challenge that John Smith sees is with the number of moving parts.  The numerous manipulators operating at such depths could be prone to breakdowns which reduce recovery rates and significantly increase operating costs.

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The Canada-Newfoundland Labrador Offshore Energy Regulator (C-NLOER) informs that once again no bids were received for tracts in the Eastern Newfoundland or Labrador South regions. According to this article, the outcome (no bids)was the same from 2021-2024.

Difficult operating conditions, high costs, and relatively modest oil price projections are no doubt factors contributing to the absence of bids. Energy NL has also pointed to the “complex, inconsistent and burdensome regulatory system” as a contributing factor.

Newfoundland’s newly elected Premier, Tony Wakeham, has said his Progressive Conservative Government will advocate for the cancellation of the emissions cap as it is a cap on production. He also supports incentives for offshore oil and gas projects such as an investment tax credit or the former Petroleum Incentive Program and indicated he would work with Energy NL to review incentives that could be implemented provincially.

The C-NLOER is committed to “review its land tenure system in collaboration with governments and others, to identify opportunities to enhance competitiveness in the Canada-Newfoundland and Labrador Offshore Area.”

On a separate policy matter, C-NLOER is applauded for announcing offshore safety/environmental incidents, including significant near misses, without delay. In the US, you have to scour BSEE investigation reports to find out about significant incidents or wait a year or more until the incident table is updated. This is inexcusable!

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BOEM completed the area identification (outlined in diagram above) for marine minerals offshore American Samoa. The full decision memorandum is attached.

In response to BOEM’s Request for Information, Impossible Metals confirmed their interest in the identified area. Several other companies also expressed interest. The Governor and a number of other parties submitted interesting comments, which are summarized on p. 2 of the attachment.

The first two steps in a process that could ultimately lead to a mineral lease sale have thus been completed. Steps 3 to 6 remain. (See below)

  1. Request for Information and Interest (RFI) published in the Federal Register. complete
  2. Identification of Areas to be considered for leasing. complete
  3. Environmental Analysis for the lease sale.
  4. Proposed Leasing Notice Published in the Federal Register.
  5. Leasing Notice Published in the Federal Register.
  6. Competitive Lease Sale

Meanwhile, Odyssey Marine has requested a critical minerals lease sale in the Atlantic.

The proposed lease area, located within the U.S. outer continental shelf (OCS) off the Mid-Atlantic coast, is highly prospective for heavy mineral sands rich in titanium, zirconium, rare earth elements (REEs), and phosphate.

This would be a shelf dredging operation rather than the deepwater module collection being proposed for the Pacific.

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Plymouth MA wind turbine that lost a blade. (Stuart Cahill/Boston Herald)

Friday’s turbine blade failure in Plymouth MA is perhaps getting added attention given its proximity to the 7/13/2024 Vineyard Wind blade failure offshore Nantucket. The Plymouth blade landed in a nearby cranberry bog (video and picture below).

Per the MV Times, the turbines for the Plymouth project were manufactured by Gamesa, which is now part of Siemens Gamesa. Both the South Fork Wind and Revolution Wind projects off the coast of the Martha’s Vineyard are being developed by Ørsted using turbines from Siemens Gamesa. Coastal Virginia Offshore Wind, the largest offshore wind project in the United States, is also being developed with Siemens Gamesa turbines. This is not to imply a higher degree of risk for those turbines. Vineyard Wind, where the only US offshore failure has occurred to date, is using GE Vernova turbines.

Unfortunately, turbine blade failures are much too common. Last October, Lars Herbst reported, based on a Wind Power article, that “with an estimated 700,000 blades in operation globally, there are, on average, 3,800 incidents of blade failure each year.” Lars noted that the annual blade failure rate of about 0.5% translates to 1.5% of all operating wind turbines experiencing a blade failure every year, a remarkably high failure frequency.

Scotland Against Spin data indicate that blade failure is the second most common accident type in the wind industry, and the most common cause of accidents at operational wind turbine sites. SAS reports further that pieces of blade are documented as travelling up to one mile, and have gone through the roofs and walls of nearby buildings.

Lastly, we are still awaiting BSEE’s report on the Vineyard Wind failures so we can better understand what happened and why.

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Per the Washington Post, the Administration’s 5 Year Oil & Gas leasing plan will include (in addition to the Central and Western Gulf):

  • Six offshore lease sales between 2027 and 2030 in areas along the California coast
  • Expansion of leasing into the Eastern Gulf of America (Gulf of Mexico per the Post)
  • 20 sales offshore Alaska through 2031 (presumably this includes the mandated Cook Inlet sales)

Previous post about 5 Year Plan speculation

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One Big Beautiful Gulf of America

The first ever Gulf of America oil and gas lease sale 😉 will be held on Dec. 10, 2025. Instead of numbering the sale sequentially (i.e. Sale 262), the sale has been designated OCS Oil and Gas One Big Beautiful Bill Act Lease Sale 1 (BBG1). 🙄 This change is a bit too cute for some of us old-timers, but we’ll judge the sale by its results, not its name.

The Notice of Sale is attached. The terms are very attractive, with the lowest allowable royalty rate (1/8th) on all shelf and deepwater leases. Note the comparison of royalty rates in the table below. The 6.25% difference for deepwater leases is substantial when you consider their high production potential.

