More red ink.
Archive for the ‘energy policy’ Category
Strategic Petroleum Reserve: the beat(down) goes on
Posted in energy policy, tagged SPR depletion, Strategic Petroleum Reserve on May 1, 2023| Leave a Comment »
SPR now at lowest level since 10/28/1983; a few of you weren’t even born yet 😀
Posted in energy policy, tagged 1983, SPR depletion, Strategic Petroleum Reserve on April 26, 2023| Leave a Comment »
On Earth Day 2023, remember to…
Posted in energy policy, Offshore Energy - General, Uncategorized, tagged Earth Day 2023, energy and the environment, offshore platforms on April 22, 2023| Leave a Comment »
- Be grateful for energy production which gives us the economic means to address environmental issues
- Appreciate the beauty and ecological significance of offshore facilities
- Explore, study, and protect the marine environment
- Strive for continuous improvement in safety and environmental performance
- Acknowledge and learn from past mistakes
- Live responsibly as individuals, families, and communities
Regulatory Theory 101: Good comment from “Save LBI” on BOEM’s Renewable Energy Modernization Rule
Posted in energy policy, Offshore Energy - General, Offshore Wind, tagged advocacy, BOEM, BSEE, Offshore Wind, Regulation, safety, Save LBI on April 18, 2023| Leave a Comment »
This comment from Save LBI (Long Beach Island, NJ) on BOEM’s Renewable Energy Modernization Rule (proposed) highlights an important regulatory policy consideration:
Promoting the offshore wind program is a very high BOEM priority. The bureau is charged with deploying 30 gigawatts of offshore wind energy capacity by 2030, which requires extensive advocacy. However, BOEM is also a core regulator for offshore wind projects, and the concern is that their regulatory role could be compromised by their advocacy priorities.
Per Notice to Lessees 2023 N-01, which arguably should have been published for public comment given its regulatory significance, BOEM has retained important responsibilities for wind project development and operations. These include review and approval of construction and operations plans, site assessment plans, and general activities plans. BOEM may also exercise enforcement authority through the issuance of violation notices and the assessment of civil penalties.
BOEM exists because in 2010 the Administration wanted to separate the OCS program’s leasing (sales/advocacy) and safety (regulatory/enforcement) functions. The intent was to avoid conflicting missions (or the appearance thereof) in the post-Macondo era. (More on this in an upcoming post.)
Ironically, the Save LBI comment describes BSEE as “a distinct unit within BOEM.” That may seem to be the case, but BSEE is actually a separate bureau in the Department of the Interior.
New hope for Alaskan gas? After years of frustration, are the stars finally aligning?
Posted in Alaska, energy policy, natural gas, tagged 40 tcf, Alaska gas, Alaska LNG, DOE, export approval on April 17, 2023| Leave a Comment »
A big step forward:
The Department of Energy approved Alaska Gasline Development Corp’s (AGDC) exports of LNG from the project to countries with which the United States does not have a free trade agreement.
Backers of the roughly $39 billion project hope it will be operational by 2030 if it gets investments and all required permits. The LNG would be exported mainly to countries in Asia.
Reuters
53 years of history in 93 seconds:
The basics:
SPR decline resumes. Is DOE concerned?
Posted in energy policy, tagged SPR depletion, SPR refill, Strategic Petroleum Reserve on April 13, 2023| Leave a Comment »
After 12 consecutive weeks at the 371.6 million barrel level, the SPR has declined another 2 million barrels to 369.6 million barrels as of 4/7/2022. The SPR is now at its lowest level since 11/11/1983 when the reserve was still being filled.
Keep in mind that the SPR deficit is now 357 million barrels, and the maximum refill rate is only 685,000 bopd. So a complete refill at the maximum rate would require 521 days plus acquisition, operational, and maintenance delays. Filling the reserve to its 727 million barrel capacity was a 28 year process.
DOE management nonetheless seems maddingly unconcerned.
