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Archive for the ‘energy policy’ Category

California says YES to offshore drilling…

Posted in California, energy policy, Offshore Energy - General, tagged , , , , on May 21, 2022| Leave a Comment »

Not really, but current economic and energy security realities doomed a bill to prohibit drilling and production in State waters. Strong quotes from bill opponents:

“SB 953 was held because it didn’t work — it was going to cost the state billions of dollars for a symbolic victory,” Andrew Meredith, president of the State Building and Construction Trades Council of California, said in a statement. “The California Senate is rightfully more concerned with actually improving the plight of workers and our environment than chasing headlines.”

Politico

“I think most legislators understand that every barrel of oil we don’t produce here under our strict environmental rules must be imported by foreign tankers floating offshore in our crowded ports from Iraq, Saudi Arabia, or the Ecuadorian rainforest,” California Independent Petroleum Association CEO Rock Zierman said in a text message.

Politico

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O Canada!

Posted in Canada, energy, energy policy, Uncategorized, tagged , on May 20, 2022| Leave a Comment »

This graphic uses 2021 EIA data to compare the volumes of crude oil and petroleum products imported by the US from other countries.

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Leasing program update – about as good as we could hope for at this point

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , on May 19, 2022| 1 Comment »

WASHINGTON — During testimony before the U.S Senate Committee on Energy and Natural Resources today, Secretary of the Interior Deb Haaland confirmed that, despite delays in implementation from the previous Administration, the Interior Department will release the Proposed Program – the next step in the five-year offshore energy planning process – by June 30, 2022, which is the expiration of the current program. A Proposed Program is not a decision to issue specific leases or to authorize any drilling or development.

DOI

Here is the timeline for the 5 Year Leasing Program (light blue).

5-year-process-diagramDownload

A sale this year under the new program is thus highly unlikely. The process will no doubt be delayed even further by litigation. As we have said previously, the only hopes for a sale this year are a successful appeal of Judge Contreras’s Sale 257 ruling or successful congressional action (unlikely but possible under the circumstances).

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Chevron sanctions Ballymore; BSEE conducts pre-production inspection of Shell’s Vito platform

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on May 19, 2022| Leave a Comment »

Ballymore will be produced with 3 seafloor wells (6540′ water depth) that are expected to transport 75,000 bopd via a three-mile subsea tieback to Chevron’s Blind Faith floating production unit. Per BOEM, the Ballymore field was discovered in December, 2017. First production is expected to be in 2025.

Pre-production inspection, Shell Vito
Vito

Shell’s Vito floating production unit was inspected last week by BSEE personnel. Vito is expected to begin production later this year or early next year and produce up to 100,000 bopd. Per BOEM data, the Vito field was discovered in 2010.

As these projects demonstrate, deepwater development takes time and is often dependent on related projects on other leases. This is why future production is dependent on regular, predictable lease sales.

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As energy prices soar, remember these 3 things…

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , on May 18, 2022| Leave a Comment »

  1. Gulf of Mexico Lease Sale 257 was vacated on 1/27/2022 because DC Federal Court Judge Contreras ruled that BOEM failed to consider the “positive” effect that higher prices (the logical result of lower production) would have on reducing foreign consumption and the associated GHG emissions. Think about that in the context of the timing and magnitude of this ruling. Why did the court fail to consider the other logical consequences of tight oil supplies and higher prices – increased coal consumption and energy poverty? To avoid the latter, India, the world’s second largest coal producer and consumer, is boosting coal production to record highs.
  2. The Administration, which had only proceeded with Sale 257 because a prior court ruling invalidated the President’s leasing pause, chose not to appeal the decision by Judge Contreras. Why appeal a decision that is consistent with your agenda?
  3. The legislatively mandated 5 year leasing program, without which no Federal offshore leases sales may be conducted, expires at the end of June. This is why last week’s cancellation of the 3 remaining sales in the current 5 year program was rather meaningless. Despite bipartisan congressional support for prompt completion of a new 5 year plan, this does not appear to be a high priority for the Department of the Interior. The only hope for a sale this year might be a successful appeal by Lousisiana and API of Judge Contreras’s Sale 257 ruling.

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Interesting shareholder votes

Posted in climate, energy policy, Uncategorized, tagged , , , , , , , , on May 17, 2022| Leave a Comment »

From Reuters article:

  • bp: Only 15% of shareholder votes backed a call for the company to accelerate its energy transition, compared with the 21% in favor in a similar vote last year.
  • Oxy: Only 17% of investors backed a call for emissions-reduction targets. (I wonder how Buffett voted 😀)
  • Marathon: 16% supported a measure calling for the company to report on how its transition plans affected workers and communities
  • ConocoPhillips: 42% supported an emissions-reductions targeting measure vs. 58% last year.

Exxon, Shell, and Chevron are on deck!

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Good advice to industry execs from Congressman Donalds

Posted in climate, energy policy, Offshore Energy - General, Uncategorized, tagged , , , on May 16, 2022| Leave a Comment »

The video below is from 6 months ago but is even more relevant today. Those who produce nothing but insults shouldn’t be dictating corporate strategy.

Amen Byron!

