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Archive for the ‘energy policy’ Category

Per Executive Order 14082, September 12, 2022, yet another White House office and task force has been established to coordinate (direct?) the 26 Federal Departments (plus many bureaus and offices) with energy and climate responsibilities.

Sec. 3. White House Office on Clean Energy Innovation and Implementation. There is hereby established the White House Office on Clean Energy Innovation and Implementation within the Executive Office of the President, which shall coordinate the policymaking process with respect to implementing the energy and infrastructure provisions of the Act and other essential initiatives. The White House Office on Clean Energy Innovation and Implementation shall have a staff headed by the Senior Advisor for Clean Energy Innovation and Implementation; shall have such staff and other assistance as may be necessary to carry out the provisions of this order, subject to the availability of appropriations; and may work with established or ad hoc committees and interagency groups.

Sec. 4. ‘‘There is hereby established a National Climate Task Force (Task Force). The Task Force shall be chaired by the Senior Advisor for Clean Energy Innovation and Implementation. The National Climate Advisor shall serve as Vice Chair.’’

Task Force Membership:

(i) the Secretary of the Treasury; (ii) the Secretary of Defense; (iii) the Attorney General; (iv) the Secretary of the Interior; (v) the Secretary of Agriculture; (vi) the Secretary of Commerce; (vii) the Secretary of Labor; (viii) the Secretary of Health and Human Services; (ix) the Secretary of Housing and Urban Development; (x) the Secretary of Transportation; (xi) the Secretary of Energy; (xii) the Secretary of Education; (xiii) the Secretary of Homeland Security; (xiv) the Administrator of the Environmental Protection Agency; (xv) the Director of the Office of Management and Budget; (xvi) the Director of the Office of Science and Technology Policy; (xvii) the Administrator of the Small Business Administration; (xviii) the Chair of the Council on Environmental Quality; (xix) the Assistant to the President for National Security Affairs; (xx) the Assistant to the President for Domestic Policy; (xxi) the Assistant to the President for Homeland Security and Counterterrorism; (xxii) the Assistant to the President for Economic Policy; (xxiii) the Administrator of the National Aeronautics and Space Administration; (xxiv) the Chief Executive Officer of the Corporation for National and Community Service; (xxv) the Administrator of General Services; (xxvi) the White House Infrastructure Coordinator; and (xxvii) the heads of such other departments, agencies, and offices as the Chair or Vice Chair may from time to time invite to participate.’’

Over the years, the work of cabinet departments has been increasingly directed by the White House, such that cabinet officials confirmed by the Senate are often subordinate to White House staff. Critics contend that the centralization of energy and climate policy in the White House has delayed and altered important Departmental actions. Did the White House climate office author this rather extreme statement in the introductory text for the proposed 5-year leasing plan?

The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs. (Interpretation: offshore oil and gas production must be throttled down to correspond with the climate office’s energy fantasies.)

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Pursuant to section 50264(b) of the Inflation Reduction Act of 2022 (Pub. L. No. 117-169), Congress has directed BOEM to award leases to the highest valid bidders in Lease Sale 257, which was held on November 17, 2021. Consistent with this direction, BOEM has accepted 307 of the highest valid bids, totaling $189,888,271.

A total of 33 companies participated in the lease sale, generating $191,688,984 in high bids for 308 tracts covering 1.7 million acres in federal waters in the Gulf of Mexico. One bid was rejected for not providing the public with fair market value.

BOEM

Bottom line:

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A full day ahead of the deadline! Waiting for an announcement and details.

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Comments from Terje Aasland, Norwegian Minister of Oil and Energy, after a strong licensing round during which 26 applications were received:

We need exploration and new discoveries to maintain the production of oil and gas over time, which is important both for Norway and Europe. The applications in TFO 2022 show very good interest among the companies active on the Norwegian continental shelf in looking for new petroleum resources. This is very gratifying, says Oil and Energy Minister Terje Aasland (Ap)

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Per legislation signed by the President on 8/16/2022, Sale 257 oil and gas leases are to be issued this week. Below is a list of the high bidders. (The carbon sequestration bids are not believed to be valid and are not included in this list.) Note the number of smaller and relatively unknown companies that participated in the sale. These smaller operators and investment companies add significantly to the vitality of the OCS program. BOE will comment on some of these companies in future posts.

Company No. of high bids
Hess2
Chevron34
Shell20
Walter2
W&T2
Houston Energy5
LLOG6
Anadarko30
BHP8
Arena11
bp46
Murphy3
Red Willow5
Equinor1
Focus Exploration7
Repsol5
Byron1
EnVen1
CSL Expl1
Talos10
Kosmos1
Beacon4
Blackcomb Energy1
Cantium3
Otto Energy1
Foster & Assoc.1
Juneau Oil and Gas5
DG Exploration 14
QuarterNorth1

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Despite continuous legal and policy headwinds, and the absence of some historically important US companies, technological innovation is sustaining US offshore production at about 1.7 to 1.8 million BOPD. BOE will continue to monitor drilling, production, and safety performance and draw attention to the leading companies.

Think about where we would be today without the shale revolution and onshore production on private lands. Grateful!

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bp ad showing workers on their Na Kika floating production platform in the Gulf of Mexico (6340′ water depth)

Is bp apologizing for the pictured workers and platform? With the demand for oil and gas expected to increase through 2050, and worldwide concerns about energy supply and security, ads like this make neither good business nor good social sense.

Moving away from oil and gas and becoming a “very different” company in the 2030’s won’t make bp the “leading energy company in the world.” On the contrary, a “very different” bp will likely be less influential, less profitable, and more dependent on government mandates and subsidies.

Contrary to the ad (and to the company’s credit), bp seems committed to Gulf of Mexico production well beyond the 2030’s. They are the number 2 oil producer in the Gulf (behind Shell), continue to drill exploration and development wells, and were the most active participant at Lease Sale 257. Bp was the high bidder on 46 tracts, 12 more than no. 2 Chevron. The Department of the Interior has been legislatively directed to award Sale 257 leases by 9/15/2022, but has yet to comment publicly on the matter.

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The reckless depletion of an important strategic resource continues:

  • Largest-ever one year SPR decline – 179 million bbls or 28.8% (9/3/2021 to 9/2/2022)
  • 39.2% decline since 2010
  • 74 consecutive weeks of decline – 4/9/2021 to 9/2/2022
  • 58 million bbls below the strategically important 500 million barrel threshold which was first breached (on the downside) on 6/24/2022
  • Lowest inventory since 11/23/1984
Above numbers are end of year volumes except for 2022 which is as of 9/2

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Link to the press release.

To the extent that these numbers are honored and adhered to, attached is the OPEC+ production table (1000’s of BOPD). Note that Russia and Saudi Arabia have identical quotas – 11,004,000 BOPD.

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GoM oil production for June increased (see chart below) with King’s Quay and Spruance contributing to the uptick. Other anticipated 2022 startups are not yet producing.

The EIA production forecast for 2022 is proving to be pretty accurate. Kudos to them. However, BOEM’s 2022 forecast of 1.9 million bopd is not achievable and concerns about the intermediate and longer term persist. Unfortunately, BOEM’s highly optimistic forecast for 2022 and beyond, along with unrealistic expectations regarding the energy transition, have significant policy implications. This stunning quote from the 5 year leasing plan explains why so few lease sales were proposed:

BOEM’s short-term (20-year) production forecast for existing leases shows steady growth from 2022 through 2024 and declining thereafter (see Section 5.2.1). The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs.

5 Year Leasing Program, p.3

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