Sale 259: Who gets the block in red (High Island 177)?
Posted in CCS, climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged CCS, Exxon, Focus Exploration, High Island 177, Lease Sale 259 on April 4, 2023| 2 Comments »
In addition to the 94 nearshore Texas leases Exxon acquired in Sale 257, the company was the sole Sale 259 bidder for all but one of 69 nearshore Texas blocks. The exception was High Island 177 (in red above). So who gets that lease?
- the company (Exxon) that was the sole participant in a de facto CCS sale (bid of $182,750)
- the company (Focus Exploration) that was participating in the announced oil and gas lease sale (bid of $145,177)
If Exxon is just acquiring these leases for evaluation purposes in preparation for a possible CCS sale in the future, their lease acquisitions may be okay. If they are planning on retaining these leases for actual sequestration operations, that is not okay, at least not until a competitive process has been established for awarding or reclassifying such leases. To date, no lease terms or bid evaluation procedures have been proposed for carbon sequestration leases; nor has an environmental review been conducted pursuant to NEPA.
Questions about Gulf of Mexico carbon sequestrationDid Granholm comment trigger Saudi production cut?
Posted in energy policy, tagged DOE, oil prices, OPEC, production cut, Saudi Arabia, Secretary Granholm, SPR on April 3, 2023| Leave a Comment »
Energy Secretary Jennifer Granholm last month said it would be difficult for the U.S. to take advantage of low oil prices to replenish the Strategic Petroleum Reserve because of maintenance at two of the four sites.
The Financial Times reported, citing people familiar with Saudi Arabia’s thinking, that Riyadh was “irritated” by that comment. In any case, it came on top of stress in the financial sector that had dragged oil prices as low as $64 in March.
Market Watch
As previously posted, the SPR is easier to drain than fill. The reserve is still flat-lined at 371.6 million barrels or about half full.
GoM Lease Sale 259: Did the 50% increase in royalty rate suppress shelf bidding?
Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged GOM Shelf, Gulf of Mexico, Lease Sale 259, royalty rate on March 30, 2023| Leave a Comment »
As anticipated, the increase in royalty and rental rates appears to have further weakened interest in leases in the shallow waters of the Gulf of Mexico continental shelf. Note the sharp declines in both the number of blocks receiving bids and the bid amounts.
| lease sale | blocks with bids (excluding CCS bids) | sum of high bids ($million, excluding CCS bids) |
| 257 | 46 | $8.1 |
| 259 | 29 | $4.1 |
The “Lower Energy Costs Act” (H.R.1) would do little to increase offshore production
Posted in Alaska, energy policy, Gulf of Mexico, Offshore Energy - General, tagged Gulf of Mexico, HR 1, Lower Energy Cost Act, OCS oil and gas on March 28, 2023| Leave a Comment »
Comments on the major offshore provisions:
- The bill neither repeals nor amends the massive land withdrawals by Presidents Obama, Trump, and Biden that have fenced the OCS program into portions of the central and western Gulf of Mexico. Worse yet, the bill tacitly endorses those withdrawals by specifically stating that they are not affected in any way (Sec. 20114).
- Sec. 20107 mandates that at least 2 lease sales be held annually in the GoM. The certainty would provide some incremental benefit, but is unlikely to stem the decline in GoM reserves. We are becoming increasingly dependent on the 4% of our OCS that may be leased, about 3/4 of which is not prospective or has limited production potential.
- The bill also mandates at least 2 sales per year offshore Alaska. What will be offered given that most Alaska areas are off limits? We have seen how little interest there is in the Cook Inlet.
- Sec. 20601 lowers the revenue to the US Treasury and increases the revenue to Gulf producing states. This would garner further support from those states, but will have little effect on production.
- Sec. 20106 requires DOI to publish information and report to Congress on the processing of drilling permits. However, delayed drilling permit approvals do not seem to be a significant issue on the OCS.
Bud's Offshore Energy (BOE) 