Archive for the ‘energy policy’ Category
President’s letter to refiners – you be the judge
Posted in energy policy, tagged letter to refiners, President Biden, White House on June 15, 2022| 1 Comment »
Interesting Dan Yergin interview
Posted in energy policy, tagged Daniel Yergin, ESG, pipelines, Saudi Arabia on June 14, 2022| Leave a Comment »
Some quotes that I found particularly interesting in Dan Yergin’s Forbes Interview:
“We don’t have a physical shortage of natural gas in the U.S., we have a shortage of pipelines. It’s very hard to get any new major pipelines done. In fact, it’s somewhere between very hard, and impossible.”
“Some of the assumptions about how easy things would be [related to the energy transition] are turning out to not have been correct. I think there is some reassessment of ESG [Environmental, Social, and Governance investment] going on, and at the same time, many investors also want good returns. Therefore, they’re looking at the oil and gas sector in a way they weren’t looking at it a year ago.”
With regard to concerns about US government policy panic: “For instance, a ban on oil exports. First of all, if you banned product exports, it would actually send gasoline prices higher…. If limits were put on LNG exports, it would be a terrible shock to Western unity and Europe’s ability to stay the course.”
On Saudi Arabia: “I think the old relationship with the U.S. is over. China is the main, critical market for the Kingdom now….The Crown Prince has said that he wants Saudi Arabia’s Sovereign Wealth Fund to be the biggest in the world, and it is probably on the way to being that. He sees Saudi Arabia becoming very influential in the world’s economy, not only as an oil producer, but as a financial player.”
“The likelihood that there will be new Iranian oil coming onto the market is increasingly unlikely“
Keeping an eye on the Strategic Petroleum Reserve
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged DOE, DOI, petroleum reserve, SPR on June 9, 2022| Leave a Comment »
SPR stocks are down 29% from the end of 2010 and 19% from the end of 2020. Continued declines of this magnitude would be a major concern. Should a major crisis arise, offshore production takes years to ramp up, especially given that the lease inventory is at historic low levels and exploration has thus been stymied. Shale producers can respond more quickly to market needs, but transportation bottlenecks, and staffing and equipment availability can limit near-term production growth.
As was noted here in April, the inconsistency of drawing heavily on the SPR while constraining leasing in the adjacent offshore waters is striking. Apparently, there is nothing to worry about because neither the Department of the Interior nor the Department of Energy home pages even mention the words oil or gas. This is pretty remarkable given their broad responsibilities for these vital resources, and the crippling effects of shortages and high prices.
A supply chain we should be worried about
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged leasing, offshore energy, oil production, supply chain on June 7, 2022| Leave a Comment »
active leases ➡ producible leases ➡ energy production
The future of US offshore energy production is in jeopardy. As is clear in the first chart below, the problem is the precipitous decline in opportunities (l.e. leases), not the will to produce. At 27.3% (6/2022 data), the % of active leases that are producing is near the historic high of 30%. The spin doctors really need to drop the old and tired nonproducing leases excuse.
While not nearly as high as it could be with better lease management, offshore production has held up relatively well thanks to deepwater discoveries that were made years ago and technical innovation that makes projects more cost-effective, safer, and cleaner. Gulf of Mexico production should be relatively stable for several years as production from these projects offsets declines elsewhere. However, in the intermediate and longer term, reserve depletion and the absence of new exploration opportunities ensure a downward production trend.
Aquaculture resurfaces
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, rigs-to-reefs, tagged aquaculture, Gulf of Mexico, NAOA, Rigs-to-Range, Rigs-to-Redfish/Rockfish, rigs-to-roe on June 3, 2022| Leave a Comment »
As is the case every 5 years or so, there is another aquaculture push within the Federal government. It looks like this will be a very process-rich endeavor (check out the list of “Scoping Information Needs“), so don’t expect much soon.
NOAA Fisheries is conducting public scoping for a programmatic environmental impact statement to consider identifying one or more AOAs in federal waters of the Gulf of Mexico. The programmatic environmental impact statement will evaluate the impacts and benefits associated with siting aquaculture in those locations, which could occur through future proposals and project level review. Public scoping is an opportunity for the public to provide input on the range of issues to be addressed in the programmatic environmental impact statement. This is a planning effort and no specific aquaculture-related activities or individual aquaculture projects are being proposed at this time.
NOAA FIsheries
Free the OCS oil and gas leasing program!
Posted in Alaska, energy policy, Gulf of Mexico, Offshore Energy - General, tagged 554days, locked down, OCS Leasing Program, political prisoner on June 2, 2022| Leave a Comment »
Locked down for 561 days!