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Whenever oil and gas prices rise, we hear the non-producing leases shtick

Posted in energy policy, Offshore Energy - General, Regulation, tagged , , , , on May 13, 2022| Leave a Comment »

Department of the Interior spokesperson: “there are 10.9 million acres of offshore federal waters already under lease to industry,” and “of those, the industry is not producing on more than three-quarters (75.7% or 8.26 million acres).”

Fox Business

As if the preventable expiration of the 5 year leasing program wasn’t bad enough, we get to hear the non-producing leases bit yet again. This pitch was popularized during the oil embargoes in the 1970’s and resurfaces whenever it is deemed to be politically helpful.

New comments:

Old comments:

  • 539 days since the last US offshore oil and gas lease sale
  • 182 lease sales since 1954, but none since 2020
  • Only 0.5% of US offshore land is leased for oil and gas exploration and production (assuming commercial quantities of oil and gas are discovered).
  • When you acquire a lease, you are not purchasing oil and gas. You are acquiring the right to explore for, and hopefully produce, those resources. Most leases will never produce.
  • Drilling strategies are linked to geophysical data and geologic information obtained in drilling other wells in the area and region.
  • Leases expire if they are not producing by the end of the lease term, which is 5 to 10 years depending on location.
  • You pay bonuses for all leases and annual rental fees for non-producing leases. None of these payments are returned if no discoveries are made.
  • US offshore leases are among the smallest in the world, only a fraction of the sized of those offered by most other nations with offshore oil and gas programs. This complicates exploration and often makes development contingent on the acquisition of additional tracts at future sales.
  • Oil is where you find it, not where you or the government think it is or want it to be.

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Questions about Gulf of Mexico carbon sequestration

Posted in CCS, climate, energy policy, Gulf of Mexico, pipelines, Regulation, tagged , , , , , , , , on May 12, 2022| Leave a Comment »

Background:

Questions:

  • What are the costs per ton of offshore carbon sequestration including emissions collection, offshore wells and platforms, the associated pipeline infrastructure, ongoing operational and maintenance costs, and decommissioning?
  • What is the timeframe given that the starting point is likely years away?
  • How long would CO2 sequestration continue.
  • Who pays? Polluters? Federal subsidies? Tax credits?
  • Who is liable for:
    • safety and environmental incidents associated with these projects?
    • CO2 that escapes from reservoirs, wells, and pipelines (now and centuries from now)?
    • decommissioning?
    • hurricane preparedness and damage?
  • For Gulf of Mexico sequestration, how much energy would be consumed per ton of CO2 injected? Power source? Emissions?
  • To what extent will these operations interfere with other offshore activities?
  • Relatively speaking, how important is US sequestration given:
  • What are the benefits of offshore sequestration relative to investments in other carbon reduction alternatives?
  • Will BOEM conduct a proper carbon sequestration lease sale with public notice (as required by BOEM regulations) such that all interested parties can bid?
    • What will be the lease terms?
    • Environmental assessment?
    • How will bids be evaluated?
  • What happens to the Exxon bids if the Judge’s Sale 257 decision is reversed?
  • What is the status of the DOI regulations mandated in the legislation with an 11/15/2022 deadline?
    • When will we see an Advanced Notice or Notice of Proposed Rulemaking?
    • Given that DOI has no jurisdiction over the State waters and onshore aspects of these projects, what is the status of parallel regulatory initiatives?
  • Finally and most importantly, how does drilling offshore sequestration wells instead of exploration and development wells increase oil and gas production?
highly simplified conceptual diagram

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Say no to NOPEC

Posted in energy policy, Offshore Energy - General, tagged , on May 9, 2022| Leave a Comment »

The Senate Judiciary Committee (with bipartisan support no less) has passed the old, stale, hypocritical, and insulting “No Oil Producing and Exporting Cartels Act” or “NOPEC”. Congress is again engaging in what it does best – blaming others. When oil prices are high, OPEC, nonproducing leases, and price gouging are the targets of choice.

Note the NOPEC language pasted below, particularly the highlighted text. Our government has proven quite capable of limiting production without OPEC’s help. This is especially true for the US offshore sector, which could be responsibly producing at least 1 million more BOPD with fewer access restrictions and timely leasing. Less than 0.5% of the US OCS is currently open to exploration and development.

Other than for grandstanding purposes, how is this bill helpful? Haven’t we been pleading with OPEC to increase production? Even the White House seems to think NOPEC is a bad idea:

White House spokesperson Jen Psaki said the administration has concerns about the “potential implications and unintended consequences” of the legislation, particularly amid the Ukraine crisis. She said the White House is still studying the bill.

Reuters

NOPEC Bill – SEC. 7A. OIL PRODUCING CARTELS.

“(a) In General.—It shall be illegal and a violation of this Act for any foreign state, or any instrumentality or agent of any foreign state, to act collectively or in combination with any other foreign state, any instrumentality or agent of any other foreign state, or any other person, whether by cartel or any other association or form of cooperation or joint action—

“(1) to limit the production or distribution of oil, natural gas, or any other petroleum product;

“(2) to set or maintain the price of oil, natural gas, or any petroleum product; or

“(3) to otherwise take any action in restraint of trade for oil, natural gas, or any petroleum product,when such action, combination, or collective action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of oil, natural gas, or other petroleum product in the United States.

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