Gulf Sale No.Date% royalty: <200m water depth% royalty: >200m water depth
25611/18/202012.518.75
25711/17/202112.518.75
25812/30/202218.7518.75
2593/29/202318.7518.75
26112/20/202318.7518.75
BBG112/10/202512.512.5

The rental rates for the BBG1 Sale are also very attractive compared to Sale 261:

Water DepthSale 261 rental rates ($/ac)BBG1 Sale rental rates ($/ac)
0 to <200myears 1-5: $10
year 6: $20
year 7: $30
year 8+: $40
years 1-5: $7
year 6: $14
year 7: $21
year 8+: $28
200 to <400myears 1-5: $16
year 6: $32
year 7: $48
year 8+: $64
years 1-5: $11
year 6: $22
year 7: $33
year 8+: $44
400+ myears 1-5: $16
year 6: $22
year 7: $22
year 8+: $22
years 1-5: $11
year 6: $16
year 7: $16
year 8+: $16

Will the bidding reflect the very favorable lease terms?

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Tyler Priest, the leading historian on US offshore oil and gas operations, has published another gem. His book, Offshore Oildom, is a fascinating account of the history of the technologically innovative and economically important, yet highly controversial, OCS Oil and Gas program. His book is highly recommended.

Consider this recommendation by Daniel Yergin:

“Tyler Priest, a preeminent historian of energy and the environment, explores how a single well drilled off a pier near Santa Barbara in 1898 gave rise to a major American industry—offshore oil and gas. In spirited prose, Priest demonstrates how this U.S. industry was created not only by innovation, creative engineering, and complex execution; it was also the result of fierce political battles.” ~Daniel Yergin, Pulitzer Prize–winning author of The Prize: The Epic Quest for Oil, Money, and Power and The New Map: Energy, Climate, and the Clash of Nations

You can learn more here.

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  • The UK Met Office told Recharge that the historic trend of wind speeds in Britain was downwards. “The UK annual mean wind speed from 1969 to 2024 shows a downward trend, consistent with that observed globally. There have been fewer occurrences of maximum gust speeds exceeding 40/50/60 knots in the last two decades compared to the 1980s and 1990s.”
  • Citigroup informs that load factors for both onshore and offshore wind are falling behind capacity growth in Britain’s turbine fleet.
  • Per the Citigroup analysts, the increasing focus on wind wakes in UK waters has led to a ballooning number of disputes between developers.
  • Entire wind farms can influence each other through large-scale wake effects. These farm wakes have been observed to extend more than 100 km downstream from a wind farm and can cut the yield of turbines in the wake by tens of percents.
  • In addition to wake losses, local turbulence in the wake regions creates significant unsteady fatigue loads on the downstream turbines, which shorten their working life.
  • Wind wakes grow with turbine size. Bigger wind turbines deliver financial economies of scale, but don’t greatly increase the total power per unit area because they must be spaced farther apart
  • recent study shows that hydrodynamic conditions in the ocean altered by wind wakes can strongly influence marine primary production (phytoplankton).
  • The US National Academy of Sciences advised BOEM about the hydrodynamic effects of wind turbines and the potential implications for the endangered North Atlantic right whale (see figure below).

Wind resource management is reminiscent of the early years of oil production when the “law of capture” reigned supreme and wasteful production practices were a self-defense mechanism.

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The attached legal petition from Save LBI and Green Oceans, asserts that BOEM improperly amended OCS wind leases at the end of the previous Administration.

The amended language makes it more difficult to cancel leases by stipulating that an OCS wind lease must be suspended for 5 years before it can be cancelled, and that in the event of cancellation, the lessees must be compensated.

The sentence of concern:

Any cancellations are subject to the limitations and protections contained in subsections 5(a)(2)(B) and (C) of the Act (43 U.S.C. § 1334 (a)(2)(B) and (C)). (Those subsections are pasted at the end of this post in their entirety.)

(5(a)(2)(B) and (C) apply to the oil and gas program and neither the EPAct (Alternate Energy) Amendments to OCSLA nor the implementing BOEM regulations include the 5 year suspension provision or the compensation requirement.

Compensation could be very costly to the Federal govt (taxpayer) given the wild (irrational?) bidding for some leases and subsequent planning and development costs.

See Section 8 of this lease for an example of the amended language. Note that the lease changes are not highlighted or otherwise identified; nor was there any public notice of this change.

The petitioners are requesting that the new lease language be rescinded and that cancellation language in the lease be aligned with the regulations.

5(a)(2)(B) and (C) read as follows:

(B) that such cancellation shall not occur unless and until operations under such lease or permit shall have been under suspension, or temporary prohibition, by the Secretary, with due extension of any lease or permit term continuously for a period of five years, or for a lesser period upon request of the lessee;

(C)that such cancellation shall entitle the lessee to receive such compensation as he shows to the Secretary as being equal to the lesser of (i) the fair value of the canceled rights as of the date of cancellation, taking account of both anticipated revenues from the lease and anticipated costs, including costs of compliance with all applicable regulations and operating orders, liability for cleanup costs or damages, or both, in the case of an oilspill, and all other costs reasonably anticipated on the lease, or (ii) the excess, if any, over the lessee’s revenues, from the lease (plus interest thereon from the date of receipt to date of reimbursement) of all consideration paid for the lease and all direct expenditures made by the lessee after the date of issuance of such lease and in connection with exploration or development, or both, pursuant to the lease (plus interest on such consideration and such expenditures from date of payment to date of reimbursement), except that (I) with respect to leases issued before September 18, 1978, such compensation shall be equal to the amount specified in clause (i) of this subparagraph; and (II) in the case of joint leases which are canceled due to the failure of one or more partners to exercise due diligence, the innocent parties shall have the right to seek damages for such loss from the responsible party or parties and the right to acquire the interests of the negligent party or parties and be issued the lease in question;

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