What the law says vs. current reality
Now <500 producing leases for the first time in more than 5 decades!
Gulf of Mexico LNG: the future is now!
Posted in energy policy, Gulf of Mexico, hurricanes, natural gas, Offshore Energy - General, tagged Gulf of Mexico, jackup rigs, LNG, New Fortress Energy on June 1, 2022| Leave a Comment »
In the past the thought was that we would be importing LNG, i.e. “Rigs-to-Regasification.” Now that we are exporting LNG, we are adding “Rigs-to-Refrigeration” to the alternative use list.
Per our previous post on this topic, New Fortress Energy is moving forward with fast-track LNG projects in the Gulf. Three converted jack-up rigs purchased from Maersk will make up the first “Fast LNG” liquefaction train.
New Fortress is planning to install its first two “Fast LNG” units in West Delta Lease Block 38, located about 16 nm off Grand Isle, Louisiana. The two independent liquefaction trains at this deepwater “port” would export about 1.4 million tonnes per annum (mtpa) of LNG each. Though small by shoreside standards, the plant design would offer a number of advantages, like low cost and speed to market – a critical factor at a time of high demand for LNG. The company says that it should be able to produce each facility on an 18-20 month timescale, from engineering through construction and commissioning.
Maritime Executive
Given the challenges posed by tropical storms, particularly for jackup units, the design criteria for these “permanent” jack-up liquefaction facilities and the role of classification societies are of particular interest.
California decommissioning – the band plays on
Posted in California, decommissioning, energy policy, rigs-to-reefs, tagged Bob Byrd, California platforms, decommissioning, Exxon, Hogan, Houchin, John Smith, OC Coastkeeper, rigs to reefs, Santa Ynez Unit on May 31, 2022| Leave a Comment »
Offshore California, the best that most facility operators and their predecessors (to the extent they continue to hold decommissioning liabilities) can hope for is a graceful exit with manageable financial losses. (The situation is a bit different for Exxon’s Santa Ynez Unit, which has been shut-in since 2015 while the company seeks to resolve oil transportation issues resulting from an onshore pipeline rupture. Here is the latest episode of that amazing saga.)
California’s Federal offshore, where 9 mobile drilling units (MODUs) were operating concurrently in the early 1980s, hasn’t seen a MODU in over 30 years. However, 23 production platforms, some of which are massive structures, remain (see the presentation below). At this point, these platforms are expensive monuments given that their combined production (per EIA) is only 7000 BOPD.
Regardless of their production status, the California offshore platforms continue to be ecologically significant. Dr. Jerry Schubel is among the many marine scientists who understand the importance of the life that has grown on and around these structures. The scientific community also sees other research, educational, and recreational uses for these platforms as per our Rigs-to-Reefs +++ page.
In the absence of workable State reefing/reuse legislation, not much is going to happen. Questionable Federal decisions on the management of decommissioning funds are another impediment to timely action. (See “The troubling case of Platforms Hogan and Houchin.”)
To their credit, State and Federal agencies, trade organizations, and interested third parties continue to discuss the issues and consider alternatives. A recent workshop was helpful in that regard. Attached is the excellent presentation by Bob Byrd and John Smith, who have been at the vanguard in addressing California decommissioning issues. Embedded below is the YouTube video of the presentations from their session. These are excellent updates for those who have an interest in decommissioning issues.
Will the Manchin – Schumer talks lead to a timely resumption of offshore oil and gas leasing?
Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged leasing, Manchin, offshore oil and gas, Schumer on May 27, 2022| Leave a Comment »
There won’t be a deal without significant energy production provisions and Manchin is on the record regarding the need for action on offshore oil and gas leasing. We’ll see what happens.
Energy at the End of the World Seminar – Peter Zeihan
Posted in energy policy, Russia, tagged international energy, Peter Zeihan, Ukraine on May 26, 2022| Leave a Comment »
Dr. Malcolm Sharples, a leading offshore engineer for many years, forwarded this interesting presentation by Peter Zeihan. It’s long (2.5 hours) but you can watch in chunks or jump around based on your particular interests.
I was surprised by Peter’s firm prediction that a US oil export ban was coming soon, but now I see that such a ban is actually being considered. This excellent assessment by the Federal Reserve Bank of Dallas explains why a ban on crude exports would not lower gasoline prices, but would reduce domestic exploration and production, increase the trade deficit, and increase US dependency on crude oil imports. Offshore projects, which require massive capital investment, could be particularly hard hit. Unfortunately, an oil export ban would be such a bad decision that it might actually happen.
Bud's Offshore Energy (BOE) 